Apr 072018
 
 April 7, 2018  Posted by at 10:24 am Finance Tagged with: , , , , , , , ,  


Arthur Rothstein Grain elevators, Great Falls, Montana 1939

 

US Jobs: One Big Miss (CNBC)
Everything Has Changed In Macroeconomics, But.. (Murphy)
Income From UK Savings Accounts Dropped 16% In A Year (Ind.)
Social Media Users Treated As ‘Experimental Rats’ – EU Watchdog (CNBC)
Facebook Users Have To Pay To Opt Out Of Their Data Being Used (CNBC)
AI: An ‘Immortal Dictator From Which We Can Never Escape’ (CNBC)
960,000 Households In Australia Will Face ‘Mortgage Stress’ (IBT)
Another Mighty Conundrum (Kunstler)
Provocations (Dmitry Orlov)
Shipping Is a Big Part of the Climate Problem (BBG)
Chinese Man Caught Smuggling Five Rhino Horns Is Jailed By Dutch Court (G.)

 

 

93 million not in the labor force.

US Jobs: One Big Miss (CNBC)

Nonfarm payrolls rose 103,000 in March while the unemployment rate was 4.1%, falling well short of Wall Street expectations during a month where weather caused havoc on the jobs market, according to a Bureau of Labor Statistics report Friday. Economists had been expecting a payrolls gain of 193,000 and the unemployment rate to decline one-tenth of a point to 4%. The monthly reading was a huge slip from the 326,000 reported in February. A broader measure of unemployment that includes discouraged workers and those holding part-time positions for economic reasons — the underemployed — fell two-tenths of a point to 8%, its lowest reading in 11 years.

“If one were to only focus on this single month, the March employment report is on the disappointing side,” said Mark Hamrick, senior economic analyst at Bankrate.com. “Broader context is appropriate, however. The job market is widely regarded to be close to full employment. So, hiring gains should be slowing at this point in the expansion.” In addition to the payrolls news, the closely watched average hourly earnings figure rose 0.3%, against estimates of 0.2%. The number equates to a healthy but not worrisome 2.7% rate on an annualized basis. The average work week was unchanged at 34.5 hours.

Stock market reaction to the report was muted, with major indexes lower largely on renewed worries over a U.S. trade war with China. “Wage growth continues to inch higher but not enough to worry markets at this point,” said Quincy Krosby, chief market strategist at Prudential Financial. “As we move closer and closer towards full employment expectations are that headline employment should slow. This number reflects a continued reversion to the mean.” Professional and business services led with 33,000 new jobs while manufacturing and health care added 22,000 new jobs apiece. Mining rose 9,000 while construction lost 15,000 positions and retail fell 4,000.

Read more …

Never again…

Everything Has Changed In Macroeconomics, But.. (Murphy)

I spend a lot of time writing about the Global Financial Crisis. Not much of it is published yet: academia is desperately slow. The crash of 2008 and its aftermath is, however, an ever-present reality both in my work life, and to be candid, the world beyond it. But I still do not think we appreciate how much everything has changed. A blog from John Lewis who works for the Bank of England gave some hint of the scale of this change this week. Lewis looked at real interest rates for three centuries i.e. those adjusted for inflation. When considering real bank rate, mortgage rates, and 10-year government bond yields over time this is what he found. As he notes: ‘the lines show the five-year moving averages of the ex-post real interest rate. The dots show the values over the years 2012 to 2016’:

As he notes: “The 5-year average of real bank rate rarely goes below zero – previous instances were mainly during the 1970s inflation and around world wars. The decline in real bond yields since the 1980s leaves them about 300bps below their all time average.” Now there may be good reason for that: broader markets, real reduced risk because of better information, and so on. The absence of world war helps too. But it also means that if we were to return to ‘normal’ or the mean then the change in rates would be massive:

The most useful contrast is with 1997 – 2007, of course. We’re talking adjustments of 4% or more. That is not going to happen. There are good reasons. Most mortgage holders would fail to make their payments. Most banks would then collapse. and government debt costs would increase and may politicians would panic at that whether appropriately or not. I will be blunt. Everything has changed. Those rates are history. This though has massive implications. If this is the case then monetary policy as a mechanism for controlling inflation and economic activity has died: rates that let it work cannot be recreated. And yet almost the whole of macroeconomic thinking is premised on its use, as is the role of central banks in our economies.

The reality is that everything has changed. And yet there is, so far, almost no reaction. Fiscal policy – spend and tax – is the only tool left to the government now and yet no one is saying so. No wonder I spend half my time wondering why we feel so out of control. We are.

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We’ll get you into the casino yet.

Income From UK Savings Accounts Dropped 16% In A Year (Ind.)

UK savers’ income from bank accounts fell 16 per cent in a year, according to new research, due to low interest rates from banks and building societies. According to easyMoney, the investment platform launched by easyJet founder Stelios Haji-Ioannou, the drop in savings income is worse in real terms due to rising inflation. The decline in income is based on numbers from the 2015/2016 financial year (the latest available data from HMRC) when savers made £5.7bn compared with £6.8bn in 2014/2015. At the end of the 2014/2015 fiscal year, inflation was -0.1 per cent; by January this year it had risen to 3 per cent.

With savers seeing less benefit from stashing their money in bank accounts and cash ISAs, easyMoney said, people are increasingly turning towards alternatives, with many inclined to “take on a sensible increase in risk”. Andrew de Candole, CEO of easyMoney, said: “Savers are increasingly fed up with seeing their money just sitting doing nothing in bank accounts. “It’s easy to see why: these figures show that savings accounts’ and cash ISAs’ performance has been getting worse. With inflation eating away at values, the reality is there’s very little incentive to save through these traditional routes. “For many people the time has come to take action. Investors need products that offer real returns, and many are prepared to accept a sensible, calculated increase in risk in order to achieve this.”

Read more …

So act.

Social Media Users Treated As ‘Experimental Rats’ – EU Watchdog (CNBC)

Facebook needs to make sure the new tools it has introduced to help safeguard user data in the wake of the Cambridge Analytica scandal is done in “practice and not only on paper,” the European Union’s top data watchdog told CNBC. The social network has unveiled a raft of new tools since news of the fiasco broke, with the aim of helping users understand and control how their data are used. Giovanni Buttarelli, the European Data Protection Supervisor (EDPS), said Facebook CEO Mark Zuckerberg needs to ensure these changes are done in practice. “I take note of what Zuckerberg has said recently, he said that he takes care of the privacy right. The question is they should do it in practice and not only on paper,” Buttarelli told CNBC in a phone interview on Thursday.

[..] Buttarelli criticized social media firms’ data collection practices. “There are days when you have the impression people are treated as battery animals or experimental rats. We are treated as a farm for data. We are in within a walled garden and every single action is monitored,” Buttarelli said. The EDPS is in charge of making sure that data are being handled correctly within EU institutions like the Commission. But it is also part of a working group made up of the data protection authorities from various member states.

[..] Buttarelli said there are likely to be far-reaching consequences which could include punishments for companies. “I’m expecting far-reaching consequences on the broader scale. There is a need of a change of culture,” he told CNBC. Last month, European Parliament President Antonio Tajani invited Zuckerberg to testify in front of lawmakers and give reassurances that EU citizens’ data were not used to “manipulate democracy.” Buttarelli said it would be “wise” for Zuckerberg to honor the invitation from Tajani.

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If you ask me, the highest tree ain’t high enough. But that’s just me. And it’s not those that do it, it’s those that let them.

Facebook Users Have To Pay To Opt Out Of Their Data Being Used (CNBC)

Facebook users could have to pay to completely opt out of their data being used to target them with advertising, the company’s Chief Operating Officer Sheryl Sandberg told NBC News on Thursday. NBC asked if Facebook could come up with a tool to let people have a button that allows them to restrict the social network from using their profile data to stop targeted ads. Sandberg said that the company has “different forms of opt out” but not one button for everything. “We don’t have an opt-out at the highest level. That would be a paid product,” Sandberg told NBC. The comments come in the wake of the scandal in which 87 million Facebook profiles were scraped with the data being sent to political consultancy Cambridge Analytica.

Facebook CEO Mark Zuckerberg has apologized for the company’s role in the data scandal and is now set to testify in front of Congress on April 11. Zuckerberg has also been summoned to appear in front of lawmakers in the U.K. and European Union. The data issue arose from a quiz app that collected data of Facebook users and their friends. This data was then passed on to Cambridge Analytica. Facebook banned the app in 2015, and said it got “assurances” from Cambridge Analytica and the app maker that the data was deleted. However, reports suggested this wasn’t the case. Facebook has been criticized for not checking the data had been erased, a mistake that Sandberg acknowledged.

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Even Musk makes sense once in a blue moon.

AI: An ‘Immortal Dictator From Which We Can Never Escape’ (CNBC)

Superintelligence — a form of artificial intelligence (AI) smarter than humans — could create an “immortal dictator,” billionaire entrepreneur Elon Musk warned. In a documentary by American filmmaker Chris Paine, Musk said that the development of superintelligence by a company or other organization of people could result in a form of AI that governs the world. “The least scary future I can think of is one where we have at least democratized AI because if one company or small group of people manages to develop godlike digital superintelligence, they could take over the world,” Musk said. “At least when there’s an evil dictator, that human is going to die. But for an AI, there would be no death. It would live forever. And then you’d have an immortal dictator from which we can never escape.”

The documentary by Paine examines a number of examples of AI, including autonomous weapons, Wall Street technology and algorithms driving fake news. It also draws from cultural examples of AI, such as the 1999 film “The Matrix” and 2016 film “Ex Machina.” [..] “If AI has a goal and humanity just happens to be in the way, it will destroy humanity as a matter of course without even thinking about it. No hard feelings,” Musk said. “It’s just like, if we’re building a road and an anthill just happens to be in the way, we don’t hate ants, we’re just building a road, and so, goodbye anthill.”

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Lowballing.

960,000 Households In Australia Will Face ‘Mortgage Stress’ (IBT)

The number of Australian households facing “mortgage stress” will likely reach 960,000, according to a new data. Slow wage growth is blamed for the trend as it does not keep up with the rising cost of living. Digital Finance Analytics (DFA) has recently released data which suggests that the number of households facing mortgage stress will likely reach about one million. Mortgage stress is a term used to refer to households spending 30% or above of its pre-tax income on home loan repayments. Households are defined as “stressed” when cash flow does not cover ongoing costs.

As for access to other available assets, that is something that they may or may not have. Some households have paid ahead, but those in mild stress have little leeway in their net income while those in severe stress could not meet repayments from current income. The new data also shows that the figure was a climb of 30,000 in the last month, encapsulating low and high-income-earning households, according to 9 News. For DFA spokesperson Martin North, it was an indication of how dire the country’s housing situation is getting.

“Things will get more severe, especially as household debt continues to climb to new record levels, mortgage lending is still growing at two to three times income,” Daily Mail Australia reported him as saying. North added that those numbers were not sustainable. It was estimated that over 55,000 households risk 30-day default in the next 12 months. Bank portfolio losses were expected to be about 2.8 basis points. Aside from flat wages growth and rising costs of living, higher real mortgage rates are perceived to be a burden. Mortgage lending continues to grow at two to three times income. The latest household debt to income ratio is currently at a record 188.6.

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Pot and sanctuary.

Another Mighty Conundrum (Kunstler)

The sanctuary city movement seems to me the most mendacious element of the story, a nakedly emotional appeal against the rule of law. The attorney general of California, Xavier Becerra, lately threatened to fine corporations there that share employee information with federal agents. There has not been such arrant flouting of federal law by state officials since Governor George Wallace stood in the doorway of the University of Alabama crying “segregation now, segregation tomorrow, segregation forever” in June, 1963 — and we all know how that ended. I’m among those who would like to see the immigration laws honestly enforced. In fact, I would also like to see the 1965 immigration law reformed to admit far fewer people from any land into this country. We have economic and cultural interests to protect, and they would seem to be self-evident.

So why has there been no move by the federal authorities to impose sovereign federal law over figures like Mr. Becerra, or Oakland Mayor Libby Schaaf, who went through the barrio there Paul Revere style warning that the ICE agents were coming? Well, one big reason is the marijuana situation. Nine states have legalized cannabis for recreational use (i.e. for getting high), and 29 have legalized it for medical purposes. This includes all of the states on the “Left Coast.” All of them are flouting federal law in doing that. But imagine the political uproar if the feds tried to step in at this point and quash the cannabis trade. In the early adapters, like Colorado, California, and Washington State, the trade has blossomed into multi-million dollar corporate enterprise, with significant tax revenue.

So, much as I object to the dishonest practices around immigration, I don’t see how the federal government can take principled action against them without first addressing its attitude to the marijuana situation. Of course, that could be easily disposed of by congress adopting a simple law to the effect that the cultivation and sale of cannabis shall be regulated by the states. The craven members of congress apparently don’t even dare to raise the issue of resolving this conundrum, and the thought may have never even entered the mighty golden brain-pan of our president — not to mention The New York Times, The Washington Post, CNN, Fox-News, or any of the other media organs of public debate. Well, maybe the time has come for that discussion.

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An absolutely fantastic story by Dmitry. Don’t miss this.

Provocations (Dmitry Orlov)

First, I will present just the facts. Next, I will indicate some huge, gaping holes in the plot which we must, perforce, fill using our imaginations (for lack of detailed factual information), but relying on real world knowledge as much as possible to build a plausible scenario (or two). In the end, the most plausible scenario wins. On February 22, 2018, the Argentine newspaper El Clarin has reported that a major shipment of drugs from Buenos Aires to Moscow—389 kg of pure cocaine, valued at over 60 million USD, and bearing the markings of the Sinaloa drug cartel of Northern Mexico—was prevented from taking place thanks to the efforts of Russia’s FSB and the Argentine authorities. Several people, including a member of the Argentine police and someone involved in charity work, have been detained.

Victor Coronelli, Russia’s ambassador to Argentina, related how all the way back in 2016 the embassy received information that possessions belonging to some third party had been found in a storage space at a children’s school operated by the embassy and located several blocks away from it. Suspicions arose and a thorough examination had uncovered 12 colorful suitcases filled with 389 “keys” (1-kilo blocks) of cocaine bearing the little star that is the symbol of the Sinaloa cartel of Northern Mexico. Shortly after the cocaine was discovered, Russia’s FSB, working together with the Argentine police, hatched an ingenious plan for a sting operation, to find out who is behind this shipment. To this end, they carefully replaced the cocaine with flour and placed the 12 colorful suitcases back in storage.

And there they sat for over a year. What has been done with the cocaine that was extracted isn’t known. Apparently, it took a great deal of effort to get anyone to take possession of these suitcases. Eventually, two people were found who agreed to take delivery of them in Moscow: Vladimir Kalmykov and Ishtimir Hudzhamov. They are currently in pretrial detention in Russia. A third suspect, Andrei Kovalchuk, is under arrest in Germany, awaiting extradition to Russia, but his extradition is conditional on whether the Russian side can offer evidence of his complicity or guilt in organizing the shipment.

Kovalchuk used to work for Russia’s Foreign Ministry, but most recently he has used his old ministerial connections to arrange for some small-scale contraband to be shipped to Russia via diplomatic mail: cigars, coffee, cognac, etc. Such trade had been common during the 1990s, when Russian diplomats had fallen on hard times and did whatever they could to make ends meet, but it has become unnecessary in recent years, now that they are very well provided for once again. Still, cigars, coffee and cognac is what Kovalchuk—an apparent throwback to this earlier, meager era—maintains was in the suitcases he had stashed at the school in Buenos Aires: he has kept all of the receipts. He plans to travel to Russia of his own free will once he has gathered all the evidence he needs to exonerate himself.

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Bloomberg editors are clueless, but the issue is real.

Shipping Is a Big Part of the Climate Problem (BBG)

When almost all the world’s governments agreed in Paris more than two years ago to address climate change, they sidestepped an important issue: carbon emissions from international shipping. Next week in London, they have a chance to put this right. Shipping is by far the most energy-efficient mode of transport, and it moves some 80% of world trade by volume. However, the fuel it uses is hard on the environment and human health — and ships last a long time, so deploying cleaner fleets takes time. Already, international shipping accounts for about as much carbon dioxide each year as Germany’s whole economy. On current trends, its share of the total will rise quickly. It could account for roughly 15% of the global carbon budget set by the Paris accord for 2050.

Next week, the International Maritime Organization is expected to announce a strategy for reducing these emissions. The plan is unlikely to be bold. Countries including Argentina, Brazil, India, Panama and Saudi Arabia are resisting carbon dioxide targets for shipping. Unsurprisingly, the industry itself is also opposed. Despite this resistance, the IMO needs to be ambitious. Ultimately, the most cost-effective approach would be to put a tax on carbon, and let that guide investment and innovation. But devising and implementing an international carbon-price system won’t be done overnight. In the short run, the IMO ought to propose a variety of useful course corrections.

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The problem in a nutshell: 1 year in jail (5 months with good conduct?!) for 5 rhinos. He’ll do it again as soon as he’s freed. $600,000. Another issue where the tallest tree isn’t high enough.

And we’re not even trying.

Chinese Man Caught Smuggling Five Rhino Horns Is Jailed By Dutch Court (G.)

A Dutch court has sentenced a Chinese man to a year in jail for smuggling five rhino horns and four other horn objects worth about €500,000 ($613,000) in his luggage. The man was caught by customs officials at Schiphol airport in December as he traveled through Amsterdam on his way from South Africa to the Chinese city of Shanghai. It recalled that trading in endangered species is banned under the CITES convention prohibiting sales of protected animals and plants. South Africa is battling a scourge of rhino poaching fuelled by insatiable demand for their horn in Asia.

The country’s ministry of environmental affairs said earlier this year that 1,028 rhinos were slaughtered in 2017. In the last eight years alone, roughly a quarter of the world population of rhinos has been killed in South Africa, home to 80% of the remaining animals. Most of the demand comes from China and Vietnam, where the horn is coveted as a traditional medicine, an aphrodisiac or as a status symbol.

Read more …

Apr 012018
 
 April 1, 2018  Posted by at 9:32 am Finance Tagged with: , , , , , , , , , , ,  


Rembrandt van Rijn Christ and St Mary Magdalene at the Tomb 1638

 

US Homes Become ATMs Again (MW)
The Housing Crisis – There’s Nothing We Can Do… Or Is There? (Steve Keen)
Fear is Back (MW)
The S&P’s 200-DMA: Why It Ain’t No Maginot Line (Stockman)
Trump Renews Amazon Attack, Says ‘Post Office Scam’ Must Stop (BBG)
Senator Warren, In Beijing, Says US Is Waking Up To Chinese Abuses (R.)
Yanis Varoufakis: ‘Greece Is A Debtors’ Prison’ (G.)
Emmanuel Macron On France’s AI Strategy (Wired)
Conservationists Call For Urgent Action To Fix ‘America’s Wildlife Crisis’ (G.)
More Poachers Than Rhinos Killed In India Reserve (BBC)

 

 

There’s nonsense and then there’s nonsense. Staying in your home is now a “huge expansion of retirement options”: “We’ve seen a huge expansion of the types of retirement options people have. One is aging in place and retrofitting your house.”

US Homes Become ATMs Again (MW)

As interest rates rise, fewer households refinance their mortgages. And the refinances that do get done are often very different than those initiated during low-rate periods. “When rates are low, the primary goal of refinancing is to reduce the monthly payment,” wrote researchers for the Urban Institute in a recent report. “But when rates are high, borrowers have no incentive to refinance for rate reasons. Those who still refinance tend to be driven more by their desire to cash out.” “Cashing out” is shorthand for taking out a new mortgage that’s bigger than the remaining balance on the old one and using the money that makes up the difference for discretionary purchases.

As of the fourth quarter of last year, the share of all refinances that were cash-outs rose to the highest since 2008, according to Freddie Mac data. Rates have churned higher since the presidential election in late 2016, though they spent much of 2017 reversing the immediate post-election surge. It’s not clear whether the overall volume of cash-out refinances is rising. Right now they’re making up a bigger share of the pie because traditional lower-monthly-payment refis are plunging. Tapping into home equity is often a good way for owners to consolidate or manage other, more expensive, forms of debt like high-interest credit cards or bills for higher education.

“As people stay in their homes longer we see people reinvesting in their homes by using equity to update their homes and do repair work,” said Rick Sharga, executive vice president for Carrington Mortgage Holdings and an industry veteran. That’s especially true for older Americans, he added. “We’ve seen a huge expansion of the types of retirement options people have. One is aging in place and retrofitting your house.”

Read more …

Housing markets need ever more private debt. So then does the overall economy.

The Housing Crisis – There’s Nothing We Can Do… Or Is There? (Steve Keen)

The supply side of the housing market has two main two factors: the turnover of the existing stock of housing, and the net change in the number of houses (thanks to demolition of old properties and construction of new ones). The turnover of existing properties is far larger than the construction rate of new ones, and this alone makes housing different to your ordinary market. The demand side of the housing market has one main factor: new mortgages created by the banks. Monetary demand for housing is therefore predominantly mortgage credit: the annual increase in mortgage debt. This also makes housing very different to ordinary markets, where most demand comes from the turnover of existing money, rather than from newly created money.

We can convert the credit-financed monetary demand for housing into a physical demand for new houses per year by dividing by the price level. This gives us a relationship between the level of mortgage credit and the level of house prices. There is therefore a relationship between the change in mortgage credit and the change in house prices. This relationship is ignored in mainstream politics and mainstream economics. But it is the major determinant of house prices: house prices rise when mortgage credit rises, and they fall when mortgage credit falls. This relationship is obvious even for the UK, where mortgage debt data isn’t systematically collected, and I am therefore forced to use data on total household debt (including credit cards, car loans etc.).

Even then, the correlation is obvious (for the technically minded, the correlation coefficient is 0.6). The US does publish data on mortgage debt, and there the correlation is an even stronger 0.78—and standard econometric tests establish that the causal process runs from mortgage debt to house prices, and not vice versa (the downturn in house prices began earlier in the USA, and was an obvious pre-cursor to the crisis there).

None of this would have happened – at least not in the UK – had mortgage lending remained the province of money-circulating building societies, rather than letting money-creating banks into the market. It’s too late to unscramble that omelette, but there are still things that politicians could do make it less toxic for the public. The toxicity arises from the fact that the mortgage credit causes house prices to rise, leading to yet more credit being taken on until, as in 2008, the process breaks down. And it has to break down, because the only way to sustain it is for debt to continue rising faster than income. Once that stops happening, demand evaporates, house prices collapse, and they take the economy down with them. That is no way to run an economy.

Yet far from learning this lesson, politicians continue to allow lending practices that facilitate this toxic feedback between leverage and house prices. A decade after the UK (and the USA, and Spain, and Ireland) suffered property crashes – and economic crises because of them – it takes just a millisecond of Internet searching to find lenders who will provide 100% mortgage finance based on the price of the property. This should not be allowed. Instead, the maximum that lenders can provide should be limited to some multiple of a property’s actual or imputed rental income, so that the income-earning potential of a property is the basis of the lending allowed against it.

Read more …

Fear is needed.

Fear is Back (MW)

The Dow and the S&P 500 halted a record-setting streak of quarterly wins at nine, and the clearest reason why may be explained by the VIX index, widely known as Wall Street’s “fear gauge.” The Dow Jones Industrial Average posted a quarterly decline of more than 2.3%, snapping the longest streak of quarterly gains for the blue-chip average since an 11-quarter rally that ended in the third quarter of 1997. The S&P 500 index booked a 1.2% quarterly fall, ending its longest such stretch since the first quarter of 2015.

There are perhaps a host of reasons for the surcease of such a lengthy bullish run for the most prominent equity benchmarks: The Federal Reserve’s normalization of monetary policy, with the central bank lifting rates for the fifth time this month since December 2015; Intensifying uncertainty in the makeup and agenda of President Donald Trump’s administration, underscored by a number of high-profile departures; and the intensification of trade-war fears, after the president imposed duties on steel and aluminum imports and leveled more targeted tariffs at the world’s second-largest economy: China.

However, the surge in the Cboe Volatility Index VIX is perhaps the most correlated with the market’s downtrend. According to WSJ Market Data Group, the VIX posted its biggest quarterly rise, up 81% since it jumped in the third-quarter of 2011 following Standard & Poor’s historical downgrade of the U.S. credit rating and European debt-crisis jitters.

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Rhyme and repeat.

The S&P’s 200-DMA: Why It Ain’t No Maginot Line (Stockman)

For the last five years the S&P 500 has been dancing up its ascending 200-day moving average (200-DMA), bouncing higher repeatedly whenever the dip-buyers did their thing. Only twice did the index actually break below this seeming Maginot Line: In August 2015, after the China stock crash, and in February 2016, when the shale patch/energy sector hit the wall. As is evident below, since the frenzied peak of 2873 on January 26, the index has fallen hard twice—on February 8 (2581) and March 23 (2588). Self-evidently, both times the momo traders and robo-machines came roaring back with a stick-save which was smack upon the 200-DMA.

But here’s the thing. The blue line below ain’t no Maginot Line; it’s just the place where the Pavlovian dogs of Bubble Finance have “marked” the charts. And something is starting to smell. In fact, it’s starting to smell very much like an earlier go-round when Pavlov’s 200-DMA barkers had enjoyed a prolonged ascent – only to find an unexpected cliff-diving opportunity at the end. We refer to the nearly identical five year run-up to the March 2000 top at 1508 on the S&P 500. Back then, too, the 200-DMA looked invincible, and had only been penetrated by the August 1998 Russian bankruptcy and the Long Term Capital Management meltdown a month later.

Indeed, the bounce from the October 8, 1998 interim bottom of 960 was nearly parabolic, rising by 57% to the March 2000 top. That latter point might sound vaguely familiar. That’s because the rebound from the February 11, 2016 interim bottom (1829) to the January 26th top (2873) this year was, well, 57%!

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This is going to cost Amazon.

Trump Renews Amazon Attack, Says ‘Post Office Scam’ Must Stop (BBG)

President Donald Trump lit into Amazon.com Inc. for the second time in three days with a pair of Twitter messages that said the online retailer “must pay real costs (and taxes) now!” The president on Saturday claimed, citing reports he didn’t specify, that the U.S. Postal Service “will lose $1.50 on average for each package it delivers for Amazon” and added that the “Post Office scam must stop.” Amazon has said the postal service, which has financial problems stretching back for years, makes money on its deliveries. Amazon shed $53 billion in market value on Wednesday after Axios reported that the president is “obsessed” with regulating the e-commerce giant, whose founder and chief executive officer, Jeff Bezos, also owns the Washington Post newspaper.

Those losses were pared on Thursday, the final day of a shortened trading week, even as Trump tweeted that Amazon was using the postal service as its “Delivery Boy.” White House spokeswoman Lindsay Walters said on Thursday that while the president was displeased with the e-commerce giant, and particularly instances where third-party sellers on the site didn’t collect sales tax, there were no administrative actions planned against Amazon “at this time.” Still, Brad Parscale, who’s managing Trump’s 2020 presidential campaign, hinted in a tweet late Thursday that the administration may act to raise Amazon’s postal costs. “Once the market figures out that a single @usps rule change will crush @amazon’s bottom line we will see,” Parscale wrote.

Amazon.com and the Washington Post have been regular punching bags for Trump. In July, the president mused about whether the newspaper was “being used as a lobbyist weapon” to keep Congress from looking into Amazon’s business practices. He echoed that comment on Saturday, saying the Post “is used as a ‘lobbyist’ and should so REGISTER.” [..] While full details of the agreement between Amazon and the U.S. Postal Service are unknown – the mail carrier is independently operated, and strikes confidential deals with retailers – David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40% of Amazon’s volume the previous year.

He estimated at the time that Amazon pays the postal service $2 per package, which is about half what it would pay UPS or FedEx. A sudden increase in postal rates would cost Amazon about $2.6 billion a year, according to a report by Citigroup from April 2017. That report predicted UPS and FedEx would also raise rates in response to a postal service hike. Citigroup also said that the “true” cost of shipping packages for the USPS is about 50% higher than its current rates, leading some editorial writers to conclude that Amazon was receiving the type of subsidy cited in Trump’s Thursday tweet.

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Wait, wasn’t she supposed to be the anti-Trump?

Senator Warren, In Beijing, Says US Is Waking Up To Chinese Abuses (R.)

U.S. policy toward China has been misdirected for decades and policymakers are now recalibrating ties, Senator Elizabeth Warren told reporters during a visit to Beijing amid heightened trade tensions between the world’s two largest economies. Warren’s visit comes as U.S. President Donald Trump prepares to implement more than $50 billion in tariffs on Chinese goods meant to punish China over U.S. allegations that Beijing systematically misappropriated American intellectual property. The Massachusetts Democrat and Trump foe, who has been touted as a potential 2020 presidential candidate despite rejecting such speculation, has said U.S. trade policy needs a rethink and that she is not afraid of tariffs.

After years of mistakenly assuming economic engagement would lead to a more open China, the U.S. government was waking up to Chinese demands for U.S. companies to give up their know-how in exchange for access to its market, Warren said. “The whole policy was misdirected. We told ourselves a happy-face story that never fit with the facts,” Warren told reporters on Saturday, during a three-day visit to China that began on Friday. “Now U.S. policymakers are starting to look more aggressively at pushing China to open up the markets without demanding a hostage price of access to U.S. technology,” she said.

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A poisonous political climate.

Yanis Varoufakis: ‘Greece Is A Debtors’ Prison’ (G.)

Yanis Varoufakis is back. He, of course, would say he never went away, but in Greece’s hurly-burly world of politics his is a name prone to triggering toxic reaction. Abroad, the shaven-headed economist is feted as the man who took on Europe’s establishment. At home, the former finance minister is seen, on both left and right, as a reckless incarnation of all that was wrong with Greece at the height of its struggle to remain in the eurozone. In Athens and Brussels, his confrontational style is still blamed for the price the debt-stricken country had to pay to be bailed out in the summer of 2015. Although his resignation now seems a long time ago, the sight of Varoufakis launching his own party in Greece has unleashed emotions that have run the gamut from enthusiasm to anger and disdain.

Media reaction has been cool; so, too, has that of politicians. None of which seems to bother him in the least. “Nobody believes the systemic media in Greece, and they’re all bankrupt,” he told the Observer with typical defiance, days after announcing his new venture in a packed Athens theatre. “To those who say I cost the country, and I’ve heard €30bn, €86bn, €100bn and even €200bn… I say I cost exactly zero. The troika [of creditors] cost Greece two generations and continue to impose cost.” At 57, in his leather bomber jacket and boots, Varoufakis clearly relishes his anti-establishment role and believes the birth of his European Realistic Disobedience Front, AKA MeRA25, is not a moment too late. Greece, almost nine years after the eurozone crisis erupted, is still condemned to being a debtors’ colony, he says.

[..] MeRA 25 has been working behind the scenes for a year now. Its plan is to contest the European elections in May 2019, although Varoufakis acknowledges Tsipras may elect to call a general election before that. After almost a decade under international surveillance, Athens will exit its third international rescue programme – the biggest sovereign bailout in global financial history – in August. With his popularity compromised under the weight of enforcing measures he once vehemently opposed, Tsipras may opt to capitalise on the success of finally exiting the programme and economic oversight. “We have travelled the whole country and held rallies in all major towns,” says Varoufakis, adding that politicians are already expressing interest in jumping ship.

Far from being saved, Varoufakis believes Greece’s future has been put on hold. If anything, he argues, it is in for an even tougher time because Europe has elected to tackle its debt problem by taking the “extend and pretend” approach of prolonging repayment timetables and condemning the country to decades of further austerity. More pension cuts and tax hikes loom, legislated by MPs at the behest of the EU and IMF. Short of measures to stop the rot, Varoufakis quips that he sees Greece becoming another Kosovo, “with beautiful beaches, only it’s a protectorate emptied of its young people. Every month 15-20,000 young Greeks leave. Everywhere I go, I meet them.”

Read more …

Macron knows what’s best for you. He’s your big brother.

Emmanuel Macron On France’s AI Strategy (Wired)

I want to create an advantage for my country in artificial intelligence, directly. And that’s why we have these announcements made by Facebook, Google, Samsung, IBM, DeepMind, Fujitsu who choose Paris to create AI labs and research centers: this is very important to me. Second, I want my country to be part of the revolution that AI will trigger in mobility, energy, defense, finance, healthcare and so on. Because it will create value as well. Third, I want AI to be totally federalized. Why? Because AI is about disruption and dealing with impacts of disruption. For instance, this kind of disruption can destroy a lot of jobs in some sectors and create a need to retrain people. But AI could also be one of the solutions to better train these people and help them to find new jobs, which is good for my country, and very important.

I want my country to be the place where this new perspective on AI is built, on the basis of interdisciplinarity: this means crossing maths, social sciences, technology, and philosophy. That’s absolutely critical. Because at one point in time, if you don’t frame these innovations from the start, a worst-case scenario will force you to deal with this debate down the line. I think privacy has been a hidden debate for a long time in the US. Now, it emerged because of the Facebook issue. Security was also a hidden debate of autonomous driving. Now, because we’ve had this issue with Uber, it rises to the surface. So if you don’t want to block innovation, it is better to frame it by design within ethical and philosophical boundaries. And I think we are very well equipped to do it, on top of developing the business in my country.

But I think as well that AI could totally jeopardize democracy. For instance, we are using artificial intelligence to organize the access to universities for our students That puts a lot of responsibility on an algorithm. A lot of people see it as a black box, they don’t understand how the student selection process happens. But the day they start to understand that this relies on an algorithm, this algorithm has a specific responsibility. If you want, precisely, to structure this debate, you have to create the conditions of fairness of the algorithm and of its full transparency. I have to be confident for my people that there is no bias, at least no unfair bias, in this algorithm.

I have to be able to tell French citizens, “OK, I encouraged this innovation because it will allow you to get access to new services, it will improve your lives—that’s a good innovation to you.” I have to guarantee there is no bias in terms of gender, age, or other individual characteristics, except if this is the one I decided on behalf of them or in front of them. This is a huge issue that needs to be addressed. If you don’t deal with it from the very beginning, if you don’t consider it is as important as developing innovation, you will miss something and at a point in time, it will block everything. Because people will eventually reject this innovation.

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“..more than 150 US species have already become extinct while a further 500 species have not been seen in recent decades..”

Conservationists Call For Urgent Action To Fix ‘America’s Wildlife Crisis’ (G.)

An extinction crisis is rippling though America’s wildlife, with scores of species at risk of being wiped out unless recovery plans start to receive sufficient funding, conservationists have warned. One-third of species in the US are vulnerable to extinction, a crisis that has ravaged swaths of creatures such as butterflies, amphibians, fish and bats, according to a report compiled by a coalition of conservation groups. A further one in five species face an even greater threat, with a severe risk of being eliminated amid a “serious decline” in US biodiversity, the report warns. “America’s wildlife are in crisis,” said Collin O’Mara, chief executive of the National Wildlife Federation. “Fish, birds, mammals, reptiles and invertebrates are all losing ground. We owe it to our children and grandchildren to prevent these species from vanishing from the earth.”

More than 1,270 species found in the US are listed as at risk under the federal Endangered Species Act, an imperiled menagerie that includes the grizzly bear, California condor, leatherback sea turtle and rusty patched bumble bee. However, the actual number of threatened species is “far higher than what is formally listed”, states the report by the National Wildlife Federation, American Fisheries Society and the Wildlife Society. Using data from NatureServe that assesses the health of entire groups of species on a sliding scale, rather than the case-by-case work done by the federal government, the analysis shows more than 150 US species have already become extinct while a further 500 species have not been seen in recent decades and have possibly also been snuffed out.

Whole classes of creatures have suffered precipitous drops, with 40% of freshwater fish species in the US now vulnerable or endangered, a third of bat species experiencing major declines in the past two decades and amphibians dwindling from their known ranges at a rate of about 4% a year. The true scale of the crisis is probably larger when species with sparse data, or those as yet unknown to science, are considered. “This loss of wildlife has been sneaking up on us but is now like a big tsunami that is going to hit us,” said Thomas Lovejoy, a biologist at George Mason University. Lovejoy was consulted on the study and said it “captures the overall degradation of American nature over recent decades, rather than little snapshots”.

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The future of wildlife conservation?! in 2015, park guards shot dead more people than poachers killed rhinos.

More Poachers Than Rhinos Killed In India Reserve (BBC)

A census in India’s Kaziranga National Park has counted 2,413 one-horned rhinos – up 12 from 2015. The Unesco World Heritage Site, in Assam state, is home to two-thirds of the world’s population of the species. The census is carried out every three years. It is an incredible conservation success story given the fact that there were only a few hundred rhinos in the 1970s, says the BBC’s South Asia editor Anbarasan Ethirajan. However, the conservation effort has not been without controversy. The government has in recent years given the park rangers extraordinary powers to protect the animals from harm – powers usually only given to soldiers intervening in civil unrest. About 150 rhinos have been killed for their horns since 2006, but in 2015, park guards shot dead more people than poachers killed rhinos.

[..] The census total given is an estimate, with authorities cautioning that the population could be bigger than that counted because some animals were concealed by tall grasses and reeds. This vegetation is usually burnt down to encourage its regeneration but this was hampered by unseasonal rains, said reports. It could mean the census is carried out again next year. Since its foundation in 1905, Kaziranga has had great success in conserving and boosting animal populations. As well as being a haven for one-horned rhinoceroses, the park was declared a tiger reserve by the Indian government, and is also home to elephants, wild water buffalo and numerous bird species. The endangered South Asian river dolphin also lives in the rivers that criss-cross the park.

Read more …

Mar 212018
 
 March 21, 2018  Posted by at 2:21 pm Finance Tagged with: , , , , , , , , , , ,  


Hildegard von Bingen (1098-1179) German artist, philosopher, composer, mystic Cosmic Tree

 

All of a sudden, politicians in the EU, UK, and USA all want to talk to Mark Zuckerberg. That’s a bad enough sign all by itself. It means they all either have been asleep, complicit, or they’re not very bright. The media tries to convince us the Facebook ‘scandal’ is about Trump, Russia (yawn..) and elections. It’s not. Not even close.

If Zuckerberg ever shows up for any of these meetings with ‘worried’ politicians, he’ll come with a cabal of lawyers in tow, and they’ll put the blame on anyone but Facebook and say the company was tricked by devious parties who didn’t live up to their legal agreements.

After that, the argument won’t be whether Facebook broke any laws for allowing data breaches, but whether their data use policy itself is, and always was, illegal. Now, Facebook has been around for a few years, with their policies, and nobody ever raised their voices. Not really, that is.

And then it’ll all fizzle out, amid some additional grandstanding from all involved, face-saving galore, and more blame for Trump and Russia.

 

The new European Parliament chief Antonio Tajani said yesterday: “We’ve invited Mark Zuckerberg to the European Parliament. Facebook needs to clarify before the representatives of 500 million Europeans that personal data is not being used to manipulate democracy.”

That’s all you need to know, really. Personal data can be used to manipulate anything as long as it’s not democracy. Or at least democracy as the Brussels elite choose to define it.

First: this is not about Cambridge Analytica, it’s about Facebook. Or rather, it’s about the entire social media and search industry, as well as its connections to the intelligence community. Don’t ever again see Google or Facebook as not being part of that.

What Facebook enabled Cambridge Analytica to do, it will do ten times bigger itself. And it sells licences to do it to probably thousands of other ‘developers’. The CIA and NSA may have unlimited powers, but prior to Alphabet and Facebook, they never had the databases. They do now, and they’re using them. ‘Manipulate democracy’? What democracy?

Then: 50 million is nothing. Once the six degrees of separation giant squid gets going, there’s no stopping it. The Cambridge Analytica thing supposedly started with a few hundred thousand people who consented to having their data used for ‘academic’ purposes. From there it’s easy to get to 50 million. It’s harder to stop there than it is to go to hundreds of millions. It’s the six degrees of separation.

Facebook allegedly has over 2 billion user accounts, and their algorithms don’t stop there either. If anything, 50 million is a bit of a failure. What you should understand in this is that Cambridge Analytica are a bunch of loose cannons (yeah, yeah, those dark videos look so incriminating..) and nobody knows what they ever captured.

The real issue lies elsewhere. And we can figure it out. All we need is a few glances into the past. This first article is from June 30 2014. It contains all you read today, and more. Just a bit less Russia and Trump.

 

Facebook Reveals News Feed Experiment To Control Emotions

It already knows whether you are single or dating, the first school you went to and whether you like or loathe Justin Bieber. But now Facebook, the world’s biggest social networking site, is facing a storm of protest after it revealed it had discovered how to make users feel happier or sadder with a few computer key strokes. It has published details of a vast experiment in which it manipulated information posted on 689,000 users’ home pages and found it could make people feel more positive or negative through a process of “emotional contagion”.

In a study with academics from Cornell and the University of California, Facebook filtered users’ news feeds – the flow of comments, videos, pictures and web links posted by other people in their social network. One test reduced users’ exposure to their friends’ “positive emotional content”, resulting in fewer positive posts of their own. Another test reduced exposure to “negative emotional content” and the opposite happened.

The study concluded: “Emotions expressed by friends, via online social networks, influence our own moods, constituting, to our knowledge, the first experimental evidence for massive-scale emotional contagion via social networks.”

The question is simple, isn’t it? Do you want to provide a bunch of, well, geeks, with the ability to change how you feel, just so their employers can make -more- money off of you? That is 1984. That is thought control. And Facebook is some modern honey trap.

Lawyers, internet activists and politicians said this weekend that the mass experiment in emotional manipulation was “scandalous”, “spooky” and “disturbing”. On Sunday evening, a senior British MP called for a parliamentary investigation into how Facebook and other social networks manipulated emotional and psychological responses of users by editing information supplied to them.

Jim Sheridan, a member of the Commons media select committee, said the experiment was intrusive. “This is extraordinarily powerful stuff and if there is not already legislation on this, then there should be to protect people,” he said. “They are manipulating material from people’s personal lives and I am worried about the ability of Facebook and others to manipulate people’s thoughts in politics or other areas. If people are being thought-controlled in this kind of way there needs to be protection and they at least need to know about it.”

Um, so 4 years ago, there was a call for a parliamentary investigation in Britain and a member of the Commons media select committee proclaimed there should be legislation to protect people. Wonder how that panned out? Read the news today. Time stood still.

But there’s of course much more going on. You can claim that people should know about their thoughts being controlled, but that’s nonsense. Nobody in their right mind would, provided the arguments are honestly laid out, permit any such thing.

Moreover, it’s not just their own emotions that are being manipulated, it’s those of their friends and family too. If you are deeply unhappy, they may not see you expressing your distress; it can be easily filtered out so you appear in great spirits. Your friends feel good but someone wants you sad? No problem.

And there’s yet another aspect, one that Facebook may try to use for legal reasons: ever since the days of Edward Bernays, advertisements, and media in a broader sense, are shaped to influence what you think and feel. It sells soda, it sells cars, and it sells wars.

So yeah, people should know about all this, but the role of politicians and parliaments must also be to eradicate it altogether and forever from the societies that vote them in power. Or to tell their voters that they think it’s acceptable, and by the way, they too use deception to get more votes.

A Facebook spokeswoman said the research, published this month in the journal of the Proceedings of the National Academy of Sciences in the US, was carried out “to improve our services and to make the content people see on Facebook as relevant and engaging as possible”. She said: “A big part of this is understanding how people respond to different types of content, whether it’s positive or negative in tone, news from friends, or information from pages they follow.”

But other commentators voiced fears that the process could be used for political purposes in the runup to elections or to encourage people to stay on the site by feeding them happy thoughts and so boosting advertising revenues. In a series of Twitter posts, Clay Johnson, the co-founder of Blue State Digital, the firm that built and managed Barack Obama’s online campaign for the presidency in 2008, said: “The Facebook ‘transmission of anger’ experiment is terrifying.”

He asked: “Could the CIA incite revolution in Sudan by pressuring Facebook to promote discontent? Should that be legal? Could Mark Zuckerberg swing an election by promoting Upworthy [a website aggregating viral content] posts two weeks beforehand? Should that be legal?”

The ‘transmission of anger’ experiment. This is the world you live in.

Well, no, none of it should be legal. And none of it would be if people knew what was going on.

It was claimed that Facebook may have breached ethical and legal guidelines by not informing its users they were being manipulated in the experiment, which was carried out in 2012. The study said altering the news feeds was “consistent with Facebook’s data use policy, to which all users agree prior to creating an account on Facebook, constituting informed consent for this research”.

But Susan Fiske, the Princeton academic who edited the study, said she was concerned. “People are supposed to be told they are going to be participants in research and then agree to it and have the option not to agree to it without penalty.”

James Grimmelmann, professor of law at Maryland University, said Facebook had failed to gain “informed consent” as defined by the US federal policy for the protection of human subjects, which demands explanation of the purposes of the research and the expected duration of the subject’s participation, a description of any reasonably foreseeable risks and a statement that participation is voluntary. “This study is a scandal because it brought Facebook’s troubling practices into a realm – academia – where we still have standards of treating people with dignity and serving the common good,” he said on his blog.

Ah, academia, you unblemished child. We never knew you. Incidentally, what appears to be creeping through between the lines here is that Facebook’s data use policy was prepared from the start, 14+ years ago, for exactly these kinds of ‘experiments’. Which gives a whole new dimension to the discussion today.

It is not new for internet firms to use algorithms to select content to show to users and Jacob Silverman, author of Terms of Service: Social Media, Surveillance, and the Price of Constant Connection, told Wire magazine on Sunday the internet was already “a vast collection of market research studies; we’re the subjects”.

“What’s disturbing about how Facebook went about this, though, is that they essentially manipulated the sentiments of hundreds of thousands of users without asking permission,” he said. “Facebook cares most about two things: engagement and advertising.

If Facebook, say, decides that filtering out negative posts helps keep people happy and clicking, there’s little reason to think that they won’t do just that. As long as the platform remains such an important gatekeeper – and their algorithms utterly opaque – we should be wary about the amount of power and trust we delegate to it.”

Robert Blackie, director of digital at Ogilvy One marketing agency, said the way internet companies filtered information they showed users was fundamental to their business models, which made them reluctant to be open about it.

“To guarantee continued public acceptance they will have to discuss this more openly in the future,” he said. “There will have to be either independent reviewers of what they do or government regulation. If they don’t get the value exchange right then people will be reluctant to use their services, which is potentially a big business problem.”

Feel a bit more awake now? Remember, that was a 2012 study. Let’s move on to 2016, when Shoshana Zuboff penned the following for German paper Franfurter Allgemeine. Just in case you thought it was all about Facebook. This is a bit more abstract, but worth it, in all its length (which I don’t have space for).

 

The Secrets of Surveillance Capitalism

[..] The game is no longer about sending you a mail order catalogue or even about targeting online advertising. The game is selling access to the real-time flow of your daily life –your reality—in order to directly influence and modify your behavior for profit. This is the gateway to a new universe of monetization opportunities: restaurants who want to be your destination. Service vendors who want to fix your brake pads.

Shops who will lure you like the fabled Sirens. The “various people” are anyone, and everyone who wants a piece of your behavior for profit. Small wonder, then, that Google recently announced that its maps will not only provide the route you search but will also suggest a destination.

This is just one peephole, in one corner, of one industry, and the peepholes are multiplying like cockroaches. Among the many interviews I’ve conducted over the past three years, the Chief Data Scientist of a much-admired Silicon Valley company that develops applications to improve students’ learning told me:

“The goal of everything we do is to change people’s actual behavior at scale. When people use our app, we can capture their behaviors, identify good and bad behaviors, and develop ways to reward the good and punish the bad.

[..] There was a time when we laid responsibility for the assault on behavioral data at the door of the state and its security agencies. Later, we also blamed the cunning practices of a handful of banks, data brokers, and Internet companies. Some attribute the assault to an inevitable “age of big data,” as if it were possible to conceive of data born pure and blameless, data suspended in some celestial place where facts sublimate into truth.

I’ve come to a different conclusion: The assault we face is driven in large measure by the exceptional appetites of a wholly new genus of capitalism, a systemic coherent new logic of accumulation that I call surveillance capitalism. Capitalism has been hijacked by a lucrative surveillance project that subverts the “normal” evolutionary mechanisms associated with its historical success and corrupts the unity of supply and demand that has for centuries, however imperfectly, tethered capitalism to the genuine needs of its populations and societies, thus enabling the fruitful expansion of market democracy.

[..] the application of machine learning, artificial intelligence, and data science for continuous algorithmic improvement constitutes an immensely expensive, sophisticated, and exclusive twenty-first century “means of production.” [..] the new manufacturing process converts behavioral surplus into prediction products designed to predict behavior now and soon.

[..] these prediction products are sold into a new kind of meta-market that trades exclusively in future behavior. The better (more predictive) the product, the lower the risks for buyers, and the greater the volume of sales. Surveillance capitalism’s profits derive primarily, if not entirely, from such markets for future behavior.

And then we get to today. For more examples of the same, and for confirmation that even though all of this stuff was known -let alone knowable- years ago, nothing has changed.

 

Ex-Facebook Insider Says Covert Data Harvesting Was Routine

Hundreds of millions of Facebook users are likely to have had their private information harvested by companies that exploited the same terms as the firm that collected data and passed it on to Cambridge Analytica, according to a new whistleblower.

Sandy Parakilas, the platform operations manager at Facebook responsible for policing data breaches by third-party software developers between 2011 and 2012, told the Guardian he warned senior executives at the company that its lax approach to data protection risked a major breach. “My concerns were that all of the data that left Facebook servers to developers could not be monitored by Facebook, so we had no idea what developers were doing with the data,” he said.

[..] That feature, called friends permission, was a boon to outside software developers who, from 2007 onwards, were given permission by Facebook to build quizzes and games – like the widely popular FarmVille – that were hosted on the platform. The apps proliferated on Facebook in the years leading up to the company’s 2012 initial public offering, an era when most users were still accessing the platform via laptops and computers rather than smartphones.

Facebook took a 30% cut of payments made through apps, but in return enabled their creators to have access to Facebook user data. Parakilas does not know how many companies sought friends permission data before such access was terminated around mid-2014. However, he said he believes tens or maybe even hundreds of thousands of developers may have done so. Parakilas estimates that “a majority of Facebook users” could have had their data harvested by app developers without their knowledge.

[..] During the time he was at Facebook, Parakilas said the company was keen to encourage more developers to build apps for its platform and “one of the main ways to get developers interested in building apps was through offering them access to this data”. Shortly after arriving at the company’s Silicon Valley headquarters he was told that any decision to ban an app required the personal approval of the chief executive, Mark Zuckerberg…

OK, to summarize: Mark Zuckerberg will be fine, apart from some stock losses. Facebook’s data use policies may not conform to every single piece of legislation in every country Facebook operates in, but they’ve been there since 2004. So lawmakers are as culpable as the company is.

There’ll be big words, lots of them. And there may be people leaving Facebook. But the platform is addictive, and 2 billion addicts is a very large target group. Some other company may develop a competitor and promise ‘better’ policies and conditions, but the big money is in the very thing discussed today: manipulating people’s data, and thereby manipulating their behavior.

Perhaps if news media and advertizers were so inclined, they’d explain to their readers and viewers exactly that, but in the end they A) all do it to some extent, and B) are all connected to Facebook and Google to some extent.

But the main driving force is and will remain the intelligence agencies, who have come to depend on ‘social media’ for the one thing they themselves were incapable of providing, but saw Alphabet and Facebook incite gullible people themselves to provide: an artificial intelligence driven database that knows more about you than you know yourself.

That the intelligence community today is powered by artificial intelligence is pretty out there to start with. That AI would give it the means to predict your future behavior, and manipulate you into that behavior seemingly at will, is something that warrants reflection.

George Orwell could not have foreseen this.

 

 

Jan 182018
 
 January 18, 2018  Posted by at 10:34 am Finance Tagged with: , , , , , , , , , , , ,  


Henry Matisse Bouquet of flowers for July 14 Oct 7 1919

 

Japan and Europe Start the Central Bank Reset (BBG)
The Bubble That Could Break the World (Rickards)
South Korea Considers Shutting Down Domestic Cryptocurrency Exchanges (R.)
Trump Reveals Winners Of Controversial ‘Fake News Awards’ (AFP)
Trump Considers Big ‘Fine’ Over China Intellectual Property Theft (R.)
China’s Communists Take More Stakes In Private Companies (BBG)
Apple Expects to Pay $38 Billion Tax on Repatriated Cash (BBG)
Apple May Not Hire 20,000 New Workers, or Bring Back Its Overseas Cash (MW)
Assange Keeps Warning Of AI Censorship (CJ)
Australia’s Household Debt-to-Income Ratio Reaches 200% (AFR)
Mario Draghi Told To Drop Membership Of Secretive Bankers’ Club (G.)
Global Air Traffic At New Record (AFP)
Europe’s Microwave Ovens Emit Nearly As Much CO2 As 7 Million Cars (G.)
1 Million Tonnes A Year: UK Supermarkets Shamed For Plastic Packaging (G.)
The Plastic-Free Stores Showing The Big Brands How To Do It (G.)

 

 

Coordinated efforts to crash the conomy. Ignore the recovery narrative.

Japan and Europe Start the Central Bank Reset (BBG)

This is going to be an exciting year for monetary policy. In fact, it already is, thanks to Europe and Japan. Investors were taken aback last week when the Bank of Japan bought fewer bonds and the ECB revealed – shock, horror – its language would have to evolve with the euro region’s economy. Both developments, and the reaction, were welcome. They say a lot about the strength of global growth and how it still surprises many people. First to Japan: Investors were wrong to interpret the reduced purchases as a sign that a policy shift is imminent. They were, however, right about the long-term direction of policy. It isn’t going to get looser. Will it remain accommodative as far as the eye can see? Yes.

With Japan’s economic sunny patch extending and inflation headed in the right direction – if still way too low – it’s not a stretch to see Governor Haruhiko Kuroda or his successor ease up a little on the stimulus. Just not right now. That was Jan. 9. Two days later, the fever struck in Europe. The proximate cause was the release of minutes from the ECB’s December meeting and the implication contained therein that communications would have to reflect a stronger growth terrain and improving, albeit still low, inflation. The euro jumped and German bond yields climbed. It feels like we just got through a big change from the ECB: the taper of bond purchases to 30 billion euros a month until September. (Remember when officials hated the word “taper”?) Now, here were policymakers flagging further revisions.

What’s the thread linking these two happenings? Despite all the data and pronouncements about a robust global economy and a synchronized upswing, people are still taken aback by signs that (a) it’s a reality and (b) policy is bound to react. I’m not saying policy is going to change overnight. But if you start with a global framework – we are in a global marketplace, are we not? – key to that framework really ought to be the direction of policy. Ask yourself: Are monetary chieftains going to make policy more easy or less easy, assuming the upswing in growth is sustainable? The answer has to be “less.”

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Because it’s by far the biggest, and it’s a debt bubble, not a gossip one.

The Bubble That Could Break the World (Rickards)

The credit-driven bubble has a different dynamic than a narrative-bubble. If professional investors and brokers can borrow money at 3%, invest in stocks earning 5%, and leverage 3-to-1, they can earn 6% returns on equity plus healthy capital gains that can boost the total return to 10% or higher. Even greater returns are possible using off-balance sheet derivatives. Credit bubbles don’t need a narrative or a good story. They just need easy money. A narrative bubble bursts when the story changes. It’s exactly like The Emperor’s New Clothes where loyal subjects go along with the pretense that the emperor is finely dressed until a little boy shouts out that the emperor is actually naked. Psychology and behavior change in an instant.

When investors realized in 2000 that Pets.com was not the next Amazon but just a sock-puppet mascot with negative cash flow, the stock crashed 98% in 9 months from IPO to bankruptcy. The sock-puppet had no clothes. A credit bubble bursts when the credit dries up. The Fed won’t raise interest rates just to pop a bubble — they would rather clean up the mess afterwards that try to guess when a bubble exists in the first place. But the Fed will raise rates for other reasons, including the illusory Phillips Curve that assumes a tradeoff between low unemployment and high inflation, currency wars, inflation or to move away from the zero bound before the next recession. It doesn’t matter. Higher rates are a case of “taking away the punch bowl” and can cause a credit bubble to burst.

The other leading cause of bursting credit bubbles is rising credit losses. Higher credit losses can emerge in junk bonds (1989), emerging markets (1998), or commercial real estate (2008). Credit crack-ups in one sector lead to tightening credit conditions in all sectors and lead in turn to recessions and stock market corrections. What type of bubble are we in now? What signs should investors look for to gauge when this bubble will burst? My starting hypothesis is that we are in a credit bubble, not a narrative bubble. There is no dominant story similar to the Nifty Fifty or dot.com days. Investors do look at traditional valuation metrics rather than invented substitutes contained in corporate press releases and Wall Street research. But even traditional valuation metrics can turn on a dime when the credit spigot is turned off.

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BTC recovered somewhat overnight.

South Korea Considers Shutting Down Domestic Cryptocurrency Exchanges (R.)

South Korean policymakers joined the global chorus of virtual-coin critics on Thursday, saying Seoul is considering shutting down domestic virtual currency exchanges as the new breed of market exposes users to speculative frenzy and crime. The country’s tough stance comes as policymakers from the United States to Germany struggle to come up with stricter regulation against money laundering and other crimes. Responding to questions in parliament, South Korea’s chief of the Financial Services Commission said: “(The government) is considering both shutting down all local virtual currency exchanges or just the ones who have been violating the law.” Separately, Bank of Korea Governor Lee Ju-yeol told a news conference that “cryptocurrency is not a legal currency and is not being used as such as of now.”

Regulators around the world are still debating how to address risks posed by cryptocurrencies, as bitcoin, the world’s most popular virtual currency, soared more than 1,700% last year. Prices have plummeted since South Korea announced last week it may ban domestic cryptocurrency exchanges. On Wednesday, bitcoin slid 18%. According to Bithumb, South Korea’s second-largest virtual currency exchange, the nation’s bitcoin trading price stood at 15,697,000 won ($14,690.69) as of 0314 GMT on Thursday. On the Luxembourg-based Bitstamp exchange, bitcoin was traded at $11,750. [..] On Thursday, the BOK governor said the central bank had begun looking into the market’s impact on the economy. “We have started looking at virtual currency from a long-term standpoint, as central banks could start issuing digital currencies in the future. This sort of research has begun at the Bank of International Settlements and we are part of that research.”

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“Studies have shown that over 90% of the media’s coverage of President Trump is negative…”

Trump Reveals Winners Of Controversial ‘Fake News Awards’ (AFP)

Donald Trump unveiled the winners of his much-touted “Fake News Awards” late Wednesday, escalating his already persistent attacks on a number of major US media outlets. The awards dropped hours after a senator from Trump’s own Republican party hurled a stinging rebuke at the president, accusing the US leader of undermining the free press with Stalinist language. The brash Republican president announced the ten “honorees” using his preferred medium of Twitter, linking to a list published on the Republican Party’s website that crashed minutes after his big reveal. The “winners” of the spoof awards included top networks and newspapers CNN, The New York Times and The Washington Post, all of which have been regular targets of Trump’s ire.

Nobel-prize winning economist Paul Krugman, who writes a regular opinion column for The New York Times, nabbed the number one spot. The administration said he merited the award for writing “on the day of President Trump’s historic, landslide victory that the economy would never recover.” Following the former reality star’s stunning rise to power, Krugman had written that Trump’s inexperience on economic policy and unpredictability risked further damaging the weak global economy. The list also pointed to a reporting error from ABC’s veteran reporter Brian Ross, who was suspended for four weeks without pay after he was forced to correct a bombshell report on ex-Trump aide Michael Flynn.

[..] 11. And last, but not least: “RUSSIA COLLUSION!” Russian collusion is perhaps the greatest hoax perpetrated on the American people. THERE IS NO COLLUSION!

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“We’re talking about big damages. We’re talking about numbers that you haven’t even thought about,” Trump said.”

Trump Considers Big ‘Fine’ Over China Intellectual Property Theft (R.)

President Donald Trump said on Wednesday the United States was considering a big “fine” as part of a probe into China’s alleged theft of intellectual property, the clearest indication yet that his administration will take retaliatory trade action against China. In an interview with Reuters, Trump and his economic adviser Gary Cohn said China had forced U.S. companies to transfer their intellectual property to China as a cost of doing business there. The United States has started a trade investigation into the issue, and Cohn said the United States Trade Representative would be making recommendations about it soon. “We have a very big intellectual property potential fine going, which is going to come out soon,” Trump said in the interview.

While Trump did not specify what he meant by a “fine” against China, the 1974 trade law that authorized an investigation into China’s alleged theft of U.S. intellectual property allows him to impose retaliatory tariffs on Chinese goods or other trade sanctions until China changes its policies. Trump said the damages could be high, without elaborating on how the numbers were reached or how the costs would be imposed. “We’re talking about big damages. We’re talking about numbers that you haven’t even thought about,” Trump said.

U.S. businesses say they lose hundreds of billions of dollars in technology and millions of jobs to Chinese firms which have stolen ideas and software or forced them to turn over intellectual property as part of the price of doing business in China. The president said he wanted the United States to have a good relationship with China, but Beijing needed to treat the United States fairly. Trump said he would be announcing some kind of action against China over trade and said he would discuss the issue during his State of the Union address to the U.S. Congress on Jan. 30. Asked about the potential for a trade war depending on U.S. action over steel, aluminum and solar panels, Trump said he hoped a trade war would not ensue. “I don’t think so, I hope not. But if there is, there is,” he said.

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This is not going to work. It’s a one way ticket back to Mao.

China’s Communists Take More Stakes In Private Companies (BBG)

After tightening the Communist Party’s grip on state-owned enterprises, President Xi Jinping’s administration is signaling an increasing presence in private companies. Xi has called state enterprises the “backbone” of China’s socialist economy. But most of the giants were founded before the boom in technology-driven industries over the past two decades. That’s created a large swathe of the economy that’s largely private – think tech and consumer champions like Alibaba, Tencent and Baidu, along with innovators in sectors from finance to automation. Now, SOEs are on track to take stakes in private companies. “China wants to maintain state control over every aspect of the national economy, and it needs to keep up with the changes in the economic structure,” said Chen Li at Credit Suisse.

“How can it overlook the most important industries to the future economy?” Much of the overhaul of state-owned enterprises under Xi has focused on a consolidation in the hundreds of sprawling units across the country, such as those that have reshaped the shipping and train-making industries. But a lesser-noticed part of the broad “mixed ownership” initiative features SOEs being encouraged to take stakes in private companies. This part of the initiative has yet to gather pace, though equity strategists anticipate moves to come. They would showcase how China continues to develop its own path toward developed-nation status – not entirely state dominated, but with more control by political authorities than in countries like France that have nurtured state champions.

The head of the Beijing agency that oversees China’s SOEs, Xiao Yaqing, reiterated the push in a People’s Daily article on state enterprise reforms Dec. 13. The private stakes will be acquired through various means, he and other top officials have said. The mechanism has already been applied in the case of the state’s crackdown on financier Xiao Jianhua’s Tomorrow Holding empire. The government ordered the holding company to divest from many of its financial assets, people with knowledge of the matter said this month. State-owned Citic Guoan Group Co. bought a $1.4 billion stake in Hengtou Securities – known as Hengtai on the mainland – with a large part of the purchase coming from Tomorrow Group. Investors applauded the move, in a sign of what could happen when the state invests elsewhere. Hengtou has jumped more than 20% this year after announcing the stake sale.

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More Trump success.

Apple Expects to Pay $38 Billion Tax on Repatriated Cash (BBG)

Apple said it will bring hundreds of billions of overseas dollars back to the U.S., pay about $38 billion in taxes on the money and invest tens of billions on domestic jobs, manufacturing and data centers in the coming years. The iPhone maker plans capital expenditures of $30 billion in the U.S. over five years and will create 20,000 new jobs at existing sites and a new campus it intends to open, the Cupertino, California-based company said Wednesday in a statement. “We are focusing our investments in areas where we can have a direct impact on job creation and job preparedness,” Chief Executive Officer Tim Cook said in the statement, which alluded to unspecified plans by the company to accelerate education programs.

In its December approval of the most extensive tax-code revisions since 1986, Congress scrapped the previous international tax system for corporations — an unusual arrangement that allowed companies to defer U.S. income taxes on foreign earnings until they returned the income to the U.S. That “deferral” provision led companies to stockpile an estimated $3.1 trillion offshore. By switching to a new system that’s designed to focus on domestic economic activity, congressional tax writers also imposed a two-tiered levy on that accumulated foreign income: Cash will be taxed at 15.5%, less liquid assets at 8%. Companies can pay over eight years. Apple has the largest offshore cash reserves of any U.S. company, with about $252 billion in at the end of September, the most recently reported fiscal quarter.

The company, which opened a new headquarters in Cupertino last year, said it also plans to open another site in the U.S. focused initially on employees who provide technical support to Apple product users. Apple said it will announce the location of the new campus at a later date. The company already has a sprawling campus in Austin, Texas, for supply chain and technical support employees.

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Or maybe not.

Apple May Not Hire 20,000 New Workers, or Bring Back Its Overseas Cash (MW)

Apple announced a series of plans Wednesday that were celebrated as promises to hire thousands of workers and bring home billions of dollars in cash. Well, not necessarily. Apple said in its release that the company planned to “create over 20,000 new jobs through hiring at existing campuses and opening a new one.” The key word there is “create,” which Apple really likes to use when discussing jobs: The company even has a portion of its website dedicated to “job creation” that claims it is “responsible for 2 million jobs” in the United States, most of which are jobs “attributable to the App Store ecosystem.” Apple currently employs 84,000 people in the U.S., it said Wednesday, while an October filing with the Securities and Exchange Commission said that it has a total of 132,000 full-time employees worldwide, suggesting that about a third of its employees work abroad.

A quarter of the 2 million jobs Apple claims responsibility for are positions through Apple’s U.S.-based suppliers. “From the people who manufacture components for our products to the people who distribute and deliver them, Apple directly or indirectly supports hundreds of thousands of U.S. jobs,” Apple says on the page. [..] Many also took Apple’s promise to pay $38 billion in repatriation taxes as a promise that Apple would bring home more than a quarter-trillion dollars it currently has overseas. However, Apple does not have to bring home that money, and much of it is tied up in long-term investments that would make it unlikely. The company has to pay taxes on overseas earnings whether it brings the money back to the United States or not, so paying the tax does not mean the money is coming home.

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What I wrote about last week: “digital super states” like Facebook and Google have been working to “re-establish discourse control”.

Assange Keeps Warning Of AI Censorship (CJ)

In a statement that was recently read during the “Organising Resistance to Internet Censorship” webinar, sponsored by the World Socialist Web Site, Assange warned of how “digital super states” like Facebook and Google have been working to “re-establish discourse control”, giving authority over how ideas and information are shared back to those in power. Assange went on to say that the manipulative attempts of world power structures to regain control of discourse in the information age has been “operating at a scale, speed, and increasingly at a subtlety, that appears likely to eclipse human counter-measures.”

What this means is that using increasingly more advanced forms of artificial intelligence, power structures are becoming more and more capable of controlling the ideas and information that people are able to access and share with one another, hide information which goes against the interests of those power structures and elevate narratives which support those interests, all of course while maintaining the illusion of freedom and lively debate. In an appearance via video link at musician and activist M.I.A.’s Meltdown Festival last June, the WikiLeaks editor-in-chief expounded in far more detail about his thoughts on the potential for artificial intelligence to be used for controlling online information and discourse in a way human intelligence can’t hope to keep up with.

Pointing out how AI can already outmaneuver even the greatest chess players in the world, he describes how programs which can operate with exponentially more tactical intelligence than the human intellect can manipulate the field of available information so effectively and subtly that people won’t even know they are being manipulated. People will be living in a world that they think they understand and know about, but they’ll unknowingly be viewing only establishment-approved information. “When you have AI programs harvesting all the search queries and YouTube videos someone uploads it starts to lay out perceptual influence campaigns, twenty to thirty moves ahead,” Assange said. “This starts to become totally beneath the level of human perception.”

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Sell sell sell.

Australia’s Household Debt-to-Income Ratio Reaches 200% (AFR)

The closely tracked Australian household debt-to-income ratio has now reached the 200% level, and analysts at UBS are concerned about rising pressures among borrowers. The increase was because of the Australian Bureau of Statistics revision to include self-managed superannuation debt. That resulted in a 3% rise in household debt from “extremely elevated levels”, and pushed the ratio to income to 199.7%, “one of the highest in the world,” according to UBS. “With subdued growth in household income expected to continue, this implies household leverage is likely to rise further in the near term,” it said. “As a result we expect total household debt to disposable income to peak around 205% before the slow deleveraging process begins.”

High household debt levels will constrain further borrowing and weigh on prospects for earnings growth at the big banks, analysts Jonathan Mott and Rachel Bentvelzen said as they downgraded their forecasts for housing credit growth. House prices, which have begun to decline in Sydney, are expected to slide further as a result of tighter lending standards, the retreat of foreign buyers, lending limits imposed by regulators and concerns about proposed changes to negative gearing and capital gains tax that have been tabled by the Opposition. “Sentiment for investment into the housing market is waning, with the ‘fear of missing out’ euphoria fading quickly, especially in Sydney,” the analysts said in a note to clients.

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The insanity of today.

Mario Draghi Told To Drop Membership Of Secretive Bankers’ Club (G.)

The president of the European Central Bank has been told by the EU’s watchdog he should drop his membership of a secretive club of corporate bankers, after claims the group had been given an inside seat from which it could influence key policies. Following a year-long investigation, Mario Draghi was informed on Wednesday by the European ombudsman, Emily O’Reilly, that his close relationship with the Washington-based G30 group threatened the reputation of the bank, despite his assurances to the contrary. Members of the exclusive club, of which only two of the current 33 are women, are chosen by an anonymous board of trustees, it emerged during the ombudsman’s investigation. Only the identity of the chair of the trustees, Jacob A Frenkel, the chairman of JPMorgan Chase, has been made public.

O’Reilly noted the group’s secrecy and lack of transparency over the content of its meetings. She additionally called for a ban on all future presidents of the ECB taking up membership of the club, previously named the Consultative Group on International Economic and Monetary Affairs. The ruling followed a complaint by the Corporate Europe Observatory (CEO), a Brussels-based NGO, which claimed Draghi’s close relationship to G30 was in contravention of the ECB’s ethical code. During his presidency of the ECB, Draghi, an Italian economist who previously worked at Goldman Sachs, has attended four G30 meetings, in 2012, 2013 and twice in 2015.

O’Reilly said there was a danger that the bank’s independence could be perceived to have been compromised by Draghi’s involvement with the group, whose members include a number of central bank governors, private sector bankers and academics. The governor of the Bank of England, Mark Carney, is a member. But O’Reilly said there was no evidence of sensitive information being shared. The ombudsman said: “The ECB takes decisions that directly affect the lives of millions of citizens. In the aftermath of the financial crisis, and in consideration of the additional powers given to the ECB in recent years to supervise member state banks in the public interest, it is important to demonstrate to that public that there is a clear separation between the ECB as supervisor and the finance industry which is affected by its decisions.”

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Not one word about emissions. Not one. Oh wait, “continuous improvements to its safety, security, efficiency and environmental footprint “. Pants on fire.

Global Air Traffic At New Record (AFP)

Budget carriers continued to push global air traffic to new record levels last year, the International Civil Aviation Organization (ICAO) said on Wednesday. Scheduled air services carried “a new record” of 4.1 billion passengers in 2017, an increase of 7.1% over the previous year, ICAO said, citing preliminary data. The figure compares with 6% growth in 2016. “The sustainability of the tremendous growth in international civil air traffic is demonstrated by the continuous improvements to its safety, security, efficiency and environmental footprint,” ICAO Council president Olumuyiwa Benard Aliu said in a statement from the Montreal-based agency.

Early this month, two industry studies showed that last year was the safest for civil aviation since plane crash statistics were first compiled in 1946. A total of 10 crashes of civil passenger and cargo planes claimed 44 lives, said the Aviation Safety Network. A separate report from the To70 agency said no major airline crashed a plane in 2017. ICAO, a United Nations agency, said Wednesday that low-cost carriers flew an estimated 1.2 billion passengers or about 30% of the global total last year. The budget airline sector “consistently grew at a faster pace compared to the world average growth, and its market share continued to increase, specifically in emerging economies,” ICAO said.

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Missed opportunity: including the emissions of electric cars.

Europe’s Microwave Ovens Emit Nearly As Much CO2 As 7 Million Cars (G.)

Popping frozen peas into the microwave for a couple of minutes may seem utterly harmless, but Europe’s stock of these quick-cook ovens emit as much carbon as nearly 7m cars, a new study has found. And the problem is growing: with costs falling and kitchen appliances becoming “status” items, owners are throwing away microwaves after an average of eight years, pushing rising sales. A study by the University of Manchester worked out the emissions of carbon dioxide – the main greenhouse gas responsible for climate change – at every stage of microwaves, from manufacture to waste disposal. “It is electricity consumption by microwaves that has the biggest impact on the environment,” say the authors.

“Efforts to reduce consumption should focus on improving consumer awareness and behaviour to use appliances more efficiently. For example, electricity consumption by microwaves can be reduced by adjusting the time of cooking to the type of food.” Each year more microwaves are sold than any other type of oven in the EU: annual sales are expected to reach 135m by the end of the decade. David Reay, professor of carbon management at the University of Edinburgh, pointed out that the damage done by microwaves is still a fraction of that done by cars. “Yes, there are a lot of microwaves in the EU, and yes they use electricity,” he said.

“But their emissions are dwarfed by those from cars – there are around 30m cars in the UK alone and these emit way more than all the emissions from microwaves in the EU. Latest data show that passenger cars in the UK emitted 69m tonnes of CO2 equivalent in 2015. This is ten times the amount this new microwave oven study estimates for annual emissions for all the microwave ovens in the whole of the EU.” The energy used by microwaves is lower than any other form of cooking. uSwitch, the price comparison website, lists microwaves as the most energy efficient, followed by a hob and finally an oven, advising readers to buy a microwave if they don’t have one. However, they urge owners to switch them off at the wall after use, to avoid powering the clock.

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The Guardian can try to chest thump as much as it wants, but it too got triggered for real only through David Attenborough’s Blue Planet II, just like Theresa may et al.

1 Million Tonnes A Year: UK Supermarkets Shamed For Plastic Packaging (G.)

Britain’s leading supermarkets create more than 800,000 tonnes of plastic packaging waste every year, according to an investigation by the Guardian which reveals how top chains keep details of their plastic footprint secret. As concern over the scale of unnecessary plastic waste grows, the Guardian asked Britain’s eight leading supermarkets to explain how much plastic packaging they sell to consumers and whether they would commit to a plastic-free aisle in their stores. The chains have to declare the amount of plastic they put on the market annually under an EU directive. But the information is kept secret, and Tesco, Sainsbury’s, Morrisons, Waitrose, Asda and Lidl all refused the Guardian’s request, with most saying the information was “commercially sensitive”. None committed to setting up plastic-free aisles – something the prime minister called for last week.

Only two supermarkets, Aldi and the Co-op, were open about the amount of plastic packaging they put on to the market. Using their data, and other publicly available market share information, environmental consultants Eunomia estimated that the top supermarkets are creating a plastic waste problem of more than 800,000 tonnes each year – well over half of all annual UK household plastic waste of 1.5m tonnes. The 800,000 tonnes of waste from food and beverage products would fill enough large 10-yard skips to extend from London to Sydney, or cover the whole of Greater London to a depth of 2.5cm. The revelations will add to mounting public concern about the damage that plastic does to the natural world. The Guardian has already revealed the vertiginous growth in plastic production, and the heavy environmental toll it exacts.

Dominic Hogg, chairman of Eunomia, said the figures could be higher. “The data reported for plastic packaging put on the market as a whole is an underestimate in our view,” said Hogg. Supermarkets in the UK keep their plastic footprint secret with a confidentiality agreement signed with the agencies involved in the British recycling compliance scheme. It means the amount of plastic packaging created by each supermarket and the money they pay towards its recycling is kept out of the public domain. One leading supermarket manager is calling for the whole system to be made more transparent and targeted to make the irresponsible producers pay more. Iain Ferguson, head of sustainability at the Co-op, said Britain should adopt the French system of “bonus-malus”, where supermarkets are taxed more for using material which is not easily recyclable and less for sustainable and recyclable packaging.

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And it really is this simple.

The Plastic-Free Stores Showing The Big Brands How To Do It (G.)

In the past few weeks Richard Eckersley has noticed a change in the type of people who come into his shop. The former Manchester United footballer, who turned his back on the game to set up the the UK’s first “zero waste” store on Totnes high street in Devon, says it is no longer only committed environmentalists who pop in, looking for a cleaner way to shop. “We thought January might be a bit quieter but it has been crazy,” says Eckersley, who set up the Earth.Food.Love shop with his wife Nicola in March. “A lot of new people are coming in – people who have not necessarily been involved in green issues before … it really feels like this [concern about plastic waste] is starting to break out of the environmental bubble.”

Last week Theresa May put cutting plastic pollution at the heart of the government’s 25-year environmental plan, and although critics said it was short on detail she did call for supermarkets to introduce plastic-free aisles to offer customers more choice. But Eckersley says many consumers are already way ahead of politicians. He and his wife have helped people who are planning to set up similar stores in Wales, Birmingham and Bristol. “We are getting calls every week from around the country from people wanting to set up something similar in their towns … it feels like this has really tapped into something that is growing all the time.” More than 200 miles away, Ingrid Caldironi shares the enthusiasm. She set up the plastic-free Bulk Market in east London last year. It has proven so popular that it is now moving to bigger, permanent premises at the end of the month.

“We have had an amazing response, especially in the last couple of months,” she says. Eckersley and Caldironi are at the vanguard of a burgeoning anti-plastics movement in the UK that has been fuelled by newspaper investigations including the Guardian’s Bottling It series, the Blue Planet television series and a general alarm at the damage plastic is doing to the natural environment. But their enthusiasm is not shared by big supermarkets, which have thus far shown little inclination to reduce their plastic waste. “For a nation of shopkeepers we are lagging behind in this race,” says Sian Sutherland, founder of the campaign A Plastic Planet which led the calls for plastic-free aisles. “The most exciting thing is that politicians and industry are no longer claiming that we can recycle our way out of the plastic problem,” she added. “Banning the use of indestructible plastic packaging for food and drink products is the only answer.”

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Dec 022017
 
 December 2, 2017  Posted by at 9:39 am Finance Tagged with: , , , , , , , , ,  


James McNeill Whistler Harmony in Blue and Silver: Trouville 1865

 

Senate Approves Republicans’ Tax Overhaul (R.)
Debt, Taxes, Growth And The GOP Con Job (Stockman)
SocGen: The Good Times Are Coming To An End In 2018 (BI)
Keeping You Awake At Night (Roberts)
Stock Market Acceleration In Final Stage (Kessler)
Pensions Aren’t The Ticking Timebomb – Rents Are (G.)
Carmageddon for Tesla (WS)
AI Has Already Taken Over, It’s Called the Corporation (Lent)
The UN Is Investigating Extreme Poverty … In America (G.)
Despite Greek Shelter, Yazidis Struggle To Integrate (AFP)

 

 

Largely hastily and secretly written by lobbyists, and mostly unread by lawmakers. Doesn’t seem to be the way to do things. Have you no pride?

Senate Approves Republicans’ Tax Overhaul (R.)

The U.S. Senate approved a sweeping tax overhaul on Saturday, moving Republicans and President Donald Trump a major step closer to their goal of slashing taxes for businesses and the rich while offering everyday Americans a mixed bag of changes. In what would be the largest U.S. tax overhaul since the 1980s, Republicans want to add $1.4 trillion over 10 years to the $20 trillion national debt to finance changes that they say would further boost an already growing economy. U.S. stock markets have rallied for months in hopes Washington would provide significant tax cuts for corporations. Following the 51-49 vote, talks will begin, likely next week, between the Senate and the House of Representatives, which has already approved its own tax bill. The two chambers must craft a single bill to send to Trump to sign into law.

Trump wants that to happen before the end of the year, allowing him and his Republicans to score their first major legislative achievement of 2017, despite controlling the White House, the Senate and the House since he took office in January. Celebrating their victory, Republican leaders said the tax cuts would encourage U.S. companies to invest more and boost economic growth. “We have an opportunity now to make America more competitive, to keep jobs from being shipped offshore and to provide substantial relief to the middle class,” said Mitch McConnell, the Republican leader in the Senate. The tax overhaul is seen by Republicans as crucial to their prospects in the November 2018 mid-term election campaigns when they will have to defend their majorities in Congress.

In a legislative battle that moved so fast a final draft of the bill was unavailable to the public until just hours before the vote, Democrats slammed the measure as a give-away to businesses and the rich financed with billions in taxpayer debt.

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Stockman agrees.

Debt, Taxes, Growth And The GOP Con Job (Stockman)

During more than four decades in Washington and on Wall Street it is quite possible that we never picked up any useful skills. But along the way we did unavoidably acquire what amounts to a survival tool in those fair precincts—-namely, a nose for the con job. And what a doozy we have going now as a desperate mob of Capitol Hill Republicans attempts to enact something—anything— that can be vaguely labeled tax reform/tax cut. And for a reason that lies only slightly below the surface. In a word, they are scared to death that the political train wreck in the Oval Office will put them out of business for years to come. So they are attempting to erect a shield of legislative accomplishment that can be sold in 2018 as the work of the GOP Congress, not the unhinged tweet-storm in the White House.

To be sure, some element of political calculus always lies behind legislation. For instance, the Dems didn’t pass the Wagner Act in 1935, the Voting Rights Act of 1965 or the Affordable Care Act of 2010 as an exercise in pure civic virtue—-these measures targeted huge constituencies with tens of millions of votes at stake. Still, threadbare theories and untoward effects are just that; they can’t be redeemed by the risible claim that this legislative Rube Goldberg Contraption is being jammed through sight unseen (in ACA redux fashion) for the benefit of the rank and file Republican voters—and most especially not for the dispossessed independents and Dems of Flyover America who voted for Trump out of protest against the failing status quo. To the contrary. The GOP tax bill is of the lobbies, by the PACs and for the money. Period.

There is no higher purpose or even nugget of conservative economic principle to it. The battle cry of “pro-growth tax cuts” is just a warmed over 35 year-old mantra from the Reagan era that does not remotely reflect the actual content of the bill or disguise what it really is: Namely, a cowardly infliction of more than $2 trillion of debt on future American taxpayers in order to fund tax relief today for the GOP’s K-Street and Wall Street paymasters. On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate Committee bill over the next decade is attributable to the $1.369 trillion cost of cutting the corporate rate from 35% to 20% (and repeal of the related AMT). All the rest of the massive bill is just a monumental zero-sum pot stirring operation.

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She sings.

SocGen: The Good Times Are Coming To An End In 2018 (BI)

The party’s almost over, Societe Generale strategists say. A strong earnings recovery and a growing economy have fueled investor interest in buying risky corporate bonds this year. SocGen’s credit strategists see 2018 as a transition year for the credit market, with the low-yield environment that has driven some investors into riskier credit instruments likely to turn. “We expect 2018 to see the last of the good times, with very positive conditions early in the year,” the strategists Juan Esteban Valencia and Guy Stear said. “In our view, the ultra-low yield environment will remain in place, making credit a very attractive proposition, even at current levels. Additionally, economic growth should remain healthy and the CSPP (and QE program) should remain supportive of the asset class. However, at some point, we expect these idyllic conditions to start shifting.”

By stopping their bond-buying programs, the ECB and the Fed would leave credit, including the market for government bonds, more vulnerable to market movements, according to SocGen. Global credit already looks overvalued, the strategists said. Sustained demand for riskier corporate bonds has reduced the spread between their yields and comparable government bonds to the lowest levels in three years. A previous study they conducted showed that the level of spreads explained about half of the following year’s performance. “Low spreads are the mother of negative excess returns,” they said, adding that credit markets would start 2018 on the wrong footing with tight valuations and low breakevens. Like Societe Generale’s credit strategists, the firm’s economists see a risk that the US economy starts to slow down in 2019 or 2020 amid lower profit margins.

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More great graphs from Lance. The last breaths of the system: It now requires nearly $4.00 of debt for each $1.00 of economic growth..

Keeping You Awake At Night (Roberts)

[..] while Janet Yellen was focused on Federal Debt, the real issue is total debt as a percentage of the economy. Every piece of leverage whether it is government debt, personal debt and even leverage requires servicing which detracts “savings” from being applied to more productive uses. Yes, in the short-term debt can be used to supplant consumption required to artificially stimulate growth, but the long-term effect is entirely negative. As shown in the chart below, total system debt how exceeds 370% of GDP and is rising.

It now requires ever increasing levels of debt to create each $1 of economic growth. From 1959 to 1983, it required roughly $1.25 of debt to create $1 of economic activity. However, as I have discussed previously, the deregulation of the financial sector, combined with falling interest rates, led to a debt explosion. That debt explosion, which allowed for an excessive standard of living, has led to the long-term deterioration in economic growth rates. It now requires nearly $4.00 of debt for each $1.00 of economic growth.

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Tick. Tock.

Stock Market Acceleration In Final Stage (Kessler)

Secular stock-market bullish trends tend to accelerate as they mature. The last three big bull moves in the Dow Jones Industrial Average look very similar and suggest a near-term major correction. See below:

 

 

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What happens when you blow bubbles to hide your failures. But just make homes places to live in again, not speculative assets. It’s not that hard to understand, or do.

Pensions Aren’t The Ticking Timebomb – Rents Are (G.)

Scottish Widows is the sort of unassuming pensions company that rarely likes to publicly criticise government policy. But an analysis it published this week is a stark warning about the ticking time bomb that will explode in 10 to 20 years’ time. And it’s not pension incomes that are the worry – it’s the fact that so many of tomorrow’s pensioners who never got on to the property ladder in the 2000s and 2010s will have to find huge amounts of money to pay ever-escalating rents to private landlords. Scottish Widows skirts around the issue by suggesting that non-homeowners currently in their 50s should start saving an extra £6,000 a year now to be able to afford their rent in retirement. As if people on low incomes are going to find that sort of money. The reason they are renting is that they were never able to find the savings for a deposit on a house in the first place, or didn’t earn enough to qualify for a mortgage.

The reality is that these people are likely to retire with little more than the state pension plus a small bit of private pension. Maybe they will be picking up about £200 a week once they are 67. Given that the average rent in England and Wales is £845 a month – and in London it’s about £1,250 a month – then the whole lot will be gobbled up by the landlord. So the taxpayer will have no alternative but to step in and pay most of the rent, and we are then on the hook for payments going on for maybe 20 or 30 years. All so that the buy-to-let landlord with multiple properties can enjoy a lavish retirement themselves. This is the lunacy of promoting buy to let as a long term form of tenure for millions of people. Even in developed countries where renting is common, such as Germany, most people are living in a home they own by the time they reach retirement.

Renting all the way through retirement, funded by the taxpayer, to a landlord who has the power to evict without reason and at short notice, is the worst possible situation. And it’s one we are hurtling towards. Make no mistake about the dramatic change in the retirement landscape that is coming. Scottish Widows projects that one in eight retirees will be renting by 2032 – treble today’s figure. After that it will continue rising. It says there is a £43bn gap between the income and savings people have now and what the rent bill will be in retirement. That’s more than one-third of the entire NHS budget for a year – to be squandered on rent.

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“In February 2017, Tesla hyped these Model 3 production numbers for 2017: “Our Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018.” November is solidly in the fourth quarter. 5,000 vehicles per week would mean over 20,000 a month. OK, this is November and not December, so maybe 4,000 a week for a total of 16,000. We got 345.”

Carmageddon for Tesla (WS)

Today was the monthly moment of truth for automakers in the US. They reported the number of new vehicles that their dealers delivered to their customers and that the automakers delivered directly to large fleet customers. These are unit sales, not dollar sales, and they’re religiously followed by the industry. Total sales in November rose 0.9% from a year ago to 1,393,010 new vehicles, according to Autodata, which tracks these sales as they’re reported by the automakers. Sales of cars dropped 8.2%. Sales of trucks – which include SUVs, crossovers, pickups, and vans – rose 6.6%. Strong replacement demand from the hurricane-affected areas in Texas papered over weaknesses elsewhere. As always, there were winners and losers. And one of the losers was Tesla.

First things first: There is nothing wrong with a tiny automaker trying to design, make, and sell cool but expensive cars that a few thousand Americans might buy every month, and trying to do so on a battleground dominated by giants. Porsche has been doing that for years. Porsche AG is owned by Volkswagen AG, which is itself majority-owned by Porsche Automobil Holding SE. Tesla is out there by itself. And Tesla has put electric vehicles on the map. That was a huge feat. EVs have been around since the 1800s, but given the challenges that batteries posed, they simply didn’t catch on until Tesla made EVs cool. Yet Tesla has to buy the battery cells from battery makers, such as Panasonic. Tesla isn’t quite out there by itself, though. The Wall Street hype machine backs it up, dousing it with billions of dollars on a regular basis to burn through as fast as it can.

This masterful hype has created a giant market capitalization of about $52 billion, more than most automakers, including Ford ($50 billion). It’s not far behind GM ($61 billion). But Tesla – which lost $619 million in Q3 – delivered only 3,590 vehicles in November in the US, down 18% from a year ago. There are all kinds of interesting aspects about this. One: 3,590 vehicles amounts to a market share of only 0.26%, of the 1,393,010 new cars and trucks sold in the US in November. Porsche outsold Tesla by 55% (5,555 new vehicles). Two: Tesla doesn’t report monthly deliveries. It wants to play with the big boys, but it doesn’t want people to know on a monthly basis just how crummy and by comparison inconsequential its US sales numbers are. Opaque and dedicated to hype, it refuses to disclose how many vehicles it delivered that month in the US.

So the industry is estimating Tesla’s monthly US sales. Tesla discloses unit sales data in its quarterly earnings reports, long after everyone has already forgotten about the months in which they occurred. Three: So how are Model 3 sales doing? Since Tesla doesn’t disclose its monthly deliveries in the US, the industry is guessing. The assembly line still isn’t working. “Manufacturing bottlenecks,” as Tesla calls it, and “manufacturing hell,” as Elon Musk calls it, rule the day. In Q3, Tesla delivered 220 handmade Model 3’s. In October, it delivered about 145 handmade units. In November, the assembly line still wasn’t assembling cars. Inside EVs estimates that Tesla delivered a whopping 345 units in November.

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Interesting angle.

AI Has Already Taken Over, It’s Called the Corporation (Lent)

When corporations were first formed back in the seventeenth century, their inventors—just like modern software engineers—acted with what they believed were good intentions. The first corporate charters were simply designed to limit an investor’s liability to the amount of their investment, thus encouraging them to finance risky expeditions to India and Southeast Asia. However, an unintended consequence soon emerged, known as moral hazard: with the potential upside greater than the downside, reckless behavior ensued, leading to a series of spectacular frauds and a market crash that resulted in corporations being temporarily banned in England in 1720. Thomas Jefferson and other leaders of the United States, aware of the English experience, were deeply suspicious of corporations, giving them limited charters with tightly constrained powers.

However, during the turmoil of the Civil War, industrialists took advantage of the disarray, leveraging widespread political corruption to expand their influence. Shortly before his death, Abraham Lincoln lamented what he saw happening with a resounding prophecy: “Corporations have been enthroned … An era of corruption in high places will follow… until wealth is aggregated in a few hands … and the Republic is destroyed.” Corporations, just like a potential runaway AI, have no intrinsic interest in human welfare. They are legal constructions: abstract entities designed with the ultimate goal of maximizing financial returns for their investors above all else. If corporations were in fact real persons, they would be sociopaths, completely lacking the ability for empathy that is a crucial element of normal human behavior.

Unlike humans, however, corporations are theoretically immortal, cannot be put in prison, and the larger multinationals are not constrained by the laws of any individual country. With the incalculable advantage of their superhuman powers, corporations have literally taken over the world. They have grown so massive that an astonishing sixty-nine of the largest hundred economies in the world are not nation states but corporate entities.

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The UN fails to speak out on far too many issues. It has made itself a lame duck.

The UN Is Investigating Extreme Poverty … In America (G.)

The United Nations monitor on extreme poverty and human rights has embarked on a coast-to-coast tour of the US to hold the world’s richest nation – and its president – to account for the hardships endured by America’s most vulnerable citizens. The tour, which kicked off on Friday morning, will make stops in four states as well as Washington DC and the US territory of Puerto Rico. It will focus on several of the social and economic barriers that render the American dream merely a pipe dream to millions – from homelessness in California to racial discrimination in the Deep South, cumulative neglect in Puerto Rico and the decline of industrial jobs in West Virginia. With 41 million Americans officially in poverty according to the US Census Bureau (other estimates put that figure much higher), one aim of the UN mission will be to demonstrate that no country, however wealthy, is immune from human suffering induced by growing inequality.

Nor is any nation, however powerful, beyond the reach of human rights law – a message that the US government and Donald Trump might find hard to stomach given their tendency to regard internal affairs as sacrosanct. The UN special rapporteur on extreme poverty and human rights, Philip Alston, is a feisty Australian and New York University law professor who has a fearsome track record of holding power to account. He tore a strip off the Saudi Arabian regime for its treatment of women months before the kingdom legalized their right to drive, denounced the Brazilian government for attacking the poor through austerity, and even excoriated the UN itself for importing cholera to Haiti. The US is no stranger to Alston’s withering tongue, having come under heavy criticism from him for its program of drone strikes on terrorist targets abroad.

In his previous role as UN special rapporteur on extrajudicial executions, Alston blamed the Obama administration and the CIA for killing many innocent civilians in attacks he said were of dubious international legality. Now Alston has set off on his sixth, and arguably most sensitive, visit as UN monitor on extreme poverty since he took up the position in June 2014. At the heart of his fact-finding tour will be a question that is causing increasing anxiety at a troubled time: is it possible, in one of the world’s leading democracies, to enjoy fundamental human rights such as political participation or voting rights if you are unable to meet basic living standards, let alone engage, as Thomas Jefferson put it, in the pursuit of happiness?

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Untreated traumas. A largely forgotten part of the refugee crisis.

Despite Greek Shelter, Yazidis Struggle To Integrate (AFP)

Having run the gauntlet of invasion, combat, killings and enslavement by Islamic State jihadists in Iraq, the members of this religious minority have found temporary shelter in the largely agricultural region of Serres in northern Greece. The camp they have been allocated to is one of the best in the country – their prefabricated homes have air conditioning and solar panels to heat water. The grounds are clean and there is a playground for the children. Many hope to be reunited with other Yazidis stranded in Greece, but with the country struggling to manage more than 50,000 refugees and migrants stranded on its territory, that is not always an option. “Creating a camp just for Yazidis is neither possible nor viable,” said a Greek official with knowledge of refugee management efforts.

The camp can normally accommodate 700 people. At the moment there are some 350 Yazidis, most of them women and children, waiting for EU-sponsored relocation to other parts of Europe. Greece’s policy is to move eligible refugees from overcrowded island camps – where they undergo identity checks upon arrival from Turkey – to the mainland, where more comfortable accommodation is available in better camps, UN-funded flats and hotels. But the Yazidis, who have already faced an ordeal keeping their dwindling community together thus far, oppose this policy. This is partly down to fear of other communities. They had a scare earlier this year, when a Yazidi celebration in Kilkis, another part of northern Greece, descended into violence between Arabs and Kurds.

[..] In areas controlled by Islamic State, thousands of women and girls from the Yazidi minority were used as sex slaves and suffered horrific abuse, including rape, abduction, slavery and cruel, inhumane and degrading treatment. The suffering the Yazidis have endured explains why community elders in Serres have written to the migration ministry to officially request that the camp be assigned to Yazidis alone. “We ask for our community not to be disturbed and to live here in safety until we depart,” says Hajdar Hamat, a self-styled spokesman for the Yazidis at the camp. “Everybody knows about our peoples’ genocide. We did not come from Sinjar to Greece for fun. Europe must protect us,” says Hamat.

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Nov 072017
 
 November 7, 2017  Posted by at 10:07 am Finance Tagged with: , , , , , , , , , ,  


Edward S. Curtis Zuni Girl with Jar c. 1903

 

Saudi Arabia’s Government Purge — And How Washington Corruption Enabled It (IC)
Saudi Arabia Accuses Lebanon Of ‘Declaring War,’ Egypt Calls For Calm (CNBC)
Oil Prices Surge On Saudi Purge (CNBC)
The Black Swan In Plain Sight – Debt Out The Wazoo (Stockman)
What Could Go Wrong? (Jim Kunstler)
Growing Homeless Camps Contrast With West Coast Tech Wealth (AP)
Profiting from Puerto Rico’s Pain (New Yorker)
Sacked Catalan President Condemns ‘Brutal Judicial Offensive’ (G.)
Bernie Sanders Warns Of ‘International Oligarchy’ – Paradise Papers (G.)
End These Offshore Games Or Our Democracy Will Die (G.)
Four False Viral Claims Spread by Journalists on Twitter in One Week (GG)
Growing Number of Greeks Unable To Pay Taxes (K.)
Greek Notaries Refuse To Carry Out Foreclosures (K.)
Hawking: AI Could Be ‘Worst Event In The History Of Our Civilization’ (CNBC)
The Charter of the Forest (Standing)

 

 

Reading a lot on Saudi. This is good by Ryan Grim. ” And make no mistake, MBS is a project of the UAE — an odd turn of events given the relative sizes of the two countries.”

Saudi Arabia’s Government Purge — And How Washington Corruption Enabled It (IC)

Whatever the official explanation, it is being read around the world as a power grab by the kingdom’s rising crown prince. “The sweeping campaign of arrests appears to be the latest move to consolidate the power of Crown Prince Mohammed bin Salman, the favorite son and top adviser of King Salman,” as the New York Times put it. “The king had decreed the creation of a powerful new anti-corruption committee, headed by the crown prince, only hours before the committee ordered the arrests. The men are being held in the Ritz-Carlton Riyadh. “There is no jail for royals,” a Saudi source noted. The move marks a moment of reckoning for Washington’s foreign policy establishment, which struck a bargain of sorts with Mohammed bin Salman, known as MBS, and Yousef Al Otaiba, the United Arab Emirates ambassador to the U.S. who has been MBS’s leading advocate in Washington.

The unspoken arrangement was clear: The UAE and Saudi Arabia would pump millions into Washington’s political ecosystem while mouthing a belief in “reform,” and Washington would pretend to believe that they meant it. MBS has won praise for some policies, like an openness to reconsidering Saudi Arabia’s ban on women drivers. Meanwhile, however, the 32-year-old MBS has been pursuing a dangerously impulsive and aggressive regional policy, which has included a heightening of tensions with Iran, a catastrophic war on Yemen, and a blockade of ostensible ally Qatar. Those regional policies have been disasters for the millions who have suffered the consequences, including the starving people of Yemen, as well as for Saudi Arabia, but MBS has dug in harder and harder. And his supporters in Washington have not blinked.

The platitudes about reform were also challenged by recent mass arrests of religious figures and repression of anything that has remotely approached less than full support of MBS. The latest purge comes just days after White House adviser Jared Kushner, a close ally of Otaiba, visited Riyadh, and just hours after a bizarre-even-for-Trump tweet. Whatever legitimate debate there was about MBS ended Saturday — his drive to consolidate power is now too obvious to ignore. And that puts denizens of Washington’s think tank world in a difficult spot, as they have come to rely heavily on the Saudi and UAE end of the bargain. As The Intercept reported earlier, one think tank alone, the Middle East Institute, got a massive $20 million commitment from the UAE. And make no mistake, MBS is a project of the UAE — an odd turn of events given the relative sizes of the two countries.

“Our relationship with them is based on strategic depth, shared interests, and most importantly the hope that we could influence them. Not the other way around,” Otaiba has said privately. For the past two years, Otaiba has introduced MBS around Washington and offered assurances of his commitment to modernizing and reforming Saudi Arabia, according to people who’ve spoken with him, confirmed by emails leaked by the group, Global Leaks. When confronted with damning headlines, Otaiba tends to acknowledge the reform project is a work in progress, but insists that it is progress nonetheless, and in MBS resides the best chance of the region.

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“The region cannot support more turmoil..”

Saudi Arabia Accuses Lebanon Of ‘Declaring War,’ Egypt Calls For Calm (CNBC)

Egyptian President Abdel Fattah al-Sisi called on Middle Eastern nations to maintain stability just as tensions were suddenly spiking between Lebanon and Saudi Arabia. “The stability of the region is very important and we all have to protect it … I am talking to all the parties in the region to preserve it,” Al-Sisi said in an interview with CNBC over the weekend that aired Tuesday morning. On Saturday, Lebanese Prime Minister Saad al-Hariri shocked the political establishment in Beirut by announcing his resignation. The leader said he was stepping down amid concerns of a potential assassination plot against him. Speaking from Riyadh, Hariri criticized Iran, and its Lebanese ally Hezbollah, for igniting conflict in the region.

Following the CNBC interview, Reuters reported that Saudi Arabia sharply escalated rhetoric in the region by declaring that Lebanon had — figuratively at least — declared “war” against it because of aggression from Hezbollah. Saudi Gulf Affairs Minister Thamer al-Sabhan said the government of Lebanon “would be dealt with as a government declaring war on Saudi Arabia,” Reuters reported. When asked whether the time had come for Egypt to consider its own measures against Hezbollah, Al-Sisi replied, “The subject is not about taking on or not taking on, the subject is about the status of the fragile stability in the region in light of the unrest facing the region.” “The region cannot support more turmoil,” he said.

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What OPEC couldn’t do.

Oil Prices Surge On Saudi Purge (CNBC)

Oil prices surged to their highest levels since the summer of 2015 on Monday as a major political shakeup in Saudi Arabia underpinned a rally fueled by geopolitical risk, analysts said. Crude futures hit the new highs overnight after the powerful Saudi Crown Prince Mohammad bin Salman coordinated the arrest of several princes and ministers, ostensibly as part of crackdown on corruption. Prices pulled back in morning trade as the market digested a wealth of analysis on the Saudi purge, but futures suddenly shot higher at midday. International benchmark Brent crude oil topped $64 a barrel for the first time since June 2015. Meanwhile U.S. West Texas Intermediate crude broke above $57, a level the market has not seen since July 2015.

WTI finished Monday’s session $1.71 or 3.1 percent, higher at $57.35. Brent was trading up $2.04, or 3.3 percent, at $64.11 by 2:27 p.m. ET. Analysts cautioned against pinning the surge on any one headline, or even the Saudi arrests alone. Instead, they said a growing cloud of geopolitical uncertainty was unleashing animal spirits in an already bullish market. “You can grab all sorts of different headlines when you have a runaway market, and this is a runaway market right now,” said Tom Kloza, global head of energy analysis at Oil Price Information Service. In this kind of environment, “people throw caution to the wind, and this is like the grand finale of fireworks,” he said.

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More debt, fast.

The Black Swan In Plain Sight – Debt Out The Wazoo (Stockman)

The black swan in plain sight does emit the Donald’s orangish glow, but at the end of the day its true color is actually red. That is, monumental towers of rapidly rising debt loom everywhere on the planet. For the moment, the artificial cash flow from this unsustainable borrowing spree is keeping a simulacrum of growth and prosperity alive. Yet this whole outbreak of debt madness – represented by $225 trillion outstanding on a global basis – is careening toward a financial and economic dead end that will soon crush today’s fiscally profligate politicians and heedless financial punters, alike, in a devastating reset of bond yields. For our first case in point, the always excellent Wolf Richter published a great chart over the weekend on the exploding US public debt.

To say the least, it constitutes a clanging wake-up call amidst the absolute fantasy world that prevails on both ends of the Acela Corridor. That’s because during the mere 8 weeks since the public debt ceiling was suspended by the Donald’s end-run with Nancy and Chuckles in September, the national debt has spiked by $640 billion. That’s about $16 billion per Federal business day, and they are not done yet. The US Treasury will continue to borrow heavily until the current debt ceiling “suspension” expires on December 8 – at which time it will repair to the old game of divesting trusting funds and employing other gimmicks which circumvent the ceiling, while waiting for Congress to blink and raise the ceiling or authorize a new “temporary” suspension.

As Wolf pointed out, this pattern played out during the debt showdowns of 2013 and 2015, as well, when the resulting “temporary” suspension resulted in borrowing spikes of $464 billion and $650 billion, respectively. Accordingly, Washington has suspended it way into a $5.7 trillion increase in the public debt in just six years since October 2011. That is, during a period which supposedly constitutes the third longest business expansion in US history.

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“The “narrative” is firmest before its falseness is proved by the turn of events, and there are an awful lot of events out there waiting to present, like debutantes dressing for a winter ball.”

What Could Go Wrong? (Jim Kunstler)

The economy isn’t growing and can’t grow. The economy is a revenant of something that used to exist, an industrial economy that has rolled over and died and come back as a moldy ghoul feeding on the ghostly memories of itself. Stocks go up because the unprecedented low interest rates established by the Fed allow company CEOs to “lever-up” issuing bonds (i.e. borrow “money” from, cough cough, “investors”) and then use the borrowed “money” to buy back their own stock to raise the share value, so they can justify their companies’ boards-of-directors jacking up their salaries and bonuses — based on the ghost of the idea that higher stock prices represent the creation of more actual things of value (front-end-loaders, pepperoni sticks, oil drilling rigs).

The economy is actually contracting because we can’t afford the energy it takes to run the things we do — mostly just driving around — and unemployment is not historically low, it’s simply mis-represented by not including the tens of millions of people who have dropped out of the work force. And an epic wickedness combined with cowardice drives the old legacy news business to look the other way and concoct its good times “narrative.” If any of the reporters at The New York Times and The Wall Street Journal really understand the legerdemain at work in these “mysteries” of finance, they’re afraid to say. The companies they work for are dying, like so many other enterprises in the non-financial realm of the used-to-be economy, and they don’t want to be out of paycheck until the lights finally go out.

The “narrative” is firmest before its falseness is proved by the turn of events, and there are an awful lot of events out there waiting to present, like debutantes dressing for a winter ball. The debt ceiling… North Korea… Mueller… Hillarygate….the state pension funds….That so many agree the USA has entered a permanent plateau of exquisite prosperity is a sure sign of its imminent implosion. What could go wrong?

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All bubbles disrupt.

Growing Homeless Camps Contrast With West Coast Tech Wealth (AP)

SEATTLE — Housing prices are soaring here thanks to the tech industry, but the boom comes with a consequence: A surge in homelessness marked by 400 unauthorized tent camps in parks, under bridges, on freeway medians and along busy sidewalks. The liberal city is trying to figure out what to do. “I’ve got economically zero unemployment in my city, and I’ve got thousands of homeless people that actually are working and just can’t afford housing,” said Seattle City Councilman Mike O’Brien. “There’s nowhere for these folks to move to.” That struggle is not Seattle’s alone. A homeless crisis is rocking the entire West Coast, pushing abject poverty into the open like never before. Public health is at risk, several cities have declared states of emergency, and cities and counties are spending millions – in some cases billions – in a search for solutions.

San Diego now scrubs its sidewalks with bleach to counter a deadly hepatitis A outbreak. In Anaheim, 400 people sleep along a bike path in the shadow of Angel Stadium. Organizers in Portland lit incense at an outdoor food festival to cover up the stench of urine in a parking lot where vendors set up shop. Homelessness is not new on the West Coast. But interviews with local officials and those who serve the homeless in California, Oregon and Washington — coupled with an Associated Press review of preliminary homeless data — confirm it’s getting worse. People who were once able to get by, even if they suffered a setback, are now pushed to the streets because housing has become so expensive. All it takes is a prolonged illness, a lost job, a broken limb, a family crisis. What was once a blip in fortunes now seems a life sentence.

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“There is no European Union standing ready to bail out Puerto Rico.”

Profiting from Puerto Rico’s Pain (New Yorker)

In 2012, Cate Long was working at the news service Reuters, where she wrote a daily column on the municipal-bond market. Municipal bonds are typically a sleepy corner of investing. They are forms of debt issued by states, counties, or cities, usually to fund infrastructure projects, such as airports and highways, and they are generally considered a safe investment, paying relatively low levels of interest. Finding a compelling story about the municipal-bond market is not an easy task, so when Long came across a document related to an $800 million bond sale that Puerto Rico would be undertaking that spring, she decided to look at the numbers more closely. What she found was startling. “I sat down and read it for a couple of hours, and I said, ‘These people are going to default,’ ” she told me recently. “It was pretty obvious.”

In the column she wrote about her analysis, titled “Puerto Rico Is America’s Greece,” Long expressed concern about the island’s economic health, calling it “America’s own Third World country.” At the time, Puerto Rico’s per-capita income was just $15,203 (less than half that of Mississippi, the poorest of the fifty states), and 45% of its residents were living below the poverty line. Puerto Rico also had a “massive” amount of debt, and was issuing even more bonds, which mutual funds and individuals were eagerly buying up, in spite of the warning signs. In her article, Long seemed to charge almost everyone involved, borrowers and creditors alike, with disingenuousness, incompetence, or both. “As happened with Greece, bond investors continue to buy the debt assuming at some point the government will be bailed out by somebody, somewhere,” she wrote.

“Caution, bond investors: There is no European Union standing ready to bail out Puerto Rico.” The article sent shock waves through the investment community. Moody’s Investors Service, which provides credit ratings, asked Long to come to its offices and defend her findings. (Her defense was, essentially, “I’m looking at the numbers.”) Nevertheless, the island continued its unsustainable borrowing for years—and Wall Street investors kept lending it money. By 2017, five years after Long’s warning, Puerto Rico’s bond debt had soared to $74 billion, almost a third of which was held by hedge funds. Meanwhile, the government was struggling to provide basic services to residents.

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Guess: he won’t be back in Catalonia in time for the Dec 21 elections.

Sacked Catalan President Condemns ‘Brutal Judicial Offensive’ (G.)

The deposed Catalan president, Carles Puigdemont, has accused the Spanish authorities of conducting a “brutal judicial offensive” against members of his ousted government and said he was afraid they would not receive an unbiased hearing in Spanish courts. Writing in the Guardian, Puigdemont said it was a “colossal outrage” that he and 13 colleagues were being investigated over possible charges including sedition and rebellion in relation to their roles in last month’s declaration of independence. “Today, the leaders of this democratic project stand accused of rebellion and face the severest punishment possible under the Spanish penal code; the same as for cases of terrorism and murder: 30 years in prison,” he said.

Puigdemont said he doubted that he and his colleagues would get a “fair and independent hearing” and called for “scrutiny from abroad” to help bring the Catalan crisis to a political, rather than judicial, conclusion. He added: “The Spanish state must honour what was said so many times in the years of terrorism: end violence and we can talk about everything. We, the supporters of Catalan independence, have never opted for violence, on the contrary. But now we find it was all a lie that everything is up for discussion.” The former Catalan leader fled to Brussels with a handful of cabinet colleagues last week, hours before Spain’s attorney general announced he would be seeking to bring charges of rebellion, sedition and misuse of public funds against them.

On Thursday, a national court judge ordered the jailing of the eight Catalan politicians and, a day later, issued a European arrest warrant for Puigdemont and four of his allies. Late on Sunday, a Belgian judge granted the five conditional release. They will make their first appearance in court on 17 November when a judge will decide on whether to execute the arrest warrant. The conditions of release include a ban on them leaving Belgium until their appearance in the court of first instance in Brussels later this month. With the extradition process likely to take months rather than weeks, there is growing scope for Puigdemont’s presence in Belgium to cause the country’s coalition government serious difficulties.

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No kidding.

Bernie Sanders Warns Of ‘International Oligarchy’ – Paradise Papers (G.)

Bernie Sanders has warned that the world is rapidly becoming an “international oligarchy” controlled by a tiny number of billionaires, highlighted by the revelations in the Paradise Papers. In a statement to the Guardian in the wake of the massive leak of documents exposing the secrets of offshore investors, Sanders said that the enrichment of wealthy individuals and companies in tax havens was “the major issue of our time”. He said the Paradise Papers opened the door on a “major problem not just for the US but for governments throughout the world”. “The major issue of our time is the rapid movement toward international oligarchy in which a handful of billionaires own and control a significant part of the global economy. The Paradise Papers shows how these billionaires and multinational corporations get richer by hiding their wealth and profits and avoid paying their fair share of taxes,” the US senator from Vermont said.

Sanders, who came in a close second to Hillary Clinton in the race for the Democratic presidential nomination last year, pointed the finger of blame for the flourishing of offshore holdings on both Congress and the Trump administration. He told the Guardian that Republicans in Congress were responsible for providing “even more tax breaks to profitable corporations like Apple and Nike”. The same tax breaks, he said, were being seized upon by super-wealthy members of Trump’s cabinet “who avoid billions in US taxes by shifting American jobs and profits to offshore tax havens. We need to close these loopholes and demand a fair and progressive tax system.”

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“We must accept that Big Finance and runaway inequality are incompatible with either a functioning democracy or a sustainable economy.”

End These Offshore Games Or Our Democracy Will Die (G.)

Tax avoidance is now so systemic that the Queen’s own wealth managers apparently see nothing wrong with her receiving £82m a year from taxpayers while shunting £10m into the Caymans and elsewhere. Shuttling between tax havens is so commonplace that economist Gabriel Zucman describes it as an “elite sport” – a sport in which the loser each time is the rest of society, which sees its taxbase shrink. These papers are aptly named: they outline a model that is paradise for the super-rich and purgatory for the rest of us. The second myth of British politics is that austerity was the only correct response to the high-living of the New Labour boom. That was always opposed by some of us – now it is exploded with each new tax investigation.

Drawing in part on data from last year’s Panama Papers and the HSBC files leaked in 2015, Zucman recently co-published a study that found wealthy Britons have stashed about £300bn – equivalent to 15% of our GDP – in offshore tax havens. Three hundred billion quid would more than cover our entire education budget for the rest of this decade and into the 2020s. Or, if you prefer, it is the equivalent of £350m being paid into the NHS every week for the next 16 years. Instead, it is funnelled offshore and used to buy yachts and mansions and other baubles – tax efficiently, of course. The economics of David Cameron and George Osborne can be summed up simply: punish the poor, but reward the rich for fear they will flee offshore. To that end, they scrapped the 50p tax rate for millionaires, they drove down corporation tax to a record low, and cut sweetheart deals with companies such as Google who couldn’t be bothered to pay even that much.

The result is that London has more super-rich residents than any other city – yet however soft the kid gloves with which they are treated, our wealthiest 0.01% stick 30-40% of their wealth offshore. In high-tax Sweden, by contrast, the rich do not use havens half as much. The logic that has underpinned our tax system over this entire decade is rubbish. [..] Add the City of London to Britain’s crown dependencies such as Jersey and the Isle of Man, and overseas territories such as the Caymans, and Britain’s tax havens account for nearly a quarter of the entire offshore financial industry. According to Deutsche Bank, London itself receives about £1bn a month in what it calls “hidden capital flows”, much of it Russian. It ends up in Stucco-fronted houses and fine art.

Much of this could be changed, and quickly. Britain has previously ordered the Caymans and other overseas territories to decriminalise homosexuality and abolish the death penalty. It could do the same with tax transparency, in an Order of Council that, a Mayfair tax lawyer recently told me, need be no longer than two sides of A4. We could change the rules on Lords and Commons’ members’ interests so that all offshore holdings would have to be registered. These are the fixes, but a real solution is ultimately political. We must accept that Big Finance and runaway inequality are incompatible with either a functioning democracy or a sustainable economy. Britain either shrinks the City of London, or the City of London will swallow Britain.

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Lots of talk about this, with widely differing views.

Four False Viral Claims Spread by Journalists on Twitter in One Week (GG)

There is ample talk, particularly of late, about the threats posed by social media to democracy and political discourse. Yet one of the primary ways that democracy is degraded by platforms such as Facebook and Twitter is, for obvious reasons, typically ignored in such discussions: the way they are used by American journalists to endorse factually false claims that quickly spread and become viral, entrenched into narratives, and thus can never be adequately corrected. The design of Twitter, where many political journalists spend their time, is in large part responsible for this damage. Its space constraints mean that tweeted headlines or tiny summaries of reporting are often assumed to be true with no critical analysis of their accuracy, and are easily spread.

Claims from journalists that people want to believe are shared like wildfire, while less popular, subsequent corrections or nuanced debunking are easily ignored. Whatever one’s views are on the actual impact of Twitter Russian bots, surely the propensity of journalistic falsehoods to spread far and wide is at least as significant. Just in the last week alone, there have been four major factually false claims that have gone viral because journalists on Twitter endorsed and spread them: three about the controversy involving Donna Brazile and the DNC, and one about documents and emails published by WikiLeaks during the 2016 campaign. It’s well worth examining them, both to document what the actual truth is as well as to understand how often and easily this online journalistic misleading occurs:

Viral Falsehood #1: The Clinton/DNC agreement cited by Brazile only applied to the General Election, not the primary.

Viral Falsehood #2: Sanders signed the same agreement with the DNC that Clinton did.

Viral Falsehood #3: Brazile stupidly thought she could unilaterally remove Clinton as the nominee.

Viral Falsehood #4: Evidence has emerged proving that the content of WikiLeaks documents and emails was doctored.

Read more …

Deep deep deeper and down.

Growing Number of Greeks Unable To Pay Taxes (K.)

Almost half a million taxpayers were added to the long list of debtors to the state in the month of September, according to the latest data from the Independent Authority for Public Revenue. The authority’s figures are a reflection of citizens’ increasing inability to pay their taxes, with 410,000 not paying their second income tax installment and the ENFIA property tax in September. More specifically, 4,267,408 taxpayers owed money to the Greek state in September, up from 3,857,086 in August. Moreover, by the end of September, the amount of unpaid taxes since the beginning of the year came to 9.25 billion euros. What concerns the government is whether the 410,000 that couldn’t pay their taxes in September will join the Finance Ministry’s 12-month installment program, as the hole in tax revenues will only grow if they don’t.

Read more …

What good will kicking people out do?

Greek Notaries Refuse To Carry Out Foreclosures (K.)

The outlook for property foreclosures in Greece is unclear after notaries announced a boycott on auctions until the end of the year, citing abuse by protesters, though foreign creditors expect the first online auctions to take place this month. According to sources, Greece’s lenders have suggested that the responsibility for foreclosures be shifted from notaries to Greek courts or possibly to Justice Ministry officials. The latter model, which has been tried and tested in Germany and Spain, was first mooted last month during a visit to Athens by bailout monitors. The auditors made it clear that the resumption of foreclosures on the homes of overindebted Greeks, which have dragged during the crisis years due to strikes by lawyers and notaries and more recently due to anti-austerity protesters, is a prerequisite for the successful conclusion of Greece’s current bailout review.

In comments at Monday’s summit of eurozone finance ministers in Brussels, ECB President Mario Draghi indicated that the resumption of property auctions would help banks by reducing the large proportion of bad loans that they hold. Commenting, Greek Finance Ministry sources said Athens was committed to “not taking our foot off the gas in the implementation of reforms for the review.” One of the many conditions of the latest review is that Greece launch electronic foreclosures. The first is supposed to take place on November 29. However, it is unclear how that procedure will be carried out in view of the protracted walkout by Greek notaries.

In a joint statement on Monday, the associations representing notaries in Athens, Piraeus and the islands of the Aegean and the Dodecanese said they will not be conducting any property auctions through December 31. The decision was reached during a meeting on Saturday with a vote of 134 in favor and 132 against. The associations said the decision was aimed at initiating talks with the Justice Ministry in order to provide protection to notaries who have come under attack – often violent – by anti-establishment groups and protesters opposed to foreclosures. Notaries also want the Justice Ministry to be made responsible for electronic auctions, as well as to address any disputes that may arise from them.

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I don’t share his optimism.

Hawking: AI Could Be ‘Worst Event In The History Of Our Civilization’ (CNBC)

The emergence of artificial intelligence (AI) could be the “worst event in the history of our civilization” unless society finds a way to control its development, high-profile physicist Stephen Hawking said Monday. He made the comments during a talk at the Web Summit technology conference in Lisbon, Portugal, in which he said, “computers can, in theory, emulate human intelligence, and exceed it.” Hawking talked up the potential of AI to help undo damage done to the natural world, or eradicate poverty and disease, with every aspect of society being “transformed.” But he admitted the future was uncertain. “Success in creating effective AI, could be the biggest event in the history of our civilization. Or the worst. We just don’t know. So we cannot know if we will be infinitely helped by AI, or ignored by it and side-lined, or conceivably destroyed by it,” Hawking said during the speech.

“Unless we learn how to prepare for, and avoid, the potential risks, AI could be the worst event in the history of our civilization. It brings dangers, like powerful autonomous weapons, or new ways for the few to oppress the many. It could bring great disruption to our economy.” Hawking explained that to avoid this potential reality, creators of AI need to “employ best practice and effective management.” The scientist highlighted some of the legislative work being carried out in Europe, particularly proposals put forward by lawmakers earlier this year to establish new rules around AI and robotics. Members of the European Parliament said European Union-wide rules were needed on the matter. Such developments are giving Hawking hope.

“I am an optimist and I believe that we can create AI for the good of the world. That it can work in harmony with us. We simply need to be aware of the dangers, identify them, employ the best possible practice and management, and prepare for its consequences well in advance,” Hawking said.

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We want one!

The Charter of the Forest (Standing)

Eight hundred years ago this month, after the death of a detested king and the defeat of a French invasion in the Battle of Lincoln, one of the foundation stones of the British constitution was laid down. It was the Charter of the Forest, sealed in St Paul’s on November 6, 1217, alongside a shortened Charter of Liberties from 2 years earlier (which became the Magna Carta). The Charter of the Forest was the first environmental charter forced on any government. It was the first to assert the rights of the property-less, of the commoners, and of the commons. It also made a modest advance for feminism, as it coincided with recognition of the rights of widows to have access to means of subsistence and to refuse to be remarried. The Charter has the distinction of having been on the statute books for longer than any other piece of legislation.

It was repealed 754 years later, in 1971, by a Tory government. In 2015, while spending lavishly on celebrating the Magna Carta anniversary, the government was asked in a written question in the House of Lords whether it would be celebrating the Charter this year. A Minister of Justice, Lord Faulks, airily dismissed the idea, stating that it was unimportant, without international significance. Yet earlier this year the American Bar Association suggested the Charter of the Forest had been a foundation of the American Constitution and that it was more important now than ever before. They were right. It is scarcely surprising that the political Right want to ignore the Charter. It is about the economic rights of the property-less, limiting private property rights and rolling back the enclosure of land, returning vast expanses to the commons.

It was remarkably subversive Sadly, whereas every school child is taught about the Magna Carta, few hear of the Charter. Yet for hundreds of years the Charter led the Magna Carta. It had to be read out in every church in England four times a year. It inspired struggles against enclosure and the plunder of the commons by the monarchy, aristocracy and emerging capitalist class, famously influencing the Diggers and Levellers in the 17th century, and protests against enclosure in the 18th and 19th. At the heart of the Charter, which is hard to understand unless words that have faded from use are interpreted, is the concept of the commons and the need to protect them and to compensate commoners for their loss. It is scarcely surprising that a government that is privatising and commercialising the remaining commons should wish to ignore it.

In 1066, William the Conqueror not only distributed parts of the commons to his bandits but also turned large tracts of them into ‘royal forests’ – ie, his own hunting grounds. By the time of the Domesday Book in 1086, there were 25 such forests. William’s successors expanded and turned them into revenue-raising zones to help pay for their wars. By 1217, there were 143 royal forests. The Charter achieved a reversal, and forced the monarchy to recognise the right of free men and women to pursue their livelihoods in forests. The notion of forest was much broader than it is today, and included villages and areas with few trees, such as Dartmoor and Exmoor. The forest was where commoners lived and worked collaboratively.

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Oct 222017
 
 October 22, 2017  Posted by at 2:02 pm Finance Tagged with: , , , , , , , , , ,  


Alfred Wertheimer Elvis 1956

 

New Zealand’s new prime minister Jacinda Ardern calls capitalism a blatant failure. Former Greek finance minister Yanis Varoufakis says capitalism is ‘merely’ coming to an end because it is making itself obsolete. Mathematics professor Bruce Boghosian claims that without redistribution of wealth, our market economy would not be stable, because wealth always tends to concentrate. The people at Artemis Capital Management write that the stock market has begun self-cannibalizing like a snake eating its tail, and the only reason we’re not in a recession already is ‘financial alchemy’.

At the very least we can say that the system is under pressure. But what system is that? It would be nice to have a clearcut definition of capitalism, but alas, there are many, about as many as there are different forms of it. That doesn’t make this any easier. Americans call many European economies ‘socialist’, which seems to mean they are not capitalist. But Scandinavian countries don’t function like the Soviet Union either.

And if you see how much money is involved in transfer payments to citizens in the US, the supposed bastion of free market capitalism, it’s tempting to conclude the system has already failed. But even with transfer payments, inequality is at record levels. That would seem to confirm Boghosian’s statement that “even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result..” So what then?

 

 

Varoufakis and others want a “universal basic dividend”, or “universal basic income”. Would that be the end of capitalism as we know it? Or is it just a -perhaps more extreme- form of ‘state capitalism’? Varoufakis deems it inevitable because technology will eradicate so many jobs from societies that people won’t be able to make money from work. Personally, I’ve long thought that the pending large-scale demise of pensions systems will lead to some form of UBI.

37-year-young Jacinda Ardern is very clear in her assessment of New Zealand’s form of capitalism. If you’ve got the worst homelessness in the developed world, you have a broken system. If the system fails the people, it’s no good. Other people might argue that capitalism never promised to take care of everyone. Or rather, not through state interference. Labour’s Ardern has her view:

 

New Zealand’s New Prime Minister Brands Capitalism A ‘Blatant Failure’

[Jacinda] Ardern, has pledged her government will increase the minimum wage, write child poverty reduction targets into law, and build thousands of affordable homes. In her first full interview since becoming prime minister-elect, she told current affairs programme The Nation that capitalism had “failed our people”. “If you have hundreds of thousands of children living in homes without enough to survive, that’s a blatant failure,” she said. [..] “When you have a market economy, it all comes down to whether or not you acknowledge where the market has failed and where intervention is required. Has it failed our people in recent times? Yes. How can you claim you’ve been successful when you have growth roughly 3%, but you’ve got the worst homelessness in the developed world?”

So to which extent should a state interfere in markets, and in society at large? There are obviously wide ideological divides when it comes to answering that one. Does that mean there is no answer possible at all? Perhaps not. Perhaps the answer lies in the fact that the system is predestined to fail, as Boghosian’s mathematical models suggest: “Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair..”

That doesn’t necessarily demand a lot of interference, we could ‘simply’ write the rules of the game in such a way that the ‘natural tendency’ towards wealth concentration is blocked. An example is the history of the top US income tax rate. Arguably, the nation was doing a lot better under Eisenhower and Kennedy, with a top rate of 91%, than it is today. If you put a few rules like that in play, perhaps including Varoufakis’ idea of a ‘common welfare fund’, maybe the state doesn’t have to interfere much otherwise.

 

 

One of the main underlying claims of capitalism, and of macroeconomics in general, is that markets -and societies- will sort themselves out if left alone. Bruce Boghosian says this is not true, and that he has the math to prove it. The entire notion of markets tending towards a ‘supply-demand equilibrium’ is nonsense, he says (echoing Minsky, Steve Keen et al). Trickle-down economics is a figment of the imagination, while trickle up-economics flourishes.

This refutes much of what our economic systems are based on, which would appear to indicate that we need an urgent revision of these systems. Unless we would agree that Darwin-on-Steroids is a good idea. We don’t and won’t, because it would mean Stephen Foster’s “frail forms fainting at the door” all over the place. A market ideology that causes widespread misery has no future.

 

The Mathematics of Inequality

Seven years ago, the combined wealth of 388 billionaires equaled that of the poorest half of humanity , according to Oxfam International. This past January the equation was even more unbalanced: it took only eight billionaires, marking an unmistakable march toward increased concentration of wealth. Today that number has been reduced to five billionaires.

Trying to understand such growing inequality is usually the purview of economists, but Bruce Boghosian, a professor of mathematics, thinks he has found another explanation—and a warning. Using a mathematical model devised to mimic a simplified version of the free market, he and colleagues are finding that, without redistribution, wealth becomes increasingly more concentrated, and inequality grows until almost all assets are held by an extremely small percent of people.

“Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair,” he said. “Our model, which is able to explain the form of the actual wealth distribution with remarkable accuracy, also shows that free markets cannot be stable without redistribution mechanisms. The reality is precisely the opposite of what so-called ‘market fundamentalists’ would have us believe.”

While economists use math for their models, they seek to show that an economy governed by supply and demand will result in a steady state or equilibrium, while Boghosian’s efforts “don’t try to engineer a supply-demand equilibrium, and we don’t find one,” he said. [..] The model tracks the data with remarkable accuracy, he said. He and his team will soon publish a paper on how it relates to U.S. wealth data from 1989 to 2013.

“We have also begun to apply it to wealth data from the ECB, and so far it seems to work very well for certain European countries as well,” he said [..] It turns out that when agents do well in early transactions, the odds are so increasingly stacked in their favor that—without redistribution from taxes or other wealth-transfer mechanisms—they will get more money, and keep accruing wealth inevitably.

“Without redistribution of wealth, our market economy would not be stable,” said Boghosian. “One person would run away with all the wealth, and it would keep going until it came to complete oligarchy.” And even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result,” Boghosian said.

If markets and societies cannot survive under current rules, theories and ideologies, what do we do? The Artemis guys strongly suggest we stop the practice of excessive stock buybacks- even if they’re the only thing propping up the whole market system. Because they’re leading us straight into a recession. Because they’re making that recession a lot worse.

 

Volatility and the Alchemy of Risk

The Ouroboros, a Greek word meaning ‘tail devourer’, is the ancient symbol of a snake consuming its own body in perfect symmetry. The imagery of the Ouroboros evokes the infinite nature of creation from destruction. The sign appears across cultures and is an important icon in the esoteric tradition of Alchemy. Egyptian mystics first derived the symbol from a real phenomenon in nature. In extreme heat a snake, unable to self-regulate its body temperature,will experience an out-of-control spike in its metabolism. In a state of mania, the snake is unable to differentiate its own tail from its prey,and will attack itself, self-cannibalizing until it perishes. In nature and markets, when randomness self-organizes into too perfect symmetry, order becomes the source of chaos.

The Ouroboros is a metaphor for the financial alchemy driving the modern Bear Market in Fear. Volatility across asset classes is at multi-generational lows. A dangerous feedback loop now exists between ultra-low interest rates, debt expansion, asset volatility, and financial engineering that allocates risk based on that volatility. In this self-reflexive loop volatility can reinforce itself both lower and higher. In a market where stocks and bonds are both overvalued, financial alchemy is the only way to feed our global hunger for yield, until it kills the very system it is nourishing.

 

 

[..] At the head of the Great Snake of Risk is unprecedented monetary policy. Since 2009 Global Central Banks have pumped in $15 trillion in stimulus creating an imbalance in the investment demand for and supply of quality assets. Long term government bond yields are now the lowest levels in the history of human civilization dating back to 1285. As of this summer there was $9.5 trillion worth of negative yielding debt globally. Last month Austria issued a 100-year bond with a coupon of only 2.1%(6) that will lose close to half its value if interest rates rise 1% or more. The global demand for yield is now unmatched in human history. None of this makes sense outside a framework of financial repression.

Amid this mania for investment, the stock market has begun self-cannibalizing… literally. Since 2009, US companies have spent a record $3.8 trillion on share buy-backs financed by historic levels of debt issuance. Share buybacks are a form of financial alchemy that uses balance sheet leverage to reduce liquidity generating the illusion of growth. A shocking +40% of the earning-per-share growth and +30% of the stock market gains since 2009 are from share buy-backs. Absent this financial engineering we would already be in an earnings recession.

Any strategy that systematically buys declines in markets is mathematically shorting volatility. To this effect, the trillions of dollars spent on share buybacks are equivalent to a giant short volatility position that enhances mean reversion. Every decline in markets is aggressively bought by the market itself, further lowing volatility. Stock price valuations are now at levels which in the past have preceded depressions including 1928, 1999, and 2007. The role of active investors is to find value, but when all asset classes are overvalued, the only way to survive is by using financial engineering to short volatility in some form.

Yanis Varoufakis doesn’t so much argue that capitalism has already failed, he says it is bound to fail in the near future. Because new technology, including artificial intelligence, will destroy too many jobs for society to continue to function intact. That is already happening, in that we both produce and consume Google’s ‘products’, but we get none of the profits. An example:

 

Google’s Plan To Revolutionise Cities Is A Takeover In All But Name

Alphabet’s weapons are impressive. Cheap, modular buildings to be assembled quickly; sensors monitoring air quality and building conditions; adaptive traffic lights prioritising pedestrians and cyclists; parking systems directing cars to available slots. Not to mention delivery robots, advanced energy grids, automated waste sorting, and, of course, ubiquitous self-driving cars. Alphabet essentially wants to be the default platform for other municipal services. Cities, it says, have always been platforms; now they are simply going digital.

“The world’s great cities are all hubs of growth and innovation because they leveraged platforms put in place by visionary leaders,” states the proposal. “Rome had aqueducts, London the Underground, Manhattan the street grid.” Toronto, led by its own visionary leaders, will have Alphabet. Amid all this platformaphoria, one could easily forget that the street grid is not typically the property of a private entity, capable of excluding some and indulging others. Would we want Trump Inc to own it? Probably not. So why hurry to give its digital equivalent to Alphabet?

Google aims at taking over our entire communities, and claims this will be to our benefit. We let the new technology companies expand far and wide, to a large extent because our ‘leaders’ don’t understand what is happening any better than we do. But that is not a good thing, for many different reasons. It’ll be very hard to whistle them back later, both because of the wealth they’re building, and because of the intensifying links they have to government, including -or especially- the intelligence community.

 

Capitalism Is Ending Because It Has Made Itself Obsolete

Former Greek finance minister Yanis Varoufakis has claimed capitalism is coming to an end because it is making itself obsolete. The former economics professor told an audience at University College London that the rise of giant technology corporations and artificial intelligence will cause the current economic system to undermine itself.

Mr Varoufakis [..] said companies such as Google and Facebook, for the first time ever, are having their capital bought and produced by consumers. “Firstly the technologies were funded by some government grant; secondly every time you search for something on Google, you contribute to Google’s capital,” he said. “And who gets the returns from capital? Google, not you. “So now there is no doubt capital is being socially produced, and the returns are being privatised. This with artificial intelligence is going to be the end of capitalism.”

Warning Karl Marx “will have his revenge ”, the 56-year-old said for the first time since capitalism started, new technology “is going to destroy a lot more jobs than it creates”. He added: “Capitalism is going to undermine capitalism , because they are producing all these technologies that will make corporations and the private means of production obsolete. “And then what happens? I have no idea.”

Describing the present economic situation as “unsustainable” and fearing the rise of “toxic nationalism”, Mr Varoufakis said governments needed to prepare for post-capitalism by introducing redistributive wealth policies. He suggested one effective policy would be for 10% of all future issue of shares to be put into a “common welfare fund” owned by the people. Out of this a “universal basic dividend” could be paid to every citizen.

Has capitalism failed already, as Jacinda Ardern claims, or will that happen only in the future, as Varoufakis says? It may be a moot question once the system and the markets start collapsing. That they will, and must, is not a question but a certainty, even a mathematical one. Whatever your ideology, that is not a good thing. And the current ideology has caused this, that much is clear.

If the remaining wealth is not divided better than it is today, those who have gathered most of it will also find themselves in non-functioning societies and communities. Unless perhaps you’re George W. and have property in Paraguay.

But even then. We’re eating our tails.

 

 

Sep 092017
 
 September 9, 2017  Posted by at 9:04 am Finance Tagged with: , , , , , , , , , , , ,  


Irma projections took a slight deflection west

 

Hurricane Irma Becomes Category 5 Storm Again (CNN)
5.6 Million People Told To Evacuate Florida Due To Irma (AP)
Hurricane Irma Thrives On Fateful Mix Of ‘Ideal’ Conditions (R.)
Harvey Won’t Help Flagging Housing Market (DDMB)
Swamp Fever (Jim Kunstler)
Capitalism, the State and the Drowning of America (CP)
The “Real” Vampire Squid (Roberts)
Venezuela’s Maduro Says Will Shun US Dollar In Favor Of Yuan, Others (R>)
What Happens To Nations That Try To Ditch The Dollar (TAM)
Bitcoin Tumbles On Report China To Shutter Digital Currency Exchanges (R.)
Russia Faces Internal Battle Over Bitcoin (Forbes)
Artificial Intelligence Fuels New Global Arms Race (Wired)
Data Swamped US Spy Agencies Put Hopes On Artificial Intelligence (AFP)
EU Brushes Off ‘Democratic Scandal’ Of Greek Bailout (EUO)

 

 

Irma took a light dip south towards Cuba last night. This may save Miami from a direct hit – but not Tampa. Irma’s the first Category 5 hurricane to make landfall in Cuba since 1924. 3 storms making landfall at the same time has never been recorded before.

Hurricane Irma Becomes Category 5 Storm Again (CNN)

Hurricane Irma regained Category 5 status late Friday as the core of the storm made landfall in Cuba with maximum sustained winds of 160 mph, the US National Hurricane Center said. Irma made landfall on the Camaguey archipelago of Cuba, the center said late Friday night. The massive storm edged closer to US landfall in the Florida Keys after leaving a trail of devastation and death in much of the Caribbean as it advanced toward South Florida. Forecasters with the National Hurricane Center say the storm’s wind speeds will increase after Irma passes Cuba then slips into the extremely warm waters near the Keys. “Nowhere in the Florida Keys will be safe,” the National Weather Service tweeted.

There were worries the storm’s most powerful winds, on the northeastern side of the core, could pummel Miami, but it appears the city will avoid a direct hit, while still getting pounded by strong winds, storm surge and heavy rains. At least 24 people were killed this week when Irma pummeled northern Caribbean islands such as Barbuda and the Virgin Islands. In Puerto Rico, hundreds of thousands of people – nearly 70% of the US territory’s utility customers – were left without power, the governor’s office said. Irma slammed the Turks and Caicos, and southeastern Bahamas early before it was off to pound northern Cuba and the central Bahamas.

Irma is expected be near the Florida Keys and South Florida by early Sunday, and many residents there have moved inland or to shelters. Many counties are under evacuation orders. “If you have been ordered to evacuate, leave now. Not tonight, not in an hour, now,” Gov. Rick Scott said Friday night. Staying in homes could subject residents to storm surge as high as 12 feet, the governor added. Forecasters have advised that the storm’s potential path could change and residents should realize that most of Florida will feel its impact.

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How do you evacuate millions? The logistics are staggering.

5.6 Million People Told To Evacuate Florida Due To Irma (AP)

Florida has asked 5.6 million people to evacuate ahead of Hurricane Irma, or more than one-quarter of the state’s population, according to state emergency officials. Andrew Sussman, the state’s hurricane program manager, said Friday the total includes people throughout the southern half of the state as well as those living in inland Florida in substandard housing who were also told leave due to the dangerous storm that will slam the state this weekend. Florida is the nation’s third-largest state with nearly 21million people according to the U.S. Census. For days Gov. Rick Scott has been urging residents to evacuate, especially those who live in coastal areas that could be flooded due to the walls of water expected from Irma’s arrival. The National Hurricane Center is warning Floridians that even if the storm seems to moving away from the East Coast in the latest tracks, don’t get complacent.

“This is a storm that will kill you if you don’t get out of the way,” said National Hurricane Center meteorologist and spokesman Dennis Feltgen. Feltgen says the storm has a really wide eye, with hurricane-force winds that cover the entire Florida peninsula and potentially deadly storm surges on both coasts. “Everybody’s going to feel this one,” Feltgen said. As Florida deals with a catastrophic, dangerous hurricane, it may have a financial storm to deal with. The annual budget forecast released this week shows, despite an ongoing economic recovery, Florida is expected to bring in just enough money to meet its spending needs. That forecast shows the state will have a surplus of just $52 million during the fiscal year that starts in July 2018. The new estimate does not take into account the potential effects that will come from Hurricane Irma.

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Ironically, Irma has sucked up so much warm surface water, it is lowering water temperatures and thereby ‘hampering’ the next storm up, José. Who was still noted as ‘close to Category 5’ overnight.

Hurricane Irma Thrives On Fateful Mix Of ‘Ideal’ Conditions (R.)

Hurricane Irma, a deadly, devastating force of nature, rapidly coalesced from a low-pressure blip west of Africa into one of the most powerful Atlantic storms on record, following an unhindered atmospheric path and fed by unusually warm seas. A combination of many factors, experts said on Friday, set the stage for Irma’s formation and helped the storm achieve its full thermodynamic potential, creating the monster tropical cyclone that wreaked havoc on the eastern Caribbean and may inflict widespread damage on Florida. “It got lucky,” said John Knaff, a meteorologist and physical scientist for the National Oceanic and Atmospheric Administration (NOAA). “This storm is in the Goldilocks environment for a major hurricane. It’s bad luck for whoever is in its path, but that’s what going on here.”

Brian Kahn, an atmospheric scientist and cloud specialist for NASA’s Jet Propulsion Laboratory, called the ocean conditions that spawned Irma “absolutely ideal.” Balmy water temperatures along Irma’s trajectory ran deep beneath the surface and slightly higher than normal, by as much as a degree Fahrenheit in places, providing ample fuel for the storm’s development, scientists said. Irma also encountered little if any interference in the form of wind shear – sudden changes in vertical wind velocity that can blunt a storm’s intensity – as it advanced at about 10 to 18 miles per hour, an ideal pace for hurricanes. Its fortuitous path of least resistance was essentially ordained by a well-placed atmospheric ridge of high pressure that steered the storm by happenstance through some of the Caribbean’s warmest waters as well as an area mostly devoid of wind shear.

The result was a gargantuan storm that rapidly grew to a Category 5, the top of the Saffir-Simpson scale of hurricane strength, with sustained winds of 185 miles per hour, the most forceful ever documented in the open Atlantic. It also ranks as one of just five Atlantic hurricanes known to have achieved such wind speeds during the past 82 years.

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“..of the 1 million or so mortgaged homeowners in the disaster area, more than 300,000 could become delinquent within two months..”

Harvey Won’t Help Flagging Housing Market (DDMB)

Something is up, or more likely down, with the U.S. housing market. And the reconstruction after Hurricane Harvey may not do much to help. Here’s the evidence: The latest take on home-builder sentiment showed that buyer traffic stubbornly remains in negative territory, despite some of the highest readings of the current cycle on builders’ expectations for sales gains in the next six months. In addition, recent mortgage rate declines have not led to an increase in applications to buy a home. Over the past few weeks, purchase activity has slumped to a six-month low, even though rates are at their lowest level since November. This defies a central tenet of the housing market that falling rates naturally lead to an uptick in sales. As for actual sales volumes, both new and existing July home sales missed forecasts by wide margins.

At an annualized rate of 571,000, new home sales dropped to a seven-month low, well off their long-term average pace of 727,000. The number of homes on the ground rose to 276,000 units, the highest since June 2009. At July’s pace, it would take 5.8 months to clear the inventory. The existing home sales report that followed was similarly weak, with closings sliding to the lowest since August 2016. Not only was the 5.44-million annualized pace 110,000 units below forecast, July’s figures reveal the all-important spring selling season was something of a bust, given July’s data captured contracts signed from April through June. Prices have been and remain the main impediment. The median new home sales price of $313,700 marked the highest July price on record and is up more than 6% over last year’s level.

At an annual gain of 6.2%, the best that can be said of the median sales price for previously occupied homes is that it’s off the record pace it set in June. Corroborating the slowdown in sales, both the Federal Housing Finance Agency and S&P Case-Shiller home-price indexes have softened unexpectedly. [..] About 1.2 million homes in and around Houston were at moderate to high risk for flooding but aren’t in a designated flood zone that would have required insurance. Many will qualify for federal disaster relief. Still, the government program comes in the form of low-interest rate loans to help shoulder the burden of repair costs at a time when many households are already buried in debt with precious little in savings; as the third quarter got underway, the saving rate fell to 3.5%, a fresh low for the current cycle.

Although many have drawn comparisons to the aftermath of Hurricane Katrina, Harvey will affect more than twice as many mortgaged properties. According to Black Knight Financial Services, of the 1 million or so mortgaged homeowners in the disaster area, more than 300,000 could become delinquent within two months, and 160,000 are at risk of becoming seriously delinquent inside a four-month period. As per the Mortgage Bankers Association, homes in foreclosure nationwide totaled 502,437 in the second quarter, exemplifying the very real potential for Harvey to leave a huge scar on the housing market.

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“A week or so after Irma has gone away, the ill-feeling that heaps this country like a swamp fever will still be there, driving the new American madness into precincts yet unknown.”

Swamp Fever (Jim Kunstler)

The destruction of Florida (and whatever else stands in the way up the line) will be as real as it gets. You’ve heard the old argument, I’m sure, that a natural disaster turns out to be a boon for the economy because so many people are employed fixing the damage. It’s not true, of course. Replacing things of value that have been destroyed with new things is just another version of the old Polish Blanket Gag: guy wants to make his blanket longer, so he cuts a foot off the top and sews it onto the bottom. The capital expended has to come from something and somewhere, and in this case it probably represents the much talked-about necessary infrastructure spending that is badly needed for bridges, roads, water and sewer systems, et cetera, in all the other parts of the USA that haven’t been hit by storms.

Instead, these places and the things in them will quietly inch closer to criticality without drawing much notice. The second major weather disaster this year may not be enough to induce holdouts to reconsider the issue of climate change, but it ought to provoke some questioning about the development pattern known as suburban sprawl, which even in its pristine form can be described as the greatest misallocation of resources in the history of the world. Surely there will be some debate as to whether Florida, or at least parts of it, gets rebuilt at all. The wilderness of strip malls, housing subdivisions, and condo clusters deployed along the seemingly endless six-lane highways that accumulated in the post-war orgy of development was an affront to human nature, if not to a deity, if one exists.

There are much better ways to build towns and we know how to do it. Ask the shnooks who paid a hundred bucks to walk down Disney’s Main Street the week before last. Apart from all that remains the personal tragedy that awaits, the losses of many lifetimes of work invested in things of value, of homes, of meaning, and of life itself. Many people who evacuated will return to… nothing, and perhaps many of them will not want to stay in such a fragile place. But the America they roam into in search of a place to re-settle is going to be a more fragile place, too. A week or so after Irma has gone away, the ill-feeling that heaps this country like a swamp fever will still be there, driving the new American madness into precincts yet unknown.

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Is it really capitalism that’s to blame? Do other systems not build where they should not? It seems a general human propensity to look at a desert or a swamp and declare ‘there’s nothing there’, so let’s build and exploit.

Capitalism, the State and the Drowning of America (CP)

What we need to understand is how capitalism has managed to reproduce itself since the Great Depression, but in a way that has put enormous numbers of people and tremendous amounts of property in harm’s way along the stretch from Texas to New England. The production of risk began during the era of what is sometimes called regulated capitalism between the 1930s and the early 1970s. This form of capitalism with a “human face” involved state intervention to ensure a modicum of economic freedom but it also led the federal government to undertake sweeping efforts to control nature. The motives may well have seemed pure. But the efforts to control the natural world, though they worked in the near term, are beginning to seem inadequate to the new world we currently inhabit.

The U.S. Army Corps of Engineers built reservoirs to control floods in Houston just as it built other water-control structures during the same period in New Orleans and South Florida. These sweeping water-control exploits laid the groundwork for massive real estate development in the post–World War II era. All along the coast from Texas to New York and beyond developers plowed under wetlands to make way for more building and more impervious ground cover. But the development at the expense of marsh and water could never have happened on the scale it did without the help of the American state. Ruinous flooding of Houston in 1929 and 1935 compelled the Corps of Engineers to build the Addicks and Barker Dams. The dams combined with a massive network of channels—extending today to over 2,000 miles—to carry water off the land, and allowed Houston, which has famously eschewed zoning, to boom during the postwar era.

The same story unfolded in South Florida. A 1947 hurricane caused the worst coastal flooding in a generation and precipitated federal intervention in the form of the Central and Southern Florida Project. Again, the Corps of Engineers set to work transforming the land. Eventually a system of canals that if laid end to end would extend all the way from New York City to Las Vegas crisscrossed the southern part of the peninsula. Life for the more than five million people who live in between Orlando and Florida Bay would be unimaginable without this unparalleled exercise in the control of nature. It is not simply that developers bulldozed wetlands with reckless abandon in the postwar period. The American state paved the way for that development by underwriting private accumulation.

Concrete was the capitalist state’s favored medium. But as the floods mounted in the 1960s, it turned to non-structural approaches meant to keep the sea at bay. The most famous program along these lines was the National Flood Insurance Program (NFIP) established in 1968, a liberal reform that grew out of the Great Society. The idea was that the federal government would oversee a subsidized insurance program for homeowners and in return state and local municipalities would impose regulations to keep people and property out of harm’s way.

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Central bankers lie when they say there is a recovery, but still keep buying assets by the trillions.

The “Real” Vampire Squid (Roberts)

According to the Bank for International Settlements: “Policy tools that involve the active use of central bank balance sheets – both the assets and the liabilities – can help monetary authorities to navigate the policy challenges during times of financial stress and when interest rates are close to zero.“ But wait, this is what Draghi said next: “The economic expansion, which accelerated more than expected in the first half of 2017, continues to be solid and broad-based across countries and sectors.” So, what is it?

If you actually have “solid and broad-based” economic growth across countries and sectors, why are you still flooding the system with “emergency measures,” and keeping interest rates near zero? That’s a rhetorical question. The reality is that Central Banks are keenly aware of the underlying economic weakness that currently exists as evidenced by the inability to generate inflationary pressures. They also understand that if the financial markets falter, the immediate feedback loop into the global economic environment will be swift and immediate. This is why there continue to be direct purchases of equities by the ECB and the BOJ. Which is also the reason why, despite nuclear threats, hurricanes, geopolitical tensions and economic disconnects, the markets remain within a one-day striking distance of all-time highs.

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Maduro trying to stay ahead of the CIA.

Venezuela’s Maduro Says Will Shun US Dollar In Favor Of Yuan, Others (R>)

Venezuelan President Nicolas Maduro said on Thursday his cash-strapped country would seek to “free” itself from the U.S. dollar next week, using the weakest of two official foreign exchange regimes and a basket of currencies. Maduro was refering to Venezuela’s “DICOM” official exchange rate in which the dollar buys 3,345 bolivars, according to the central bank. At the strongest official rate, one dollar buys just 10 bolivars, but on the black market the dollar fetches 20,193 bolivars, a spread versus the official rate that economists say has fostered corruption. A thousand dollars of local currency bought when Maduro came to power in 2013 would now be worth $1.20. “Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in an hours-long address to a new legislative superbody, without providing details of the new mechanism.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro said. The oil-rich nation is undergoing a major economic and social crisis, with millions suffering food and medicine shortages and what is believed to be the world’s highest inflation. Monthly inflation quickened to 34%, according to the opposition-controlled National Assembly. Critics say that instead of overhauling Venezuela’s failing currency controls or enacting reforms to shake the economy out of a fourth straight year of recession, Maduro has dug in and increased controls. On Thursday night, he increased the country’s minimum wage by 40%, taking it to just over $7 per month at the black market exchange rate. He also announced that around 50 “essential” products and services would have their prices frozen at new levels, auguring higher inflation and more shortages.

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Sorry, but this isn’t “a theory advanced in William R. Clark’s book Petrodollar Warfare”. This is general knowledge, has been for many years.

What Happens To Nations That Try To Ditch The Dollar (TAM)

Venezuela sits on the world’s largest oil reserves but has been undergoing a major crisis, with millions of people going hungry inside the country which has been plagued with rampant, increasing inflation. In that context, the recently established economic blockade by the Trump administration only adds to the suffering of ordinary Venezuelans rather than helping their plight. A theory advanced in William R. Clark’s book Petrodollar Warfare essentially asserts that Washington-led interventions in the Middle East and beyond are fueled by the direct effect on the U.S. dollar that can result if oil-exporting countries opt to sell oil in alternative currencies. For example, in 2000, Iraq announced it would no longer use U.S. dollars to sell oil on the global market. It adopted the euro, instead. By February 2003, the Guardian reported that Iraq had netted a “handsome profit” after making this policy change. Despite this, the U.S. invaded not long after and immediately switched the sale of oil back to the U.S. dollar.

In Libya, Muammar Gaddafi was punished for a similar proposal to create a unified African currency backed by gold, which would be used to buy and sell African oil. Though it sounds like a ludicrous reason to overthrow a sovereign government and plunge the country into a humanitarian crisis, Hillary Clinton’s leaked emails confirmed this was the main reason Gaddafi was overthrown. The French were especially concerned by Gaddafi’s proposal and, unsurprisingly, became one of the war’s main contributors. (It was a French Rafaele jet that struck Gaddafi’s motorcade, ultimately leading to his death). Iran has been using alternative currencies like the yuan for some time now and shares a lucrative gas field with Qatar, which may ultimately be days away from doing the same. Both countries have been vilified on the international stage, particularly under the Trump administration.

Nuclear giants China and Russia have been slowly but surely abandoning the U.S. dollar, as well, and the U.S. establishment has a long history of painting these two countries as hostile adversaries. Now Venezuela may ultimately join the bandwagon, all the while cozying up to Russia, as well (unsurprisingly, Venezuela and Iran were identified in William R. Clark’s book as attracting particular geostrategic tensions with the United States). The CIA’s admission that it intends to interfere inside Venezuela to exact a change of government — combined with Trump’s recent threat of military intervention in Venezuela and Vice President Mike Pence’s warning that the U.S. will not “stand by” and watch Venezuela deteriorate — all start to make a lot more sense when viewed through this geopolitical lens.

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It’s still unclear what exactly Beijing is banning.

Bitcoin Tumbles On Report China To Shutter Digital Currency Exchanges (R.)

Bitcoin fell sharply on Friday after a report from a Chinese news outlet said China was planning to shut down local crypto-currency exchanges, although analysts said this was just a temporary setback. Sources close to a cross regulators committee that oversees online finance activities told Chinese financial publication Caixin that authorities plan to shut key bitcoin exchanges in China. [..] two sources in direct contact with officials at three Chinese bitcoin exchanges – Beijing-based OKCoin, Shanghai-based BTC China, and Beijing-based Huobi – said the platforms told them that they have not heard anything from the Chinese government.

The news follows China’s move earlier this week to ban so-called “initial coin offerings,” or the practice of creating and selling digital currencies or tokens to investors in order to finance start-up projects. Greg Dwyer, business development manager at crypto-currency trading platform BitMEX, said there was confusion over whether China would close bitcoin exchanges following the ICO ban. [..] China’s Bitcoin exchanges said on Saturday they are still awaiting clarification from the authorities on a media report that they will be shut down.

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Nabiullina, the world’s smartest central banker, doesn’t seem to be seeing eye to eye with Putin on this.

Russia Faces Internal Battle Over Bitcoin (Forbes)

A lot can happen in month. Russian institutions went from preparing the Moscow Stock Exchange for the legal trading in crypto-currencies like bitcoin and ether, the two most popular ones used in Russia, to coming a hair away from following in China’s footsteps and banning initial coin offerings (ICO), a crypto-currency funding mechanisms for new tech companies. “The use of crypto-currency as a surrogate for the ruble in trading in goods and services, in our opinion, has a risk of undermining the circulation of money,” central banker Elvira Nabiullina told Russian newswire Tass on Friday. “We will not allow the use of crypto-currency as a surrogate money,” she said without mentioning ICOs in particular. One can only speculate that those crowdfunding platforms are on her radar.

Nabiullina is arguably one of the most powerful women in Russia. She has Vladimir Putin’s ear on all things economic and financial. Putin defers to her on such matters. This summer, Putin met with Ethereum developer and CEO Vitalik Buterin to discuss developments in so-called blockchain technologies, the tech platforms that provide the backbone to digital money. Buterin later told a local newspaper in Tatarstan that he felt Putin was opening to these new technologies as a matter of Russian national tech strategy. “Many people at different levels of the Russian government are open to crypto-currencies. I think my meeting with Putin helped him see things clearer,” Buterin was quoted as saying in Tatarstan’s online daily Realnoe Vremya. This is the second time this week that the Russian Central Bank has come out against crypto-currencies.

“Crypto-currencies are issued by an unlimited circle of anonymous entities. Due to the anonymous nature of the issuance of crypto-currency, citizens and legal entities can be involved in illegal activities, including legalization (laundering) of proceeds from crime and financing of terrorism,” the Russian central bank said in a statement issued on September 4. “Given the high risks of circulation and use of crypto-currency, the Bank of Russia considers it premature to admit crypto-currencies, as well as any financial instruments nominated or associated with crypto-currencies, into circulation and used at organized trades such as clearing and settlement infrastructure within the territory of the Russian Federation.” Nabiullina likened the rapid expansion of crypto-currency to the gold rush. Others have referred to it as a bubble. “For a long time there was very little growth (in this technology), and now we see something like a gold rush,” she warned.

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Why Google and Facebook won’t be regulated anythime soon. They’re part of the CIA now.

Artificial Intelligence Fuels New Global Arms Race (Wired)

For many Russian students, the academic year started last Friday with tips on planetary domination from President Vladimir Putin. “Artificial intelligence is the future, not only for Russia but for all humankind,” he said, via live video beamed to 16,000 selected schools. “Whoever becomes the leader in this sphere will become the ruler of the world.” Putin’s advice is the latest sign of an intensifying race among Russia, China, and the US to accumulate military power based on artificial intelligence. All three countries have proclaimed intelligent machines as vital to the future of their national security. Technologies such as software that can sift intelligence material or autonomous drones and ground vehicles are seen as ways to magnify the power of human soldiers.

“The US, Russia, and China are all in agreement that artificial intelligence will be the key technology underpinning national power in the future,” says Gregory C. Allen, a fellow at nonpartisan think tank the Center for a New American Security. He coauthored a recent report commissioned by the Office of the Director of National Intelligence that concluded artificial intelligence could shake up armed conflict as significantly as nuclear weapons did. In July, China’s State Council released a detailed strategy designed to make the country “the front-runner and global innovation center in AI” by 2030. It includes pledges to invest in R&D that will “through AI elevate national defense strength and assure and protect national security.” The US, widely recognized as home to the most advanced and vibrant AI development, doesn’t have a prescriptive roadmap like China’s.

But for several years the Pentagon has been developing a strategy known as the “Third Offset,” intended to give the US, through weapons powered by smart software, the same sort of advantage over potential adversaries that it once held in nuclear bombs and precision-guided weapons. In April, the Department of Defense established the Algorithmic Warfare Cross-Functional Team to improve use of AI technologies such as machine vision across the Pentagon. Russia lags behind China and the US in sophistication and use of automation and AI, but is expanding its own investments through a military modernization program begun in 2008. The government’s Military Industrial Committee has set a target of making 30 percent of military equipment robotic by 2025. “Russia is behind the curve—they are playing catchup,” says Samuel Bendett, a research analyst who studies the country’s military at the Center for Naval Analyses.

Algorithms good at searching holiday photos can be repurposed to scour spy satellite imagery, for example, while the control software needed for an autonomous minivan is much like that required for a driverless tank. Many recent advances in developing and deploying artificial intelligence emerged from research from companies such as Google. China’s AI strategy attempts to directly link commercial and defense developments in AI. For example, a national lab dedicated to making China more competitive in machine learning that opened in February is operated by Baidu, the country’s leading search engine.

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It’s not just about warfare either, it’s about tracking your own people.

Data Swamped US Spy Agencies Put Hopes On Artificial Intelligence (AFP)

Swamped by too much raw intel data to sift through, US spy agencies are pinning their hopes on artificial intelligence to crunch billions of digital bits and understand events around the world. Dawn Meyerriecks, the Central Intelligence Agency’s deputy director for technology development, said this week the CIA currently has 137 different AI projects, many of them with developers in Silicon Valley. These range from trying to predict significant future events, by finding correlations in data shifts and other evidence, to having computers tag objects or individuals in video that can draw the attention of intelligence analysts. Officials of other key spy agencies at the Intelligence and National Security Summit in Washington this week, including military intelligence, also said they were seeking AI-based solutions for turning terabytes of digital data coming in daily into trustworthy intelligence that can be used for policy and battlefield action.

AI has widespread functions, from battlefield weapons to the potential to help quickly rebuild computer systems and programs brought down by hacking attacks, as one official described. But a major focus is finding useful patterns in valuable sources like social media. Combing social media for intelligence in itself is not new, said Joseph Gartin, head of the CIA’s Kent School, which teaches intelligence analysis. “What is new is the volume and velocity of collecting social media data,” he said. In that example, artificial intelligence-based computing can pick out key words and names but also find patterns in data and correlations to other events — and continually improve on that pattern finding.

AI can “expand the aperture” of an intelligence operation looking for small bits of information that can prove valuable, according to Chris Hurst, the chief operating officer of Stabilitas, which contracts with the US intelligence community on intel analysis. “Human behavior is data and AI is a data model,” he said at the Intelligence Summit. “Where there are patterns we think AI can do a better job.” The volume of data that can be collected increases exponentially with advances in satellite and signals intelligence collection technology. “If we were to attempt to manually exploit the commercial satellite imagery we expect to have over the next 20 years, we would need eight million imagery analysts,” Robert Cardillo, director of the National Geospatial-Intelligence Agency, said in a speech in June.

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The EU is full of people who have no say. Ultimately, only Merkel does, or rather, those who keep her in power. The Eurogroup is not accountable to anyone but her, because it doesn’t even officially exist.

EU Brushes Off ‘Democratic Scandal’ Of Greek Bailout (EUO)

The European Commission has defended its role in the Greek bailout despite Pierre Moscovici, the EU finance commissioner, having called the Eurogroup “a democratic scandal.” The Eurogroup is a club of eurozone states’ finance ministers presided over by Dutch finance minister Jeroen Dijsselbloem but dominated in practice by his German counterpart, Wolfgang Schaeuble. It imposed its will on Greece when the country was teetering on the verge of economic collapse and a eurozone exit in 2015, in exchange for access to bailout funds from the European Commission, the ECB, and IMF. A Commission spokesperson on Tuesday (5 September) noted that the EU executive had “invested a lot of time and effort and resources to keep Greece in the eurozone.” But Pierre Moscovici, the EU finance commissioner, took a more critical line.

Over the weekend, he described the Eurogroup as a “democratic scandal”, given that its talks are held behind closed doors and without any public accountability. “Let’s face it, the Eurogroup as we know it is rather a pale imitation of a democratic body,” he said in his blog on Saturday (2 September). Moscovici said the governance behind the EU’s economic and monetary union had also lacked proper democratic oversight. “Sometimes in the past, when we look at Greece, it has been close to a democratic scandal,” he said. Moscovici’s admission is all the more striking given the recent publication of a book by Greece’s former finance minister, Yanis Varoufakis. Varoufakis, who steered Greek talks at the Eurogroup until his resignation in July 2015, provides a detailed account of the Commission’s double-standards during the initial rounds.

He said that Moscovici would agree in private to easing the austerity measures but, in the Eurogroup, the Commission’s representative would then reject everything in favour of harsh measures driven by Dijsselbloem and Schaeuble. In one private meeting in Dijsselbloem’s office, Varoufakis said that Moscovici had even capitulated to Dijsselbloem, despite having previously agreed to concessions that would render the Greek programme more flexible. Dijsselbloem refused to agree to the measures proposed by the Commission. Varoufakis said that Moscovici had responded to Dijsselbloem with “whatever the Eurogroup president says” in a voice that quavered with dejection. “During the Eurogroup meeting, whenever I looked at him [Moscovici] I imagined the horror Jacques Delors or any of the EU’s founding fathers would have felt had they observed the scene in Jeroen’s [Dijsselbloem’s] office,” writes Varoufakis.

[..] Most of the bailout funds have gone towards paying off international loans and proved beneficial to German and French banks that were massively exposed to Greek public debt in the lead up to the financial crisis. According to one study, Germany had also ended up with large profits, yielding interest savings on German bonds of more that €100 billion during the period of 2010 to 2015 from the Greek debt crisis.

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Sep 022017
 
 September 2, 2017  Posted by at 8:58 am Finance Tagged with: , , , , , , , , , ,  


René Magritte Promenades d’Euclid 1955

 

Whoever Leads In AI Will Rule The World – Putin (RT)
Deflation Is Already Here – Albert Edwards (ZH)
Fiscal Austerity After The Great Recession Was A Catastrophic Mistake (Coppola)
Ugly Jobs Report: August Payrolls Miss (ZH)
Deciphering The Swamp’s Unemployment Deception (Feierstein)
The Working Class Can’t Afford the American Dream (HowMuch)
Central Banks Must Be Ready With Cash To Calm Brexit Nerves – Bank Lobby (R.)
How to Crack the Code on Gold – Rickards (DR)
Trump Seeks $7.85 Billion For Harvey Relief, Warns On Debt Ceiling (R.)
Harvey: “Unprecedented” Disruptions To Supplies Of “Essential” Chemicals (ZH)
Irma Intensifies Over The Atlantic (R.)

 

 

Plenty scary thought.

Whoever Leads In AI Will Rule The World – Putin (RT)

Vladimir Putin spoke with students about science in an open lesson on September 1, the start of the school year in Russia. He told them that “the future belongs to artificial intelligence,” and whoever masters it first will rule the world. “Artificial intelligence is the future, not only for Russia, but for all humankind. It comes with colossal opportunities, but also threats that are difficult to predict. Whoever becomes the leader in this sphere will become the ruler of the world,” Russian President Vladimir Putin said. However, the president said he would not like to see anyone “monopolize” the field.

“If we become leaders in this area, we will share this know-how with entire world, the same way we share our nuclear technologies today,” he told students from across Russia via satellite link-up, speaking from the Yaroslavl region. During the 45-minute open lesson (the standard academic hour in Russia), Putin also discussed space, medicine, and the capabilities of the human brain, pointing out the importance of cognitive science. “The movement of the eyes can be used to operate various systems, and also there are possibilities to analyze human behavior in extreme situations, including in space,” Putin said, adding that he believes these studies provide unlimited opportunities. The open lesson was attended by students and teachers from 16,000 schools, Rossiyskaya Gazeta reports. The total audience exceeded one million.

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“..never since the mid-1960s, when records began, has core CPI (less food, energy and shelter) declined over a six-month period..”

Deflation Is Already Here – Albert Edwards (ZH)

At the start of the year, we were surprised when SocGen’s Albert “Ice Age” Edwards, the biggest perma-deflationist on Wall Street, flipped his outlook on the US economy, and said he now expected a fast spike in inflation driven by wage growth, which in turn would prompt an even more accelerated tightening cycle by the Fed. We did not see it, and said so, pointing out that the bulk of US job growth in recent years has been among industries that have little to no wage power. More than half a year later, and several months after a puzzled Edwards asked “Where Is The Wage Inflation?”, the SocGen strategist has finally thrown in the towel, and in a note released this morning, admits he was wrong, or as he puts it “I was too optimistic”, to wit:

“At this point in the US economic cycle a tight labour market would normally be producing a notable upturn in wage and CPI inflation. This would usually prompt the Fed into a tightening cycle that would typically end in a surprise recession. This is exactly what I expected to occur at the start of this year and I thought it would be that recession that would tip the US into outright deflation ? but I was wrong. I was too optimistic!” And while there has been a modest improvement in average hourly earnings according to the BLS, if not according to the BEA’s wage data, which according to the just released Personal Income data showed another drop in both private and government worker wages…

… broader inflation trends continue to disappoint. Furthermore, when digging through the recent CPI data, Edwards noticed something unexpected: as he writes, although wages have accelerated due to the tight labor market, the last six months has seen consistent downside surprises. And then this: “this has come hand-in-hand with an unprecedented slump in underlying US CPI inflation into outright deflation – in stark contrast to the eurozone where core CPI inflation has decisively risen.” Putting the finding in context, the “wrong, too optimistic” Edwards writes that never since the mid-1960s, when records began, has core CPI (less food, energy and shelter) declined over a six-month period, as demonstrated by the red line in the chart below. Or, as he summarizes, “Deflation did not need another US recession to emerge. It is already here.”

the SocGen strategist has some advice to the Fed: “If I were a Fed Governor I would be pretty shocked/concerned/bemused at inflation developments this year. However confident the Fed is of a self-sustaining-recovery, there is growing evidence of a slide into outright deflation even ahead of the next recession which will likely unambiguously take us deep into deflationary territory.” Imminent deflationary prints notwithstanding, Edwards still thinks rates should be normalised. Why? “Well, because the longer the current credit excesses are allowed to continue, the deeper the next recession and deflationary bust will ultimately be.”

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“What a complete, utter, disastrous failure of public policy, not just for Greece but for the world.”

Fiscal Austerity After The Great Recession Was A Catastrophic Mistake (Coppola)

In a new paper presented at Jackson Hole last week, the economists Alan Auerbach and Yuriy Gorodnichenko showed that, contrary to popular belief, fiscal expansion after a major financial shock such as that in 2008 did not cause debt/GDP ratios to rise. In fact, the researchers found that debt could become more sustainable, not less, after fiscal stimulus: For a sample of developed countries, we find that government spending shocks do not lead to persistent increases in debt-to-GDP ratios or costs of borrowing, especially during periods of economic weakness. Indeed, fiscal stimulus in a weak economy can improve fiscal sustainability along the metrics we study. Fiscal stimulus works. What a pity we did not allow ourselves to do it, much. But what about Greece? Surely fiscal austerity was necessary there?

Well, maybe. “The experience of Greece and other countries in Southern Europe is a grave warning about the political risks and limits of fiscal policy,” say the researchers. “Bridges to nowhere, “pet” projects and other wasteful spending can outweigh any benefits of countercyclical fiscal policy.” But they nevertheless find that fiscal expansion works even when debt/GDP levels are high. “The penalty for a high debt-to-GDP ratio does not appear to be high at the debt levels experienced historically for developed countries,” they say. So when Greece’s debt was a mere 100% of GDP, fiscal expansion could have been a good strategy. Now, of course, Greece’s debt/GDP ratio is off the chart, because of the aforementioned catastrophic failure of public policy. The researchers warn that their results are uncertain at very high debt/GDP levels. So fiscal expansion might now be too late for Greece. What a tragedy.

“We have been giving catastrophically bad advice to countries with high debt to GDP ratios”, said Jason Furman, the former chair of Barack Obama’s Council of Economic Advisers who is now at Harvard. Too right. And Greece has paid the price. But it is not just Greece that has paid. If Auerbach and Gorodnichenko are right, then the policy path since 2010 has been wrong for many more countries. They have truncated their recoveries and hurt their populations by embarking on premature fiscal consolidation, while cudgeling central banks into somehow conjuring up a recovery that monetary policy is incapable of producing at the lower bound. As a result, there has been a prolonged and wholly unnecessary global slowdown, which will leave lasting scars, particularly on the young. What a complete, utter, disastrous failure of public policy, not just for Greece but for the world.

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Pre-Harvey ugly.

Ugly Jobs Report: August Payrolls Miss (ZH)

[..] moments ago the BLS reported that in August just 156K jobs were created, a big miss to the 180K expected, and following a sharp downward revision to June and July, which were revised to 210K and 189K, respectively, a 41K drop combined. But don’t worry, the worse, the better as the more disappointing the economic data, the less likely the Fed will hike in September, December, or ever for that matter. And keep in mind, today’s data did not include the Harvey devastation, which will assure no rate hikes from the Fed for months, if not decades to come. Not helping matters – for the economy, if not the stock market which now once again loves bad data – was the Household Survey, according to which the number of employed Americans declined by 74,000 to 153,439K. On an annual basis, the increase in the employment level dropped to 1.2%, the lowest since March.

The unemployment rate also disappointed, rising from 4.3% to 4.4%, while the avg hourly earnings missed, increasing by 2.5% Y/Y in August, below the 2.6% estimate and the same as July. The sequential increase in earnings was just 0.1%, also below the 0.2% expected, and far below the 0.3% in July. Furthermore, since average weekly hours declined also, from 34.5 to 34.4, average weekly earnings declined outright from $909.42 to $907.82 in August. Furthermore, average weekly earnings rose just 2.2% Y/Y, the lowest rate of increase since January.

While the labor force participation rate remained unchanged at 62.9%, the number of Americans not in the labor force increased once again, growing by 128K in August to 94.785 million.

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Mitch wants investigations. And not the ones going on right now.

Deciphering The Swamp’s Unemployment Deception (Feierstein)

I strongly see the need for a full and open inquiry into Hillary’s illegal server, Clinton’s leaking of top secret documents, the pay-to-play Clinton Foundation, the entire ‘Fake news’ Russian collusion affair and James Comey’s ‘Fake FBI investigation’ with a predetermined outcome. I am not taking a partisan position here. However, I am guessing many people will reason: ‘The Republicans are bashing the Democrats over these inquiries; this guy Feierstein wants an inquiry, so he must be a Republican.’ I don’t blame people for making these assumptions. Our whole country has become infected with this kind of twisted logic. Our entire political debate has caught the virus. Yet, it makes no sense. No sense at all. Here are two facts and one conclusion:

Fact One : Hillary had an illegal server in the basement of her home that contained ‘Top-Secret Emails.’ Fact Two : Senators Grassley and Graham’s statement regarding FBI’s James Comey’s exoneration of Clinton read: “Conclusion first, fact-gathering second—that’s no way to run an investigation. The FBI should be held to a higher standard than that, especially in a matter of such great public interest and controversy.” Conclusion : These allegations are serious enough to deserve an open investigation, period. Partisan bickering and political spin is simply a diversion from the action that American people deserve — and the truth that the American people require.

I say all this because I’m about to call attention to another government department: the Bureau of Labor Statistics. Now, I know that Democrats are currently bashing President Trump over everything he does. I know that Trump is bashing back. But, people, the issue at stake is the creation of jobs in America and the way those things are being recorded and reported. The issues I’m about to address were present under George W. Bush and Barack Obama. They haven’t changed under Donald Trump. The depression which struck this country in the wake of financial crisis 1.0 might have peaked under a Democrat, but it was born in a Republican era. If you yourself are so partisan that you want to make fine distinctions about these things, you should go ahead and make them. Me: I see two peas in a pod.

Good. Preamble over. Here’s the issue: “The number of jobs created in America declined by 74,000 to 153,439 in August. A horrible number, far below expectations. The jobless rate rose to 4.4 and hourly earnings missed increasing only 2.5% year-over-year. Average hours worked also declined, seeing as weekly wages followed suit.” Yet, central bank manipulated stocks are surging, on the terrible economic news, in anticipation of more global central bank easing. News and economic data are irrelevant in our “rigged” system as market participants eagerly line up like heroin addicts awaiting another federal reserve fix.

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As if anyone still believes in that dream.

The Working Class Can’t Afford the American Dream (HowMuch)

The national conversation in the U.S. is focused squarely on improving the lives of people in the working class. The debate revolves around exactly how to do that. Politicians and pundits have all sorts of ideas, from efforts to save jobs, create tax cuts, subsidize housing, and provide universal healthcare. Thing is, people don’t even agree on how to define the working class, much less how their living conditions stack up across the country. We created a data visualization to illustrate this complex situation. Each bubble represents a city. The color corresponds to the amount of money a typical working-class family would have left over at the end of the year after paying for their living costs, like housing, food and transportation.

The darker the shade of red, the worse off you are. The darker the shade of green, the better off you are. The size of the bubble also fits on a sliding scale—large and dark red means the city is totally unaffordable. Bigger dark green bubbles likewise indicate a city where the working class can get by. The data come from our new True Cost of Living Tool. It’s kind of a big deal because it lets you drill down to a specific city and search through layers of relevant information to understand exactly how much money it takes to live in any given area. We stitched together a variety of different reputable sources, like the Bureau of Labor Statistics for income levels, the National Bureau of Economic Research for tax data, and the U.S. Department of Agriculture for the cost of food. Basically, you can check our work.

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Banks say central banks must be ready to give money to … banks.

Central Banks Must Be Ready With Cash To Calm Brexit Nerves – Bank Lobby (R.)

Central banks should be ready to inject cash into the financial markets to keep them stable after Britain leaves the European Union in 2019, a draft report from a bank industry lobby said. The Association for Financial Markets in Europe (AFME), in a draft report seen by Reuters, said that regulators, central banks and national governments should continue to support financial market stability between Britain’s departure from the EU and start of new trading terms. “This may require particular attention during the uncertain period around Brexit, and in particular during the transition, and may involve more regular market communications and targeted support in case of market need, for example, access to liquidity schemes,” the report said. This and other steps would be needed to minimise disruption, it said. AFME’s report also provides a blueprint for a transition phase after Britain’s EU exit in March 2019.

This would include a “bridging phase” to avoid “short-term disruption” until new trading terms are ratified and an “adaptation phase” for moving to the new terms. The report did not specify a time frame for the transition but said it should be limited. “It is crucial that clarity is provided as soon as possible on a transitional period, and ideally before the end of this year,” AFME said. AFME wants existing market arrangements maintained throughout the transitional period, reflecting worries among bankers that they might have to comply first with a transition period and then the new trading terms. “This means that existing legislation, regulation, permissions and authorisations should continue to be effective during the transitional period,” it said. Company bosses also want Britain to negotiate a staggered departure from the EU by the end of this year or they will have to push ahead with plans that assume they will lose all access to the single market after March 2019.

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Rickards sticks to his guns.

How to Crack the Code on Gold – Rickards (DR)

“Don’t underestimate the extent to which gold is being impacted by hedge funds, leverage players, and others that are in the mix for the current high in gold. They don’t really care if it is gold, soybeans, etc. but it is simply another commodity. They receive a nice profit with tight profits, tight stops.” “The bigger picture to look as here is that gold hit an interim low last December and has been grinding higher ever since. Now gold is up over $200 an ounce and is one of the best performing assets in 2017. There’s a pattern of higher highs and shows a very positive occurrence.” [..] “This all relates to currency wars. I think of gold by weight.”

“When most people look at the cost of gold they relate it to the dollar. That gives the dollar a privilege to say that it is the way to count everything. It is also possible to count gold in euro, yen or even bitcoin. I think of gold as money. These are all just cross rates. When I see a higher dollar price for gold, I think of the dollar as being weaker. Likewise, if I see a lower price for gold it just shows that gold is constant and the dollar got stronger.” “There are three things going on right now in gold. There’s a fear trade, there’s technicals with supply shortages and ultimately a weaker dollar. If you want to know where the dollar price for gold is going, ask yourself where the dollar is headed. As the dollar gets weaker due to Federal Reserve Chair Yellen’s plan to tighten rates into weakness. We’re getting disinflation, not inflation and the desire from the Fed is a weaker dollar.”

[..] “I expect to see gold hit $5,000 and eventually to $10,000 an ounce. Maybe not tomorrow or a couple of years but that is the fundamental price of gold as money.” [..] “Bitcoin is a very small market cap compared to gold. I don’t think it has much impact on gold and looks like a bubble right now.” “As someone who has been around Wall Street a long time I’ve seen a lot of different tricks of the trade and frauds that come and go. I am seeing all of the various schemes in bitcoin right now. There’s good forensic evidence that there are people doing wash sales right now and the suckers don’t know they are getting sucked in. Gold is still the ultimate safe haven.”

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That’s just emergency funding. Washington will need to find ways to help the uninsured.

Trump Seeks $7.85 Billion For Harvey Relief, Warns On Debt Ceiling (R.)

U.S. President Donald Trump has asked Congress for an initial $7.85 billion for Hurricane Harvey recovery efforts, the White House budget director said on Friday, adding that failure to raise the budget ceiling may hinder disaster relief spending. In a letter to U.S. House of Representatives Speaker Paul Ryan, White House budget director Mick Mulvaney said the request included $7.4 billion for the Federal Emergency Management Agency’s Disaster Relief Fund and $450 million for the Small Business Administration’s disaster loan program. “This request is a down-payment on the president’s commitment to help affected states recover from the storm, and future requests will address longer-term rebuilding needs,” Mulvaney said. Trump had been expected to request $5.95 billion for the recovery effort after Harvey flooded areas of Houston and other parts of Texas.

The White House has said that it would make multiple requests for aid from Congress to fund the Harvey recovery effort. White House homeland security adviser Tom Bossert told reporters on Thursday aid funding requests would come in stages as more became known about the impact of the storm. Texas Governor Greg Abbott has said that his state may need more than $125 billion. Bossert said the Trump administration wanted Congress to pass the disaster relief measure on its own and not add it to other measures, such as the effort to raise the debt ceiling. The U.S. government has a statutory limit on how much money it can borrow to cover the budget deficit that results from Washington spending more than it collects in taxes. Only Congress can raise that limit. Mulvaney urged Congress to act “expeditiously to ensure that the debt ceiling does not affect these critical response and recovery efforts.”

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Ethylene, polypropylene. It’s silly, but we ‘need’ them.

Harvey: “Unprecedented” Disruptions To Supplies Of “Essential” Chemicals (ZH)

The unprecedented destruction wrought by Hurricane Harvey will impact the US economy in ways may not be immediately apparent. Until recently, coverage of the storm’s impact has focused on property damage and the impact on the energy industry. But in a story published Friday, Bloomberg explains the devastating impact the storm has had on Texas’s chemicals industry, which is already causing supply-chain headaches for American manufacturers who’re struggling to source the chemicals required to produce plastics and other components used in everything from milk jugs to car parts. Indeed, if Texas’s chemicals plants are closed for an extended period, production at a potentially huge number of American manufacturers to grind to a halt.

More than 60% of the US’s production capacity for ethylene – one of the most important chemical building blocks for American manufacturers – has been taken offline by the storm, a development that could ripple across the US manufacturing industry. “Texas alone produces nearly three quarters of the country’s supply of one of the most basic chemical building blocks. Ethylene is the foundation for making plastics essential to U.S. consumer and industrial goods, feeding into car parts used by Detroit and diapers sold by Wal-Mart. With Harvey’s floods shutting down almost all the state’s plants, 61% of U.S. ethylene capacity has been closed, according to PetroChemWire.” Ethylene, the gas given off by fruit as it ripens, occurs naturally, but it’s also a crucial product of the $3.5 trillion global chemical industry, with factories pumping out 146 million tons last year.

Processing plants turn the chemical into polyethylene, the world’s most common plastic, which is used in garbage bags and food packaging. When transformed into ethylene glycol, it’s the antifreeze that keeps engines and airplane wings from freezing in winter. It’s used to make polyester for both textiles and water bottles. Ethylene is an ingredient in vinyl products such as PVC pipes, life-saving medical devices and sneaker soles. It helps combat global warming with polystyrene foam insulation and lighter, fuel-saving plastic auto parts. It’s used to make the synthetic rubber found in tires. It’s even an ingredient in house paints and chewing gum. Ethylene and its derivatives account for about 40% of global chemical sales, according to Hassan Ahmed, an analyst at Alembic Global Advisors. And the Gulf Coast is a crucial player in the global market: US production accounts for one of every five tons on the market. International ethylene plants were running nearly full out to meet rising demand before Harvey.

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‘T is the season. The lesser Antilles could get hit bigtime.

Irma Intensifies Over The Atlantic (R.)

As Harvey diminishes a new storm has emerged. Irma, the fourth hurricane of the 2017 Atlantic hurricane season, has strengthened over the eastern Atlantic to become a Category 3 storm, the U.S. National Hurricane Center said in its latest advisory Thursday. Irma is forecast to intensify Thursday night and is projected to be a very dangerous hurricane for the next few days, the Miami-based center said. Irma is located about 1,845 miles east of the Leeward Islands and has maximum sustained winds of 115 mph, the NHC said. NHC forecast models were showing it heading for the U.S. territory of Puerto Rico, the Dominican Republic, and neighboring Haiti with possible landfall by the middle of next week.

While currently a Category 3 storm, Irma’s winds could strengthen to become a Category 4 storm in five days’ time, the Miami Herald reported. Irma will not reach the eastern Caribbean Lesser Antilles islands until the middle of next week, and it is too soon to determine whether or not the storm will pose a threat to the U.S., according to The Weather Channel. Still, the potential for a U.S. landfall should prompt all who may be affected in those areas to closely monitor the storm in the coming days, The Weather Channel said. “Irma is forecast to become a major hurricane by tonight and is expected to be an extremely dangerous hurricane for the next several days,” the NHC said Thursday, while adding there is no current risk to land from the storm.

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Aug 012017
 
 August 1, 2017  Posted by at 8:45 am Finance Tagged with: , , , , , , , , , , ,  


Paul Cézanne Young Italian Woman at a Table c1900

 

How Can The Richest Nation On Earth Be Lagging So Far Behind Its Peers? (BBG)
With LIBOR Dead, $400 Trillion In Assets Are Stuck In Limbo (ZH)
Amazon And The 110% Surge In US Retail Bankruptcies (ZH)
No Bubble in Stocks But Look Out When Bonds Pop, Greenspan Says (BBG)
Trump Got This One Right: Shutting Down The CIA’s Ghost War In Syria (WS)
The Tweet That Is Shaking the War Party (David Stockman)
Pentagon Offers To Arm Ukraine, McCain Delighted (ZH)
Killing Them is Killing Us (Robert Gore)
Scaramucci’s China Dealings Pushed Him Out Of White House – Rickards (CNBC)
Unsecured UK Consumer Credit Tops £200 Billion For First Time Since 2008 (G.)
Moody’s Warns Of Growing UK Household Debt As Brexit Downturn Looms (Ind.)
Facebook AI Creates Its Own Language In Creepy Preview Of Our Future (F.)
Narratives Are Not Truths (Jim Kunstler)
Aid Groups Snub Italian Code Of Conduct On Mediterranean Rescues (G.)

 

 

I blame Darwin.

How Can The Richest Nation On Earth Be Lagging So Far Behind Its Peers? (BBG)

What do the economists at the IMF see when they look at the U.S.? An economy in the midst of a long expansion (“its third longest expansion since 1850”), with “persistently strong” job growth, “subdued” inflation and something close to “full employment.” But also this: For some time now there has been a general sense that household incomes are stagnating for a large share of the population, job opportunities are deteriorating, prospects for upward mobility are waning, and economic gains are increasingly accruing to those that are already wealthy. This sense is generally borne out by economic data and when comparing the U.S. with other advanced economies. The IMF then goes on to compare the U.S. with 23 other advanced economies in the OECD in this chart:

[..] the overall point is that the U.S. has been losing ground relative to other OECD members in most measures of living standards. 1 And in the areas where the U.S. hasn’t lost ground (poverty rates, high school graduation rates), it was at or near the bottom of the heap to begin with. The clear message is that the U.S. – the richest nation on Earth, as is frequently proclaimed, although it’s actually not the richest per capita – is increasingly becoming the developed world’s poor relation as far as the actual living standards of most of its population go. This analysis is contained in the staff report of the IMF’s annual “consultation” with the U.S., which was published last week. Another IMF report released last week, an update to its World Economic Outlook that downgraded short-term growth forecasts for the U.S. and U.K., got a lot more attention. But the consultation report is more interesting.

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With Libor shut down to prevent revelations of involvement in manipulation by ‘higher-ups’, what will these same ‘higher-ups’ opt to use instead? Who has the political clout to make the decisions?

They better hurry: “moving an existing $9.6 trillion retail mortgage market, $3.5 trillion commercial real estate market, $3.4 trillion loan market and a $350 trillion derivatives market is a herculean task.”

With LIBOR Dead, $400 Trillion In Assets Are Stuck In Limbo (ZH)

In an unexpected announcement, earlier this week the U.K.’s top regulator, the Financial Conduct Authority which is tasked with overseeing Libor, announced that the world’s most important, and manipulated, benchmark rate will be phased out by 2021, catching countless FX, credit, derivative, and other traders by surprise because while much attention had been given to possible LIBOR alternatives across the globe (in a time when the credibility of the Libor was non-existent) this was the first time an end date had been suggested for the global benchmark, which as we explained on Thursday, had died from disuse over the past 5 years.

Commenting on the decision, NatWest Markets’ Blake Gwinn told Bloomberg that the decision was largely inevitable: “There had never been an answer as to how you get market participants to adopt a new benchmark. It was clear at some point authorities were going to force them. The FCA can compel people to participate in Libor. What can ICE do if they’ve lost the ability to get banks to submit Libor rates?” And while the rationale for replacing Libor is well understood (for those unfamiliar, read David Enrich’s “The Spider Network”), there are still no clear alternatives. Ultimately, as Bank of America calculates, “moving an existing $9.6 trillion retail mortgage market, $3.5 trillion commercial real estate market, $3.4 trillion loan market and a $350 trillion derivatives market is a herculean task.”

And with nearly half a quadrillion dollar in securities referncing a benchmark that is set to expire in under 5 years, the biggest problem is one of continuity: as Bloomberg calculated last week, in addition to the hundreds of trillion in referencing securities, there is also currently an open interest of 170,000 eurodollar futures contracts expiring in 2022 and beyond – contracts that settle into a benchmark that will no longer exist. “What are existing contract holders and market makers supposed to do?” Then there is the question of succession: with over $300 trillion in derivative trades, and countless billions in floating debt contracts, referening Libor, the pressing question is what will replace it, and how will the transition be implemented seamlessly?

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Tech monopolies are devastating economies.

Amazon And The 110% Surge In US Retail Bankruptcies (ZH)

As Amazon flirts with a $500 billion market cap, letting Jeff Bezos try on the title of world’s richest man on for size if only for a few hours, for Amazon’s competitors it’s “everything must go” day everyday, as the bad news in the retail sector continue to pile up with the latest Fitch report that the default rate for distressed retailers spiked again in July. According to the rating agency, the trailing 12-month high-yield default rate among U.S. retailers rose to 2.9% in mid-July from 1.8% at the end of June, after J. Crew completed a $566 million distressed-debt exchange. Meanwhile, with the shale sector flooded with Wall Street’s easy money, the overall high-yield default rate tumbled to 1.9% in the same period from 2.2% at the end of June as $4.7 billion of defaulted debt – mostly in the energy sector – rolled out of the default universe.

In a note, Fitch levfin sr. director Eric Rosenthal, said that “even with energy prices languishing in the mid $40s, a likely iHeart bankruptcy and retail remaining the sector of concern, the broader default environment remains benign.” He’s right: after the energy sector dominated bankruptcies in the first half of 2016, accounting for 21% of Chapter 11 cases, in H1 2017 the worst two sectors for bankruptcies are financials and consumer discretionary. And if recent trends are an indication, the latter will only get worse as Fitch expects Claire’s, Sears Holdings and Nine West all to default by the end of the year, pushing the default rate to 9%. “The timing on Sears and Claire’s is more uncertain, and our retail forecast would end the year at 5% absent these filings,” Rosenthal wrote. Putting the retail sector woes in context, Reorg First Day has calculated that retail bankruptcies soared 110% in the first half from the year-earlier period, accounting for $6 billion in debt.

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Oracle dementia.

No Bubble in Stocks But Look Out When Bonds Pop, Greenspan Says (BBG)

Equity bears hunting for excess in the stock market might be better off worrying about bond prices, Alan Greenspan says. That’s where the actual bubble is, and when it pops, it’ll be bad for everyone. “By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.” While the consensus of Wall Street forecasters is still for low rates to persist, Greenspan isn’t alone in warning they will break higher quickly as the era of global central-bank monetary accommodation ends.

Deutsche Bank’s Binky Chadha says real Treasury yields sit far below where actual growth levels suggest they should be. Tom Porcelli, chief U.S. economist at RBC Capital Markets, says it’s only a matter of time before inflationary pressures hit the bond market. “The real problem is that when the bond-market bubble collapses, long-term interest rates will rise,” Greenspan said. “We are moving into a different phase of the economy – to a stagflation not seen since the 1970s. That is not good for asset prices.” Stocks, in particular, will suffer with bonds, as surging real interest rates will challenge one of the few remaining valuation cases that looks more gently upon U.S. equity prices, Greenspan argues. While hardly universally accepted, the theory underpinning his view, known as the Fed Model, holds that as long as bonds are rallying faster than stocks, investors are justified in sticking with the less-inflated asset.

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How on earth can Obama and Hillary have supported this?

Trump Got This One Right: Shutting Down The CIA’s Ghost War In Syria (WS)

Earlier this year, President Donald Trump was shown a disturbing video of Syrian rebels beheading a child near the city of Aleppo. It had caused a minor stir in the press as the fighters belonged to the Nour al-Din al-Zenki Movement, a group that had been supported by the CIA as part of its rebel aid program. The footage is haunting. Five bearded men smirk as they surround a boy in the back of a pickup truck. One of them holds the boy’s head with a tight grip on his hair while another mockingly slaps his face. Then, one of them uses a knife to saw the child’s head off and holds it up in the air like a trophy. It is a scene reminiscent of the Islamic State’s snuff videos, except this wasn’t the work of Abu Bakr al-Baghdadi’s men. The murderers were supposed to be the good guys: our allies.

Trump wanted to know why the United States had backed Zenki if its members are extremists. The issue was discussed at length with senior intelligence officials, and no good answers were forthcoming, according to people familiar with the conversations. After learning more worrisome details about the CIA’s ghost war in Syria—including that U.S.-backed rebels had often fought alongside extremists, among them al Qaeda’s arm in the country—the president decided to end the program altogether. On July 19, the Washington Post broke the news of Trump’s decision: “a move long sought by Russia,” the paper’s headline blared. Politicians from both sides of the aisle quickly howled in protest, claiming that Trump’s decision was a surrender to Vladimir Putin.

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I said it before: Stockman’s had enough.

The Tweet That Is Shaking the War Party (David Stockman)

Most of the Donald’s tweets amount to street brawling with his political enemies, but occasionally one of them slices through Imperial Washington’s sanctimonious cant. Indeed, Monday evening’s 140 characters of solid cut right to the bone: “The Amazon Washington Post fabricated the facts on my ending massive, dangerous, and wasteful payments to Syrian rebels fighting Assad…..” Needless to say, we are referencing not the dig at the empire of Bezos, but the characterization of Washington’s anti-Assad policy as “massive, dangerous and wasteful”. No stouter blow to the neocon/Deep State “regime change” folly has ever been issued by an elected public official. Yet there it is – the self-composed words of the man in the Oval Office. It makes you even want to buy some Twitter stock! Predictably, the chief proponent of illegal, covert, cowardly attacks on foreign governments via proxies, mercenaries, drones and special forces, Senator McWar of Arizona, fairly leapt out of his hospital bed to denounce the President’s action: “If these reports are true, the administration is playing right into the hands of Vladimir Putin.”

That’s just plain pathetic because the issue is the gross stupidity and massive harm that has been done by McCain’s personally inspired and directed war on Assad – not Putin and not Russia’s historic role as an ally of the Syrian regime. Since 2011, Senator McCain has been to the region countless times. There he has made it his business to strut about in the manner of an imperial proconsul – advising, organizing and directing a CIA recruited, trained and supplied army of rebels dedicated to the overthrow of Syria’s constitutionally legitimate government. At length, several billions were spent on training and arms, thereby turning a fleeting popular uprising against the despotic Assad regime during the 2011 “Arab spring” into the most vicious, destructive civil war of modern times, if ever. That is, without the massive outside assistance of Washington, Saudi Arabia and the emirates, the Syrian uprising would have been snuffed out as fast as it was in Egypt and Bahrain by dictators which had Washington’s approval and arms.

As it has happened, however, Syria’s great historic cities of Aleppo and Damascus have been virtually destroyed – along with its lesser towns and villages and nearly the entirety of its economy. There are 400,000 dead and 11 million internal and external refugees from an original population of hardly 18 million. The human toll of death, displacement, disease and disorder which has been inflicted on this hapless land staggers the imagination. Yet at bottom this crime against humanity – there is no other word for it – is not mainly Assad’s or Putin’s doing. It can be properly described as “McCain’s War” in the manner in which (Congressman) Charlie Wilson’s War in Afghanistan during the 1980’s created the monster which became Osama bin Laden’s al-Qaeda.

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And of course they just go on.

Pentagon Offers To Arm Ukraine, McCain Delighted (ZH)

The WSJ reports that, in what appears to be the next gambit by the U.S. Military-Industrial Complex (or “deep state” for those so inclined) to force Trump to “prove” that he did not, in fact, collude or have any ties with Russia or Vladimir Putin, Pentagon and State Department officials have devised plans to hit Russia where it hurts the most, and supply Ukraine with antitank missiles and other weaponry, and are now seeking White House approval at a time when ties between Moscow and Washington are as bad as during any point under the Obama administration. American military officials and diplomats say the arms, which they characterized as defensive, are meant to deter aggressive actions by Moscow, which the U.S. and others say has provided tanks and other sophisticated armaments as well as military advisers to rebels fighting the Kiev government.

The question of course is, “why now?” Since the start of the Crimean conflict, which in turn was the byproduct of a State Department-facilitiated presidential coup in Ukraine, the US has been supporting Russian-speaking insurgents in the country’s east however Washington, wary of escalating the conflict, has largely limited its support for Kiev’s military to so-called non-lethal aid and training. So one attempt at “why now”, is because with Trump reeling, and having already caved on the latest Congressional anti-Russia bill, why not push the president to escalate the Russia conflict to a point where not even his predecessor dared to take it. For now, Trump is unaware of the plan: “A senior administration official said there has been no decision on the armaments proposal and it wasn’t discussed at a high-level White House meeting on Russia last week. The official said President Donald Trump hasn’t been briefed on the plan and his position isn’t known.”

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“The blood never washes away.”

Killing Them is Killing Us (Robert Gore)

There is something eerily fascinating about cold-blooded murderers – a staple of Hollywood thrillers and crime dramas—killing without emotion or remorse. Ordinary humans, afflicted with guilt for minor, not even criminal transgressions, can’t conceive of pulling the trigger and then sitting down for dinner. In real life, the number of people who can is glancingly small. Even for those few, actions have consequences. The blood never washes away. “Live and let live,” is, in American mythology, a benevolent and almost uniquely American attitude. We destroyed Japan and Germany in World War II and then helped rebuild them. Live and let live goes down well with the living, the winners. However, it’s often nothing more than balm for an uneasy conscience, hand sanitizer for bloodstained hands.

A century and a half later, many Southerners lack this “unique” American attitude towards their conquerers in the War of Northern Aggression. The war on terror has laid waste to large swaths of the Middle East and Northern Africa. Cities, towns, and villages have been reduced to smoking, bombed-out rubble, chaos reigns, the carnage is ubiquitous. The US military keeps count of its own personnel wounded and killed, a number in the thousands. Civilian casualties —or collateral damage as the military calls it—across Chaostan (Richard Maybury’s apt coinage) are in the millions, as are the number of people displaced (an estimated 11 million in Syria alone).

Imagine the American fury and media sensationalism if a small US town was carpet-bombed by a foreign power. YouTube’s servers would melt from the overflow of viewers watching videos of parents pulling their dead children from collapsed homes. The war on terror’s refugee flows threaten to upend civic order and submerge the cultures of the countries receiving them. It’s a vicious act of intellectual corruption to maintain that the war on terror does not create terrorists, that those killed, wounded, or displaced have no friends or family who will exact what they consider justified vengeance. The terrorism we see now is lava trickling from a volcano of hatred that has boiled, bubbled, and occasionally erupted for centuries, and will continue to do so. There will be no live and let live. Blood will have blood, not banalities.

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A different perspective.

Scaramucci’s China Dealings Pushed Him Out Of White House – Rickards (CNBC)

The abrupt dismissal of White House communications director Anthony Scaramucci less than two weeks after his appointment may be linked to the outspoken financier’s China dealings. The firing has been widely attributed to Scaramucci’s verbal tirade to a reporter in addition to orders from new chief of staff John F. Kelly. But there’s a third issue that may have played into the decision, Jim Rickards, editor of investment newsletter Strategic Intelligence, told CNBC. The sale of Scaramucci’s hedge fund, SkyBridge Capital, to HNA Capital, a subsidiary of Chinese conglomerate HNA Group, was a red flag for Washington, according to Rickards. The acquisition, which was finalized in January and reportedly values SkyBridge at around $200 million, is currently pending approval from the Committee on Foreign Investment in the United States – or CFIUS – a government panel that reviews foreign purchases of American companies for national security risks.

Officially chaired by Treasury Secretary Steven Mnuchin, CFIUS involves multiple U.S. agencies, including the defense, commerce and state departments. Rickards, who previously worked with intelligence officials on CFIUS regarding foreign acquisitions of U.S. financial services firms, said he believes the Skybridge deal was “a sleeper story waiting to come back to haunt the White House.” HNA’s purchase is likely to get rejected amid concerns of Chinese control over U.S. hedge funds and investment banks — a decision that wouldn’t bode well for President Donald Trump’s administration, he said. “My recommendation would have been for CFIUS to turn the deal down…we had always warned ‘don’t let our adversaries such as China or Russia get plugged into the U.S. financial system’…When I was involved, this deal would have not gone through,” he said.

“In some ways, the White House is probably relieved to get rid of Scaramucci because now, no matter what happens to that deal, that burden won’t be with the White House,” Rickards continued. “Using the [New Yorker] interview was great cover to get rid of Scaramucci before the hedge fund deal and national security review blew up in his face.”

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Oh well, someone will always say it’s because of confidence…

Unsecured UK Consumer Credit Tops £200 Billion For First Time Since 2008 (G.)

The financial watchdog has announced fresh measures to protect consumers from spiralling debt as official data showed that borrowing through credit cards, overdrafts and car loans has topped £200bn for the first time since the global financial crisis. The Financial Conduct Authority said it was cracking down on the high cost of overdrafts and reviewing the booming car loan market. The regulator’s latest intervention came as credit ratings agency Moody’s also warned about the growing household debt mountain, saying that some borrowers would struggle to repay their debt as the economy weakened and inflation ate into their salaries. Unsecured consumer credit, which includes credit cards, car loans and overdrafts, peaked in the autumn of 2008 – just as the banking crisis was taking hold.

It fell in subsequent years, but has been rising again since 2014 and is now in touching distance of the pre-crisis lending boom. Data from the Bank of England on Monday showed that it grew by 10% in the year to June, to almost £201bn. The last time outstanding debt was above £200bn was December 2008. In a paper published on Monday, the FCA said that one in six people with debt on credit cards, personal lending and car loans – 2.2 million – were in financial distress. They are more likely to be younger, have children, be unemployed and less educated than others. As households grapple with rising living costs, charities and policymakers have raised concerns that consumers are increasingly turning to loans amid worrying signs of a return to reckless lending by the banks.

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… but in reality it’s not confidence, but poverty that rules Britannia.

Moody’s Warns Of Growing UK Household Debt As Brexit Downturn Looms (Ind.)

A credit rating agency has warned that soaring levels of household debt could leave Britain’s lower-income families dangerously exposed amid signs of an economic downturn linked to Brexit. Moody’s said the UK’s weak economic climate meant it had to downgrade four of the five consumer finance sectors to negative. The agency’s warning over credit came as the Bank of England revealed that the amount borrowed by UK consumers through credit cards, loans and overdrafts had reached £200bn for the first time since the financial crash of 2008. Inflation, triggered by the low pound, is now rising faster than wage growth and has put growing pressure on households, squeezing budgets and causing credit card spending to increase and savings to fall.

In this context, the Bank of England has expressed concerns over surging levels of unsecured consumer borrowing on credit cards, which is going up by more than 10 per cent a year and outstripping income. Moody’s analyst Greg Davies said: “Household debt is high and still growing, leaving consumers vulnerable to an economic downturn, while higher inflation, weaker wage growth and levels of indebtedness leaves those in lower-income brackets the most exposed. “An additional challenge is that households’ capacity to draw on savings to maintain consumption and/or service their consumer debts has significantly diminished.” The credit rating agency has also warned in recent weeks of the potential economic damage if the UK fails to secure an exit trade deal with the EU.

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“Our entire world is wired and connected. An artificial intelligence will eventually figure that out – and figure out how to collaborate and cooperate with other AI systems. Maybe the AI will determine that mankind is a threat, or that mankind is an inefficient waste of resources – conclusions that seems plausible from a purely logical perspective.”

Facebook AI Creates Its Own Language In Creepy Preview Of Our Future (F.)

Facebook shut down an artificial intelligence engine after developers discovered that the AI had created its own unique language that humans can’t understand. Researchers at the Facebook AI Research Lab (FAIR) found that the chatbots had deviated from the script and were communicating in a new language developed without human input. It is as concerning as it is amazing – simultaneously a glimpse of both the awesome and horrifying potential of AI. Artificial Intelligence is not sentient—at least not yet. It may be someday, though – or it may approach something close enough to be dangerous. Ray Kurzweil warned years ago about the technological singularity. The Oxford dictionary defines “the singularity” as, “A hypothetical moment in time when artificial intelligence and other technologies have become so advanced that humanity undergoes a dramatic and irreversible change.”

To be clear, we aren’t really talking about whether or not Alexa is eavesdropping on your conversations, or whether Siri knows too much about your calendar and location data. There is a massive difference between a voice-enabled digital assistant and an artificial intelligence. These digital assistant platforms are just glorified web search and basic voice interaction tools. The level of “intelligence” is minimal compared to a true machine learning artificial intelligence. Siri and Alexa can’t hold a candle to IBM’s Watson. Scientists and tech luminaries, including Elon Musk, Bill Gates, and Steve Wozniak have warned that AI could lead to tragic unforeseen consequences. Eminent physicist Stephen Hawking cautioned in 2014 that AI could mean the end of the human race. “It would take off on its own and re-design itself at an ever increasing rate. Humans, who are limited by slow biological evolution, couldn’t compete, and would be superseded.”

Why is this scary? Think SKYNET from Terminator, or WOPR from War Games. Our entire world is wired and connected. An artificial intelligence will eventually figure that out – and figure out how to collaborate and cooperate with other AI systems. Maybe the AI will determine that mankind is a threat, or that mankind is an inefficient waste of resources – conclusions that seems plausible from a purely logical perspective.

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Racketeering.

Narratives Are Not Truths (Jim Kunstler)

The American polity is not thriving. It has been incrementally failing to meet its needs for quite a while now, playing games with itself to pretend that it is okay while its institutional organs and economic operations decay. It turns this way and that way ever more desperately, over-steering like a drunk on the highway. It is drunk on the untruths it tells itself in the service of playing games to avoid meeting its real needs. Narratives are not truths. Here is a primary question we might ask ourselves: do we want to live in a healthy society? Do we want to thrive? If so, what are the narratives standing in the way of turning us in the direction? Let’s start with health care, so called, since the failure to do anything about the current disastrous system is so fresh. What’s the narrative there?

That “providers” (doctors and hospitals) can team up with banking operations called “insurance companies” to fairly allocate “services” to the broad population with a little help from the government. No, that’s actually not how it works. The three “players” actually engage in a massive racketeering matrix — that is, they extract enormous sums of money dishonestly from the public they pretend to serve and they do it twice: once by extortionary fees and again by taxes paid to subsidize mitigating the effects of the racketeering. The public has its own narrative, which is that there is no connection between their medical problems and the way they live. The fact is that they eat too much poisonous food because it’s tasty and fun, and they do that because the habits-of-life that they have complicitly allowed to ev0lve in this country offers them paltry rewards otherwise.

They dwell in ugly, punishing surroundings, spend too much time and waste too much money driving cars around it in isolation, and have gone along with every effort to dismantle the armatures of common social exchange that afford what might be called a human dimension of everyday living. So, the medical racket ends up being nearly 20 percent of the economy, while the public gets fatter, sicker, and more anxiously depressed. And there is no sign that we want to disrupt the narratives.

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Well, they got the NGOs fighting each other now. Mission accomplished.

Aid Groups Snub Italian Code Of Conduct On Mediterranean Rescues (G.)

Five aid groups that operate migrant rescue ships in the Mediterranean have refused to sign up to the Italian government’s code of conduct, the Interior Ministry said, but three others backed the new rules. Charity boats have become increasingly important in rescue operations, picking up more than a third of all migrants brought ashore so far this year against less than one percent in 2014, according to the Italian coastguard. Italy, fearing that the groups were facilitating people smuggling from North Africa and encouraging migrants to make the perilous passage to Europe, proposed a code containing around a dozen points for the charities. Those who refused to sign the document had put themselves “outside the organised system of sea rescues, with all the concrete consequences that can have”, the ministry said.

Italy had previously threatened to shut its ports to NGOs that did not sign up, but an source within the Interior Ministry said that in reality those groups would face more checks from Italian authorities. Doctors Without Borders (MSF), which has taken part in many of the rescues of the 95,000 migrants brought to Italy this year, attended a meeting at the Interior Ministry but refused to sign the code. MSF objected most strongly to a requirement that aid boats must take migrants to a safe port themselves, rather than transferring people to other vessels, which allows smaller boats to stay in the area for further rescues. “Our vessels are often overwhelmed by the high number of [migrant] boats … and life and death at sea is a question of minutes,” MSF Italy’s director, Gabriele Eminente, wrote in a letter to the interior minister, Marco Minniti.

“The code of conduct puts at risk this fragile equation of collaboration between different boats,” he continued, adding that MSF still wanted to work with the ministry to improve sea rescues. [..] “For us, the most controversial point … was the commitment to help the Italian police with their investigations and possibly take armed police officers on board,” Jugend Rettet coordinator Titus Molkenbur said. “That is antithetical to the humanitarian principles of neutrality that we adhere to, and we cannot be seen as being part of the conflict.”

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