Sep 072018
 
 September 7, 2018  Posted by at 9:18 am Finance Tagged with: , , , , , , , , , , ,  


René Magritte The false mirror 1928

 

I Know Who the “Senior Official” Is Who Wrote the NY Times Op-Ed (PCR)
Pompeo Denies Being Author Of ‘Sad’ NYT Op-Ed On Trump (AFP)
Mueller Hardens Stance On Trump Interview In Russia Probe, Giuliani Says (R.)
‘Lots Of Evidence’ Syria Preparing Chemical Weapons In Idlib- New US Envoy (R.)
Operation Yellowhammer: Secret Government Paper On No-Deal Brexit (Ind.)
Brexit Negotiators Risk Sleepwalking Into Crisis – Former UK Envoy To EU (G.)
The Fed’s QE Unwind Hits $250 Billion (WS)
Twitter Permanently Bans Alex Jones, Website Infowars (R.)
Google and Apple’s Systems to Track you in Person (CP)
Moon Says Is Seeking To Establish ‘Irreversible’ Peace On Korean Peninsula (YH)
Paris Official Seeks To Outlaw Airbnb Rentals In City Centre (AFP)
Most Of British Countryside Now Devoid Of Hedgehogs (G.)

 

 

Paul Craig Roberts: “The New York Times wrote it.”

I Know Who the “Senior Official” Is Who Wrote the NY Times Op-Ed (PCR)

I know who wrote the anonymous “senior Trump official” op-ed in the New York Times. The New York Times wrote it. The op-ed is an obvious forgery. As a former senior official in a presidential administration, I can state with certainty that no senior official would express disagreement anonymously. Anonymous dissent has no credibility. Moreover, the dishonor of it undermines the character of the writer. A real dissenter would use his reputation and the status of his high position to lend weight to his dissent. The New York Times’ claim to have vetted the writer also lacks credibility, as the New York Times has consistently printed extreme accusations against Trump and against Vladimir Putin without supplying a bit of evidence.

The New York Times has consistently misrepresented unsubstantiated allegations as proven fact. There is no reason whatsoever to believe the New York Times about anything. Consider also whether a member of a conspiracy working “diligently” inside the administration with “many of the senior officials” to “preserve our democratic institutions while thwarting” Trump’s “worst inclinations” would thwart his and his fellow co-conspirators’ plot by revealing it! This forgery is an attempt to break up the Trump administration by creating suspicion throughout the senior level. If Trump falls for the New York Times’ deception, a house cleaning is likely to take place wherever suspicion falls. A government full of mutual suspicion cannot function.

The fake op-ed serves to validate from within the Trump administration the false reporting by the New York Times that serves the interests of the military/security complex to hold on to enemies with whom Trump prefers to make peace. For example, the alleged “senior official” misrepresents, as does the New York Times, President Trump’s efforts to reduce dangerous tensions with North Korea and Russia as President Trump’s “preference for autocrats and dictators, such as President Vladimir Putin of Russia and North Korea’s leader, Kim Jong-un” over America’s “allied, like-minded nations.” This is the same non-sequitur that the New York Times has expressed endlessly. Why is resolving dangerous tensions a “preference for dictators” and not a preference for peace? The New York Times has never explained, and neither does the “senior official.”

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As have lots of others. If PCR is right, makes sense.

Pompeo Denies Being Author Of ‘Sad’ NYT Op-Ed On Trump (AFP)

US Secretary of State Mike Pompeo denied Thursday being the author of a damning, anonymous op-ed in the New York Times about President Donald Trump, calling it “sad”. “It shouldn’t surprise anyone that the New York Times, a liberal newspaper that has attacked this administration relentlessly, chose to print such a piece,” Pompeo said in New Delhi. “If it’s accurate… they should not… have chosen to take a disgruntled, deceptive bad actor’s word for anything and put it in their newspaper. It’s sad more than anything else,” he told reporters.

He added: “I come from a place where if you’re not in a position to execute the commander’s intent, you have a singular option, that is to leave. And this person instead, according to the New York Times, chose not only to stay but to undermine what President Trump and this administration are trying to do. “And I have to tell you, I just, I find the media’s efforts in this regard to undermine this administration incredibly disturbing. The editorial, by an anonymous senior US official according to the New York Times, said that Trump’s own staff see him as a danger to the nation. Trump has questioned whether the “gutless” piece, entitled “I am part of the resistance inside the Trump administration”, might be treasonous. “It’s not mine,” Pompeo added.

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“We’ve said no, and let’s see how they deal with it.”

Mueller Hardens Stance On Trump Interview In Russia Probe, Giuliani Says (R.)

Special Counsel Robert Mueller wants President Donald Trump to commit to a follow-up interview to written answers to questions in his probe of any coordination between Trump campaign members and Russia in the 2016 U.S. election, Rudy Giuliani, who is representing the president, said on Thursday. Giuliani, who said talks between the two sides were continuing, saw Mueller’s stance as a hardening in the position prosecutors are taking after offering to allow Trump to answer questions in writing. “I thought we were close to having an agreement until they came back with, ‘You have to agree now that you’ll allow a follow-up,’ and I don’t see how we can do it,” Giuliani told Reuters.

Lawyers for Trump have been negotiating over a potential interview with Mueller’s team since last year in the U.S. investigation of Russian meddling in the presidential election, which Moscow denies. Trump has denied any campaign collusion, calling the Mueller probe a “witch hunt.” In a letter to Trump’s lawyers last week, Mueller expressed a willingness to accept written responses on questions about collusion, but did not rule out a possible interview as a follow-up, a person familiar with the matter told Reuters on Tuesday. After receiving the written responses, Mueller’s investigators would decide on a next step, which could include an interview with Trump, the person said. But Giuliani said on Thursday that Mueller’s team had stiffened its position in the latest talks. “They want a commitment” to a follow-up interview, Giuliani said. “We’ve said no, and let’s see how they deal with it.”

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In crease the pressure on Trump with anon op-eds and Mueller, and see if he bombs Assad. Transparent.

‘Lots Of Evidence’ Syria Preparing Chemical Weapons In Idlib- New US Envoy (R.)

There is “lots of evidence” chemical weapons are being prepared by Syrian government forces in Idlib, north-west Syria, the new US representative for Syria has said, warning any attack on the last big rebel enclave would be a “reckless escalation”. “I am very sure that we have very, very good grounds to be making these warnings,” said Jim Jeffrey, who was named on 17 August as secretary of state Mike Pompeo’s special adviser on Syria overseeing talks on a political transition. “Any offensive is to us objectionable as a reckless escalation,” Jeffrey said. “There is lots of evidence that chemical weapons are being prepared.”

Washington has issued a strong warning to Syria’s government against using chemical weapons in the widely expected operation. Jeffrey said any offensive by Russian and Syrian forces, and the use of chemical weapons, would force huge refugee flows into south-eastern Turkey or areas in Syria under Turkish control. The Syrian president, Bashar al-Assad, has massed his army and allied forces on the frontlines in the north-west and Russian planes have joined his bombardment of rebels there – the prelude to a possible assault. The fate of the insurgent stronghold in and around Idlib province now seems to rest on a meeting to be held in Tehran on Friday between the leaders of Assad’s supporters Russia and Iran, and the rebels’ ally Turkey.

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“..its song is said to have a rhythm like “a little bit of bread and no cheese”

Operation Yellowhammer: Secret Government Paper On No-Deal Brexit (Ind.)

A secret Treasury document has raised questions about “rail access to the EU” after a no-deal Brexit. The document – snapped as it was carried into a Whitehall meeting – also reveals that Philip Hammond’s department has codenamed its contingency planning “Operation Yellowhammer”. It warns that government departments will have to make cuts to prepare for crashing out of the EU, saying: “Their first call should be internal reprioritisation.” And it acknowledges the need to “maintain confidence in the event of contingency plans being triggered – particularly important for financial services”.

Operation Yellowhammer is being overseen by the Civil Contingencies Secretariat, which is usually responsible for coping with emergencies such as floods and disease outbreaks. The document was photographed just hours after the health secretary admitted that taxpayers would have to foot the bill for stockpiling NHS medicines in a no-deal Brexit. A Treasury spokesman refused to be drawn on the paper, saying: “We don’t comment on leaked documents.” The yellowhammer is a bird with a bright yellow head, a brown back streaked with black and chestnut rump, often seen perched on top of a hedge or bush, singing. Intriguingly for critics of a no-deal Brexit, its song is said to have a rhythm like “a little bit of bread and no cheese”.

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“Rogers says the prime minister’s compromise plan “contains many wholly unsaleable elements and will not [and] cannot be agreed by the 27..”

Brexit Negotiators Risk Sleepwalking Into Crisis – Former UK Envoy To EU (G.)

Brexit negotiators on both sides of the Channel risk “sleepwalking into a major crisis” that could poison relations for a generation, the UK’s former ambassador to the European Union Sir Ivan Rogers, has warned. In a speech to the British Irish Chambers of Commerce in Dublin, he urged EU leaders to move beyond a technocratic approach to Brexit and give serious thought to “the British question” or risk “endless toxic running battles”. “There is now, in my view, a higher risk than the markets are currently pricing of a disorderly breakdown in Brexit negotiations, and of our sleepwalking into a major crisis,” he said. “Not because either negotiating team actively seeks it, but precisely because each side misreads each other’s real incentives and political constraints and cannot find any sort of landing zone for a deal, however provisional.”

He said it was “tempting” and “an understandable accusation” for European capitals to think that “the British have brought all this on themselves without much apparent thought or honesty”. But he urged leaders to take a longer view, or risk a brittle settlement that would not last. Rogers resigned as the UK’s ambassador to the EU last January after being attacked as “the gloomy mandarin” by Tory Eurosceptics, who dismissed his warnings that leaving the EU would be be complicated process that would dominate UK political life for a decade.

In a parting email to staff he urged British officials to challenge ill-founded arguments and “muddled thinking”, while another former top civil servant lamented his departure as a “wilful and total destruction of EU expertise”. In his speech on Thursday night Rogers criticised the “delusional” thinking of British Eurosceptics and said they knew that a genuine no-deal Brexit “would bring several key sectors of the economy to a halt”. He said that advocates of a no-deal Brexit expected to trigger a host of mini deals at the 11th hour.

[..] Much of his speech was a plea to EU27 member states to take a strategic approach to Brexit, recognising that they cannot have “just a bog-standard third-country relationship like any other” with the UK. But Rogers was not attempting to sell Theresa May’s Chequers plan, an array of proposals that includes an unprecedented customs deal and “common rule book” for goods that the EU has rejected. Rogers says the prime minister’s compromise plan “contains many wholly unsaleable elements and will not [and] cannot be agreed by the 27”.

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Just a start, but getting serious.

The Fed’s QE Unwind Hits $250 Billion (WS)

In August, the Federal Reserve was supposed to shed up to $24 billion in Treasury securities and up to $16 billion in Mortgage Backed Securities (MBS), for a total of $40 billion, according to its QE-unwind plan – or “balance sheet normalization.” The QE unwind, which started in October 2017, is still in ramp-up mode, where the amounts increase each quarter (somewhat symmetrical to the QE declines during the “Taper”). The acceleration to the current pace occurred in July. So how did it go in August? The Fed released its weekly balance sheet Thursday afternoon. Over the period from August 2 through September 5, the balance of Treasury securities declined by $23.7 billion to $2,313 billion, the lowest since March 26, 2014. Since the beginning of the QE-Unwind, the Fed has shed $152 billion in Treasuries:

The step-pattern of the QE unwind in the chart above is a consequence of how the Fed sheds Treasury securities: It doesn’t sell them outright but allows them to “roll off” when they mature; and they only mature mid-month or at the end of the month. On August 15, $23 billion in Treasuries matured. On August 31, $21 billion matured. In total, $44 billion matured during the month. The Fed replaced about $20 billion of them with new Treasury securities directly via its arrangement with the Treasury Department that cuts out Wall Street – the “primary dealers” with which the Fed normally does business. Those $20 billion in securities were “rolled over.” But it did not replace about $24 billion of maturing Treasuries. They “rolled off” and became part of the QE unwind.

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They have to reveal their grounds.

Twitter Permanently Bans Alex Jones, Website Infowars (R.)

Twitter on Thursday permanently banned U.S. conspiracy theorist Alex Jones and his website Infowars from its platform and Periscope, saying in a tweet that the accounts had violated its behavior policies. “As we continue to increase transparency around our rules and enforcement actions, we wanted to be open about this action, given the broad interest in this case,” the company tweeted. “We do not typically comment on enforcement actions we take against individual accounts for their privacy.” In a video posted on the Infowars website on Thursday Jones said, “I was taken down not because we lied but because we tell the truth and because we were popular.”

The ban came weeks after Apple, Alphabet’s YouTube, and Facebook took down podcasts and channels from Jones, citing community standards. Jones, whose conspiracy theories include that the 2012 Sandy Hook school massacre was a hoax, hosts the syndicated radio program “The Alex Jones Show.” Last month, Jones lost a bid to dismiss a defamation lawsuit brought against him by the parents of a boy who was killed in the Sandy Hook shooting. On Wednesday, Jones attended a Senate Intelligence Committee hearing on ways to counteract foreign efforts to influence U.S. elections and political discourse. Facebook Chief Operating Officer Sheryl Sandberg and Twitter Chief Executive Jack Dorsey testified at the hearing.

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Bluetooth ‘beacons’ everywhere that track you. Lovely.

Google and Apple’s Systems to Track you in Person (CP)

Google is in the news (again) for creepy surveillance practices. Google, AP reported, is tracking your physical whereabouts even after you tell them to shut Location History off. Now Bloomberg reports they bought data about Mastercard transactions to link online ads with in-store purchases. These make for interesting stories, but the real story, not being discussed, is the online-physical advertising systems engineered by Google and Apple.

Over the last few years, there’s been a quiet revolution in retail marketing empowering advertisers to track consumers in physical space. Retailers have realized that, contrary to popular misconceptions, most retail purchases are still made in brick-and-mortar stores– not the online world of Amazon and Walmart. The capacity to track each of us in the physical world offers an untapped market for high-tech advertising. Google previously called this the Physical Web, a new Internet of Things frontier that melds the online and offline worlds into one.

To facilitate online-offline tracking, Google and Apple developed protocols for communications with mobile devices like smartphones. The idea is to make the physical world, like a poster on a building, something you can “click on” (i.e. interact with) without installing a special app. The dominant weapon of choice is the bluetooth beacon – silly putty-sized units that broadcast bluetooth signals to track your precise location and send messages to your phone. Bluetooth beacons are now scattered about stores, airports, sporting arenas, malls, and other locales. The technology is several years in the making.

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Let him.

Moon Says Is Seeking To Establish ‘Irreversible’ Peace On Korean Peninsula (YH)

South Korea is seeking to formally end its hostile relations with North Korea before the year’s end to establish permanent peace that would be irreversible, South Korean President Moon Jae-in said in an interview published Friday. “The most basic goal of our policy is that there must never be another war on the Korean Peninsula,” the president said in a written interview with Indonesian newspaper Kompas. The rare interview came ahead of Indonesian President Joko Widodo’s three-day trip to Seoul. Moon and Widodo will meet Monday, one day after the Indonesian leader arrives on a state visit. Moon noted he and North Korean leader Kim Jong-un have already agreed to denuclearize the Korean Peninsula and establish permanent peace.

“The issue is sincerely implementing the agreement reached by the leaders, and the plan is to make enough progress by the year’s end so the process cannot be reversed,” the South Korean president said, according to a script of his written interview released by his office Cheong Wa Dae. Moon’s remarks came as he is set to hold his third bilateral summit with the North Korean leader in Pyongyang from Sept. 18-20. Moon and Kim earlier met in the border village of Panmunjom on April 27 and May 26. He expressed hope for a formal end to the Korean War before the year’s end. “As a practical way of building trust, it would be great if a declaration of the war that would mark the end of hostile relations on the Korean Peninsula can be made this year,” Moon said.

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“We’ll be living in an open-air museum.”

Paris Official Seeks To Outlaw Airbnb Rentals In City Centre (AFP)

The Paris city council member in charge of housing said Thursday that he would propose outlawing home rentals via Airbnb and other websites in the city centre, accusing the service of forcing residents out of the French capital. Ian Brossat told AFP that he would also seek to prohibit the purchase of secondary residences in Paris, saying such measures were necessary to keep the city from becoming an “open-air museum”. “One residence out of every four no longer houses Parisians,” said Brossat, who is expected to head the Communist party list for European Parliament elections next year. With some 60,000 apartments on offer in the city, Paris is the biggest market for Airbnb, which like other home-sharing platforms has come under increasing pressure from cities which claim it drives up rents for locals.

“Do we want Paris to be a city which the middle classes can afford, or do we want it to be a playground for Saudi or American billionaires?” he said. Brossat has had Airbnb and its rivals in his sights for years, and recently published a book assailing the US giant titled “Airbnb, or the Uberised City”. He wants to forbid any short-term tourist rentals of entire apartments in the First, Second, Third and Fourth Arrondissements of Paris, home to some of the world’s most popular sites including the Cathedral of Notre-Dame and the Louvre museum. “If we don’t do anything, there won’t be any more locals: Like on the Ile Saint-Louis, we’ll end up with a drop in the number of residents and food shops turned into clothing or souvenir stores,” he said, referring to the Seine island in the shadow of the Notre-Dame cathedral. “We’ll be living in an open-air museum.”

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In the end this means a countryside devoid of countryside.

Most Of British Countryside Now Devoid Of Hedgehogs (G.)

A “perfect storm” of intensive farming and rising badger populations has left most of the countryside in England and Wales devoid of hedgehogs, according to the first systematic national survey. The research used footprints left by hedgehogs in special tunnels to reveal that they were living at just 20% of the 261 sites surveyed. Hedgehogs, which topped a vote in 2013 to nominate a national species for Britain, were significantly less common where badgers were more numerous. Badgers eat hedgehogs and also compete for the beetles and worms the prickly animals consume. However, hedgehogs and badgers lived alongside each other in half the hedgehog sites, while a quarter of all the sites had neither animal, showing the destruction of habitat such as hedgerows and coppices was also a major factor.

“There are lots of areas in the countryside that are not suitable for hedgehogs or badgers,” said Ben Williams, at the University of Reading, who led the new work. “There is something fundamentally wrong in the rural landscape for those species and probably lots of other species as well,” such as birds and shrews. Previous work based on visual sightings and roadkills indicated that the number of hedgehogs living in the British countryside has plummeted by more than half since 2000. Historical hedgehog numbers are hard to estimate, but scientists think populations have fallen by at least 80% since the 1950s. The new survey, published in the journal Scientific Reports, is much more detailed and reliable. It concludes: “The combined effects of increasing badger abundance and intensive agriculture may have provided a perfect storm for hedgehogs in rural Britain, leading to worryingly low levels of occupancy over large [areas].”

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Aug 082018
 
 August 8, 2018  Posted by at 8:20 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh The red tree house 1890

 

Tesla Shares Soar After Elon Musk Floats Plan To Take Company Private (G.)
Securities Lawyers Shocked By Elon Musk’s Tweet (CNBC)
Alex Jones Pleads With Donald Trump To Fight ‘Censorship’ (Ind.)
US Think Tank’s Tiny Lab Helps Facebook Battle Fake Social Media (R.)
Trump’s Sanctions Causing Turmoil In Turkey (CNBC)
Turkish Banks Scramble to Stave Off Debt Crisis (DQ)
Europe ‘Needs To Get A Backbone’ On Trump’s Iran Sanctions – Ron Paul (RT)
EU Foreign Policy Chief Calls On Firms To Defy Trump Over Iran (G.)
The Blowup With Canada Is the Latest Saudi Overreach (IC)
London Is The World’s Airbnb Capital (ZH)
My Amsterdam Is Being Un-Created By Mass Tourism (G.)
First Trial Alleging Monsanto’s Roundup Causes Cancer Goes To Jury (R.)
The American Sea of Deception (TD)

 

 

$82 billion in funding arranged? Perhaps the SEC should have a word with Musk about that.

Tesla Shares Soar After Elon Musk Floats Plan To Take Company Private (G.)

Elon Musk has launched a campaign to take Tesla private on a day that included several provocative tweets, a suspension (and resumption) of trading in the company’s shares, reports of a significant Saudi investment, a surge in stock price, and an evocative, Musk-tinged appeal to the Tesla faithful: “The future is very bright and we’ll keep fighting to achieve our mission.” The ride started with Tesla’s stock rising more than 7% after Musk tweeted he was “considering taking Tesla private” and had funding in place to do so at a price of $420 (£325) per share. Shortly afterwards, Tesla published a blogpost written by Musk entitled ‘Taking Tesla private’ that had been sent to all employees.

The tweet appeared to be triggered by a report in the Financial Times that Saudi Arabia has built up a stake in Tesla worth up to $2.9bn. At $420 a share, Tesla would have an enterprise value of about $82bn including debt, well above its stock market value, which reached $63.8bn on Tuesday. Shares closed up 11% at $378. To take Tesla private, Musk would have to pull off the largest leveraged buyout in history, surpassing Texas electric utility TXU’s in 2007. Analysts say Tesla doesn’t fit the typical profile of a company that can raise tens of billions of dollars of debt to fund such a deal. In a follow up tweet, Musk wrote: “I don’t have a controlling vote now and wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario.”

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Social media and its consequences.

Securities Lawyers Shocked By Elon Musk’s Tweet (CNBC)

“If his comments were issued for the purpose of moving the price of the stock, that could be manipulation, it could also be securities fraud,” former SEC Chairman Harvey Pitt told CNBC on Tuesday. “The use of a specific price for a potential going private transaction is highly unprecedented and therefore raises significant questions about what his intent was. So, that would have to be investigated.” [..] Five years ago the Securities and Exchange Commission had to clarify its social media policy after Netflix founder and CEO Reed Hastings set off a firestorm of his own.

Companies can use social media like Facebook and Twitter to announce key information and be OK under Fair Disclosure regulations as long as investors know that they can find that information on the social media accounts. Reg FD was designed to make sure investors could get information at the same time, rather than having select disclosures to some before others. The SEC’s enforcement division had investigated Hasting’s use of a personal Facebook page back in 2012 to say the streaming service’s monthly online viewing had exceeded 1 billion hours for the first time.

The SEC didn’t take any action against Netflix or Hastings but clarified its social media policy. “Personal social media sites of individuals employed by a public company would not ordinarily be assumed to be channels through which the company would disclose material corporate information,” the SEC said in a statement at the time. There might not be any SEC action this time, either, but it’s only a matter of time before an executive gets accused of making a false or misleading statement on social media, said Kevin LaCroix, an attorney focused on management liability issues. “There will be a case someday.”

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A hard one for Trump. Alex Jones is his biggest media asset. But how can Washington stop Silicon Valley?

Alex Jones Pleads With Donald Trump To Fight ‘Censorship’ (Ind.)

Far-right conspiracy theorist Alex Jones has appealed to Donald Trump to pursue an end to “censorship” after the InfoWars host was banned from all but one of the West’s major content platforms. On Monday, Apple deleted most of Mr Jones’s podcasts saying they contained hate speech; Facebook removed four of his pages down for “repeated violations of community standards”; YouTube terminated Mr Jones’s account after he violated a 90-day ban; and Spotify removed one of Jones’s podcasts for “hate content”. In a free-wheeling monologue posted online, the prominent far-right personality praised the president, condemned the mainstream press, and accused China of meddling in US elections.

“Mr President, America knows you’re real. They know the Democrats are the anti-American globalists allied with the ChiComms, radical Islam, the unelected EU, and others,” he said. “If you come out before the midterms and make the censorship the big issue of them trying to steal the election. “And if you make the fact we need an Internet Bill of Rights, and anti-trust busting on these companies, if they don’t back off right now. “And if you don’t come out and point out that the communist Chinese have penetrated and infiltrated and are way, way worse than the Russians …. then they will be able to steal the midterms and start the impeachment.” He said cracking down on China and speaking out against censorship was “the right thing to do”.

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The Atlantic Council doesn’t find the truth, it makes its own. Main Russiagate proponents.

US Think Tank’s Tiny Lab Helps Facebook Battle Fake Social Media (R.)

A day before Facebook announced that it had discovered and disabled a propaganda campaign designed to sow dissension among U.S. voters, it exclusively shared some of the suspicious pages with an online forensics team so busy it hasn’t put a nameplate on the door. The Atlantic Council’s Digital Forensic Research Lab is based in a 12-foot-by-12-foot office in the Washington, D.C., headquarters of the nearly 60-year-old Council www.atlanticcouncil.org, a think tank devoted to studying serious and at times obscure international issues. Facebook is using the group to enhance its investigations of foreign interference. Last week, the company said it took down 32 suspicious pages and accounts that purported to be run by leftists and minority activists.

While some U.S. officials said they were likely the work of Russian agents, Facebook said it did not know for sure. It fell to the lab to point out similarities to fake Russian pages from 2016 during Facebook’s news conference last week. Facebook began looking for outside help amid criticism for failing to rein in Russian propaganda ahead of the 2016 presidential elections. The U.S. Justice Department won indictments against 13 Russians and three companies for using social media in that election to influence voters. U.S. President Donald Trump’s national security team warned last week of persistent attempts by Russia to use social media against the 2018 congressional elections as well.

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All they need to do is release a pastor.

Trump’s Sanctions Causing Turmoil In Turkey (CNBC)

The Turkish lira and benchmark sovereign bond hit a record low as the threat of U.S. sanctions added pressure to already ailing markets. The U.S. dollar rose to 5.4 against the lira on Monday before trading around 5.29 on Tuesday. Turkey’s 10-year bond fell to a record low on Tuesday, pushing its yield up to around 20 percent before hovering around 18.8 percent. Bond prices move inversely to yields. Turkish capital markets have struggled this year as the country deals with a weakening economy. The sharp moves down come after President Donald Trump threatened last month to slap “large sanctions” on the Middle Eastern nation if it refuses to free Andrew Brunson, an evangelical pastor.

The U.S. then announced on Aug. 1 sanctions on Turkey’s justice and interior ministers, prohibiting U.S. citizens from doing business with them. “This is a shot across the bow,” said Marcus Chenevix, an analyst at TS Lombard. “Now, I think the U.S. will give them time to respond. It’s not like the U.S. sees this as a pressing political matter, it just can’t seem to be backing down to these hostage tactics.” Turkey detained Brunson in October 2016, accusing him of spying and trying to overthrow the government after a failed coup earlier that year. Trump demanded in a July 26 tweet the Turkish government release Brunson.

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20% yields on bonds… As the lira has lost 25% or so of its value..

Turkish Banks Scramble to Stave Off Debt Crisis (DQ)

Highly leveraged companies currently face a potent cocktail of soaring borrowing costs and a plunging Lira. As the local currency weakens against the dollar and the euro, it gets harder and harder for local companies to service foreign currency bonds. That’s how a currency crisis becomes a debt crisis. Turkish companies are sitting on $337 billion in debt. With as much as $100 billion in debt scheduled to come due over the course of the next year, Turkish banks are under growing pressure to restructure foreign-currency denominated corporate loans as those companies struggle to service them.

The banks have proposed rules to accelerate the restructuring of company debt and allow lenders to avoid booking these loans as “non-performing loans,” a move that may help prevent defaults from piling up. As has happened in Italy since Europe’s sovereign debt crisis, the banks will try to extend loans indefinitely in order to avoid gaping holes developing on their balance sheets. But it may already be too late. The downgrades, both sovereign and corporate, are coming thick and fast. On July 20, Fitch Ratings downgraded the Long-Term Foreign Currency Issuer Default Ratings (LTFC IDRs) of 24 Turkish banks and their subsidiaries, in many cases by two notches.

The agency also slashed Turkey’s sovereign rating deeper into junk territory, downgrading its Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘BB’ from ‘BB+’ with a negative outlook. Moody’s also downgraded the ratings of 17 banks in July. These downgrades will make it even more costly for Turkish banks and the Turkish government to raise funds, with the yield on Turkey’s benchmark 10-year bond soaring to an eye-watering 19% on Tuesday.

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“In time people are going to realize we might have to adjust because countries are not going to tolerate what we have done..”

Europe ‘Needs To Get A Backbone’ On Trump’s Iran Sanctions – Ron Paul (RT)

Washington is powerful, but Europe needs to “stick to its guns” against President Donald Trump’s threats that any countries doing business with Iran will not to do business with the US, according to former Congressman Ron Paul. In an interview with RT, Paul said that while the US can “throw its weight around” the EU needs to “get some backbone” to resist Trump’s threats. “If they stick to their guns I think the United States would have to adjust our policies a bit, because how are they going to enforce that? You know, if China and Russia and other countries and India, they do business with Iran — how are we going to punish them?” he said. Paul acknowledged that standing up to Washington might be difficult if major companies are faced with the threat of losing business in the US. “In time people are going to realize we might have to adjust because countries are not going to tolerate what we have done,” he said.

Asked about the anti-Russia sentiment currently gripping the US, Paul said that the people who are in favor of taking a very negative view of Russia — and who are pushing the narrative that Trump colluded with Russia to win the presidency — are in control in both the media and in Congress. “I think it’s tragic what’s happening, because they have no proof of anything and for some reason these senators have come up with this new [Russia sanctions] bill — Graham and McCain and Menendez — just out of the clear blue, they have no evidence whatsoever of their charges that they have made,” he said. Paul, who has long advocated a non-interventionist foreign policy and taken a negative view of sanctions, said that the US tendency to blame other countries for everything, slapping them with sanctions and then complaining when they retaliate is “very, very bad foreign policy.”

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Catch 22.

EU Foreign Policy Chief Calls On Firms To Defy Trump Over Iran (G.)

The EU is set on a collision course with Donald Trump after its foreign policy chief called for Europeans to increase their business dealings with Iran in defiance of bellicose statements from the US president. As Trump vowed to block those trading with Iran from the US market, the EU stepped up efforts to save the Iran nuclear deal by encouraging its companies to ignore the White House. Federica Mogherini, the EU’s high representative for foreign affairs, said Brussels would not let the 2015 agreement with Tehran die, and she urged Europeans to make their own investment decisions. The EU, China and Russia remain signatories to the joint comprehensive plan of action under which economic sanctions on Iran have been lifted in return for the regime curtailing its nuclear aspirations.

Trump reneged on the deal in May, describing it as “a horrible one-sided deal that should never, ever have been made”. The clash risks destabilising the wider transatlantic relationship weeks after the European commission president, Jean-Claude Juncker, and Trump vowed in the White House rose garden to increase tariff-free trade between the EU and the US and to move on from recent disagreements. During a trip to Wellington, New Zealand, on Tuesday, Mogherini said: “We are doing our best to keep Iran in the deal, to keep Iran benefiting from the economic benefits that the agreement brings to the people of Iran, because we believe this is in the security interests of not only our region but also of the world.

“If there is one piece of international agreements on nuclear non-proliferation that is delivering, it has to be maintained. We are encouraging small and medium enterprises in particular to increase business with and in Iran as part of something [that] for us is a security priority.” Hours earlier, Trump had tweeted: “The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!”

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“Have the Saudis gone stark-raving bonkers?”

The Blowup With Canada Is the Latest Saudi Overreach (IC)

Have the Saudis gone stark-raving bonkers? First, they pick a fight with Canada — yeah, that Canada! Maple syrup-loving, hockey-playing, poutine-eating, liberal, multicultural Canada; the land with free health care and a prime minister who wears “Eid Mubarak” socks. On Sunday, Saudi Arabia (over)reacted to a single tweet from the Canadian foreign ministry. The tweet called on the Saudis to “immediately release” imprisoned activist Samar Badawi, sister of Raif, as well as “all other peaceful #humanrights activists.” The Saudi foreign ministry lambasted the Canadians for an “unfortunate, reprehensible, and unacceptable” statement, announced the “freezing of all new trade and investment transactions” with Canada, demanding the Canadian ambassador leave the country “within the next 24 hours.”

At the same time, Saudi trolls took to Twitter to declare their loud support for … Quebec’s independence. Who knew that an absolute Persian Gulf monarchy was so passionate about a French-speaking secessionist movement 6,000 miles away? (Hey, Canadian trolls — if you even exist — my advice would be to retaliate by offering Ottawa’s backing for independence in the restless, Shia-dominated Eastern Province of Saudi Arabia. It’ll drive them totally nuts.) And Saudi Arabia was just getting started. On Monday, the kingdom escalated the row by suspending scholarships “for about 16,000 Saudi students” studying in Canada, the Toronto Star reported, “and ordered them to attend schools elsewhere.” (Can you think of a better example of biting your bigoted nose to spite your intolerant face?)

Then — and this is my favorite part of this whole bizarre episode — a Saudi group put out an image on Twitter of a Canadian airliner flying directly toward Toronto’s tallest building over a warning against interfering in others’ affairs. (The Saudi group later deleted it and apologized) Are. You. Kidding. Me?

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Destruction in its wake.

London Is The World’s Airbnb Capital (ZH)

10 years ago, in early August 2008, the website Airbedandbreakfast.com went online, marking the birth of Airbnb. Back then the three founders, Brian Cheky, Joe Gebbia and Nathan Blecharczyk wanted to help short-term travelers find affordable accommodation and provide renters with an opportunity to make an extra buck by renting out spare rooms or even just the namesake airbed on the floor. However, as Statista’s Felix Richter notes, little did they know that 10 years later their little venture would be one of the hottest private companies in the world, valued at nearly $30 billion.

Over the years, Airbnb has developed into much more than what it was originally meant to be. These days you can rent millions of houses, apartments and rooms on the platform. For many young travelers is has become the favorite if not the only way to find accommodation when travelling. Luckily for Airbnb, its rise coincided with a steep increase in city tourism. In cities such as London, Paris or New York, where hotel rooms are often hard to find and/or expensive, Airbnb has become an affordable and popular way to experience cities in a less touristy way.

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Politicians can’t keep up with tech developments. They’re always late. They sit on their hands until someone else does something.

“..the red light district is no longer under government control at weekends. Criminals operate with impunity; the police can no longer protect citizens; ambulances struggle to reach victims on time.”

My Amsterdam Is Being Un-Created By Mass Tourism (G.)

The word on everyone’s lips is “Venice”. It starts as a whisper, some time in early spring, when the lines in front of the Rijksmuseum get a little longer, and the weekend shopping crowds in the Negen Straatjes begin to test your bike-navigation skills. By the time it’s July those streets are flooded. You don’t even try steering through the crowds. You’d be like Moses, except that God is not on your side, the Red Sea will not part in your favour, and the crowds will wash you away: the middle-aged couples from the US and Germany, here for the museums; and the stag parties from Spain, Italy and the UK, here in their epic attempt to drink all the beer and smoke all the pot.

So you learn to take the long way round to your destination and skip entire areas of Amsterdam – which nevertheless means that, perhaps once every summer, you’ll be down on the pavement after crashing into a distracted tourist who walked in front of your bike, and the whisper becomes a curse: “Fucking Venice!” (The Dutch like to swear in English.) “Venice”is shorthand for a city so flooded by tourists that it no longer feels like a city at all. In the famed 2013 Dutch documentary I Love Venice a tourist asks: “At what time does Venice close?” It’s very funny, except, of course, that it is not funny at all.

This year Amsterdam’s 850,000 inhabitants will see an estimated 18.5 million tourists flock to the city – up 11% on last year. By 2025, 23 million are expected. Last week the city’s ombudsman condemned the red light district as no longer under government control at weekends. Criminals operate with impunity; the police can no longer protect citizens; ambulances struggle to reach victims on time. [..] There are several ways to react. One is to leave town. A study shows that in the past five years 40% of couples relocated to smaller towns after their first child. Many feel this is no longer a city to raise kids.

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Hard to prove, I said it before. But a jury might decide anyway. Huge case, 5,000 more plaintiffs to come.

First Trial Alleging Monsanto’s Roundup Causes Cancer Goes To Jury (R.)

Groundskeeper Dewayne Johnson is one of more than 5,000 plaintiffs across the United States who claim Monsanto’s glyphosate-containing herbicides, including the widely-used Roundup, cause cancer. His case, the first to go to trial, began in San Francisco’s Superior Court of California four weeks ago. Johnson’s lawyer Brent Wisner on Tuesday urged jurors to hold Monsanto liable and punish them with a verdict he said would “actually change the world.” Wisner claimed Monsanto knew about glyphosate’s cancer risk, but decided to bury the information. Monsanto, a unit of Bayer following a $62.5 billion acquisition by the German conglomerate, denies the allegations and says expert testimony on which Johnson and others rely does not satisfy any scientific or legal requirements.

“The message of 40 years of scientific studies is clear: this cancer is not caused by glyphosate,” Monsanto’s lawyer George Lombardi said, according to an online broadcast of the trial by Courtroom View Network. The U.S. Environmental Protection Agency in September 2017 concluded a decades-long assessment of glyphosate risks and found the chemical not likely carcinogenic to humans. The World Health Organization’s cancer arm in 2015 classified glyphosate as “probably carcinogenic to humans.” If it finds Monsanto liable, the jury can decide to award punitive damages on top of the more than $39 million in compensatory damages Johnson demanded. The jury is expected to start deliberating on Wednesday.

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All the Presidents’ lies.

The American Sea of Deception (TD)

U.S. President Franklin D. Roosevelt lied to Congress and the American people when he claimed that the Japanese attack on Pearl Harbor was “unprovoked” by the U.S. and a complete “surprise” to the U.S. military. President Dwight Eisenhower flatly lied to the American people and the world when he denied the existence of American U-2 spy plane flights over Russia. President John F. Kennedy lied about the supposed missile gap between the United States and the Soviet Union. And Kennedy lied when he claimed that the United States sought democracy in Latin America, Southeast Asia and around the world. President Lyndon Johnson lied on Aug. 4, 1965, when he claimed that North Vietnam attacked U.S. Navy destroyers in the Gulf of Tonkin. This provided a false pretext for a massive escalation of the U.S. war on Vietnam, resulting in the deaths of more than 50,000 U.S. military personnel and millions of Southeast Asians.

Regarding Vietnam, Daniel Ellsberg recalled 17 years ago that his 1971 release of the Pentagon Papers exposed U.S. military and intelligence documents “proving that the government had long lied to the country. Indeed, the papers revealed a policy of concealment and quite deliberate deception from the Truman administration onward. … A generation of presidents,” Ellsberg noted, “chose to conceal from Congress and the public what the real policy was. …” President Richard Nixon lied about wanting peace in Vietnam (his agent, Henry Kissinger, actively undermined a peace accord with Hanoi before the 1968 election) and about respecting the neutrality of Cambodia. He lied through secrecy and omission about the criminal and fateful U.S. bombing of Cambodia—a far bigger crime than the burglarizing of the Democratic Party headquarters in the Watergate complex, about which he of course famously lied.

The serial fabricator Ronald Reagan made a special address to the nation in which he lied by saying, “We did not—repeat—we did not trade weapons or anything else [to Iran] for hostages, nor will we.” President George H.W. Bush falsely claimed on at least five occasions in the run-up to the 1990-91 Persian Gulf War that Iraqi forces, after invading Kuwait, had pulled babies from incubators and left them to die.

President Bill Clinton shamelessly lied about his White House sexual shenanigans with Monica Lewinsky. He falsely claimed to be upholding international law and to be opposing genocide when he bombed Serbia for more than two months in early 1999. The serial liar George W. Bush and his administration infamously, openly and elaborately lied about Saddam Hussein’s alleged Iraqi “weapons of mass destruction” and about Iraq’s purported links to al Qaida and the 9/11 jetliner attacks. After the WMD fabrication was exposed, Bush falsely claimed to have invaded Iraq to spread liberty and democracy.

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Jul 172018
 
 July 17, 2018  Posted by at 8:39 am Finance Tagged with: , , , , , , , , , , ,  


René Magritte The human condition 1935

 

IMF Warns Trump Trade War Could Cost Global Economy $430 Billion (G.)
Detente Bad, Cold War Good (Murray)
Mueller’s Latest Indictment Contradicts Evidence In The Public Domain (Carter)
Has Mueller Caught the Hackers? (RN/NC)
Putin Rejects UK’s ‘Ungrounded Accusations’ Over Novichok Poisoning (AFP)
Vote Leave Fined For Breaking Electoral Law (BBC)
May Narrowly Heads Off Defeat After Caving In To Brexit Hardliners (G.)
Brexit Is Like The Python That Swallowed An Alligator (Ind.)
Theresa May Told Her Chequers Deal Is ‘Dead In The Water’ (Ind.)
IRS To Revoke 362,000 Passports From US Citizens (Black)
Going Cashless Is Discriminatory (G.)
Netflix Stock Slammed As Subscriber Growth And Revenue Fall Short (MW)
Airbnb Warned It Breaches EU Rules Over Pricing Policy (G.)
High Housing Costs Prompt Thousands of Greeks To Disclaim Inheritance (K.)

 

 

US “as the focus of global retaliation”..

IMF Warns Trump Trade War Could Cost Global Economy $430 Billion (G.)

Rising trade tensions between the United States and the rest of the world could cost the global economy $430bn, with America “especially vulnerable” to an escalating tariff war, the International Monetary Fund has warned. Delivering a sharp rebuke for Donald Trump, the Washington-based organisation said the current threats made by the US and its trading partners risked lowering global growth by as much as 0.5% by 2020, or about $430bn in lost GDP worldwide. Although all economies would suffer from further escalation, the US would find itself “as the focus of global retaliation” with a relatively higher share of its exports taxed in global markets. “It is therefore especially vulnerable,” the fund said.

Trump raised the stakes in his mounting trade dispute with China last week by proposing 10% tariffs on $200bn of Chinese goods entering the country, on top of $34bn of tariffs that were officially imposed on Beijing at the beginning of the month. The Chinese government, which hit back at the first wave of US tariffs with similar measures, was quick to warn of further retaliation on Monday.[..] Issuing its latest World Economic Outlook report on Monday amid the rising tensions, the IMF said there were greater risks emerging for the global economy since its last assessment in the spring. Although world growth remains strong, the expansion is “becoming less even, and risks to the outlook are mounting”, it said.

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So much vitriol these days. Craig Murray is one of many to tone it down.

Detente Bad, Cold War Good (Murray)

The entire “liberal” media and political establishment of the Western world reveals its militarist, authoritarian soul today with the screaming and hysterical attacks on the very prospect of detente with Russia. Peace apparently is a terrible thing; a renewed arms race, with quite literally trillions of dollars pumped into the military industrial complex and hundreds of thousands dying in proxy wars, is apparently the “liberal” stance. Political memories are short, but just 15 years after Iraq was destroyed and the chain reaction sent most of the Arab world back to the dark ages, it is now “treason” to question the word of the Western intelligence agencies, which deliberately and knowingly produced a fabric of lies on Iraqi WMD to justify that destruction.

It would be more rational for it to be treason for leaders to blindly accept the word of the intelligence services. This is especially true on “Russia hacking the election” when, after three years of crazed accusations and millions of man hours by lawyers and CIA and FBI investigators, they are yet to produce any substantive evidence of accusations which are plainly nuts in the first place. This ridiculous circus has found a few facebook ads and indicted one Russian for every 100,000 man hours worked, for unspecified or minor actions which had no possible bearing on the election result.

There are in fact genuine acts of election rigging to investigate. In particular, the multiple actions of the DNC and Democratic Party establishment to rig the Primary against Bernie Sanders do have some very real documentary evidence to substantiate them, and that evidence is even public. Yet those real acts of election rigging are ignored and instead the huge investigation is focused on catching those who revealed Hillary’s election rigging. This gets even more absurd – the investigation then quite deliberately does not focus on catching whoever leaked Hillary’s election rigging, but instead seeks to prove that the Russians hacked Hillary’s election-rigging, which I can assure you they did not. Meanwhile, those of us who might help them with the truth if they were actually interested, are not questioned at all.

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Excellent point by point take-down of the entire indictment.

Mueller’s Latest Indictment Contradicts Evidence In The Public Domain (Carter)

Mueller’s indictment leaves us with the premise that a supposed GRU officer working in league with other GRU officers, acquiring Podesta’s attachments and, just three days after Julian Assange announces leaks are coming in relation to Hillary Clinton, releases deliberately tainted files that serve to pin the blame on Russians, that only really hurt Trump, that ultimately undermined leaks and that provided fabricated evidence. Evidence that, for whatever reason, supported several claims made by CrowdStrike executives published in a legacy media article the previous day.

Guccifer 2.0 repeatedly tried to associate his efforts with WikiLeaks (from the day he appeared) – an organization for whistleblowers to be able to leak files anonymously. Something a hacker willing to publish leaks on his own blog would have had no need for, especially not if he was connected to a site that published leaks already (that is, DCLeaks.com). What we know about Guccifer 2.0 and his multi-layered efforts to be seen as Russian destroy the notion that he was anyone operating on the side of the Russian state.

Ultimately, the indictment produces a lot of new claims, many in keeping with what we know or have heard, however, it presents no evidence to support what it has introduced and an indictment by itself is not evidence, points that have already been noted by Consortium News, Moon of Alabama, Mark McCarty and others. They have also picked up on the timing of the indictment, which seems to have become a theme for Mueller’s indictments in particular. This latest example comes immediately following Rosenstein and Strzok being grilled and receiving negative press as well as immediately before Trump’s summit with Putin. Exactly how much of the indictment is bogus, I can’t know for sure, but definitely, some of it is, especially those parts that relate to the Guccifer 2.0 persona “being on Russia’s side” in all of this.

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The whole WMD presentation lost Mueller his right to be believed at face value.

Has Mueller Caught the Hackers? (RN/NC)

AARON MATE: Right. So, then let me ask you, Michael, this question, this belief that Putin personally ordered this interference campaign against the U.S. The strongest evidence to bolster it that I’ve seen was this Washington Post report in June 2017, I believe, that said that the U.S. had a mole inside Putin’s inner circle who reported that he personally instructed this operation to happen. Doesn’t that strike you as odd, that, well A, that the U.S. could penetrate Putin’s inner circle at that high level, and B, if they did, that they’d be willing to disclose that in a media report, thereby potentially compromising this incredibly sensitive source of information?

MICHAEL ISIKOFF: Now, you read Russian Roulette and you read about the secret source they had inside the Kremlin in 2014, who was warning the U.S. government that this is exactly what Putin’s government was up to. And this is what they were planning. And I know exactly. I know, we know a lot more about that secret source than we put in the book. This was something that was vetted very carefully. But it is not at all unusual that American spy agencies would seek to cultivate and develop sources who can provide insight into what Putin’s up to, and in these cases they clearly did.

AARON MATE: Someone claims they did. I just find it shocking that they would publicly reveal that, something that high level.

MICHAEL ISIKOFF: Well, so what’s your suggestion? That they invented the source, or what’s your-?

AARON MATE: My suggestion is it’s quite possible that, given the legacy of U.S. intelligence officials inventing intelligence to fix, to comport with political imperatives whatever they are, whether it’s the Iraq War, whether it’s allegations against any number of official U.S. enemies, that that may have happened here. And I’m just urging skepticism in the absence of evidence that we obviously disagree on whether it has been presented yet.

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Doesn’t look like we will ever see proof.

Putin Rejects UK’s ‘Ungrounded Accusations’ Over Novichok Poisoning (AFP)

Vladimir Putin has accused Britain of making baseless allegations against Russia over the former Soviet spy and three other people poisoned, one fatally, with the novichok nerve agent in Salisbury. Asked in a Fox News interview about the British government’s assertion that Moscow was behind the novichok attack on the former spy Sergei Skripal, Putin said London had not provided any evidence to back up the claim. “We would like to get documentary evidence but nobody gives it to us,” Putin, speaking through a translator, told the US network after a summit with Donald Trump in Finland.

“It’s the same thing with the accusations of meddling in the election process in America,” he added in reference to claims that Russia interfered in the 2016 US presidential election which was won by Trump. Putin suggested the case could be driven by domestic issues in Britain, saying: “Nobody wants to look into these.” “We just see the ungrounded accusations – why is it done this way? Why should our relationship be made worse by this?” The former Russian double agent Skripal and his daughter Yulia collapsed in Salisbury on 4 March after being exposed to novichok. Both have since recovered. On 30 June Charlie Rowley and his partner Dawn Sturgess fell ill not far from the Skripal attack after being exposed to the same nerve agent. Sturgess died on 8 July.

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Referred to the police. What are they going to do with this? At what point does the whole vote get nullified?

Vote Leave Fined For Breaking Electoral Law (BBC)

Brexit campaign group Vote Leave has been fined £61,000 and referred to the police after an Electoral Commission probe said it broke electoral law. The investigation found “significant evidence of joint working” between the group and another organisation – BeLeave – leading to it exceeding its spending limit by almost £500,000. Vote Leave also returned an “incomplete and inaccurate spending report”, with almost £234,501 reported incorrectly, and invoices missing for £12,849.99 of spending, the watchdog said. BeLeave founder Darren Grimes has also been fined and referred to the police for breaking the group’s spending limit by more than £665,000 and wrongly reporting the spending as his own.

Veterans for Britain were also found to have inaccurately reported a donation it received from Vote Leave and has been fined £250. Bob Posner, from the Electoral Commission, said: “The Electoral Commission has followed the evidence and conducted a thorough investigation into spending and campaigning carried out by Vote Leave and BeLeave. “We found substantial evidence that the two groups worked to a common plan, did not declare their joint working and did not adhere to the legal spending limits. These are serious breaches of the laws put in place by Parliament to ensure fairness and transparency at elections and referendums.”

He added: “Vote Leave has resisted our investigation from the start, including contesting our right as the statutory regulator to open the investigation. It has refused to cooperate, refused our requests to put forward a representative for interview, and forced us to use our legal powers to compel it to provide evidence. “Nevertheless, the evidence we have found is clear and substantial, and can now be seen in our report.”

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Like a full-time contortionist.

May Narrowly Heads Off Defeat After Caving In To Brexit Hardliners (G.)

Theresa May has narrowly seen off a Commons rebellion from Conservative remainers unhappy that she had caved in to hardline Brexiters by accepting their amendments to the customs bill. The government majority was reduced to just three votes on the two most controversial amendments after leading Tory remainer Anna Soubry complained that the prime minister had lost control of events by making concessions to the rightwing European Research Group of MPs. The most important of the four amendments from the ERG, chaired by Jacob Rees-Mogg, had been designed to frustrate May’s compromise proposals over customs arrangements and had initially been opposed by the government, until Downing Street made a sudden U-turn in the afternoon.

No 10 then concluded that all four amendments were “consistent with the Brexit white paper”, a decision that so incensed Tory remainers they vowed to vote against the amendments in Monday night’s Commons debate. One junior minister, Guto Bebb, resigned rather than support the ERG customs union amendment, which narrowly passed by 305 to 302. A total of 14 Tory remainers voted against the government, while three Labour MPs and former Labour MP Kelvin Hopkins voted the other way. A second ERG amendment, preventing the UK joining in with the EU’s VAT regime post-Brexit, passed 303 to 300.

A frustrated Soubry had told the Commons: “The only reason that the government has accepted these amendments is because it is frightened of somewhere in the region of 40 members of parliament – the hard, no-deal Brexiteers, who should have been seen off a long time ago and should be seen off.”

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Nice metaphor.

Brexit Is Like The Python That Swallowed An Alligator (Ind.)

About a year ago, I described the passage of Brexit through parliament as being like that regularly reappearing photograph of a Burmese python that tried to swallow a six-foot alligator whole and accidentally exploded. The alligator suffocated, the python’s head got blown off. That much is not contested. But apart from that, no one knows quite what happened in the hours before an amateur photographer chanced upon it. We must presume the alligator struggled til the last, and that is the stage of Brexit at which we have now arrived. Parliament embraced Brexit of its own free will, but now it cannot handle the monster coming down its oesophagus. And the monster itself does not want to die.

More than a year on from triggering Article 50, the point at which the teeth of the two beast’s teeth first touched, Theresa May had hoped she had found a way of easing its passage that might keep both alive. The so-called “Chequers deal”, which is not a deal at all but an agreed position among the cabinet, detonated the cabinet within moments of it being agreed to. None of which engages with the fact that the European Union was highly likely to reject the agreement anyway. David Davis has quit. Boris Johnson has quit. Justine Greening, the former education secretary who quit in January, has said the only way forward is a second referendum with three choices on the ballot paper (hard Brexit, no Brexit, or the least damaging Brexit the government can manage to get).

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No there there.

Theresa May Told Her Chequers Deal Is ‘Dead In The Water’ (Ind.)

Theresa May has faced taunts that her Chequers deal is “dead in the water” after caving in to a series of changes to customs rules demanded by pro-hard Brexit Tories. Plans for the UK to collect duties for the EU – which lie at the heart of the prime minister’s hopes for a deal with Brussels – will only go forward if the EU in turn agrees to collect them for the UK. There appears to be no prospect of the EU bowing to such a request, apparently throwing the hard-fought Chequers proposals up in the air after just 10 days. In the Commons, Ms May was accused of “dancing to the tune of the European Research Group” – the 60-80 strong organisation of Brexiteer MPs led by Jacob Rees-Mogg.

“By capitulating to their proposals on the Customs and [the] Trade Bill she is accepting that the Chequers deal is now dead in the water,” said Labour MP Stephen Kinnock. Ms May insisted he was “absolutely wrong”, telling MPs: “I would not have gone through all the work that I did to ensure that we reached that agreement only to see it changed in some way through these bills. They do not change that Chequers agreement.” Nevertheless, the Brexit white paper – published only four days ago – appeared to rule out a requirement for the EU to agree reciprocal arrangements. It said the two sides would have to “agree a mechanism for the remittance of relevant tariff revenue”, but added: “The UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

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Disturbing.

IRS To Revoke 362,000 Passports From US Citizens (Black)

About two and a half years ago, I told you about a particularly nasty piece of legislation that President Obama quietly signed into law towards the end of his administration. They called it the “FAST Act”, which stood for Fixing America’s Surface Transportation. Yet despite $300 billion earmarked for infrastructure repairs, they didn’t manage to fix very much of America’s surface transportation. The legislation did, however, have two major effects: 1) The FAST Act authorized the US government to plunder excess capital from the Federal Reserve… which is about as stupid as thing as anyone could possibly do. The Federal Reserve is America’s central bank; they control the value and fate of the US dollar… which is still the most dominant currency in the world.

You’d think that having some excess cash on the Federal Reserve’s balance sheet would be viewed as wise and conservative. But not Congress. These guys are so broke, they’ll grab every penny they can get. Even from their own central bank. So they buried a provision into the FAST Act demanding that the Federal Reserve hand over any excess capital to the Treasury Department at the end of every calendar year. They started doing that almost immediately, in December 2015. And in 2016. And in 2017. This is one of the reasons why, to this day, the Federal Reserve is borderline insolvent… which hardly inspires confidence. Now, I could go on for quite some time about what an idiotic idea this was. But believe it or not, there was an even worse section of the FAST Act– one they only started implementing recently:

2) Section 32101 of the FAST Act required the US State Department to revoke or deny the passport of any taxpayer that the IRS deems to have “seriously delinquent tax debt.” They define seriously delinquent tax debt as owing $50,000 or more. Well, it took them a couple of years, but the IRS has finally started enforcing this law. Earlier this month the IRS acknowledged that they had sent at least 362,000 names to the State Department to start revoking or denying passports. And that’s just the beginning. The IRS is sending these names out ‘in batches’, so there will be many more to follow. They hope to be finished by the end of the year.

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Washington DC, capital of cash.

Going Cashless Is Discriminatory (G.)

Mobile payments. Credit cards. Digital currencies. Going cashless seems to be a worldwide trend. In Belgium, it is illegal to buy real estate with cash. Some banks in Australia have eliminated cash from their branches. Sweden has seen its use of cash drop to less than 2% of all transactions, and the number could be heading even lower in the next few years. However, one city in the US is resisting that trend: Washington DC. In the nation’s capital cash is still king, and a new bill introduced this week wants to keep it that way. The Cashless Retailers Prohibition Act of 2018 would make it illegal for restaurants and retailers not to accept cash or charge a different price to customers depending on the type of payment they use.

City councilmember David Grasso, and five other councilmembers who co-introduced the bill, are responding to the recent tide of retailers in their city and around the country – like the salad chain Sweetgreen – who are no longer accepting cash. These retailers, which mostly serve upscale customers, say that going cashless speeds up transactions, improves customer service and makes for more accurate accounting. They also argue that having less cash lying around also minimizes the risk of crime and contributes to a safer environment for both their customers and employees.

But to some, not accepting cash is discriminatory. A report last year by the Washington City Paper found that 27% of people in the US would have trouble using only a credit card to purchase products, and that the percentage in Washington DC is even higher. “I’m concerned with more and more restaurants, businesses and shops going cashless because you’re systematically excluding a group of people who are already disadvantaged and disenfranchised,” Linnea Lassiter, an analyst at the DC Fiscal Policy Institute, told the paper. “And now they can’t have access to this restaurant?”

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When growth slows…

Netflix Stock Slammed As Subscriber Growth And Revenue Fall Short (MW)

Netflix posted weaker-than-expected second-quarter revenue and subscriber numbers Monday afternoon, sending its stock into a sharp dive during after-hours trading. Netflix shares fell about 14% in the extended session after the Los Gatos, Calif-based company announced it added 5.2 million streaming users in the second quarter, a substantial drop from the 6.2 million estimate the company provided in April. The company added 4.47 million international subscribers and 670,000 domestic subscribers, missing its April estimates of 5.9 million and 1.2 million.

The company reported a profit of $384 million, or 85 cents a share, topping the FactSet consensus of 79 cents a share and up from $66 million, or 15 cents a share, in the same quarter a year ago. Revenue rose to $3.91 billion from $2.79 billion the year before, just below the FactSet consensus of $3.94 billion. In a letter to shareholders, Netflix said the company had a “strong but not stellar” quarter, acknowledging the company had “over-forecasted” both domestic and global net subscriber additions and “acquisition growth was lower than we projected.”

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Doesn’t feel like the EU actually identifies the danger to society.

Airbnb Warned It Breaches EU Rules Over Pricing Policy (G.)

Airbnb has been found in breach of EU law and given until the end of the summer to ditch a range of practices, including that of belatedly applying additional fees to the prices it promotes online. The accommodation service has been accused by the European commission and national regulators of failing its customers and making the mistake of many global digital firms of “forgetting its responsibilities”. Vera Jourova, the commissioner for justice and consumers, told reporters in Brussels that the company had until the end of August to show it was reforming its ways or it could expect national regulators across Europe to launch coordinated action.

The commissioner said the prices displayed to those using the Airbnb website fail to reflect the fees and charges later passed on to the consumer, including cleaning costs. The site did not clearly identify if the offer of accommodation was being made by amateur hosts or professionals. The issue is important because the level of consumer rights differ according to the status of the owner, as do the health and safety requirements. The commissioner said Airbnb’s terms and conditions were unclear. She also said the company should put an end to its policy of seeking to tackle legal complaints made by its clients in courts outside the country where the complainant resides.

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Maybe the government can make a deal with Airbnb.

High Housing Costs Prompt Thousands of Greeks To Disclaim Inheritance (K.)

Thousands of properties are coming into the state’s possession not because they’re bogged down in debt, but simply because the people who inherit them are opting to give up the titles. According to real estate experts, more than 135,000 inheritances were disclaimed in 2017, because the beneficiaries were unable to pay the inheritance tax or they found the future financial demands of the property unbearable. The slump in the real estate market, in combination with the fact that many properties are suffering from neglect, meanwhile, are making it even harder for those who may be hoping to find a buyer before accepting their inheritance.

“Property has become a burden,” says Babis Haralambopoulos, a certified valuer, scientific consultant to Solum Property Solutions and former president of the Hellenic Valuation Institute. “Since the start of the crisis, residential properties have shed an average of 45 percent of their value, while there’s a trend toward stabilization right now.” Meanwhile, recent data from Eurostat showed that Greece had the highest housing costs as a percentage of disposable income among the European Union’s member-states. In 2016, the proportion of Greek households that spent more than 40 percent of their disposable income on housing costs came to 40.5 percent, which is almost four times the EU average of 11.1 percent.

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Jun 152018
 
 June 15, 2018  Posted by at 8:10 am Finance Tagged with: , , , , , , , , , , , , ,  


OR LIGHT Compassion 2018

 

Argentina’s Peso Collapses Even Further Despite $50 Billion IMF Bailout (WS)
ECB Calls Halt To Quantitative Easing, Despite ‘Soft’ Euro (G.)
Japan’s Central Bank Dials Down Inflation View, Complicates Stimulus-Exit (R.)
Powell Orchestrates a Masterful Move (DDMB)
The Fed Creates Problems For Itself (Macleod)
The Art of the Deal Worked On Sentosa Island (AT)
Absence of “CVID” In Joint Statement? (Hani)
Optimism (Caitlin Johnstone)
Blackstone Becomes Biggest Hotel & Property Owner in Spain (WS)
‘Tourism Pollution’: Japanese Crackdown Costs Airbnb $10 Million (G.)
Greeks Are Least Satisfied In The EU (K.)
Turkey: Even Birds Need Our Consent To Fly In The Aegean (K.)
Comey et al Just Made It More Difficult For Mueller To Prosecute Trump (Hill)
A Closer Look At Extreme FBI Bias Revealed In OIG Report (ZH)

 

 

Money has left the building.

Argentina’s Peso Collapses Even Further Despite $50 Billion IMF Bailout (WS)

Today the Argentina peso plunged another 5.5% against the US dollar. It now takes ARS 27.7 to buy $1. Over the past 16 years, the peso has gone through waves of collapses. This collapse began on April 20. The central bank of Argentina (BCRA) countered it by selling $1 billion per day of scarce foreign exchange reserves and buying pesos. The peso fell more quickly. The BCRA responded with three rate hikes, to finally 40%! On May 8, the government asked the IMF for a bailout. On May 16, after a chaotic plunge of the peso, the BCRA was able to refinance about $26 billion in maturing peso-denominated short-term debt (Lebacs) at an annual interest of 40%, and the peso bounced. It was a dead-cat bounce, however, and the peso plunged another 13% against the dollar through today.

Since April 20, the peso has plunged 27.5%. The annotated chart shows the daily moves of the collapse, and the various failed gyrations to halt it (the chart depicts the value of 1 ARS in USD). The collapse of the peso comes despite an endless series of measures to halt it. Just this week so far: On Tuesday, the BCRA decided to keep its key interest rate at 40%; and on Wednesday, the Ministry of Finance announced it would hold daily auctions to sell $7.5 billion in foreign exchange reserves and buy pesos, to prop up the peso. But it was apparently the only one buying pesos. With inflation at 25.5% and heading to 27% by year-end, according to government estimates, with a rising budget deficit, a surging current account deficit, soaring borrowing costs, and burned investors, what else is there to do?

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Not Draghi’s finest hour.

ECB Calls Halt To Quantitative Easing, Despite ‘Soft’ Euro (G.)

The European Central Bank has shrugged off evidence of a slowdown in the eurozone and announced that it will phase out the stimulus provided by its massive three-year bond-buying programme to the eurozone economy by the end of the year. Despite warning that the single currency area was going through a soft patch at a time when protectionist risks were rising, the ECB said it would wind down its bond purchases over the next six months. The ECB is currently boosting the eurozone money supply by buying €30bn of assets each month, but this will be reduced to €15bn a month after September and ended completely at the end of 2018.

The move follows strong pressure from some eurozone countries, led by Germany, that were uncomfortable about the more than €2.4tn of assets accumulated by the ECB since it launched its quantitative easing programme at the start of 2015. Mario Draghi, the ECB’s president, said at the end of a meeting of the bank’s governing council in Latvia that the QE programme had succeeded in its aim of putting inflation on course to meet its target of being below but close to 2%. Eurozone activity has accelerated markedly over the past three years, with some estimates suggesting that QE contributed 0.75percentage points a year to the average 2.25% annual growth rate.

The ECB’s statement reflected the battle between hawks and doves on the bank’s council, with the decision on QE matched by a softening of its approach to interest rates. Draghi said there would be no prospect of an increase in the ECB’s key lending rate – currently 0.0% – until next summer at the earliest. “We decided to keep the key ECB interest rates unchanged and we expect them to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path,” Draghi said.

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No, really, Abenomics is dead.

Japan’s Central Bank Dials Down Inflation View, Complicates Stimulus-Exit (R.)

The Bank of Japan maintained its ultra-loose monetary policy on Friday and downgraded its view on inflation in a fresh blow to its long-held 2% price goal, further complicating the central bank’s path to rolling back its crisis-era stimulus. Markets are on the lookout for clues from BOJ Governor Haruhiko Kuroda’s post-meeting briefing on how long the central bank could hold off on whittling down stimulus given recent disappointingly weak price growth. As widely expected, the Bank of Japan kept its short-term interest rate target at minus 0.1% and a pledge to guide 10-year government bond yields around zero%.

The move contrasts with the European Central Bank’s decision to end its asset-purchase program this year and the U.S. Federal Reserve’s steady rate increases, which signaled a break from policies deployed to battle the 2007-2009 financial crisis. “Consumer price growth is in a range of 0.5 to 1%,” the BOJ said in a statement accompanying the decision. That was a slightly bleaker view than in the previous meeting in April, when the bank said inflation was moving around 1%. The BOJ stuck to its view the economy was expanding moderately, unfazed by a first-quarter contraction that many analysts blame on temporary factors like bad weather.

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He just likes the attention.

Powell Orchestrates a Masterful Move (DDMB)

Federal Reserve Chairman Jerome Powell has taken the first steps in remaking the central bank in his “plain-English” image, which can only be a good thing for financial markets. Earlier this week, news leaked that the central bank was considering holding a press conference following each Federal Open Market Committee meeting instead of after every other one like it does now. The reports set off a mini-storm. Speculation rose the Fed would implement this new policy immediately, which could mean the central bank was considering accelerating the pace of interest-rate increases as soon as August. After all, investors had become accustomed to the Fed only making a major policy move at meetings followed by a press conference. Now, every meeting would be “live.”

But in a masterful move, Chairman Jerome Powell managed to confirm the policy while also putting financial markets at ease. Rather than announcing the change in the official statement outlining the Fed’s plan to raise its target for the federal funds rate for the seventh time since December 2015, Powell waited until the start of his press conference to drop the bomb, noting that the policy wouldn’t start until January. Here’s Powell’s reasoning: “My colleagues and I meet eight times a year and take a fresh look each time at what is happening in the economy and consider whether our policy needs adjusting. We don’t put our interest rate decisions on auto-pilot because the economy can always evolve in unexpected ways.

History has shown that moving interest rates either too quickly or too slowly can lead to bad economic outcomes. We think the outcomes are likely to be better overall if we are as clear as possible about what we are likely to do and why. To that end, we try to give a sense of our expectations for how the economy will evolve and how our policy stance may change. As Chairman, I hope to foster a public conversation about what the Fed is doing to support a strong and resilient economy. And one practical step in doing so is to have a press conference like this after every one of our scheduled FOMC meetings. We’re going to do that beginning in January. That will give us more opportunities to explain our actions and to answer your questions.

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“..the unsustainable excesses of unprofitable debt created by suppressing interest rates..”

The Fed Creates Problems For Itself (Macleod)

Since Hayek’s time, monetary policy, particularly in America, has evolved away from targeting production and discouraging savings by suppressing interest rates, towards encouraging consumption through expanding consumer finance. American consumers are living beyond their means and have commonly depleted all their liquid savings. But given the variations in the cost of consumer finance (between 0% car loans and 20% credit card and overdraft rates), consumers are generally insensitive to changes in interest rates. Therefore, despite the rise of consumer finance, we can still regard Hayek’s triangle as illustrating the driving force behind the credit cycle, and the unsustainable excesses of unprofitable debt created by suppressing interest rates as the reason monetary policy always leads to an economic crisis.

The chart below shows we could be living dangerously close to another tipping point, whereby the rises in the Fed Funds Rate (FFR) might be about to trigger a new credit and economic crisis. Previous peaks in the FFR coincided with the onset of economic downturns, because they exposed unsustainable business models. On the basis of simple extrapolation, the area between the two dotted lines, which roughly join these peaks, is where the current FFR cycle can be expected to peak. It is currently standing at about 2% after yesterday’s increase, and the Fed expects the FFR to average 3.1% in 2019. The chart tells us the Fed is already living dangerously with yesterday’s hike, and further rises will all but guarantee a credit crisis.

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The view from Asia Times. Many people in that part of the world don’t understand the criticism.

The Art of the Deal Worked On Sentosa Island (AT)

Some statesmen by their sheer force of personality and unorthodox ways of politicking arouse disdain among onlookers. US President Donald is perhaps the most famous figure of that kind in world politics today. No matter what he does, Trump attracts criticism. He evokes strong feelings of antipathy among a large and voluble swathe of opinion within half of America. The making of history in a virtual solo act on his part, which is the rarest of efforts, on Sentosa Island in Singapore on Tuesday and which the world watched with awe and disbelief, will be instinctively stonewalled. Half of America simply refuses to accept the positive tidings about him coming from Singapore.

The skeptics are all over social media pouring scorn, voicing skepticism, unable to accept that if the man has done something sensible and good for his country and for world peace, it deserves at the very least patient, courteous attention. The problem is about Trump – not so much the imperative need of North Korea’s denuclearization. But western detractors – ostensibly rooting for the “liberal international order” – will eventually lapse into silence because what emerges is that North Korean leader Kim Jong-un has enough to “bite” here in the deal that Trump is offering – broadly, a security guarantee from the US and the offer of a full-bodied relationship with an incremental end to sanctions plus a peace treaty.

Succinctly put, Trump has offered a deal that Kim simply cannot afford to reject. The ending of the US-ROK military exercises forthwith; Trump’s agenda of eventual withdrawal of troops from ROK; the lure of possible withdrawal of sanctions once 20% of the denuclearization process gets underway, or once the process becomes irreversible; Trump’s hint that he has sought assurances from Japan and the ROK that they will be “generous” in offering economic assistance to the reconstruction of North Korea; China’s involvement in the crucial process – these are tangibles.

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The view from South Korea.

Absence of “CVID” In Joint Statement? (Hani)

The absence of any reference to “complete, verifiable, and irreversible dismantlement” (CVID) of North Korea’s nuclear program in the joint statement reached at US President Donald Trump and North Korean leader Kim Jong-un’s June 12 summit in Singapore is being seen by some as a “negotiation failure” on the US’s part. But an analysis of Trump’s subsequent remarks – and a reading between the lines of the Pyongyang’s official announcement – suggests the US achieved practical gains in terms of a commitment from the North in exchange for the face-saving measure of avoiding use of the “CVID” term due to possible North Korean objections to it.

To begin with, the Singapore joint statement’s language marks a step forward from the Panmunjeom Declaration of Apr. 27 in terms of the final goal of denuclearizing the Korean Peninsula. The latest statement refers to Kim having “reaffirmed his firm and unwavering commitment to complete denuclearization of the Korean Peninsula.” While the Panmunjeom Declaration referred to “realizing, through complete denuclearization, a nuclear-free Korean Peninsula,” the new statement includes the additional reference to a “firm and unwavering commitment.”

From the reference to Kim’s “firm and unwavering” commitment to denuclearization, some experts are suggesting North Korea may have agreed to verification in addition to denuclearization – in other words, that the language may be a substitute for the “verifiable” part of the CVID approach demanded by Washington. “You could see them as having used the term out of awareness of North Korea’s discomfort with the word ‘verification,’” Handong Global University professor Kim Joon-hyung said after a Korea Press Foundation debate at Singapore’s Swissotel on June 13. “It may be fair to say North Korea made a definite commitment on the implementation and verification issues,” Kim argued.

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“..while you can always count on Capitol Hill to make it incredibly easy for a president to deploy military personnel around the globe, giving that same office the power to bring troops home is a completely different matter. ”

Optimism (Caitlin Johnstone)

Off the top of my head I have a hard time thinking of anything sleazier than smearing peace talks in order to gain partisan political points, but that has indeed been the theme of the last few days when it comes to the Singapore summit. Liberal pundits everywhere have been busily circulating the narrative that Kim Jong-Un “played” Trump by getting him to temporarily halt military drills in exchange for suspended nuclear testing. It was the most fundamental beginning of peace negotiations and a slight deescalation in tensions on the Korean Peninsula, but the way they talk about it you’d think Kim had taken off from Singapore in Air Force One with the keys to Fort Knox and Melania on his lap.

I’m not sure how far up the military-industrial complex’s ass one’s head needs to be to think that one single step toward peace is a gigantic take-all-the-chips win for the impoverished North Korea, but many of Trump’s political enemies are taking it even further. Senate Democrats have introduced a bill to make it more difficult for Trump to withdraw US troops from South Korea, because while you can always count on Capitol Hill to make it incredibly easy for a president to deploy military personnel around the globe, giving that same office the power to bring troops home is a completely different matter.

Surprising no one, MSNBC’s cartoon children’s program The Rachel Maddow Show took home the trophy for jaw-dropping, shark-jumping ridiculousness with an eighteen-minute Alex Jones impression claiming that the chief architect of the Korean negotiations was none other than (and if you can’t guess whose name I’m going to write once we get out of these parentheses I deeply envy your ignorance on this matter) Vladimir Putin. [..] This president is facilitating acts of military violence and dangerous escalations around the world; anyone who isn’t relieved by the possibility of one powder keg being defused in that rampage actually has a lot more faith in Trump’s competence than they’re pretending to.

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Easy pickings.

Blackstone Becomes Biggest Hotel & Property Owner in Spain (WS)

Private equity firm Blackstone, the undisputed king of property funds, continues to bet big on global real estate. In the last week it raised $9.4 billion for Asian real estate. It was also given the green light to acquire Spain’s biggest real estate investment fund (REIT), Hispania, for €1.9 billion. The move, after its prior acquisitions, will cement its position as Spain’s biggest hotel owner and fully private landlord. Hispania’s 46 hotels, added to Blackstone’s other hotels, will turn the PE firm into Spain’s largest hotelier with almost 17,000 rooms, far ahead of Meliá (almost 11,000), H10 (more than 10,000) and Hoteles Globales (just over 9,000).

It took Blackstone just three moves to become market leader. First, it acquired the hotel group HI Partners from struggling Spanish lender Banco Sabadell for €630 million in October 2017. Then, a month ago, it bought 29.5% of the hotel chain NH Hoteles, which is currently in the hands of the Chinese conglomerate HNA. Now, by raising its stake in Hispania from 16.75% to 100%, it will take up a dominant position in one of the world’s biggest tourist markets. With this deal, it will also expand its residential property empire in Spain. Blackstone has over 100,000 real estate assets controlled via dozens of companies. Those assets include a huge portfolio of impaired real estate assets, including defaulted mortgages and real estate-owned assets (REOs).

Blackstone also owns 1,800 social housing units, which it acquired from Madrid City Hall in a controversial deal brokered by the son of former Spanish prime minister José María Aznar and former Madrid mayor Ana Botella. Blackstone paid €202 million for the apartments in 2013; they are now estimated to be worth €660 million — a 227% return in just five year! Since its purchase of the properties, Blackstone has hiked rents on the flats by 49%. Those who can’t pay have been evicted. Blackstone also played a starring role in one of the world’s biggest real estate operations of 2017, in which it payed €5.1 billion for the defaulted loans Banco Santander inherited from its shotgun-acquisition of Banco Popular.

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“..a dramatic drop in the number of Japanese properties available via Airbnb, from more than 60,000 this spring to just 1,000 on the eve of the law’s introduction.”

‘Tourism Pollution’: Japanese Crackdown Costs Airbnb $10 Million (G.)

It has become a familiar scene: tourists in rented kimonos posing for photographs in front of a Shinto shrine in Kyoto. They and other visitors have brought valuable tourist dollars to the city and other locations across Japan. But now the country’s former capital is on the frontline of a battle against “tourism pollution” that has already turned locals against visitors in cities across the world such as Venice, Barcelona and Amsterdam. The increasingly fraught relationship between tourists and their Japanese hosts has spread to the short-stay rental market. On Friday a new law comes into effect that requires property owners to register with the government before they can legally make their homes available through Airbnb and other websites.

The restriction has caused the number of available properties to plummet and has cost the US-based company millions of dollars. Thanks to government campaigns, the number of foreign tourists visiting Japan has soared since the end of a flat period caused by a strong yen and radiation fears in the aftermath of the 2011 Fukushima disaster. A record 28.7 million people visited last year, an increase of 250% since 2012. Almost seven million were from China, with visitors from South Korea, Taiwan, Hong Kong Thailand and the US taking the next five spots. By 2020, the year Tokyo hosts the Olympic Games, the government hopes the number will have risen to 40 million.

[..] Under the new private lodging law, which was supposed to address a legal grey area surrounding short-term rentals – known as minpaku – properties can be rented out for a maximum of 180 days a year, and local authorities are permitted to impose additional restrictions. The result has been a dramatic drop in the number of Japanese properties available via Airbnb, from more than 60,000 this spring to just 1,000 on the eve of the law’s introduction. The legislation has forced the firm to cancel reservations for guests planning to stay in unregistered homes after Friday and to compensate clients to the tune of about $10m.


A sign in Kyoto cautions against touching geishas, taking selfies, littering, sitting on fences and eating and smoking on the street. Photograph: Justin McCurry for the Guardian

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Surprise!

Greeks Are Least Satisfied In The EU (K.)

Greece is the least satisfied nation in the European Union, according to a Eurobarometer survey published Thursday. More specifically, the survey, conducted between March 17 and 28, showed that just 52% of Greeks said they were satisfied with their lives, compared to a 83% average for the 28-member bloc. Only 35% of Greeks surveyed said they were satisfied with the financial situation of their households, compared to 71% across the EU. A staggering 98% said the state of the country’s economy is bad while one in two Greeks said the country’s financial crisis is not over yet and that it will deteriorate even further. As for the country’s general situation, 94% said it is negative. Just 6% said the general situation was positive compared to the 51% average for EU member-states.

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Even turkeys?!

Turkey: Even Birds Need Our Consent To Fly In The Aegean (K.)

With Greece featuring prominently in Turkey’s election campaigning, Turkish Foreign Minister Mevlut Cavusoglu raised the tension a notch again Thursday, warning that not even a bird will fly over the Aegean without Ankara’s permission. Responding to criticism by Turkish ultra-nationalists that 18 islands have been “lost” to Greece in recent years, Cavusoglu said that since the crisis over the Imia islets in 1996 there have been no changes in the legal status of the Aegean. “Not only during our own rule, but before that there has been no change in the status of the Aegean. We will not allow this. Even in the case of research we will not give permission, not even to a bird in the Aegean,” he said during an interview with a Turkish radio station.

He went on to say that Turkey will make no concessions in the Aegean and Cyprus, and that Ankara will also begin gas exploration “around” the Eastern Mediterranean island. “We also have a drill,” he said. Turkey has vowed to stop Cyprus from drilling for gas and oil in its exclusive economic zone (EEZ), insisting there can be no development of the island’s natural resources without the participation of the Turkish Cypriots in the island’s Turkish-occupied north. “In the last few months we have prevented drilling and we drove the Italians away. We will not allow anyone to take away the rights of Turkish Cypriots,” he said. Cyprus government spokesman Prodromos Prodromou said that Nicosia will not be dragged into the “climate of tension” that Turkey is cultivating. He cited international law and said that Cyprus has an established EEZ. Moreover, he said the US, Russia and the European Union have all backed Cyprus’s rights.

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Wonder what the fallout will be.

Comey et al Just Made It More Difficult For Mueller To Prosecute Trump (Hill)

James Comey once described his position in the Clinton investigation as being the victim of a “500-year flood.” The point of the analogy was that he was unwittingly carried away by events rather than directly causing much of the damage to the FBI. His “500-year flood” just collided with the 500-page report of the Justice Department inspector general (IG) Michael Horowitz. The IG sinks Comey’s narrative with a finding that he “deviated” from Justice Department rules and acted in open insubordination. Rather than portraying Comey as carried away by his biblical flood, the report finds that he was the destructive force behind the controversy. The import of the report can be summed up in Comeyesque terms as the distinction between flotsam and jetsam.

Comey portrayed the broken rules as mere flotsam, or debris that floats away after a shipwreck. The IG report suggests that this was really a case of jetsam, or rules intentionally tossed over the side by Comey to lighten his load. Comey’s jetsam included rules protecting the integrity and professionalism of his agency, as represented by his public comments on the Clinton investigation. The IG report concludes, “While we did not find that these decisions were the result of political bias on Comey’s part, we nevertheless concluded that by departing so clearly and dramatically from FBI and department norms, the decisions negatively impacted the perception of the FBI and the department as fair administrators of justice.”

The report will leave many unsatisfied and undeterred. Comey went from a persona non grata to a patron saint for many Clinton supporters. Comey, who has made millions of dollars with a tell-all book portraying himself as the paragon of “ethical leadership,” continues to maintain that he would take precisely the same actions again. Ironically, Comey, fired FBI deputy director Andrew McCabe, former FBI agent Peter Strzok and others, by their actions, just made it more difficult for special counsel Robert Mueller to prosecute Trump for obstruction. There is now a comprehensive conclusion by career investigators that Comey violated core agency rules and undermined the integrity of the FBI. In other words, there was ample reason to fire James Comey.

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Many heads will roll at the Bureau.

A Closer Look At Extreme FBI Bias Revealed In OIG Report (ZH)

As we digest and unpack the DOJ Inspector General’s 500-page report on the FBI’s conduct during the Hillary Clinton email investigation “matter,” damning quotes from the OIG’s findings have begun to circulate, leaving many to wonder exactly how Inspector General Michael Horowitz was able to conclude: “We did not find documentary or testimonial evidence that improper considerations, including political bias, directly affected the specific investigative actions we reviewed” We’re sorry, that just doesn’t comport with reality whatsoever. And it really feels like the OIG report may have had a different conclusion at some point.

Just read IG Horowitz’s own assessment that “These texts are “Indicative of a biased state of mind but even more seriously, implies a willingness to take official action to impact the Presidential candidate’s electoral prospects.” Of course, today’s crown jewel is a previously undisclosed exchange between Peter Strzok and Lisa Page in which Page asks “(Trump’s) not ever going to become president, right? Right?!” to which Strzok replies “No. No he’s not. We’ll stop it.” Nevermind the fact that the FBI Director, who used personal emails for work purposes, tasked Strzok, who used personal emails for work purposes, to investigate Hillary Clinton’s use of personal emails for work purposes. Of course, we know it goes far deeper than that…

The Wall Street Journal’s Kimberley Strassel also had plenty to say in a Twitter thread:
1) Don’t believe anyone who claims Horowitz didn’t find bias. He very carefully says that he found no “documentary” evidence that bias produced “specific investigatory decisions.” That’s different
2) It means he didn’t catch anyone doing anything so dumb as writing down that they took a specific step to aid a candidate. You know, like: “Let’s give out this Combetta immunity deal so nothing comes out that will derail Hillary for President.”
3) But he in fact finds bias everywhere. The examples are shocking and concerning, and he devotes entire sections to them. And he very specifically says in the summary that they “cast a cloud” on the entire “investigation’s credibility.” That’s pretty damning.
4) Meanwhile this same cast of characters who the IG has now found to have made a hash of the Clinton investigation and who demonstrate such bias, seamlessly moved to the Trump investigation. And we’re supposed to think they got that one right?
5) Also don’t believe anyone who says this is just about Comey and his instances of insubordination. (Though they are bad enough.) This is an indictment broadly of an FBI culture that believes itself above the rules it imposes on others.
6) People failing to adhere to their recusals (Kadzik/McCabe). Lynch hanging with Bill. Staff helping Comey conceal details of presser from DOJ bosses. Use of personal email and laptops. Leaks. Accepting gifts from media. Agent affairs/relationships.
7)It also contains stunning examples of incompetence. Comey explains that he wasn’t aware the Weiner laptop was big deal because he didn’t know Weiner was married to Abedin? Then they sit on it a month, either cuz it fell through cracks (wow) or were more obsessed w/Trump
8) And I can still hear the echo of the howls from when Trump fired Comey. Still waiting to hear the apologies now that this report has backstopped the Rosenstein memo and the obvious grounds for dismissal.

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Jun 072018
 
 June 7, 2018  Posted by at 2:24 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh The good Samaritan (after Delacroix) 1890

 

UK House Prices Have Soared 100-Fold Since 1966 (CityAM)
No Need To Buy US Gas At Triple The Price, Will Buy From Russia – Austria (RT)
European Businesses Advised To Avoid Using British Parts Ahead Of Brexit (Sky)
Volatility May Hit Wall Street As Alphabet, Facebook Leave Tech Sector (R.)
China’s Debt Default Avalanche (ZH)
Turkey Escalates Row With Greece Over ‘Putschist’ Soldiers (G.)
Merkel Backs Macron’s European Defense Force Initiative (RT)
Airbnb Culls Japan Listings Ahead Of New Rental Law (AFP)
Whoever Controls The Narrative Controls The World (CJ)
How Humanity Could Become Impossible To Propagandize (CJ)
Study Warns Of Alarming Decline In Australian Fish (AFP)

 

 

Shifting priorities. Homes are no longer places to live.

UK House Prices Have Soared 100-Fold Since 1966 (CityAM)

UK house prices are 106 times higher than they were when England won the World Cup in 1966, according to research from online mortgage broker Trussle. Average house prices have gone up from £2,006 to £211,000, the company found, while wages have risen at around a third of the rate, moving from £798 to £26,500. But for the country’s footballers, the story is somewhat different. On average Premier League footballers earn 1,136 times more than top-flight stars like Bobby Moore and George Best did back in 1966. It’s estimated that the average wage of the current England squad is just below £80,000 per week – more than 3 times the annual UK average wage.

Ishaan Malhi, CEO and founder of Trussle, said: “A lot of has changed since England won the World Cup. We’ve put a man on the moon, invented the internet and we’ve seen technology transform almost every aspect of our lives. “We’ve also seen the UK housing market change dramatically. Prices have soared in the last 52 years, wages have struggled to keep pace and for young people, the chances of getting on the property ladder today will feel a lot slimmer than they did in 1966.” The research from Trussle comes as analysis from trade union GMB published yesterday showed that rents in London are far outpacing wage growth. Analysing data from the Valuation Office Agency, GMB found that between 2011 and 2017, rent prices for two-bedroom flats in London increased by 25.9%, whilst over the same period, monthly earnings increased by just 9.1%.

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European ties to Russia are old and deep.

No Need To Buy US Gas At Triple The Price, Will Buy From Russia – Austria (RT)

The US is force-feeding Europe its liquefied natural gas, which is three times more expensive that buying it from Russia, Austrian President Alexander Van der Bellen said after signing a gas-supply contract with Moscow until 2040. While US politicians are accusing Europe of being dependent on Russian gas, they forget that “American liquefied gas is two or three times more expensive than Russian gas. Under such circumstances, it makes little sense in purely economic terms to replace Russian gas with American LNG,” Van der Bellen said at a press conference after meeting Russian President Vladimir Putin in Vienna on Tuesday.

Putin noted that Austria is a major transportation hub for Russian gas being exported to Europe. “Austria has become one of the key, if not to say, one of the most important units of Russian gas transportation to Western Europe and plays an important role in ensuring the energy security of the entire European continent,” Putin said. He recalled that Russia has exported more than 200 billion cubic meters of natural gas to Austria in the past 50 years. After the meeting, Russia’s Gazprom and Austria’s OMV signed a gas supply contract until 2040.

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Trade deals can be bitches.

European Businesses Advised To Avoid Using British Parts Ahead Of Brexit (Sky)

European governments are advising businesses not to use British parts in goods for export ahead of Brexit, Sky News has established. In its advice rolled out to all Dutch businesses, the Dutch government has told its exporters that “if a large part of your product consists of parts from the UK” domestic exporters may lose free trade access under existing deals. The advice says: “Brexit will have consequences for exports outside the EU. “After Brexit, parts made in the UK no longer count towards this minimum production in the European Union.” This is a reference to what are known as “rules of origin” and “local content” under international trade rules. In order to qualify for EU free trade deals, a certain proportion, typically 55% of a product’s parts, needs to come from the EU.

The Dutch government says UK parts “no longer count towards EU origin” in its official “Brexit impact scan” advice to Dutch businesses. That warning has also been underpinned by the EU’s own technical notice on this issue. “As of withdrawal date, the UK becomes a third country. UK inputs are considered ‘non-originating’,” it says. A leading car industry executive told Sky News that not using UK parts for EU exports would be a “catastrophe” for the British industry. “The hard Brexiteers have built a bomb under the UK automotive industry and the EU have lit it,” said one chief executive. Sky News has also heard of major UK automotive suppliers now ceasing UK supply of major components to cars for export to countries currently covered by EU Free Trade Areas – countries such as South Korea, South Africa and Canada.

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A new day.

Volatility May Hit Wall Street As Alphabet, Facebook Leave Tech Sector (R.)

Volatility could well be in the cards for Wall Street again early this fall, but not for the same reason stocks got rattled in February. This time the culprit would be the largest-ever shakeup of the stock market’s broad business sectors, which will mean some of the hottest stocks, like Facebook and Google parent Alphabet, will shift from their traditional homes in the top-performing technology sector and into a deepened pool of telecommunications and media stocks. The sweeping reorganization of the Global Industry Classification Standard, or GICS, means that funds tracking the telecom, tech and consumer discretionary sectors will be forced to trade billions of dollars of stock to realign their holdings by a Sept. 28 effective date.

While the choppiness many investors expect to see is unlikely to hit stocks in quite the same way that wave of the global uncertainty did in early 2018, the fact that so much money must be shifted among index funds in a short time will cause a stir. In a bid to ensure a smooth transition, leading fund provider Vanguard Group has have already started adjusting its sector exchange-traded funds, or ETFs, while State Street Global Advisors is launching an entirely new fund. Other investors predict price swings and commotion on trading desks if last-minute sales of Alphabet and Facebook shares by heavyweight technology index funds dwarf demand from a handful of telecom funds buying those stocks.

“There’s probably going to be net selling,” said Andrew Bodner, president of Double Diamond Investment Group in Parsippany, New Jersey. “That will be a temporary scenario, and it could be a good buying opportunity for a lot of those stocks.” Maintained by S&P Dow Jones Indices and MSCI since 1999 and widely used by portfolio managers, the GICS classifies companies across 11 sectors. The newest, real estate, was split off from financials in 2016. The upcoming changes, which have yet to be finalized, are meant to reflect evolving industries. Facebook and Alphabet will move from information technology and sit alongside AT&T Inc and Verizon Communications in a broadened telecommunication services sector that will be renamed communications services.

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Who’s the boss in China? Xi or the shadows?

China’s Debt Default Avalanche (ZH)

[..] what if the first domino to fall in the coming corporate debt crisis is not in the US, but in China? After all, as part of China’s aggressive deleveraging campaign, there has already been a spike of corporate bankruptcies as banks shed more of their massive note holdings and de-risk their balance sheets. According to Logan Wright, Hong Kong-based director at research firm Rhodium, there have already been least 14 corporate bond defaults in China in 2018; a separate analysis by Economic Information Daily, as of May 25, there had already been no less than 20 corporate defaults, involving more than 17 billion yuan, a shockingly high number for a country which until recently had never seen a single corporate bankruptcy, and a number which is set to increase as Chinese banks pull pull back from lending to other firms that use the funds to buy bonds, exacerbating the pressure on the market.

“You have seen banks redeeming funds placed with non-bank financial institutions that have reduced the pool of funds available for corporate bond investment overall,” Wright told Bloomberg, adding that additional bond defaults are especially likely among those property developers and local-government financing vehicles which have relied on shadow banking sources of funds. As we discussed last year, as part of Beijing’s crackdown on China’s $10 trillion shadow banking sector, strains have spread from high-yield trust products to corporate bonds as the lack of shadow funding has choked off refinancing for weaker borrowers. Separately, Banks’ lending to other financial firms, a common route for funds and securities brokers to add leverage for corporate bond investments, declined for three straight months, or a total of 1.7 trillion yuan ($265 billion), since January according to Bloomberg calculations.

The deleveraging campaign is also depressing bond demand: “Unlike the U.S., where the majority of buyers of bonds are mutual funds, individuals and investment companies, in China, the key holders of bonds are bank on-and off-balance sheet positions,” said Jason Bedford at UBS, who noted that Chinese banks are buying far fewer bonds as a result. Putting the number in context, according to Bloomberg, China’s four largest banks held about 4.1 trillion yuan in bonds issued by companies and other financial institutions at the end of 2017, nearly 20% below 5.1 trillion yuan a year earlier; all Chinese banks held about 12 trillion yuan of corporate bonds on or off their balances sheets, some 70% of outstanding issuance, according to Citic.

It is therefore hardly surprising to see that Chinese corporate bonds, especially riskier issues, have been getting slammed in recent weeks. According to Chinabond data, as noted first by Bloomberg, the yield premium of three-year AA- rated bonds over similar-maturity AAA notes has blown out 72 bps since March to 225 basis points, the highest level since August 2016, an indication of the recent pressures on weaker firms. One can imagine what is going on with deep junk-rated corps.

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Under heavy police protection in Greece. Because the Turks may come and get them. Elections June 24.

Turkey Escalates Row With Greece Over ‘Putschist’ Soldiers (G.)

Turkey has sent fighter jets roaring into Greek airspace as tensions mount between the two neighbours following the release from pre-trial detention of eight Turkish army officers described as traitors by Ankara. Formations of F-16s flew at low altitude over Aegean isles for more than 20 minutes on Tuesday as Turkey furiously accused Greece of sheltering terrorists. Ankara vowed to trace the commandos who it claimed participated in the failed July 2016 coup against the president, Recep Tayyip Erdogan and his government. “It is our duty to find these ‘putschist’ soldiers wherever they are, pack them up and bring them to Turkey,” the country’s deputy prime minister, Bekir Bozdag, said late on Monday.

He personally criticised the Greek prime minster, Alexis Tsipras, for failing to hand the soldiers over to Turkey after they flew into Greek airspace. “From statements made in Greece by its prime minister right after the coup, we were of the positive opinion that they would be extradited to Turkey,” he said. “We thought that Mr Tsipras would keep his word. With time, though, we saw that the judicial authorities were mobilised and these ‘putschists’ were not extradited.” The fate of the eight has been in Greek hands ever since the army officers took local authorities aback, landing their helicopter outside the northern border town of Alexandroupolis a day after the abortive coup.

[..] On Monday Greek authorities moved the military personnel out of police custody; following expiry of the 18-month pre-trial period they are legally allowed to be detained while they apply for asylum. They have been placed in top-secret locations under heavy police protection. “Given Turkey’s mindset, the situation is very dangerous,” said a senior judicial source. “But this is an issue of justice and we feel strongly that we must stand up for it.”

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Competition for NATO?!

Merkel Backs Macron’s European Defense Force Initiative (RT)

Chancellor Angela Merkel has supported “in principle” the idea of a joint European Defense Force proposed by French President Emmanuel Macron. Germany’s opposition had been the main stumbling block for the much-discussed project. “I am in favor of President Macron’s proposal for an intervention initiative,” the German chancellor told Frankfurter Allgemeine newspaper on Sunday. “However, such an intervention force with a common military-strategic culture must fit into the structure of defense cooperation,” she said. Merkel said that the German military, the Bundeswehr, “must, in principle, be part of such an initiative,” but added that her statement “doesn’t mean that we are to be involved in every mission.”

During his key speech at Sorbonne University last September, Macron proposed a European military “intervention force” that would protect the continent by taking action in hotspots around the globe. It’s a crucial element of the French leader’s defense reform, which is aimed at integrating European defense capacities. But the talks on implementing the European Defense Force have so far been complicated due to Berlin’s cautions approach to the initiative. “European defense cooperation is very important. Of the 180 weapon systems that currently co-exist in Europe, we must move to a situation like the United States, which has only about 30 weapons systems,” Merkel said.

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Still a pretty weak law.

Airbnb Culls Japan Listings Ahead Of New Rental Law (AFP)

Rental platform Airbnb has suspended a large majority of its listings in Japan ahead of a new law that goes into effect next week regulating short-term rentals in the country. The law, which will comes into force on June 15, requires owners to obtain a government registration number and meet various regulations that some have decried as overly strict. “This weekend we reached out to those hosts who have not yet obtained their notification number to let them know that they will need this to accept any new bookings,” Airbnb spokesman for Asia-Pacific Jake Wilczynski told AFP. “We have informed those hosts that we are in the process of turning off future listing capabilities.”

He declined to confirm the exact number of listings affected, but local media reports and sources put the figure at about 80 percent of the rentals available on the site across Japan. Wilczynski said many Airbnb hosts had already obtained their registration, and others were “going through or finalising” the process. “We are on course to register tens of thousands of new listings in Japan in the months ahead,” he added. [..] The law limits stays to 180 days a year, and allows local governments to impose additional restrictions, with the tourist magnet of Kyoto only permitting rentals in residential areas between mid-January and mid-March, the low season for tourists.

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Two excellent pieces from Caitlin Johnstone.

Whoever Controls The Narrative Controls The World (CJ)

MSNBC host Joy Reid still has a job. Despite blatantly lying about time-traveling hackers bearing responsibility for bigoted posts a decade ago in her then-barely-known blog, despite her reportedly sparking an FBI investigation on false pretenses, despite her colleagues at MSNBC being completely fed up with how the network is handling the controversy surrounding her, her career just keeps trundling forward like a bullet-riddled zombie. To be clear, I do not particularly care that Joy Reid has done any of these things. I write about war, nuclear escalations and the sociopathy of US government agencies which kill millions of people; I don’t care that Joy Reid is or was a homophobe, and I don’t care that she lied to cover it up.

The war agendas that MSNBC itself promotes on a daily basis are infinitely worse than either of these things, and if that isn’t obvious to you it’s because military propaganda has caused you to compartmentalize yourself out of an intellectually honest understanding of what war is. What is interesting to me, however, is the fact that Reid’s bosses are protecting her career so adamantly. Both by refusing to fire her, and by steering the conversation into being about her controversial blog posts rather than the fact that she told a spectacular lie in an attempt to cover them up, Reid is being propped up despite this story constantly re-emerging and making new headlines with new embarrassing details, and despite her lack of any discernible talent or redeeming personal characteristics. This tells us something important about what is going on in the world.

It is not difficult to find someone to read from a teleprompter for large amounts of money. What absolutely is difficult is finding someone who is willing to deceive and manipulate to advance the agendas of the privileged few day after day. Who else would be willing to spend all day on Twitter smearing everyone to the left of Hillary Clinton while still claiming to stand on the political left? Who else would advance the point-blank lieabout “17 intelligence agencies” having declared Russia guilty in US election meddling months after that claim had been famously and virally debunked? Who else would publicly claim that Edward Snowden’s NSA leaks did not benefit anyone besides Russia? Who else could oligarchs like Comcast CEO Brian L Roberts, whose company controls MSNBC, count on to consistently advance his agendas?

While it’s easy to find someone you can count on to advance one particular lie at one particular time, it is difficult to find someone you can be absolutely certain will lie for you day after day, year after year, through election cycles and administration changes and new war agendas and changing political climates. A lot of the people who used to advance perspectives which ran against the grain of the political orthodoxy at MSNBC like Phil Donahue, Ed Schultz and Dylan Ratigan have vanished from the airwaves never to return, while reporters who consistently keep their heads down and toe the line for the Democratic establishment like Chris Hayes, Rachel Maddow and Joy Reid are richly rewarded and encouraged to remain.

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It’s just that I’m asking myself if maybe the notion that ‘we can change and be better people’ is itself a narrative?!

How Humanity Could Become Impossible To Propagandize (CJ)

Narrative rules our world today, from our most basic concepts about ourselves to the behavior of nations and governments. Right now your direct experience of life is little more than the air going in and out of your respiratory system, your gaze moving from left to right over this text, and perhaps the sensation of your bum in a chair or sofa; without any narrative overlay, those experiences are all you are in this moment. Add in mental narrative and all of a sudden you’re a particular individual with a particular name and a particular story, who has perhaps some concerns about the future and regrets about the past, with all sorts of desires and goals and fears and aversions. As far as your actual present experience is concerned, all that stuff is pure mental noise. Pure narrative.

The same is true of things like power, money, and government. There is nothing grafted onto the electrons of the universe which says that the world needs to be mostly ruled by a few billionaires and their lackeys. Only the made-up rules about how power, money and government operate cause that to be the case, and those rules are only as true as we all collectively agree to pretend they are. They are all mental constructs that people made up, and we can therefore change them whenever we want to. Which is why so much plutocratic effort goes into making sure that we don’t.

Narrative dominates our society from top to bottom, which means that all someone has to do to control society is control its narratives. If people are sick, hungry, or poor, you don’t have to give them medicine, food or money to pacify them; you can just give them a narrative instead. If you can get them subscribed to the notion that attempts to rectify these problems with economic justice ought to be rejected and avoided by all hardworking Americans, you can have them defending the plutocracy and advocating their own poverty without giving them a thing. In a society where power is relative and money equals power, the rich are necessarily incentivized to keep everyone else poor in order to retain power, so using narrative control to pacify the masses is a common and useful tactic.

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Wherever you look, life itself appears to be exiting the planet. Rapidly.

Study Warns Of Alarming Decline In Australian Fish (AFP)

Conservation experts warned Wednesday of alarming falls in Australian fish populations and called for more marine reserves and better management to halt the decline. A 10-year study, looking at nearly 200 species at 544 sites, found the main cause was overfishing, with climate change also contributing, although the organisation that manages the nation’s fisheries disputed the findings. The research, in the decade to 2015 by the University of Tasmania and Sydney’s University of Technology, indicated that the numbers of large fish species – over 20 centimetres (eight inches) – had decreased by about 30 percent.

Claimed to be the first independent assessment of the size and abundance of coastal fish species off the Australian continent, it used frequent underwater surveys by divers along blocks of reef. Researchers compared areas where fishing was allowed with marine parks where it was limited or not permitted at all. “We found consistent population declines amongst many popular commercial and recreational fishes, including in marine parks that allowed limited fishing, while numbers increased within no-fishing reserves,” said lead author Graham Edgar. The study, published in the journal Aquatic Conservation, warned that the present situation globally — with more than 98 percent of seas open to some form of fishing — needed “immediate multinational attention”.

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May 212018
 


Margaret Bourke-White Great Ohio River Flood, Louisville, Kentucky 1937

 

The Soaring Dollar Will Lead To An “Explosive” Market Repricing (ZH)
Draghi Calls for Consolidation of Debts? (Martin Armstrong)
Italy’s Organic Crisis (Thomas Fazi)
Italy Has A New Government As Populist Parties Agree On New Premier (ZH)
Argentina: From The “Confidence Fairy” To The -Still Devilish- IMF (CF)
US-China Trade War ‘On Hold’ As America Backs Off On Tariffs (Ind.)
Bill Aimed At Saving Community Banks Is Already Killing Them (Dayen)
EU Blocking Cities’ Efforts To Curb Airbnb (G.)
End Of Greek Bailout Means Fresh Cuts To Salaries, Pensions (K.)
Why Boomtown New Zealand Has A Homelessness Crisis
Hundreds Of Homeless People Fined And Imprisoned In UK (G.)
Scientists Revise Their Understanding of Novichok (Slane)

 

 

Dollar shortage grows as interest rates grow.

The Soaring Dollar Will Lead To An “Explosive” Market Repricing (ZH)

Something curious took place one month ago when the PBOC announced on April 17 that it would cut the reserve requirement ratio (RRR) by 1% to ease financial conditions: it broke what until then had been a rangebound market for both the US Dollar and the US 10Y Treasury, sending both the dollar index and 10Y yields soaring…

… which led to an immediate tightening in financial conditions both domestically and around the globe, and which has – at least initially – manifested itself in a sharp repricing of emerging market risk, resulting in a plunge EM currencies, bonds and stocks.

Adding to the market response, this violent move took place at the same time as geopolitical fears about Iran oil exports amid concerns about a new war in the middle east and Trump’s nuclear deal pullout, sent oil soaring – with Brent rising above $80 this week for the first time since 2014 – a move which is counterintuitive in the context of the sharply stronger dollar, and which has resulted in even tighter financial conditions across the globe, but especially for emerging market importers of oil.

Meanwhile, all this is playing out in the context of a world where the Fed continues to shrink its balance sheet – a public sector “Quantitative Tightening (QT)” – further tightening monetary conditions (i.e., shrinking the global dollar supply amid growing demand), even as high grade US corporate bond issuance has dropped off a cliff for cash-rich companies which now opt to repatriate cash instead of issuing domestic bonds, with the resulting private sector deleveraging, or “private sector QT”, further exacerbating tighter monetary conditions and the growing dollar shortage (resulting in an even higher dollar).

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Europe has no bond market left. Japan has no bond market left. All they have is central banks.

Draghi Calls for Consolidation of Debts? (Martin Armstrong)

COMMENT: You were here in Brussels a few weeks ago. Suddenly, the ECB is talking about the need to merge the debts to prevent a crisis. So your lobbying here seems to work. – RGV, Brussels. REPLY: I do not lobby. It is rather common knowledge I have made those proposals since the EU commission attended our World Economic Conference held back in 1998 in London. I focused on the reason the Euro would fail if the debts were not consolidated. So it is not a fair statement to say I meet in Brussels to lobby for anything. I meet with people who call me in because of a crisis brewing.

So everyone else understands what this is about, the ECB President Mario Draghi has come out and proposed interlocking the euro countries to create a “stronger” and “new vehicle” as a “crisis instrument” to save Europe. He is arguing that this should prevent countries from drifting apart in the event of severe economic shocks. Draghi has said it provides “an extra layer of stabilization” which is a code phrase for the coming bond crash. He has conceded that the legal structure is difficult because what he is really talking about is the consolidation of national debts into a single Eurobond market. There is no bond market that is viable in Europe after the end of Quantitative Easing. There will be NO BID.

There is no viable bond market left in Europe. The worst debt is below US rates only because the ECB is the buyer. Stop the buying and the ceiling comes crashing down. This is why what he is saying is just using a different label. He is not calling it debt consolidation, just an extra layer of stabilization to bind the members closer together. It will be a hard sell and it may take the crisis before anyone looks at this. You have “bail-in” policies because of the same problem. If the banks in Italy need a bailout from Brussels, then other members will look at it as a subsidization for Italy which is unfair. There is no real EU unity behind the curtain which is when the debt was NEVER consolidated from day one. They wanted a single currency, but not a single responsibility for the debt.

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“..20% of Italy’s industrial capacity has been destroyed, and 30% of the country’s firms have defaulted..”

Italy’s Organic Crisis (Thomas Fazi)

The Italian Marxist Antonio Gramsci coined the term “organic crisis” to describe a crisis that differs from ”ordinary” financial, economic, or political crises. An organic crisis is a “comprehensive crisis,” encompassing the totality of a system or order that, for whatever reason, is no longer able to generate societal consensus (in material or ideological terms). [..] Gramsci was talking about Italy in the 1910s. A century later, the country is facing another organic crisis. More specifically, it is a crisis of the post-Maastricht model of Italian capitalism, inaugurated in the early 1990s.

[..] The downfall of the political establishment—and the rise of the “populist” parties—can only be understood against the backdrop of the “the longest and deepest recession in Italy’s history,” as the governor of the Italian central bank, Ignazio Visco, described it. Since the financial crisis of 2007–9, Italy’s GDP has shrunk by a massive 10%, regressing to levels last seen over a decade ago. In terms of per capita GDP, the situation is even more shocking: according to this measure, Italy has regressed back to levels of twenty years ago, before the country became a founding member of the single currency. Italy and Greece are the only industrialized countries that have yet to see economic activity surpass pre–financial crisis levels.

As a result, around 20% of Italy’s industrial capacity has been destroyed, and 30% of the country’s firms have defaulted. Such wealth destruction has, in turn, sent shockwaves throughout the country’s banking system, which was (and still is) heavily exposed to small and medium-sized enterprises (SMEs). Italy’s unemployment crisis continues to be one of the worst in all of Europe. Italy has an official unemployment rate of 11% (12% in southern Italy) and a youth unemployment rate of 35% (with peaks of 60% in some southern regions). And this is not even considering underemployed and discouraged workers (people who have given up looking for a job and therefore don’t even figure in official statistics).

If we take these categories into consideration, we arrive at a staggering effective unemployment rate of 30%, which is the highest in all of Europe. Poverty has also risen dramatically in recent years, with 23% of the population, about one in four Italians, now at risk of poverty—the highest level since 1989.

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Europe gets nervous.

Italy Has A New Government As Populist Parties Agree On New Premier (ZH)

Taking the biggest step toward forming Italy’s next government, the head of the anti-immigration League party Matteo Salvini said he’s reached a deal with Five Star leader Luidi Di Maio on forming a populist government, and picked a premier. According to a report in Corriere, Florence University law professor Giuseppe Conte was chosen as prime minister, while Matteo Salvini would be proposed as interior minister, and Five Star head Luigi and Di Maio would be labor minister. On Saturday, Il Messaggero reported that Salvatore Rossi, the Bank of Italy’s director general, could be picked as finance minister.

Today, Ansa added that according to Di Maio, Five Star will head joint ministry of economic development and labor; separately Giancarlo Giorgetti, Matteo Salvini’s right-hand man, will be proposed as economy minister, while Nicola Molteni would become minister of the infrastructure and transport and Gian Marco Centinaio would head the department of Agriculture and Tourism. ANSA added that Salvini will present the proposal to President Sergio Mattarella on Monday. As Bloomberg adds, the endgame follows a week of turmoil in Italian bonds and stocks triggered by reports about the coalition’s spending plans and rejection of European Union budget rules.

Italy’s 10-year yield spread over German bonds shot up to 165 bps on Friday, the most since October, prompting a warning from Paris. French Finance Minister Bruno Le Maire said in a Sunday interview with Europe 1 radio that “if the new government took the risk of not respecting its commitments on debt, the deficit and the cleanup of banks, the financial stability of the entire euro zone will be threatened.” Salvini fired back on Twitter, suggesting the warning was “unacceptable” interference. “Italians first!” he said, clearly referencing Donald Trump.

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No crisis until now because so much was borrowed. Crisis now because so much was borrowed. It’s like a blue print for the entire world.

Argentina: From The “Confidence Fairy” To The -Still Devilish- IMF (CF)

[..] looking at the external front, one may even be forgiven for asking: why did this crisis take so long to burst? Argentina was haemorrhaging dollars for many years, and with no sign of reversal: since 2016 the domestic non-financial sector acquired an accumulated amount of USD 41 billion in external assets. During the same period, the current account deficit totalled another USD 30 billion, in the form of trade deficit, tourism deficit, profit remittances by foreign companies and increasing interest payments. The well-known factor that allowed all these trends to last until now is the foreign borrowing spree that involved the government, provinces, firms, and the central bank, including the inflow from short-term investors for carry trade operations.

In the case of debt issuance, since 2016 the central government, provinces and private companies, have issued a whopping USD 88 billion of new foreign debt (13% of GDP). In the case of carry trade operations, since 2016 the economy recorded USD 14 billon of short-term capital inflows (2% of GDP). The favourite peso-denominated asset for this operations were the debt liabilities of the central bank called LEBAC (Letters of the Central Bank). Because of this, the outstanding stock of this instrument has now become the centre of all attention. It is important to understand the LEBACs. They were originally conceived as an inter-bank and central bank liquidity management instrument.

Since the lifting of foreign exchange and capital controls and the adoption of inflation targeting, the stock of LEBACs grew by USD 18 billion. Moreover, the composition of holders has changed significantly since 2015: At that time, domestic banks held 71% of the stock, and other investors held 29%. In 2018 that proportion has reverted to 38% banks/62% to other non-financial institution holders, which includes other non-financial public institutions (such as the social security administration) (17%), domestic mutual investment funds (16%), firms (14%), individuals (9%), and foreign investors (5%). That means that a large part of all the new issuance of LEBAC is held by investors outside the regulatory scope of the central bank, especially individuals and foreign investors. [..] these holdings could easily be converted into foreign currency, causing a large FX depreciation.

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They’re talking.

US-China Trade War ‘On Hold’ As America Backs Off On Tariffs (Ind.)

The US will hold off on imposing steep tariffs on China that ignited fears of a trade war as both sides pursue a broader deal, a top economic official said. “We’re putting the trade war on hold,” Treasury secretary Steve Mnuchin said during an appearance on Fox News Sunday. “We have agreed to put the tariffs on hold”. The announcement of a detente in the escalating trade dispute came after Chinese officials visited Washington last week, leading the White House to release an optimistic statement about both sides agreeing to take “measures to substantially reduce the United States trade deficit in goods with China” and to work on expanding trade and protecting intellectual property.

Donald Trump has railed against trade imbalances, particularly with China, as he seeks to renegotiate America’s economic relationship with other nations he accuses of exploiting the US. Breaking with some of his top economic advisers, Mr Trump announced earlier this year that he would levy tariffs on steel and aluminium. He also signed a memorandum seeking tariffs on $60bn worth of Chinese goods. [..] Mr Mnuchin signalled that America was using the leverage from tariff threats to pivot to negotiation, saying talks with Chinese officials had produced “very meaningful progress” – including a “Very productive” oval office meeting between Mr Trump and a top Chinese official.

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Unintended?

Bill Aimed At Saving Community Banks Is Already Killing Them (Dayen)

After initial reluctance, House Republicans have finally reached an agreement to move forward on a bipartisan bank deregulation bill that the Senate passed in March. Its stated aim — to help rural community banks thrive against growing Wall Street power — appears to have been enough to power it across the finish line. But banking industry analysts say the bill is already having the opposite effect, and its loosening of regulations on medium-sized banks is encouraging a rush of consolidation — all of which ends with an increasing number of community banks being swallowed up and closed down. “We absolutely expect bank consolidation to accelerate,” Wells Fargo’s Mike Mayo told CNBC the day after the Senate passed the deregulation bill in March.

The reason? Banks no longer face the prospect of stricter and more costly regulatory scrutiny as they grow. And regional banks in Virginia, Ohio, Mississippi, and Wisconsin have already taken note before the bill has even passed into law, announcing buyouts of smaller rivals. The expected consolidation simply furthers an existing trend. Community banks have been struggling for decades against an epidemic of consolidation; the number of banks in America has fallen by nearly two-thirds in the past 30 years. Ironically, the one state that has seemingly figured out how to arrest this systemic abandonment of smaller communities is North Dakota, the home state of the bill’s co-author, Democratic Sen. Heidi Heitkamp. That’s because North Dakota has a public bank.

Using idle state tax revenue as its deposit base, the Bank of North Dakota partners with community lenders on infrastructure, agriculture, and small business loans. It has thrived, earning record profits for 14 straight years, which have funneled back into state coffers. And while Heitkamp has complained that the Dodd-Frank Act has been disastrous for community banks, in North Dakota they appear to be doing well. According to a Institute for Local Self-Reliance analysis of Federal Deposit Insurance Corp. data, North Dakota has more banks per capita than any other state, and lends to small businesses at a rate that is four times the national average.

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The wonders of lobbying.

EU Blocking Cities’ Efforts To Curb Airbnb (G.)

The explosive rise of short-stay Airbnb holiday rentals may be shutting locals out of housing and changing neighbourhoods across Europe, but cities’ efforts to halt it are being stymied by EU policies to promote the “sharing economy”, campaigners say. “It’s pretty clear,” said Kenneth Haar, author of UnfairBnB, a study published this month by the Brussels-based campaign group Corporate Europe Observatory. “Airbnb is under a lot of pressure locally across Europe, and they’re trying to use the top-down power of the EU institutions to fight back.” While it might have started as a “community” of amateur hosts offering spare rooms or temporarily vacant homes to travellers, Airbnb had seen three-digit growth in several European cities since 2014 and was now a big, powerful corporation with the lobbying clout to match, Haar said.

The platform lists around 20,500 addresses in in Berlin, 18,500 in Barcelona, 61,000 in Paris and nearly 19,000 in Amsterdam. Data scraped by the campaign group InsideAirbnb suggests that in these and other tourist hotspots, more than half – sometimes as many as 85% – of listings are whole apartments. Many of the properties are also rented out year-round, removing tens of thousands of homes from the residential rental market. Even in cities where short-term lets are now restricted, about 30% of Airbnb listings are available for three or more months a year, the data indicates. In those where they are not, such as Rome and Venice, the figure exceeds 90%.

[..] local attempts to protect residents’ access to affordable housing and preserve the face of city-centre neighbourhoods are being undermined, campaigners say, by the EU’s determination to see the “collaborative economy” as a key future driver of innovation and job creation across the bloc. “The commission seems almost hypnotised by the prospect of a strong sharing economy, and not really interested in its negative consequences,” said Haar. “Commissioners talk about ‘opportunities, not threats’. The parliament, too, recently condemned cities’ attempts to restrict lettings on online platforms.”

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The torture never stops. Death by a thousand cuts.

End Of Greek Bailout Means Fresh Cuts To Salaries, Pensions (K.)

Millions of salaried workers and pensioners stand to lose at least one monthly payment within two years, in 2019 and 2020. For Greece to boast of a successful – as the government desires – exit from the third bailout program without facing any obstacles by August, the Finance Ministry has ruled out the option of avoiding a reduction to pensions from 2019 and will also be proceeding with demands to reduce the minimum tax threshold as of 2020. [..] January 2019 is when the barrage of cuts to pensions is due to start, lasting at least until 2022, with reductions to main as well as auxiliary pensions and also the abolition of family benefits. The bulk of cuts will affect some 1.1 million retirees, who will see their main pension slashed as of this December (when the January 2019 pensions are paid out) by up to 18%.

In total, in the private and public sector, the reduction of pension expenditure from this particular measure in 2019 is estimated at 2.13 billion euros. Reductions will start at 5 euros a month and may reach up to 350 euros a month. There will even be cuts to pensions where there is no personal difference, owing to the abolition of family benefits currently being paid out with the pensions in the public and private sectors. This is expected to concern around 1 million pensioners. Some 200,000 pensioners will also be affected by the cut of the personal difference from auxiliary pensions. According to the midterm fiscal plan, the reduction in 2019 will amount to savings of 232 million euros for state coffers, which is the amount pensioners will also be deprived of.

According to the government’s plans, the sum of cuts that will become evident as of this December will mean that new pensions will eventually be 30 percent below the original level before the law introduced in May 2016 by then labor minister Giorgos Katrougalos. Therefore, the vast majority of monthly pensions will hover in the 700-euro range, even for retirees who used to bring in an average of 1,300 euros.

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“They’re a long way down a hole that was created by somebody else..”

Why Boomtown New Zealand Has A Homelessness Crisis

New Zealand’s dairy-fuelled economy has for several years been the envy of the rich world, yet despite the rise in prosperity tens of thousands of residents are sleeping in cars, shop entrances and alleyways. The emerging crisis has created a milestone that New Zealanders won’t be proud of: the highest homelessness rate among the 35 high-income OECD countries. It’s a curious problem afflicting boom towns where some residents get pushed onto the streets as they can no longer afford the rocketing rents in a flourishing economy – let alone purchase a house as the price of property has soared. “I have no assets at the moment,” said 64-year-old Victor Young, who spoke to Reuters at a soup kitchen in New Zealand’s capital, Wellington.

“It’s not a kind country, it’s not an easy country. I slept in my car 20 days last year. I worked 30 hours a week.” That sentiment is something the country’s popular Prime Minister Jacinda Ardern would like to reverse. Last Thursday, across town from the Sisters of Compassion Soup Kitchen, her Labour-led government unveiled its first budget with an ambitious plan to build social infrastructure. The government has allocated NZ$3.8 billion ($2.62 billion) of new capital spending over a five-year period. This includes an extra NZ$634 million for housing, on top of the NZ$2.1 billion previously announced to fund Kiwibuild, a government building program to increase affordable housing supply.

[..] But experts say the government’s first budget underwhelms on the radical reforms the wider public wanted. “They’re a long way down a hole that was created by somebody else and they haven’t really got a great or easy solution,” said John Tookey, professor of construction management at Auckland University of Technology. He said the government’s much-vaunted Kiwibuild could come unstuck because there weren’t enough skilled workers to deliver on its ambitious target to build 100,000 homes in the next decade.

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Where does this originate? WIth Theresa May of course.

Hundreds Of Homeless People Fined And Imprisoned In UK (G.)

Growing numbers of vulnerable homeless people are being fined, given criminal convictions and even imprisoned for begging and rough sleeping. Despite updated Home Office guidance at the start of the year, which instructs councils not to target people for being homeless and sleeping rough, the Guardian has found over 50 local authorities with public space protection orders (PSPOs) in place Homeless people are banned from town centres, routinely fined hundreds of pounds and sent to prison if caught repeatedly asking for money in some cases. Local authorities in England and Wales have issued hundreds of fixed-penalty notices and pursued criminal convictions for “begging”, “persistent and aggressive begging” and “loitering” since they were given strengthened powers to combat antisocial behaviour in 2014 by then home secretary, Theresa May.

Cases include a man jailed for four months for breaching a criminal behaviour order (CBO) in Gloucester for begging – about which the judge admitted “I will be sending a man to prison for asking for food when he was hungry” – and a man fined £105 after a child dropped £2 in his sleeping bag. Data obtained by the Guardian through freedom of information found that at least 51 people have been convicted of breaching a PSPO for begging or loitering and failing to pay the fine since 2014, receiving CBOs in some cases and fines up to £1,100. Hundreds of fixed-penalty notices have been issued. Lawyers, charities and campaigners described the findings as “grotesque inhumanity”, saying disadvantaged groups were fined for being poor.

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“..one of its primary effects is to generate in its victims a strong desire to go out for a beer followed by a pizza.”

Scientists Revise Their Understanding of Novichok (Slane)

Warning: This article is likely to contain traces of satire. In the aftermath of the poisoning of Sergei and Yulia Skripal in Salisbury on 4th March, scientists are currently re-evaluating their understanding of A-234 – or Novichok as it is more commonly known. Prior to the poisoning, it had been thought that the substance was around 5-8 times more toxic than VX nerve agent, and therefore that just a tiny drop would be likely to kill a person within minutes or possibly even seconds of them coming into contact with it. In the unlikely event of a person surviving, it was believed that their central nervous system would be completely destroyed, and that they would suffer numerous chronic health issues, including cirrhosis, toxic hepatitis, and epilepsy before dying a premature and miserable death, probably within a year or so.

However, according to an anonymous source at the Porton Down laboratory, which is located just a few miles down the road from Salisbury, scientists now believe they may have completely misunderstood the properties and effects of the chemical: “All the available information we had about Novichok before March this year suggested that it was by far the most lethal nerve agent ever produced, and we had assumed that even the tiniest drop would kill a person within minutes. However, after studying the movements of the Skripals after being poisoned, we have now revised our understanding, and we now believe that one of its primary effects is to generate in its victims a strong desire to go out for a beer followed by a pizza.”

Yet it’s not only the effects of the substance that have led to this reappraisal, but also its mysterious ability to move about from location to location, seemingly at will. According to the source: “At first, differing reports of the location of the poisoning baffled us. First it was the restaurant, then it was the pub, followed by the bench, the car, the cemetery, the flowers, the luggage, the porridge, and then finally the door handle three weeks after the incident. However, we now believe we have an explanation for this phenomena. When Novichok was developed, we think it may have been given the ability to appear in one place, only to then disappear and turn up in an entirely different place.

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May 162018
 


Alfred Wertheimer Elvis 1956

 

What If Wall Street Is Waiting For The Wrong Disaster? (BI)
US Mortgage Rates Surge To Highest Level In 7 Years (CNBC)
Economic Numbers Are Less Than Meet the Eye (Rickards)
Argentina Went From Selling 100-Year Bonds To An IMF Rescue In 9 Months (Q.)
Turkey’s Economy Enters A ‘Slow Burning Crisis’ (CNBC)
Investors In Turkey Stunned By Erdogan’s Fight With Markets (R.)
Ecuador Spent Millions On Spy Operation For Julian Assange (G.)
New York City Poised To Join Airbnb Crackdown (Pol.)
US State Lawsuits Against Purdue Pharma Over Opioid Epidemic Mount (R.)
Debt Relief Woes Threaten Greece’s Bailout Exit (K.)
Greece Changes Asylum Rules To Fight Camp Overcrowding (AP)
UK Government Wants To Put A Price On Nature – But That Will Destroy It (G.)
Chimpanzees Have Much Cleaner Beds Than Humans Do (Ind.)

 

 

Deflation.

What If Wall Street Is Waiting For The Wrong Disaster? (BI)

What if the entire world of money is preparing for the wrong disaster — which would be a disaster in and of itself? Since the financial crisis, Wall Street, central-bank heads, economists, and policymakers have been waiting for the return of inflation. At the beginning of this year, they thought they had found it. It came, so they thought, in the form of a weak dollar, wage growth, economic stability in China, and steadily rising interest rates. So here in the US, the Fed started talking about the importance of preparing to fight runaway inflation. In fact, it’s obsessed with the idea. According to Deutsche Bank analyst Torsten Slok, the Fed is talking more about inflation now (in its minutes and in its reports) than it did in 2006 when the economy was actually overheating, right before the crash.

This, even though personal-consumption expenditures haven’t grown by the Federal Reserve’s 2% target since the financial crisis. There’s a lot of noise, from data revisions and Trump tweets, trade-war threats and hopes of growth from tax policy, a wobbling stock market, and rising interest rates. But when it comes down to it, the things that everyone is saying will be sources of inflation may not be sources at all. Meanwhile, the weak dollar, wage growth, and a stable China elixir that got markets high in January have since faded. That should be a warning. If we play our cards wrong and pay attention to all the wrong signs, we may still be in a world tilting dangerously closer to our old enemy, deflation.

[..] As Slok said, aging can’t fully explain why wage growth has been suppressed, but he has other ideas too. “One important reason why the expansion since 2009 has been so weak is that wealth gains have been unevenly distributed (see chart below). A decline in the homeownership rate and the number of households holding stocks has dampened consumer spending growth for the bottom 90% of households,” he wrote in a note to clients back in March.

The deflationary impacts of economic inequality and an aging population are not going away with the flick of a wrist or the push of a button. They are long-term challenges that require imaginative, difficult policy solutions. It’s hard to see that coming from the Trump administration or an increasingly polarized, uncooperative world. So we need to ask ourselves: Are we waiting for the wrong disaster?

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That’s the end?!

US Mortgage Rates Surge To Highest Level In 7 Years (CNBC)

A sharp sell-off in the bond market is sending mortgage rates to the highest level in seven years. The average contract rate on the 30-year fixed will likely end the day as high as 4.875% for the highest creditworthy borrowers and 5% for the average borrower, according to Mortgage News Daily. Mortgage rates, which loosely follow the yield on the 10-year Treasury, started the year right around 4% but began rising almost immediately. They then leveled off in March and early April, only to begin rising yet again. Tuesday’s move follows positive economic data in retail sales, suggesting that newly imposed tariffs would not hit sales as hard as expected.

Rates have been widely expected to rise, as the Federal Reserve increases its lending rate and pulls back its investments in mortgage-backed bonds. But mortgage rates have reacted only in fits and starts. “The bottom line is that the writing on the wall has been telling rates to go higher since at least last September,” said Matthew Graham, chief operating officer of Mortgage News Daily. “Rates keep looking back to see if the writing has changed, and although there have been opportunities for hope (trade wars, stock selling-sprees, spotty data at times), it hasn’t. Today is just the latest reiteration of that writing.”

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10% unemployment.

Economic Numbers Are Less Than Meet the Eye (Rickards)

Let’s start with the employment report. The U.S. Department of Labor, Bureau of Labor Statistics report dated May 4, 2018, showed the official U.S. unemployment rate for April 2018 at 3.9%, with a separate unemployment rate for adult men of 4.1% and adult women of 3.7%. The 3.9% unemployment rate is based on a total workforce of 160 million people, of whom 153 million are employed and 6.3 million are unemployed. The 3.9% figure is the lowest unemployment rate since 2001, and before that, the early 1970s. The average rate of unemployment in the U.S. from 1948 to 2018 is 5.78%. By these superficial measures, unemployment is indeed low and the economy is arguably at full employment.

Still, these statistics don’t tell the whole story. Of the 153 million with jobs, 5 million are working part time involuntarily; they would prefer full-time jobs but can’t find them or have had their hours cut by current employers. Another 1.4 million workers wanted jobs and had searched for a job in the prior year but are not included in the labor force because they had not searched in the prior four weeks. If their numbers were counted as unemployed, the unemployment rate would be 5%. Yet the real unemployment rate is far worse than that. The unemployment rate is calculated using a narrow definition of the workforce. But there are millions of able-bodied men and women between the ages of 25–54 capable of work who are not included in the workforce.

These are not retirees or teenagers but adults in their prime working years. They are, in effect, “missing workers.” The number of these missing workers not included in the official unemployment rolls is measured by the Labor Force Participation Rate, LFPR. The LFPR measures the total number of workers divided by the total number of potential workers regardless of whether those potential workers are seeking work or not. The LFPR plunged from 67.3% in January 2000 to 62.8% in April 2018, a drop of 4.4percentage points. If those potential workers reflected in the difference between the 2018 and 2000 LFPRs were added back to the unemployment calculation, the unemployment rate would be close to 10%.

[..] Another serious problem is illustrated in Chart 1 below. This shows the U.S. budget deficit as apercentage of GDP (the white line measured on the right scale) compared with the official unemployment rate (the blue line measured on the left scale). From the late 1980s through 2009, these two time series exhibited a fairly strong correlation. As unemployment went up, the deficit went up also because of increased costs for food stamps, unemployment benefits, stimulus spending and other so-called “automatic stabilizers” designed to bring the economy out of recession. That makes sense. But as the chart reveals, the correlation has broken down since 2009 and the two time series are diverging rapidly. Unemployment is going down, but budget deficits are still going up.

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Too late to get a new government?

Argentina Went From Selling 100-Year Bonds To An IMF Rescue In 9 Months (Q.)

In financial markets, memories can be short. Last year, Argentina sold 100-year bonds, joining a select club of countries with the confidence to borrow for such an extended period. Yes, the same Argentina that has defaulted on its debt eight times in the past 200 years, including the largest sovereign default in history in 2001. Not long before investors decided it was a good idea to lend to the South American nation for 100 years, it was largely shut out of international capital markets. In June 2017, Argentina sold $2.75 billion of US dollar-denominated 100-year bonds at an effective yield of 8%. The history of defaults seemed to be forgotten—nearly $10 billion in bids were placed for the bonds.

The sale came at a time when investors were hungry for high-yielding debt, but it also showed confidence in president Mauricio Macri and his program of pro-market reforms. Less than a year later, Macri has asked the IMF for a $30 billion loan to help it combat a currency crisis and limit further damage to the Argentinian economy from a dangerous outbreak of market turmoil. What went wrong?

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Not sure it’ll be all that slow. Turekey has borrowed in dollars up the wazoo.

Turkey’s Economy Enters A ‘Slow Burning Crisis’ (CNBC)

Turkey’s economy is overheating and if the government doesn’t act then the country is in trouble, according to several analysts. “The government has no intention of tackling imbalances or overheating,” Marcus Chevenix, global political research analyst at TS Lombard, said in a research note this week. “It is this unwillingness to act that leads us to believe that we can now say that Turkey is entering a slow burning crisis.” The Turkish lira is at a record low against the dollar, and is ranked among the worst-performing currencies this year. After comments this week by Turkish President Recep Erdogan promising to lower interest rates after the country’s June election, the currency tanked to its lowest point yet against the greenback, hitting 4.4527 on Tuesday mid-afternoon.

The dollar has appreciated by around 18% against the lira so far this year. The reason? Erdogan has been sitting on interest rates, opting for a monetary policy that prioritizes growth over controlling its double-digit inflation. Turkey’s growth rate reached an impressive 7.4% for 2017 and leads the G-20, but at the expense of inflation, which has shot up to 10.9%. Market sentiment has driven much of the lira’s sell-off, as investors worry about government intervention in monetary policy and central bank independence. Investors have been hoping for a rate rise by the bank, but that now appears unlikely.

Erdogan plays an unusually heavy-handed role in deciding his country’s monetary policy, and many observers say he keeps the Central Bank of the Republic of Turkey’s (TCMB) hands tied. The bank finally raised its rates for the first time in several sessions in late April, moving its late liquidity window rate (which it uses to set policy) up by 75 basis points to 13.5%. The lira temporarily jumped on the news. But Erdogan aims to bring the rate back down, saying it must be done to ease pressure on Turkish households and drive the growth needed to create jobs for Turkey’s youth. “I’m seriously concerned about the Turkish lira,” Piotr Matys at Rabobank told CNBC via email. “Is Turkey the domino the market expects to fall next? It’s got all those problems — high current account deficit, government borrowing in other currencies.”

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He went to the City for this?!

Investors In Turkey Stunned By Erdogan’s Fight With Markets (R.)

“Shock and disbelief” – that’s how global money managers reacted to an attempt by Turkish President Tayyip Erdogan to re-assure foreign investors about his economic management as the lira went into tailspin. Fund managers who met Erdogan and his delegation in London on Monday, part of a three-day visit to Britain, were baffled about how he plans to tame rising inflation and a currency in freefall – while simultaneously seeking lower interest rates. Some said that while Erdogan has crushed his domestic enemies, he would find taking on international financial markets with policies that defy economic orthodoxy much tougher.

A resurgent dollar, rising oil prices and a jump in borrowing costs have caused havoc across emerging markets in recent weeks. However, Turkey has been among the worst affected due to its a gaping current account deficit and growing puzzlement over who exactly holds the reins of monetary policy. Erdogan’s comments that he planned to take greater control of the economy after snap presidential and parliamentary elections next month deepened investors’ worries about the central bank’s ability to fight inflation, helping to send the lira to a record low on Tuesday.

Rampant inflation dogged Turkey for decades before 2000 and has been back in double digits since the start of 2017. But Erdogan has styled himself as an enemy of high interest rates, defying orthodox monetary policy that prescribes tighter credit to keep a lid on prices. Speaking on condition of anonymity due to the political sensitivity of the meetings, investors told Reuters they were flabbergasted by his stance and willingness to go into battle with world markets at such a fragile time.

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A suggestive and tendentious piece by the Guardian, which seems to prepare us for a justification of Ecuador throwing Julian out. Other articles in today’s paper have titles like “How Julian Assange became an unwelcome guest in Ecuador’s embassy” and “Why does Ecuador want Assange out of its London embassy?”

Ecuador Spent Millions On Spy Operation For Julian Assange (G.)

Ecuador bankrolled a multimillion-dollar spy operation to protect and support Julian Assange in its central London embassy, employing an international security company and undercover agents to monitor his visitors, embassy staff and even the British police, according to documents seen by the Guardian. Over more than five years, Ecuador put at least $5m (£3.7m) into a secret intelligence budget that protected the WikiLeaks founder while he had visits from Nigel Farage, members of European nationalist groups and individuals linked to the Kremlin. Other guests included hackers, activists, lawyers and journalists.

[..] Documents show the intelligence programme, called “Operation Guest”, which later became known as “Operation Hotel” – coupled with parallel covert actions – ran up an average cost of at least $66,000 a month for security, intelligence gathering and counter-intelligence to “protect” one of the world’s most high-profile fugitives. An investigation by the Guardian and Focus Ecuador reveals the operation had the approval of the then Ecuadorian president, Rafael Correa, and the then foreign minister, Ricardo Patiño, according to sources. [..] Worried that British authorities could use force to enter the embassy and seize Assange, Ecuadorian officials came up with plans to help him escape.

They included smuggling Assange out in a diplomatic vehicle or appointing him as Ecuador’s United Nations representative so he could have diplomatic immunity in order to attend UN meetings, according to documents seen by the Guardian dated August 2012. In addition to giving Assange asylum, Correa’s government was apparently prepared to spend money on improving his image. A lawyer was asked to devise a “media strategy” to mark the “second anniversary of his diplomatic asylum”, in a leaked 2014 email exchange seen by the Guardian.

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Force them to open the books.

New York City Poised To Join Airbnb Crackdown (Pol.)

New York’s City Council is plotting a crackdown on Airbnb, the largest home-sharing platform in the world, as the hotel industry and its unionized workers push lawmakers in some of the nation’s biggest cities to blunt the $30 billion company’s growth. New York City’s push resembles a legislative effort underway in Los Angeles, and comes months after San Francisco passed a measure mandating that hosts of short-term rental platforms register their homes with the city, leading to a decline in listings. The coastal cities are among Airbnb’s largest markets in the United States.

The Council is crafting a bill that would require online home-sharing companies to provide the Mayor’s Office of Special Enforcement with the addresses of their listings — a potential blow to Airbnb if its users are revealed to be turning rent-regulated apartments into business enterprises in a city starved for more housing. The move is coming two years after New York’s state Legislature first took aim at Airbnb with a bill that banned the advertising of illegal short-term rentals — but ultimately did little to hurt the company. The New York push comes amid a well-funded advertising and lobbying campaign by the hotel industry, which has run ads supporting a recent report from City Comptroller Scott Stringer that was critical of Airbnb, and is accusing the company of reducing the amount of affordable housing in cities.

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What’s taking so long?

US State Lawsuits Against Purdue Pharma Over Opioid Epidemic Mount (R.)

Litigation against OxyContin maker Purdue Pharma is intensifying as six more U.S. states on Tuesday announced lawsuits, accusing the company of fueling a national opioid epidemic by deceptively marketing its prescription painkillers to generate billions of dollars in sales. U.S. state attorneys general of Nevada, Texas, Florida, North Carolina, North Dakota and Tennessee also said Purdue Pharma violated state consumer protection laws by falsely denying or downplaying the addiction risk while overstating the benefits of opioids. “It’s time the defendants pay for the pain and the destruction they’ve caused,” Florida State Attorney General Pam Bondi told a press conference.

Florida also sued drugmakers Endo Pharmaceuticals, Allergan, units of Johnson & Johnson and Teva Pharmaceutical Industries, and Mallinckrodt, as well as drug distributors AmerisourceBergen, Cardinal Health and McKesson. [..] Lawsuits have already been filed by 16 other U.S. states and Puerto Rico against Purdue. The privately-held company in February said it stopped promoting opioids to physicians after widespread criticism of the ways drugmakers market highly addictive painkillers. Bondi said state attorneys general from New York, California and Massachusetts were preparing similar lawsuits.

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And on and on and on…

Debt Relief Woes Threaten Greece’s Bailout Exit (K.)

The tug of war between the IMF and Berlin over the Greek debt issue is threatening Greece’s successful bailout program exit in August. Germany insists on granting Greece gradual debt relief under the condition that it will be approved every year by the Bundestag. For its part, the IMF disagrees with Berlin’s insistence on reviewing the measures every year and is threatening to leave the Greek program. If the IMF were to leave the program because it thinks that debt relief measures are inadequate to secure the sustainability of Greece’s debt, the country’s access to international market funding will be cast in doubt. This means that, inevitably, the government will have to resort to precautionary credit to shield itself from complications.

The chasm between Berlin and the IMF was clear during Monday’s session of the so-called Washington Group – representatives of Greece’s creditors as well as the governments of Germany, France, Spain and Italy, the biggest eurozone economies. Poul Thomsen, the head of the IMF’s European Department, who attended Monday’s meeting, countered that Berlin’s conditions were not acceptable. Thomsen said Tuesday that the Fund wants to activate the program for Greece but warned that time is running out and asked for final decisions on the matter by the next Eurogroup on May 24.

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Speed up deportations and appeals, restrict freedom of movement. Lovely

Greece Changes Asylum Rules To Fight Camp Overcrowding (AP)

Greece’s parliament approved legislation Tuesday that is designed to speed up the asylum process for migrants, ease the overcrowding at Greek island refugee camps and to deport more people back to Turkey. Under the new law, staff will be added at the office that handles asylum requests, the appeals process for rejected applications will be shortened and travel restrictions can be imposed on asylum-seekers who are moved from the Greek islands to the mainland. Currently, restrictions on asylum-seekers are mostly limited to five islands near the coast of Turkey, where strained refugee camps are trying to cope with up to three times more residents than planned.

More than 16,000 people are stuck there. A group of 13 Greek human rights organizations, however, has accused the government of ignoring refugee rights. The number of newly arriving migrants and refugees has risen sharply this year at the islands and Greece’s land border with Turkey, prompting the change in policy. Police cleared out two abandoned factory buildings used by migrants in the city of Patras in western Greece early Tuesday. More than 600 people will be moved from there to refugee camps on the mainland, police said.

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Have we lost the ability to frame everything in anything else than monetary terms?

UK Government Wants To Put A Price On Nature – But That Will Destroy It (G.)

Never mind that the new environmental watchdog will have no teeth. Never mind that the government plans to remove protection from local wildlife sites. Never mind that its 25-year environment plan is all talk and no action. We don’t need rules any more. We have a pouch of magic powder we can sprinkle on any problem to make it disappear. This powder is the monetary valuation of the natural world. Through the market, we can avoid conflict and hard choices, laws and policies, by replacing political decisions with economic calculations. Almost all official documents on environmental issues are now peppered with references to “natural capital” and to the Natural Capital Committee, the Laputian body the government has created to price the living world and develop a set of “national natural capital accounts”.

The government admits that “at present we cannot robustly value everything we wish to in economic terms; wildlife being a particular challenge”. Hopefully, such gaps can soon be filled, so we’ll know exactly how much a primrose is worth. The government argues that without a price, the living world is accorded no value, so irrational decisions are made. By costing nature, you ensure that it commands the investment and protection that other forms of capital attract. This thinking is based on a series of extraordinary misconceptions. Even the name reveals a confusion: natural capital is a contradiction in terms. Capital is properly understood as the human-made segment of wealth that is deployed in production to create further financial returns.

Concepts such as natural capital, human capital or social capital can be used as metaphors or analogies, though even these are misleading. But the 25-year plan defines natural capital as “the air, water, soil and ecosystems that support all forms of life”. In other words, nature is capital. In reality, natural wealth and human-made capital are neither comparable nor interchangeable. If the soil is washed off the land, we cannot grow crops on a bed of derivatives. A similar fallacy applies to price. Unless something is redeemable for money, a pound or dollar sign placed in front of it is senseless: price represents an expectation of payment, in accordance with market rates. In pricing a river, a landscape or an ecosystem, either you are lining it up for sale, in which case the exercise is sinister, or you are not, in which case it is meaningless.

Still more deluded is the expectation that we can defend the living world through the mindset that’s destroying it. The notions that nature exists to serve us; that its value consists of the instrumental benefits we can extract; that this value can be measured in cash terms; and that what can’t be measured does not matter, have proved lethal to the rest of life on Earth. The way we name things and think about them – in other words the mental frames we use – helps determine the way we treat them.

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Make a fresh bed every day.

Chimpanzees Have Much Cleaner Beds Than Humans Do (Ind.)

Chimpanzees have much cleaner beds – with fewer bodily bacteria – than humans do, scientists have found. A study comparing swabs taken from chimp nests with those from human beds found that people’s sheets and mattresses harboured far more bacteria from their bodies than the animals’ beds did from theirs. The researchers say their findings suggest that our attempts to create clean environments for ourselves may actually make our surroundings “less ideal”. More than a third – 35 per cent – of the bacteria in human beds comes from our own saliva, skin and faecal particles. By contrast, chimps – humans’ closest evolutionary relatives – appear to sleep with few such bacteria.

“We found almost none of those microbes in the chimpanzee nests, which was a little surprising,” said Megan Thoemmes, lead author of the paper. The researchers collected samples from 41 chimpanzee beds – or nests – in Tanzania and tested them for microbial biodiversity. At 15 primates’ nests, researchers also used vacuums to find out whether there were arthropods, such as insects, spiders, mites and ticks. “We also expected to see a significant number of arthropod parasites, but we didn’t,” said Ms Thoemmes. In addition, the team were shocked to find very few fleas, lice and bed bugs – ectoparasites – in the chimp nests.

“There were only four ectoparasites found, across all the nests we looked at. And that’s four individual specimens, not four different species,” said Ms Thoemmes, a PhD student at North Carolina State University. She believes chimps’ beds are cleaner because they make them freshly in treetops each day.

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Apr 252018
 
 April 25, 2018  Posted by at 8:27 am Finance Tagged with: , , , , , , , , , ,  


Amedeo Modigliani Nu allongé 1917

 

Why All Companies Fear ‘Death By Amazon’ (G.)
Richmond Fed Manufacturing Survey Crashes By Most In 25 Years (ZH)
Markets Better Prepare for Stagflation (DDMB)
Trade War With US And China’s $14 Trillion Debt-Ridden Economy (CNBC)
Big Farms Set To Pay The Price As EU Eyes Subsidy Cuts (Pol.)
In Japan, New Rules May Leave Home-Sharing Industry Out In The Cold (R.)
Palma de Mallorca To Ban Holiday Rentals After Residents’ Complaints (BBC)
Greece Uncovers Tax Evading Airbnb Owners By Posing as Customers (KTG)
World Wine Output Falls To 60-Year Low (R.)
Homelessness In UK ’10 Times Worse’ Than Official Figures Suggest (Ind.)
Over One In Five Greeks Can’t Make Ends Meet (K.)
Greek Minister Drafts Action Plans Amid Fears Over Refugee Influx (K.)
Greek Government Defies Court on Asylum Seekers (HRW)
Arctic Sea Ice Contains Huge Quantity Of Microplastics (Ind.)

 

 

Do we want monopolies? We’re letting them grow in front of our eyes.

Why All Companies Fear ‘Death By Amazon’ (G.)

Although its retail site is the most visible of its business strands, the $740bn company has quietly stretched its tentacles into an astonishing range of unrelated industries. Google and Facebook might have cornered the online advertising market, but Amazon’s business successes now include groceries, TV, robotics, cloud services and consumer electronics. “If you try to measure power by how many executives are up at night because of X company, I think Amazon would win,” said Lina Khan, legal fellow with the Open Markets Program at the thinktank New America. Amazon has a restaurant delivery service, a music streaming service and an Etsy clone called Amazon Homemade. It makes hugely successful hardware and software; it makes movies, television shows and video games.

It runs a labour brokerage for computer-based work and another for manual labour. It publishes books, sells books, and owns the popular social network site for book readers GoodReads.com. It sells diapers, baby food, snacks, clothing, furniture and batteries. It sells ads, processes payments, and makes small loans. It is the unexpected owner of a huge number of websites – everything from the gaming livestream site Twitch to the movie database IMDb. Of the top 10 US industries by GDP (information, manufacturing non-durable goods, retail trade, wholesale trade, manufacturing durable goods, healthcare, finance and insurance, state and local government, professional and business services, and real estate), Amazon has a finger in all but real estate.

And how confident can the real estate industry be right now that Amazon won’t at some point decide to allow people to buy and sell homes on its platform? “I see them as kind of a great white shark,” said Greer. “You don’t really want to mess with them.” “It’s basically become a railroad for the 21st century,” added Khan. “It’s existential for so many businesses but also competing with all those businesses.” What makes Amazon so frightening for rival businesses is that it can use its expertise in data analytics to move into almost any sector. “Amazon has all this data available. They track what people are searching for, what they click, what they don’t,” said Greer. “Every time you’re searching for something and don’t click, you’re telling Amazon that there’s a gap.”

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Recovery.

Richmond Fed Manufacturing Survey Crashes By Most In 25 Years (ZH)

When hope dies… against expectations of a small rise from March to a 16 print, April came in at a disastrous -3 (the worst data since Sept 2016). From record highs just a couple months ago, Richmond Fed manufacturing has crashed by the most in the survey’s 25 year history into contraction…

It was a bloodbath below the surface too. New orders collapsed to -9 from +17, order backlogs plunged to -4 from +10 and while wages and employees rose, workweek dropped notably. Finally, prices paid rose once again even as new orders crashed… Must be the weather, right?

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No, inflation is not “heating up by all metrics”. But we get the point.

Markets Better Prepare for Stagflation (DDMB)

Investors better wake up to the growing risk of stagflation. The coming weeks promise to deliver the verdict on how they should be positioned. By all metrics, inflation is heating up. But it’s not clear the same can said for underlying economic activity. According to producers, input costs have risen for six of the past eight months. And it’s not just big companies that are feeling pressure. One in four small businesses say they plan to raise prices, a 10-year high, according to the National Federation of Independent Business. Inflation’s persistence will finally begin to trickle through to consumers.

David Rosenberg, chief economist at the wealth management company Gluskin Sheff, recently quipped that investors “better say a prayer for Jay Powell,” the Federal Reserve chair. The deniers will dismiss the suggestion. But Rosenberg is serious, citing the core consumer price index’s March leap to 2.1%, a level that breaches the Fed’s 2% inflation target. “There is going to be a price to be paid for last year’s string of wireless-induced 0.1% prints which are falling out of the year-over-year math,” Rosenberg explained, referring to the collapse in wireless services that skewed inflation lower in 2017. “I see 50/50 odds of a 3% core inflation by year end.”

[..] The New York Fed’s regional survey also raised red flags. Delivery Times remained near their highest levels in seven years while New Orders, Backlogs and Employment all declined. The survey showed an even gloomier outlook for the future. The six-month business activity outlook dove to 18.8 from 44.1, the weakest since February 2016. Though one month can never make a trend, the depth of the plunge is bound to have raised eyebrows given that prior moves of its magnitude tend to coincide with recession.

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China’s so bloated with debt it is very vulnerable.

Trade War With US And China’s $14 Trillion Debt-Ridden Economy (CNBC)

While some of the rhetoric around trade tariffs on China has died down over the last couple of weeks, the prospect of a trade war has not. On April 18, China imposed preliminary antidumping tariffs of 178.6% on sorghum, a crop used to make alcohol and biofuels, while President Donald Trump’s threat to impose tariffs on $150 billion worth of goods on everything from solar panels to aircraft to cars remains on the table. If an actual U.S. trade war ensues, then China’s economic growth prospects could be negatively impacted in a significant way. While the country’s economy has shifted inward over the last few years, relying on its own citizens to fuel growth, it still exports billions of dollars in goods and services every year.

Last year it sold $506 billion in exports to the United States — nearly 20% of its exports go to America — while the United States sold just $130 billion to the Chinese. In January the IMF said China’s economic growth would top 6.6% in 2018, but it could now drop by as much as 0.5% if these tariffs are imposed — and it could slow even further if a global trade war truly heats up. China’s economy can likely weather a small decline in growth, in part because of its increased reliance on domestic spending, but this isn’t the only potentially GDP-destroying situation it’s dealing with.

Over the last few years, China’s debt-to-GDP has ballooned to more than 300% from 160% a decade ago, causing many people, including Chinese officials, to warn of a financial-sector debt bubble that’s waiting to burst. [..] How did it get so bad? After the recession, the country spent trillions on infrastructure projects, with many banks, including unregulated or “shadow” banks, loaning money to companies that have been unable to pay back their debts. According to a Chinese news outlet, Lai Xiaoming, chairman of China Huarong Asset Management, one of the country’s biggest asset management firms, said that total volume of nonperforming loans could hit a record $476 billion by 2020.

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Why the insects are dying. Europe should cut subsidies for anyone using chemicals.

Big Farms Set To Pay The Price As EU Eyes Subsidy Cuts (Pol.)

EU Budget Commissioner Günther Oettinger said Monday that Brussels plans to cut its payments to Europe’s biggest farms in the next budget cycle in order to reduce the bloc’s lavish agricultural subsidies by 6%. Brussels is due to make a proposal for the EU’s 2021-2027 budget framework on May 2, and cutbacks are seen as inevitable because Britain will no longer be contributing funds. Agricultural spending is one of the most obvious targets for cost cutting because the Common Agricultural Policy represents almost 40% of the EU budget, or some €59 billion each year.

When asked by POLITICO about CAP cuts on the sidelines of a trade conference in Hannover, Oettinger said: “We cannot fully exempt the existing programs from cutbacks. And in comparison to 2020, as the last year of the existing financial framework, my proposal will focus on approximately 6%, a moderate 6%, reductions.” One of the biggest criticisms of the CAP is that it has prioritized big landowners with direct payments based on acreage. Some 80% of CAP funds go to 20% of farms, owned by the likes of British royalty and major multinational companies. Oettinger said the new budget model would aim to balance that slightly.

“What we have in mind is degressive funding: That means a very big business receives for its hectares a little bit less money than a small enterprise. And that’s exactly what we still have to discuss within the next next days. On Wednesday, we will have a discussion between [Agriculture Commissioner Phil] Hogan and me on this.” Hogan has already told farmers to prepare for belt-tightening. “We need to be realistic: In the absence of more money from member states, there will be a cut to the CAP budget. My job as I see it is to build the strongest possible coalition to resist the worst of these cuts, and achieve the best outcome in a difficult scenario,” he said last week.

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Governments are starting to tackle Airbnb.

In Japan, New Rules May Leave Home-Sharing Industry Out In The Cold (R.)

Japan’s new home-sharing law was meant to ease a shortage of hotel rooms, bring order to an unregulated market and offer more lodging options for foreign visitors ahead of next year’s Rugby World Cup and the 2020 Tokyo Olympics. Instead, the law is likely to stifle Airbnb Inc and other home-sharing businesses when it is enacted in June and force many homeowners to stop offering their services, renters and experts say. The “minpaku,” or private temporary lodging law, the first national legal framework for short-term home rental in Asia, limits home-sharing to 180 days a year, a cap some hosts say makes it difficult to turn a profit.

More important, local governments, which have final authority to regulate services in their areas, are imposing even more severe restrictions, citing security or noise concerns. For example, Tokyo’s Chuo ward, home to the tony Ginza shopping district, has banned weekday rentals on grounds that allowing strangers into apartment buildings during the week could be unsafe. That’s a huge disappointment for Airbnb “superhost” Mika, who asked that her last name not be used because home-renting is now officially allowed only in certain zones. She has enjoyed hosting international visitors in her spare two-bedroom apartment but will stop because her building management has decided to ban the service ahead of the law’s enactment.

“I was able to meet many different people I would have not met otherwise,” said Mika, 53, who started renting out her apartment after she used a home-sharing service overseas. “I may sell my condo.” Mika added that if she were to rent the apartment out on a monthly basis, she would only make one-third of what she does from short-term rentals. The ancient capital of Kyoto, which draws more than 50 million tourists a year, will allow private lodging in residential areas only between Jan. 15 and March 16, avoiding the popular spring and fall tourist seasons.

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“..only 645 of 11,000 holiday rentals being offered to tourists on Palma have the licence required to do so.”

Palma de Mallorca To Ban Holiday Rentals After Residents’ Complaints (BBC)

The Spanish resort city of Palma, on the island of Majorca, is to ban flat owners from renting their apartments to travellers, becoming the first place in Spain to introduce such a measure. The restrictions follow complaints from residents of rising rents due to short holiday lets through websites and apps. Palma’s mayor says the ban, to be introduced in July, will be a model for cities suffering with mass tourism. But business associations say many families will be financially impacted. It was not immediately clear if the ban was restricted only to private flats advertised by their owners on apps or websites.

Houses and chalets will be exempt from the restrictions unless they are located inside protected areas, next to the airport or in industrial zones. Palma, like many other cities around the world, has seen an increase in visitor numbers driven, in part, by private rental accommodation offered through websites and apps. Officials from the local left-wing governing coalition cited a study suggesting that the number of non-licensed apartments on offer to tourists increased by 50% between 2015 and 2017. According to Spanish newspaper El País, only 645 of 11,000 holiday rentals being offered to tourists on Palma have the licence required to do so.

Locally, there is resentment over tourism pushing up prices – rents in Palma have reportedly increased 40% since 2013 – but also about deteriorating conditions in neighbourhoods popular with travellers due to noise and bad behaviour. “Palma is a determined and courageous city,” Mayor Antoni Noguera said. “We agreed on this [ban] based on the general interest [of the city] and we believe it will set the trend for other cities when they see that finding a balance is key.”

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They’re all doing it all wrong. Simply force Airbnb to supply numbers on all rentals.

Greece Uncovers Tax Evading Airbnb Owners By Posing as Customers (KTG)

Tax inspectors uncover tax evading Airbnb owners by pretending to be customers. According to Greece’s Independent Authority for Public Revenue (AADE), the trap has revealed a total of 55 Airbnbn tax evaders, so far. In some cases, the ‘fake customers’ even proceeded to booking an Airbnb flat. The first Airbnb owners who failed to declare their earnings from home-sharing practices were uncovered by Greece’s Independent Authority for Public Revenue (AADE) this week. Under a pilot program aiming to weed out violators, AADE inspectors posed as customers seeking to rent out short-term accommodation via the Airbnb platform. The undercover inspections focused on central points in the Greek capital as well as on luxury options available on popular Greek islands. In some cases, AADE authorities even proceeded to book.

According to AADE, 55 proprietors who had not proceeded with the mandatory declaration of earnings from home-sharing services were notified of the violation. A total of 39 came forward and proceeded with corrections to their income tax declarations indicating additional property income of approximately 921,163 euros resulting in over 200,000 euros going into state coffers. It should be noted that all owners renting out their properties on home-sharing platforms are required by Greek law to declare earned incomes from short-term lease in 2017 on their E2 Forms (column 7).

For income up to 12,000 euros, tax is imposed at a rate of 15%. Takings between 12,001 and 35,000 euros will be taxed at a 35% rate; annual gains over 35,000 euros at a 45% rate. For those offering additional services on the side, the earnings are assessed as income from business activity and taxed at 22% for earnings up to 20,000 euros, 29% for yields between 20,001 and 30,000 euros, 37% for takings between 30,001 and 40,000 euros, and 45% for profits exceeding 40,000 euros.

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Looked it up: World population 60 years ago was less than 3 billion (it hit that in 1960). It is now 7.5 billion. Ergo: people used to drink over 2x as much wine back then.

World Wine Output Falls To 60-Year Low (R.)

Wine production totaled 250 million hectoliters last year, down 8.6% from 2016, data from the Paris-based International Organisation of Vine and Wine (OIV) released on Tuesday showed. It is the lowest level since 1957, when it had fallen to 173.8 million hectoliters, the OIV told Reuters. A hectoliter represents 100 liters, or the equivalent of just over 133 standard 75 cl wine bottles. All top wine producers in the EU have been hit by harsh weather last year, which lead to an overall fall in the bloc of 14.6% to 141 million hectoliters.

The OIV’s projections, which exclude juice and must (new wine), put Italian wine production down 17% at 42.5 million hectoliters, French output down 19% at 36.7 million and Spanish production down 20% at 32.1 million. The French government said last year production had hit a record low due to a series of poor weather conditions including spring frosts, drought and storms that affected most of the main growing regions including Bordeaux and Champagne. In contrast, production remained nearly stable in the United States, the world’s fourth largest producer, and China, which has become the world’s seventh largest wine producer behind Australia and Argentina.

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Failed state.

Homelessness In UK ’10 Times Worse’ Than Official Figures Suggest (Ind.)

The true scale of homelessness in the UK is almost 10 times worse than official figures suggest, according to a new report. Homeless charity Justlife warns thousands of people are being “forgotten in statistics” after it estimated that at least 51,500 people were living in B&Bs in the year to April 2016 – compared with 5,870 official B&B placements recorded by the government. It comes after a separate investigation found that 78 homeless people died last winter – an average of at least two a week. The report by the Bureau of Investigative Journalism revealed the fatalities included rough sleepers, people recognised as “statutory homeless” and people staying in temporary accommodation.

Justlife reached its estimate on the homeless B&B population using data gathered from Freedom of Information requests to local authorities, along with other information from the government’s Rural and Urban Classification for Local Authority Districts data. Christa Maciver, author of the report, said: “We can no longer ignore the tens of thousands of people stuck homeless, hidden and ignored in our cities. This report shows there is so much we don’t know and that we really need to be calculating homelessness more accurately.

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And another failed state.

Over One In Five Greeks Can’t Make Ends Meet (K.)

Last year 21.1% of Greeks – or more than one in five – were unable to cover their basic needs, such as the timely payment of utility bills and regular consumption of meat, according to Eurostat. That 21.1% in 2017 may constitute a minor improvement from the 22.4% rate in 2016, but is still a particularly high level. This rate was also the second highest in the European Union and translates to a large share of the population, or 2.24 million people.

The people or households in that category are by definition those unable to meet the costs of at least four of the following: payment of utility bills in time, sufficient heating at home, tackling extraordinary expenses, consumption of meat (or fish or the equivalent in vegetables) on a regular basis, a one-week vacation away from home, and capacity to purchase a TV set, a washing machine, a car or a telephone. The age group with the highest rate of material deprivation in Greece includes those between 20 and 24 years, amounting to 32.6% – or one in three – though this is according to 2016 data. Notably, the year with the highest material deprivation rate in Greece from 2003 to 2017 (for which Eurostat has data), was 2009.

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Arrivals on Lesbos are 4 times what they were last year this time.

Greek Minister Drafts Action Plans Amid Fears Over Refugee Influx (K.)

Migration Minister Dimitris Vitsas conceded on Tuesday that he is “worried” about the significant increase in the flow of migrants and refugees to Greece observed recently. Vitsas said that arrivals on Lesvos had increased almost fourfold since last year, noting that daily arrivals were 54 on average last year compared to the 206 migrants who arrived on the island on Tuesday. Between January and April, more than 7,000 migrants and refugees arrived on the islands of the eastern Aegean, he said, noting that just 112 people were returned to Turkey during that same period. However, Vitsas appeared far more concerned with the increase in arrivals over the Greek-Turkish land border, noting that 340 people crossed the border on Tuesday.

“I’m not scared about the islands because we know what we have to do. What is really worrisome is the huge increase through Evros,” he said. Under pressure from the opposition over mistakes and omissions in the government’s current migration policy, Vitsas said that his ministry has prepared two plans to deal with the situation and pledged to outline their content to political party leaders in private. According to Bulgarian government statistics, 356 migrants have crossed into that country from Turkey since the beginning of the year. In the same period, more than 2,700 crossed Turkey’s land border with Greece, Vitsas said.

There are fears that the difference in flows is due to deteriorating ties between Greece and Turkey while relations between Sofia and Ankara are good, particularly since Bulgarian authorities returned alleged supporters of the US-exiled Turkish cleric Fethullah Gulen to Turkey in 2016. Security along Turkey’s border with Bulgaria has intensified since then. The opposite has been happening along the Greek border since the detention of two Greek soldiers who strayed across the border in early March. Greek border guards are now more cautious, and less inclined to crack down on migrants.

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Curious. Athens should be open about EU pressure on the topic.

Greek Government Defies Court on Asylum Seekers (HRW)

The Greek government’s move on April 20, 2018, overturning a binding court ruling ordering it to end its abusive policy of trapping asylum seekers on Greece’s islands raises rule of law concerns, 21 human rights and humanitarian organizations said today. Rather than carrying out the April 17 ruling by the Council of State, the country’s highest administrative court, the government issued an administrative decision reinstating the policy, known as the “containment policy.” It also introduced a bill on April 19 to clear the way to restore the policy in Greek law. Parliament members should oppose such changes and press the government to respect the ruling.

Parliament began discussing the draft law on April 24. But the government has preempted the debate on the bill, including the issue of the containment policy by reinstating it. On April 20, the new director of the asylum service reissued an administrative order setting down the reasons for the containment policy. Among grounds given to justify the restrictions imposed by the policy are the need to implement an EU-Turkey deal on migration and a broader public interest claim. But the decision goes against the Council of State ruling and Greece’s responsibilities under international, EU and Greek law, as it offers insufficient justification for the restrictions, the groups said.

The Council of State’s April 17 ruling said that Greece’s containment policy had no legal basis and that there were no imperative reasons under EU and Greek law justifying the restrictions to the freedom of movement of asylum seekers. It ordered the annulment of the administrative decision imposing the restrictions and permitted the free movement of asylum seekers arriving on the islands following the ruling’s publication. The ruling also highlighted that the disproportionate distribution of asylum seekers has overburdened the islands. The ruling is limited, however, applying only to new arrivals.

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“Each litre of sea ice contained around 12,000 particles of plastic..”

Arctic Sea Ice Contains Huge Quantity Of Microplastics (Ind.)

Scientists have found an unprecedented number of microplastics frozen in Arctic sea ice, demonstrating the alarming extent to which they are pervading marine environments. Analysis of ice cores from across the region found levels of the pollution were up to three times higher than previously thought. Each litre of sea ice contained around 12,000 particles of plastic, which scientists are now concerned are being ingested by native animals. Based on their analysis, the researchers were even able to trace the tiny fragments’ paths from their places of origin, from fishing vessels in Siberia to everyday detritus that had accumulated in the infamous Great Pacific Garbage Patch.

“We are seeing a clear human imprint in the Arctic,” the study’s first author, Dr Ilka Peeken, told The Independent. “It suggests that microplastics are now ubiquitous within the surface waters of the world’s ocean,” said Dr Jeremy Wilkinson, a sea ice physicist at the British Antarctic Survey who was not involved with the study. “Nowhere is immune.”

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Apr 052018
 
 April 5, 2018  Posted by at 12:11 pm Finance Tagged with: , , , , , , , , , , , , ,  


Herbert Ponting Scott’s Terra Nova Expedition, Antarctica 1911

 

Something must be terribly wrong with the world. A few days ago Elizabeth Warren agreed with Trump on China, now Bernie Sanders agrees with him about Amazon. What’s happening?

 

Bernie Sanders Agrees With Trump: Amazon Has Too Much Power

Independent Vermont senator and 2016 presidential hopeful Bernie Sanders echoed President Donald Trump in expressing concern about retail giant Amazon. Sanders said that he felt Amazon had gotten too big on CNN’s “State of the Union” Sunday, and added that Amazon’s place in society should be examined.

“And I think this is, look, this is an issue that has got to be looked at. What we are seeing all over this country is the decline in retail. We’re seeing this incredibly large company getting involved in almost every area of commerce. And I think it is important to take a look at the power and influence that Amazon has,” said Sanders.

A backlash against Facebook, a backlash against Amazon. Are these things connected? Actually, yes, they are connected. But not in a way that either Trump or Sanders has clued in to. Someone who has, a for now lone voice, is David Stockman. Here’s what he wrote last week.

 

The Donald’s Blind Squirrel Nails An Acorn

It is said that even a blind squirrel occasionally finds an acorn, and so it goes with the Donald. Banging on his Twitter keyboard in the morning darkness, he drilled Jeff Bezos a new one – or at least that’s what most people would call having their net worth lightened by about $2 billion:

“I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!” You can’t get more accurate than that. Amazon is a monstrous predator enabled by the state, but Amazon’s outrageous postal subsidy – a $1.46 gift card from the USPS stabled on each box – isn’t the half of it.

The real crime here is that Amazon has been exempted from making a profit, and the culprit is the Federal Reserve’s malignant regime of Bubble Finance. The latter has destroyed financial discipline entirely and turned the stock market into the greatest den of speculation in human history. That’s why Bezos can kill established businesses with impunity.

The casino allows him to run a pernicious business model based on “price to destroy”, rather than price for profit and a return on capital. Needless to say, under a regime of sound money and honest capital markets Amazon would be a far more benign economic creature. That’s because no real investors would value AMZN’s money-loosing e-Commerce business at $540 billion – nor even a small fraction of that after 25-years of profitless growth.

The bubble economy, the everything bubble, that we have been forced into, with QE, ultra-low rates, central banks buying trillions in what at least used to be assets, and massive buybacks that allow companies to raise their ‘value’ into the stratosphere, has enabled a company like Amazon to kill off its competition, which consists of many thousands of retailers, that do have to run a profit.

It’s a money scheme that allows many of the most ‘valuable’ tech companies to elbow their way into our lives, in ways that may seem beneficial to us at first, but in reality will only leave us behind with much less choice, far less competition, and many, many fewer jobs. Once it’s done someone will mention ‘scorched earth’. But for now they are everybody’s darlings; they are, don’t you know, the tech giants, the brainchildren of the best that the best among us have to offer.

They don’t all work the exact same way, which may make it harder to recognize what they have in common. For some it’s easier to see than for others. It’s also difficult to list them all. Here’s a few: Apple, Amazon, Facebook, Google (Alphabet), Tesla, Uber, Airbnb, Monsanto. Let’s go through the list.

 

Apple ? Yes, Apple too. But they make real things! Yes, but just as Apple CEO Tim Cook seeks to distance his company from the likes of Facebook on morals and ethics, he can’t deny that Apple sells a zillion phones to a large extent because everybody uses them to look at Facebook and Alphabet apps until their faces are blue. If data ethics are the only problem Cook sees, he’s in trouble.

Silicon Valley infighting shows that the industry does have an idea what is going wrong, in ways that should have already led to many more pronounced worries and investigations.

 

Silicon Valley Rivals Take Shots At Facebook

Mr. Cook, who has long sought to differentiate Apple on privacy matters, contrasted its focus on selling devices with Facebook and Google’s ad-based businesses that are built on user data. Asked what he would do if he were Facebook CEO Mark Zuckerberg, Mr. Cook replied: “I wouldn’t be in this situation.”

[..] Days earlier, François Chollet, an artificial intelligence engineer at Google, sought to draw a line between his company and Facebook. He tweeted that Google products like search and Gmail help users “to do more, to know more.” Facebook’s newsfeed, he wrote, “manipulates your worldview and seeks to maximally waste your time.”

[..] In January, Salesforce.com CEO Marc Benioff, whose company sells business software services, said that the addictive nature of social media means it should be regulated like a health issue.“I think that you do it exactly the same way that you regulated the cigarette industry,” Mr. Benioff told CNBC when asked how Facebook should be regulated. Some of the most cutting rebukes have come from people who know Facebook well.

In November, Sean Parker, the founding president of Facebook, said that Facebook executives, including himself, were “exploiting a vulnerability in human psychology” by designing a platform built on social validation. Mr. Parker didn’t respond to a request for comment.

Facebook generally hasn’t responded to the criticism, but it did after sharp comments from its former vice president of growth, Chamath Palihapitiya. “The short-term, dopamine-driven feedback loops that we have created are destroying how society works,” Mr. Palihapitiya said at a talk at Stanford University in November.

I would expect to hear a lot more of that sort of thing. Big Tech is changing the world in more ways than one. And spying on people Facebook-style is merely one of a long list of them. So yes, Apple certainly also belongs in that list. Facebook doesn’t build the devices people use to see what their friends had for breakfast, Apple does that. Moreover, Apple profits hugely from stock buybacks, so it fits in Stockman’s bubble finance definition of Amazon, too.

The failure of politics to investigate, and act against, those dopamine-driven feedback loops which exploit a vulnerability in human psychology in order to maximally waste your time and sell you product after product that you never (knew you) wanted is downright bizarre. Politicians only started talking about Facebook when a topic connected to Trump and Russia was linked to it.

 

Amazon: Trump can’t act fast enough on the tax situation and the US Postal deal. Not that that will solve the issue. Amazon, like all the companies on my list, can only be cut down to size if and when the everything bubble is. They are, after all, its children.

The most pernicious aspect of the Amazon ‘business model’, which all these firms share, and all are able to live by thanks to the central banks and the “greatest den of speculation in human history” they have created, is the prospect of world domination in their respective fields. They all hold in front of speculators the promise that they can crush all competition, or nearly all. Scorched earth, flat earth.

 

Facebook: their place in the list is obvious. What is it, 2.5 billion users? And what they don’t have is divvied up between them and Google when they buy up apps like Instagram. Officially competitors, but they have the exact same goals. And, like me, you may think: what’s the problem, just ban them from collecting all that data. Facebook has no reason to know, at least not one that serves us, where you were last Friday, and with whom. And just in case you missed that bit, they do.

But there their connection to the intelligence world comes in. Their platforms are better than anything the NSA has ever been able to develop. So we can say we don’t want Zuckerberg and Alphabet spying on us, but our own spies do want to do just that. That makes any kind of backlash much harder to succeed. And it doesn’t matter if you delete your Facebook account, they’ll find you anyway. Friend of a friend. We all have friends who are on Facebook, rinse and repeat.

The only hope there is, with Facebook as with the other companies, is for investors and speculators to dump their holdings in massive numbers. And that will only happen when the central bank Ponzi collapses. And it will, but by then we have a whole new set of problems.

 

Google: largely the same set of issues that Facebook has. Its tentacles are everywhere. Former CEO Eric Schmidt’s connections to the Pentagon should be really all you need to know. The EU may have issued all sorts of complaints and fines on competition grounds, but that makes no difference.

The one country with an effective response to Google and Facebook is China, that has largely banned both and built its own versions of their products. Which allows Beijing to ban people from boarding planes, buying homes etc., if their ‘social credit’ is deemed too low. If you want to be scared about where Big Tech’s powers can lead, look no further.

 

Tesla: Elon Musk has built a fantasy (and maybe I should put Paypal in this list too) on what everyone thinks must be done to ‘save the planet’ (yeah, build cars…) by grossly overstating the number of cars he can build, and financing his growth on not only speculation, but also on spectacular amounts of government subsidies (politicians want to save the planet, too).

And now he needs additional financing again. He will probably get it, again, but the Amazon backlash might have people take another look. One fine day… Fits David Stockman’s complaint to a t(ee), doesn’t have to make a profit. Musk has perfected that model.

 

Uber and Airbnb: why anyone anywhere would want to send money generated in their community, by renting out cars and apartments in that same community, to a bunch of people in Silicon Valley, is beyond me. Someone should set this up as an international effort that makes it easy for a community, a city etc., to provide this kind of service and make the profits benefit their own cities.

But like Amazon, they are free to run any competition into the ground because no profits are required until they have conquered the world. And then they can go nuts. It may look like a business model, but it isn’t. It’s a soon to be orphaned bubble child..

 

Monsanto: less obvious perhaps as an entry in the Big Tech list, but very much warranting a spot. And of course it stands for the entire chemical-seeds field. From Agent Orange to your children’s dinner plate. Monsanto has more lawyers and lobbyists on its payroll than it has scientists, but then its lofty goals outdo even those of Google or Amazon.

Facebook may focus on your addiction to human contact, but Bayer, DuPont, Syngenta et al have decided to make your food so addicted to their chemicals that they will in the future profit from every bite served on your table. How they will grow that food long term without any insects, bees or birds left is unclear, but they don’t seem to care much. As for profits? Monsanto seeks to rule the world, and for now care as little about profits as they do about insects.

 

Zuckerberg may claim that he only wants to improve Facebook’s service, but when that is done through for instance the 2012 so-called Transmission of Anger experiment in which the company tried to alter their users’ emotional states -and succeeded-, by manipulating their friends’ postings, that claim becomes pure ridicule. Selling off user data to scores of developers doesn’t help either. But do you see Congress tackling him in any serious way next week? Neither do I.

Because there’s one huge catch to the scenario that David Stockman -and I- painted, of the whole tech bubble collapsing when the financial bubble does. It is the links tech companies have built to intelligence. A group of Google employees wrote a letter to their CEO Sundar Pichai to protest the company’s involvement in “weaponized AI”, in the shape of Project Maven, a military surveillance engine to-be.

These people undoubtedly mean well, but they’re far too late. They will have to leave the “don’t be evil” company to actually not be evil. Because it’s not a big step from weaponized AI to killer robots. Microsoft is also part of the project, and Amazon is. If you work there and don’t want to be evil, you know what to do.

Yeah, it’s about our safety, and security, and political and military and economic power. But it’s also about spying on people, in even worse ways than Facebook does. So even as the central bank bubble, and the tech bubble, go poof, some of these companies may be saved by their military ties.

That sound you hear is George Orwell turning in his grave.

 

 

Nov 222017
 
 November 22, 2017  Posted by at 9:53 am Finance Tagged with: , , , , , , , , ,  


Arthur Rothstein Quarter Circle U Ranch, Big Horn County, MT 1939

 

UK Water Firms Admit Using Divining Rods To Find Leaks And Pipes (G.)
UK MPs Vote ‘That Animals Cannot Feel Pain Or Emotions’ (Ind.)
UK Environment Department Using 1,400 Disposable Coffee Cups A Day (G.)
Biggest Bubble Ever? (ZH)
China Is On Course To Become One Of The World’s Most Indebted Nations (BBG)
China’s Growth Miracle Has Run Out Of Steam (Pettis)
Tesla’s Burning Through Nearly Half a Million Dollars Every Hour (BBG)
US Credit Card Delinquencies Spike (BI)
Too-Big-To-Fail Banks Keep Getting Bigger (CNN)
US Doctors Cut Off Opioids, Leaving Millions in Pain and Withdrawal (BBG)
Uber Concealed Cyberattack Exposing Data Of 57 Million Users, Drivers (BBG)
Airbnb Locks Horns With Athens (K.)
Greek Budget For 2018 Sees High Growth, Surplus And More Taxes (K.)

 

 

Today’s the day UK Chancellor Hammond will present his budget, which will go a long way towards the country’s Brexit plans. So let’s have a few articles that make you wonder why you would want to belong to a club that includes these people.

This first one makes me think: if this is the best piece I read all day, I’m good.

UK Water Firms Admit Using Divining Rods To Find Leaks And Pipes (G.)

Ten of the 12 water companies in the UK have admitted they are still using the practice of water dowsing despite the lack of scientific evidence for its effectiveness. The disclosure has prompted calls for the regulator to stop companies passing the cost of a discredited medieval practice on to their customers. Ofwat said any firm failing to meet its commitments to customers faced a financial penalty. Dowsers, or water witchers, claim that their divining rods cross over when the presence of water is detected below ground. It is regarded as a pseudoscience, after numerous studies showed it was no better than chance at finding water. Some water companies, however, insisted the practice could be as effective as modern methods.

The discovery that firms were still using water diviners was made by the science blogger Sally Le Page, after her parents reported seeing an engineer from Severn Trent “walking around holding two bent tent pegs to locate a pipe” near their home in Stratford-upon-Avon. Le Page asked Severn Trent why it was still using divining rods to find pipes when there was no evidence that it worked. Replying on Twitter, the company said: “We’ve found that some of the older methods are just as effective than the new ones, but we do use drones as well, and now satellites.” Le Page then asked the other 11 water companies whether they were using water dowsing. Only one, Wessex Water, said it did not use divining rods, and one, Northern Ireland Water had yet to reply. The other nine confirmed the practice was still used in some form in their areas.

Read more …

The second one defies all belief. What else is appropriate but utter silence?

UK MPs Vote ‘That Animals Cannot Feel Pain Or Emotions’ (Ind.)

MPs have voted to reject the inclusion of animal sentience – the admission that animals feel emotion and pain – into the EU Withdrawal Bill. The move has been criticised by animal rights activists, who say the vote undermines environment secretary Michael Gove’s pledge to prioritise animal rights during Brexit. The majority of animal welfare legislation comes from the EU. The UK Government is tasked with adopting EU laws directly after March 2019 but has dismissed animal sentience. The Government said during the debate before the vote that this clause is covered by the Animal Welfare Act 2006. The RSPCA disputed the Government’s claim. “It’s shocking that MPs have given the thumbs down to incorporating animal sentience into post-Brexit UK law,” RSPCA head of public affairs David Bowles told Farming UK.

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“In addition, 500 reusable or so-called “keep cups” were purchased in 2013, but only four of these have been sold in the last three years.”

UK Environment Department Using 1,400 Disposable Coffee Cups A Day (G.)

More than 2.5m disposable cups have been purchased by the UK’s environment department for use in its restaurants and cafes over the past five years – equivalent to nearly 1,400 a day. The Liberal Democrats’ environment spokesman, Tim Farron, said the revelation, obtained through a freedom of information request, showed Michael Gove “needs to get his own house in order” in light of his public pledges to tackle the growing scourge of plastic pollution. The Lib Dems revealed that 516,000 disposable cups had been purchased by the Department for Environment, Food and Rural Affairs’ (Defra) catering contractors in the last year alone, under two separate outsourced contracts for use in catering outlets across its sites.

The figure was 589,700 in 2016 and 785,100 the previous year. The catering contractors did not previously provide any reusable cups, but purchased 200 reusable cups on 31 October 2017. Separate figures uncovered by the Lib Dems have revealed the House of Commons itself is also failing to get to grips with disposable cup waste, using almost 4m disposable cups in the past five years. They reveal that 657,000 disposable cups have been purchased by the Commons’ catering service in the last year alone – equivalent to 1,000 per MP – but down from 918,700 in 2013. In addition, 500 reusable or so-called “keep cups” were purchased in 2013, but only four of these have been sold in the last three years.

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Everything bubble. Where’s Tesla, Uber, Airbnb?

Biggest Bubble Ever? (ZH)

Yesterday we presented readers with one of the most pessimistic, if not outright apocalyptic, 2018 year previews, courtesy of BofA’s chief investment, Michael Hartnett who warned that in addition to the bursting of the bond bubble in the first half of the year, the stock market could see a 1987-like flash crash, potentially followed by a sharp spike in (violent) social conflict. However, in addition to his forecast, Hartnett also had one of the more informative, and descriptive, reviews of the year that was, or as he put it: 2017 was the perfect encapsulation of an 8-year QE-led bull market.

Here are his 15 bullet points that show why in 2017 we may have seen the biggest bubble ever (and why we can’t wait to see what 2018 reveals).
• Da Vinci’s “Salvator Mundi” sold for staggering record $450mn
• Bitcoin soared 677% from $952 to $7890
• BoJ and ECB were bull catalysts, buying $2.0tn of financial assets
• Number of global interest rate cuts since Lehman hit: 702
• Global debt rose to a record $226tn, record 324% of global GDP
• US corporates issued record $1.75tn of bonds
• Yield of European HY bonds fell below yield of US Treasuries
• Argentina (8 debt defaults in past 200 years) issued 100-year bond
• Global stock market cap jumped1 $15.5tn to $85.6tn, record 113% of GDP
• S&P500 volatility sank to 50-year low; US Treasury volatility to 30-year low
• Market cap of FAANG+BAT grew $1.5tn, more than entire German market cap
• 7855 ETFs accounted for 70% of global daily equity volume
• The first AI/robot-managed ETF was launched (it’s underperforming)
• Big performance winners: ACWI, EM equities, China, Tech, European HY, euro
• Big performance losers: US$, Russia, Telecoms, UST 2-year, Turkish lira

As Hartnett summarizes, “2017 was a perfect encapsulation of an 8-year QE-led bull market”

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Xi needs to start letting zombies die, or he’ll lose control.

China Is On Course To Become One Of The World’s Most Indebted Nations (BBG)

China’s debt is poised to soar over the next five years, severely reducing the chances the nation can avoid a financial crisis. Bloomberg Economics economists Fielding Chen and Tom Orlik estimate China’s total debt will reach 327% of GDP by 2022, double the level in 2008. That will put China among the most indebted countries in the world. “The rapid growth and high level of China’s debt have already placed them in the danger zone for a financial crisis,” said the economists in a note published Tuesday. “Adding debt equivalent to almost 70% of GDP in the next five years wouldn’t mean a crisis is inevitable, but it would severely reduce the chances of avoiding one.”

Central bank Governor Zhou Xiaochuan, who has hinted he’ll soon retire, recently warned of the risks in company and household debt, saying that corporate borrowing was “very high” and that the nation needs to be on guard against excessive optimism that could spark a sudden drop in asset prices. The Bloomberg estimates of future debt levels are based on a new model that assumes a moderate slowdown in growth, continued rebalancing of the structure of the economy toward services, a stabilization in the credit intensity of growth, and continued large-scale write-offs of bad loans. Economic expansion is expected to slow to 5.8% in 2022 from 6.7% in 2016, the economists said. Nominal growth, more relevant for calculating the debt-to-GDP ratio, is expected to edge down to 7.9% in 2022 from 8% in 2016, they said.

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Bridges to nowhere and ghost cities account for a large part of China GDP growth.

China’s Growth Miracle Has Run Out Of Steam (Pettis)

China’s 19th Communist party congress ended last month with an indication that Xi Jinping’s new administration plans to rein in debt by abandoning the country’s long-term economic targets and allowing gross domestic product growth to fall. Typically, analysts assume that changes in reported GDP reflect movements in living standards and productive capacity. In China, however, this is not the case. Local governments are expected to boost spending by whatever amount is needed to meet the country’s targets, whether or not it is productive. GDP growth is not the same as economic growth. Consider two factories that cost the same to build and operate. If the first factory produces useful goods, and the second produces unwanted ones that pile up as inventory, only the first boosts the underlying economy.

Both factories, however, will increase GDP in exactly the same way. Most economies, however, have two mechanisms that force GDP data to conform to underlying economic performance. First, hard budget constraints, which set spending limits, drive companies that systematically waste investment out of business before they can substantially distort the economy. Second, there is a market-pricing factor in GDP accounting that when bad debts caused by wasted investment are written down, the value-added component of GDP and the overall level of reported growth are reduced. In China, however, neither mechanism works. Bad debt is not written down and the government is not subject to hard budget constraints.

It is the government sector that is mainly responsible for the investment misallocation that characterises so much recent Chinese growth. The implications are obvious, even if most economists have been surprisingly reluctant to acknowledge them. Anyone who believes there has been a significant amount of wasted investment in China must accept that reported GDP growth overstates the real increase in wealth by the failure to recognise the associated bad debt. Were it correctly written down, by some estimates GDP growth would fall below 3%.

Read more …

Anyone buying into Tesla will get what they deserve.

Tesla’s Burning Through Nearly Half a Million Dollars Every Hour (BBG)

Elon Musk said last week that Tesla is designing a new sports car that could go from zero to 60 mph in 1.9 seconds. Not bad, but here’s a speed number that investors might want to focus on instead: Over the past 12 months, the electric-car maker has been burning money at a clip of about $8,000 a minute (or $480,000 an hour), Bloomberg data show. At this pace, the company is on track to exhaust its current cash pile on Monday, Aug. 6. (At 2:17 a.m. New York time, if you really want to be precise.) To be fair, few Tesla watchers expect the cash burn to continue at quite such a breakneck pace, and the company itself says it’s ramping up output of its all-important Model 3, which will bring money in the door. But still, its need for fresh cash came into high relief last week when Musk unveiled his latest plan to raise funds. He’s asking customers to pay him upfront to order vehicles that may not be delivered for years.

The Founders Series Roadster will cost buyers a $250,000 down payment even though it’s not coming for more than two years. Orders of those cars are capped at 1,000, meaning they alone could generate $250 million. Tesla is charging a total of $50,000 for reservations of the regular Roadster. Companies can also pre-order electric Semi trucks for $5,000, though they don’t go into production until 2019. But all this is a pittance compared with Tesla’s financial needs. It’s blowing through more than $1 billion a quarter thanks to massive investment in making the Model 3, a $35,000 car that’s looking less likely to generate a return anytime soon. “Whether they can last another 10 months or a year, he needs money, and quickly,” said Kevin Tynan, senior analyst with Bloomberg Intelligence, who estimates Tesla will be required to raise at least $2 billion in fresh capital by mid-2018.

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Oh, puhlease… “The rise in new delinquencies is difficult to square with the continued strength of the labor market.”

US Credit Card Delinquencies Spike (BI)

Americans are having increasing trouble paying their credit card bills, a potentially ominous sign for an economy reliant on consumer spending for some two-thirds overall activity. US credit card debt recently surged to new record highs, surpassing peaks seen before the 2008 financial crisis. Several large US banks and credit card companies reported a rise in credit card delinquency rates for August, the second consecutive monthly rise. Michael Pearce, economist at Capital Economics, does not see the spike as a major threat to the growth outlook for now. But given the prospect of higher interest rates from the Federal Reserve next year, it could become a growing problem. “The increase in new delinquencies may be an early sign of stress in household finances,” he wrote in a note sent out to clients on Friday.

“After all, credit card lending is one of the most expensive forms of borrowing, and missing a credit card payment doesn’t carry the same risk of repossession as falling behind on mortgage or car payments might,” Pearce added. “The rise in new delinquencies is difficult to square with the continued strength of the labor market.”

Read more …

Feature not flaw.

Too-Big-To-Fail Banks Keep Getting Bigger (CNN)

Many too-big-to-fail banks have grown even larger during the decade since the financial crisis. The 2008 meltdown showed how big banks that get into trouble can hold the entire global economy hostage. Hoping to avoid another round of unpopular bailouts, financial watchdogs have forced too-big-to-fail banks to make themselves less dangerous by adding lots of capital that safeguards against losses. But regulators continue to monitor these financial institutions, creating a list of 30 “systemically important” banks that deserve extra scrutiny. JPMorgan Chase sits atop that list of banks that could threaten global stability, according to new rankings published on Tuesday by international regulators. While JPMorgan has been required to take significant steps to make itself less risky, America’s leading bank has nonetheless gotten much bigger over the past decade.

JPMorgan has amassed an incredible $2.56 trillion in assets. That’s nearly twice as much as at the end of 2006 when the subprime mortgage bubble was beginning to burst. A chunk of JPMorgan’s growth is due to its government-backed rescues of failing Bear Stearns and Washington Mutual. Bank of America and Deutsche Bank are ranked one level below JPMorgan on the “systemically important” list published by the Financial Stability Board. BofA’s asset footprint has soared by 56% since the end of 2006 to $2.28 trillion. Deutsche Bank’s asset size has increased by 21% over that span, according to FactSet. Wells Fargo, which acquired failing Wachovia during the financial crisis, is sitting on $1.93 trillion. That’s up nearly 300% since the end of 2006.

Big banks in China are also growing at a rapid pace. China’s four systemically important banks have more than tripled their asset sizes over the last 10 years, according to S&P Global Market Intelligence. Industrial and Commercial Bank of China is the world’s largest bank, with $3.76 trillion in assets. That’s up from $1.11 trillion at the end of 2006. “If and when another crisis hits, the biggest players will be far larger than they were in the last crash,” S&P Global Market Intelligence wrote in a report.

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“Roughly 8 million Americans are on long-term opioid therapy for chronic pain, and as many as a million are taking dangerously high doses..”

US Doctors Cut Off Opioids, Leaving Millions in Pain and Withdrawal (BBG)

Six months after surgery to repair a damaged urinary tract in 1998, computer technician Doug Hale woke one morning with excruciating, burning pain. Hale’s suffering persisted for years, despite all sorts of treatments. Finally, in 2006, he was prescribed strong doses of opioids. Fast-forward 10 years. Still on his pain killers, Hale was popping so many of the highly addictive pills that he regularly ran out of his prescription early. His doctor cut off his supply and urged Hale to enter a detox program. That didn’t work. Hale, still in agonizing pain and now suffering from intense withdrawal symptoms, returned to his doctor and pleaded to get back on his opioid regime. The doctor refused. The next day, Hale put the barrel of a small-gauge gun in his mouth and pulled the trigger.

It would be tempting to view Hale’s death, at 53, as one more sad entry in the never-ending national tragedy of opioid deaths. In fact, it’s much more than that. Hale’s story is a window into the country’s silent majority of opioid sufferers. These are the millions of painkiller-dependent users inhabiting a vast gray zone somewhere between medical patient and drug addict, who are finding themselves suddenly abandoned in droves by the medical system. Under threat of lawsuits and government and insurance industry crackdowns, doctors have been cutting off the supply of painkillers, forcing many of their patients to quit cold turkey after years or even decades of dependence, sometimes with catastrophic consequences. Worst of all, those left suddenly without their meds often have nowhere to turn for help.

[..] Roughly 8 million Americans are on long-term opioid therapy for chronic pain, and as many as a million are taking dangerously high doses, said Michael Von Korff, a senior researcher at the Kaiser Permanente Washington Health Research Institute. In the Medicare program alone, 500,000 patients were on high opioid doses in 2016, according to a 2017 report from the U.S. Department of Health and Human Services.

Read more …

Close it down. Or lawsuits will.

Uber Concealed Cyberattack Exposing Data Of 57 Million Users, Drivers (BBG)

Hackers stole the personal data of 57 million customers and drivers from Uber Technologies Inc., a massive breach that the company concealed for more than a year. This week, the ride-hailing firm ousted its chief security officer and one of his deputies for their roles in keeping the hack under wraps, which included a $100,000 payment to the attackers. Compromised data from the October 2016 attack included names, email addresses and phone numbers of 50 million Uber riders around the world, the company told Bloomberg on Tuesday. The personal information of about 7 million drivers was accessed as well, including some 600,000 U.S. driver’s license numbers. No Social Security numbers, credit card information, trip location details or other data were taken, Uber said.

At the time of the incident, Uber was negotiating with U.S. regulators investigating separate claims of privacy violations. Uber now says it had a legal obligation to report the hack to regulators and to drivers whose license numbers were taken. Instead, the company paid hackers to delete the data and keep the breach quiet. Uber said it believes the information was never used but declined to disclose the identities of the attackers. “None of this should have happened, and I will not make excuses for it,” Dara Khosrowshahi, who took over as CEo in September, said in an emailed statement. “We are changing the way we do business.” After Uber’s disclosure Tuesday, New York Attorney General Eric Schneiderman launched an investigation into the hack, his spokeswoman Amy Spitalnick said. The company was also sued for negligence over the breach by a customer seeking class-action status.

[..] In January 2016, the New York attorney general fined Uber $20,000 for failing to promptly disclose an earlier data breach in 2014. After last year’s cyberattack, the company was negotiating with the FTC on a privacy settlement even as it haggled with the hackers on containing the breach, Uber said. The company finally agreed to the FTC settlement three months ago, without admitting wrongdoing and before telling the agency about last year’s attack.

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Airbnb gambles that it’s above and beyond the law. Let’s see.

Airbnb Locks Horns With Athens (K.)

In its first public statement on Greek tax affairs, Airbnb took a tough stance against the Greek government and refused to share the tax details of the property owners with whom it cooperates with the Greek state. The short-term property lease website announced a few days ago that “hosts on Airbnb want to pay their share of tax and we want to help but in respect of their privacy. Personal data are subject to strict rules to protect privacy and we want to work together on a better way forward. Airbnb routinely shares information with Greece on the impacts of home sharing. Personal data is shared only through a valid legal request pursuant to national and European data privacy laws.”

The US-headquartered home-sharing firm therefore refuses to supply the tax registration numbers of its property owners, even though it knows that multiple property entries by the same owner aimed at tax-free investment utilization concerns at least 40% of its customers in Greece. According to Greek law, owners are not allowed to lease out more than two properties per tax registration number unless they set up a company for that purpose and are taxed accordingly. This is why it is crucial to distinguish owners who just top up their income from those who let properties for short periods as a professional/investment activity.

According to Airbnb, the average annual takings of Greek owners last year came to €2,375, while the average occupancy stood at just three days per month. However, this is far from representative as it also includes thousands of properties listed without having a single visitor and therefore no revenues, as they have been incorrectly registered or are simply located in unpopular areas. The vast majority of Greek owners on Airbnb appear to “forget” to declare their revenues from this activity to the tax authorities, knowing that the monitoring mechanism is unable to cross-check and inspect their revenues because their guests are typically foreign citizens who would not declare their expenditure to the Greek authorities.

Read more …

Guess which one of the three will actually pan out.

Greek Budget For 2018 Sees High Growth, Surplus And More Taxes (K.)

The government on Wednesday submitted the 2018 budget in Parliament, predicting a higher-than-expected primary surplus, of 3.8% of GDP, and a growth rate of 2.5%, as well as additional austerity with some 1 billion euros in new taxes. The strong growth rate of 2.5% is projected to follow a 1.6% expansion this year – a figure that has been downwardly revised twice following an original forecast of 2.7%. In a report accompanying the budget, the Finance Ministry looked forward to an “exit from a long period of programs of macroeconomic adjustment,” referring to Greece’s anticipated exit from its third foreign bailout in the summer of next year. The budget – which is to be voted on in Parliament on December 22 – foresees a primary surplus of 2.4% of GDP for this year, significantly above a target of 1.75%, and 3.8% for 2018.

“The significant overshooting of the targets… has contributed to restoring international trust in Greek public finances and created the preconditions for the country’s return to international capital markets in a sustainable way,” the ministry noted in its report. The budget also provides details about a “social dividend,” heralded by Prime Minister Alexis Tsipras last week, for 1.4 million households. The handout is worth an average of 483 euros, the ministry said, adding that a projected increase in growth rates in the coming years should allow the government to broaden its initiatives for social protection. The budget also includes a list of 12 measures that were passed in Parliament earlier this year but have yet to be implemented.

They include increases in social security contributions, cuts to heating and oil subsidies, higher tax rates for medium-sized and large properties, the elimination of value-added tax breaks for dozens of Aegean islands that had enjoyed a reduced rate of VAT, and a new hotel stayover levy. There are fears that the latter could have an impact on tourism, which remains one of Greece’s few dynamic economic sectors. The government hopes that the 12 measures will raise around 1 billion euros in revenue.

Read more …