William Henry Jackson Portales of the market of San Marcos, Aguascalientes, Mexico 1890
“I’ve been here before though and know full well how this story ends and it doesn’t involve me being detained in a mental health establishment (usually).”
Societe Generale’s notoriously bearish strategist, Albert Edwards, has poured scorn on the belief that the U.S. economy is recovering and predicts “violent” reactions in asset markets during the second half of 2015. “The downturn in U.S. profits is accelerating and it is not just an energy or U.S. dollar phenomenon – a broad swathe of U.S. economic data has disappointed in February,” he said in a research note published Thursday. U.S. indexes have continued to hit all-time highs this year and the Nasdaq is also looking to break through a level last seen at the peak of the tech bubble in 2000. However, Edwards said that, rather than concentrating on these corporate earnings or dismal economic data points, market participants were too focused on the “pillow talk” about decent payroll data from the U.S. Federal Reserve.
Fed Chair Janet Yellen sounded a dovish tone this week in front of Congress, saying the central bank would be patient with its goal of normalizing benchmark interest rates. Analysts have been busy dialing back their estimates for the next rate hike in the U.S., with many now believing that it could be September, or even later – rather than June – when a change in policy takes place. “The reality is that the vast bulk of economic, as well as earnings, data (even outside the energy sector), has been simply dreadful,” Edwards said. “The economic cycle will be brought down by asset bubbles bursting long before ‘tight’ policy has any effect. Lessons were learned from the global financial crisis, but not that one.”
In the research note, he highlights a slew of data that has surprised on the downside so far in 2015, adding that it was the worst start-of-year since 2009. Examples he gave included retail sales, factory orders and personal spending. There have also been a number of disappointing earnings, with Wall Street powerhouse Morgan Stanley seeing adjusted earnings fall short of estimates and retail giant Wal-Mart posting worse-than-expected revenue last week. Edwards said that such an earnings slump was normally associated with an outright U.S. recession. “With equity markets galore hitting record highs clearly I must be missing something big!” he said. “I’ve been here before though and know full well how this story ends and it doesn’t involve me being detained in a mental health establishment (usually).”
“When the U.S. consumer is starting to be more than 70% of GDP, as it’s threatening to do again, the U.S. structural story is not as powerful as so many people seem to now believe it is,”
The U.S. may not be as strong as investors think because it is growing overly dependent on the consumer for economic growth, said Jim O’Neill, former chairman of Goldman Sachs Asset Management. “When the U.S. consumer is starting to be more than 70% of GDP, as it’s threatening to do again, the U.S. structural story is not as powerful as so many people seem to now believe it is,” O’Neill told CNBC on Thursday. “It was, but it’s weakening.” A bull case emerged for the United States after the financial crisis in part because investors saw growth coming from structural improvement, rather than cyclical momentum, O’Neill said.
The idea was the country would begin rebuilding its savings rate and shore up exports and investments as the consumer took a smaller role in fueling growth, he said. That shift was beginning to take shape, but in the last year, signs are beginning to emerge that “the consumer is back to being king,” O’Neill said in a “Squawk Box” interview. “In some ways, the reason we had the whole mess in the first place is because the U.S. consumer was too much of the king,” he said, referring to the financial and subprime mortgage crises. He pointed to the role of oil production in improving the country’s balance of payments with the rest of the world.
Last year, President Barack Obama’s Council of Economic Advisers highlighted strength in the American oil industry as one of three structural changes that would support sustained U.S. growth. However, oil prices fell 60% between last summer and January. Many marketwatchers have said that is a net positive for growth because consumers will spend what they save at the pump in the broader economy, but O’Neill said collapsing crude prices are a negative for the rebalancing of the U.S. economy. “It’s not really in the U.S.’s long-term interest for oil prices to drop so sharply on a sustained basis,” he said.
The double-digit gains global stock markets have experienced in the past few years can’t continue much longer, and more modest gains are in store, said Michael Sabia, the head of Canada’s second-largest pension fund. “It’s going to run out of gas,” said Sabia, chief executive of the Caisse de Depot et placement du Quebec, in an interview in Montreal. The Caisse has benefited from the run-up in stock prices, in particular in the U.S., coming out of the recession. The Montreal-based pension fund posted an overall return of 12% in 2014 on its investments, fueled by an increase in its equities portfolio. Over the past five years, its overall return on its investments has averaged 10.4% annually.
Sabia said a more realistic annual return would be in the single digits once the public equity markets cool, although he cautioned he didn’t know when that will be. The bulk of gains in corporate profitability, in particular among U.S. multinationals, have come from cost cuts, he said. Companies will have to boost sales too, for the Standard & Poor’s 500 Index to continue rising. The Caisse isn’t forecasting a massive correction. Instead, single-digit returns are a more likely scenario, he said. The fund had C$225.9 billion ($182 billion) in total assets at the end of 2014, compared with C$200 billion a year earlier.
The pension fund, which oversees the retirement savings of those living in Quebec, is a prominent investor in infrastructure, real estate, public and private equity worldwide. The fund is looking to diversify its portfolio globally and will pursue opportunities in the U.S., Australia, and Mexico, Sabia said. It will also be exploring some opportunities in India and Europe. The Caisse has shifted about 5% of its exposure in Canada to other markets in the past four years and currently has about about C$117 billion, or 47% of its investments, outside of the country. That’s up from C$72 billion in 2010.
“Many people feel like all their money is going to making ends meet and having enough money to save for retirement seems like a stretch.”
Many Americans appear to be giving up on retirement. Just over one-quarter (26%) of Americans have a traditional notion of retirement in which they plan to stop working altogether when they reach retirement age, according to a new survey of 7,000 households — “Americans’ Financial Security: Perception and Reality” — released Thursday by The Pew Charitable Trusts. Asked about their retirement plans, 21% said they are never planning to retire, while 53% anticipate doing something else, including working at a different job. “Some people really enjoy working and imagine working for a great deal longer, whereas the reluctance to retire for other people reflects their income and retirement savings shortfalls,” says Diana Elliott, research manager for financial security and mobility at Pew.
“Many people feel like all their money is going to making ends meet and having enough money to save for retirement seems like a stretch.” The survey included additional focus groups in Orlando, Fla., Boston and Phoenix. Roughly 10,000 baby boomers reach retirement every day, so it’s not unexpected that so many of them are either not willing or able to stop work altogether, says Andrew Meadows, a San Francisco-based producer of “Broken Eggs,” a documentary about retirement. He spent seven weeks traveling around the U.S. and interviewed over 100 people about why they haven’t saved enough money. “You tend to get a negative tone when you talk to people about retirement,” he says.
One reason fewer people plan to retire is that more families with older breadwinners have debt. The%age of families with a head of household ages 55 or older that carried debt increased to 65.4% in 2013 from 63.4% in 2010, according to “Debt of the Elderly and Near Elderly, 1992-2013”, released last month by the Employee Benefit Research Institute. Furthermore, the%age of these families with debt payments greater than 40% of income—a traditional threshold measure of debt load trouble—increased to 9.2% in 2013 from 8.5% in 2010. The amount of debt shouldered by all families has soared over the last two decades, mainly due to mortgage debt, says Craig Copeland, author of the EBRI report. The median debt level of all indebted families with heads aged 55 and over hit $47,900 in 2013, up from $17,879 in 1992.
Americans no longer see China as public enemy number one, with Russia now cited as the country’s top adversary, according to a new poll. 12% of Americans named China when asked which country they consider the U.S.’s greatest enemy in Gallup’s annual World Affairs poll, down from 20% in 2014 when it topped the list. China now ranks behind Russia and North Korea, which received 18 and 15% of the vote, respectively, compared with 9 and 16% last year. The poll is based on interviews conducted on February 8-11, 2015 with a random sample of 837 adults, aged 18 and older, living across the country.
“China is distinct from the other countries that typically rank among the top U.S. enemies in that it represents primarily an economic threat to the U.S., whereas Russia, Iran, Iraq and North Korea represent more of a security threat,” said Gallup. “International events over the past year, particularly the dispute with Russia over the Ukraine situation and the growing influence of ISIS militants in Iraq and Syria, have likely made countries other than China seem more threatening to the U.S,” it said. A simultaneous strengthening of the U.S. economy and slowdown in China’s economy is another possible factor in Americans’ seeing the mainland as less of a threat than in recent years.
Last year, China’s economy grew 7.4%, its slowest pace in 24 years, undershooting the government’s target for the first time since 1998. Meantime, the U.S. economy expanded 2.4%, up from 2.2% in the year before. “As Americans have grown more confident in the health of the U.S. economy, their views of what threatens the U.S. may shift more to security concerns than economic ones,” Gallup said. The proportion of Americans that regard “the economic power of China” as a critical threat to the vital interests of the U.S fell to 40%, down from 52% in both 2013 and 2014.
Crude oil futures fell sharply on Thursday as rising inventories in the United States pressured both Brent and U.S. contracts and countered expectations for recovering demand. While Brent losses were tempered by those expectations for improving global demand and geopolitical concerns about energy supplies from Libya and Russia, U.S. crude losses more than wiped out Wednesday’s gains. Brent April crude fell $1.58, or 2.56%, to settle at $60.05 a barrel, off a $62.63 intraday peak. On Wednesday, Brent surged 5%. U.S. April crude fell $2.82, or 5.53%, to settle at $48.17, after rallying 3.47% on Wednesday. Brent’s premium to U.S. crude on Thursday increased to $12.06, the widest spread since January 2014.
Both crude contracts rallied on Wednesday after Saudi oil minister Ali al-Naimi said demand was growing. Earlier in the week, a Gulf OPEC delegate predicted stronger demand growth in the second half of 2015. Brent prices collapsed after hitting $115 in June 2014 on global oversupply and OPEC’s subsequent decision to defend market share against rival producers rather than cut output. Brent’s recovery from a nearly six-year low of $45.19 in January was sparked by signs that lower prices are starting to reduce investment in production in non-OPEC countries. “But stopping production growth is not the same as lowering production,” said a Texas-based cash crude broker.
“This is a supply-side correction in property..”
As China slows down, leaders in Beijing are understandably turning to one of their favored growth stabilizers: housing. A record decline in new-home prices in January has, as my Bloomberg News colleagues reported this week, prompted Chinese officials to contemplate additional stimulus measures, including reducing the required down payments on second homes and eliminating sales tax after only two years of ownership instead of five. And why not? To this point, various price-boosting schemes have helped China ward off the kind of downturn that befell America in the late 2000s and Japan two decades earlier. Unfortunately, though, they’re no longer likely to have the same impact today.
That’s because of a little-recognized shift in the nature of China’s property bust – from the demand side to the supply side. As research done by Rosealea Yao of Gavekal Dragonomics shows, China’s real problem is that new construction is evaporating no matter what sales and prices do. That means the knock-on effects of additional stimulus – on cement, steel and so on – will necessarily be limited. “This is a supply-side correction in property,” Yao writes in a new report. “While housing sales will likely improve this year, construction and all the industrial activity that depends on it will not. Therefore an upturn in housing sales will not deliver as much of a boost to growth.”
I checked in with Yao about which data series should frighten Beijing most: “It is floor space started,” she says. Property starts (measured in area of floor space) declined 26% year-over-year in December following a 35% plunge in November. That marks a dramatic deepening of the 5.5% plunge seen between January and October 2014. Also last year, parcels of land allotted for new projects slid 25%, a blow for highly-indebted local governments that rely on such sales. It gets worse. Even with contingency plans to stabilize the market, “we believe China’s underlying housing demand is peaking and will soon start declining,” Yao says. That’s a problem given the current oversupply – all those ghost cities – which Yao estimates will require “at least another two years” to work through.
In the meantime, “the traditional correlation between housing sales and indicators like steel use and construction starts will break down.” In Yao’s rosiest scenario, new stimulus measures would only pump up sales 2% and limit the fall in housing starts to 10%. One has to wonder at what cost, too. In the short run, it’s easy to understand why the government is targeting housing prices. As the experiences of Japan, the U.S. and now parts of Europe demonstrate, housing busts take entire economies down with them. But such measures ultimately make China more vulnerable to a crash. A $328 billion surge in new credit in January – the third straight monthly jump – adds to a debt pile that has grown to frightening proportions.
Personal, I told you: “The word in Brussels is that Schäuble and Varoufakis can hardly bear to be in the same room together.”
The German parliament is expected to agree to extend the eurozone’s bailout of Greece on Friday, capping a tumultuous first four weeks in office for the anti-austerity government in Athens. The next four months will be crueller yet. That will be clear from the debate in the Bundestag in Berlin. Although Chancellor Angela Merkel has never been outvoted in five years of policy decisions on the euro crisis and need not fear defeat on Friday, the endorsement will be grudging and will reek of suspicion of the Greek prime minister, Alexis Tsipras. At least 25 of Merkel’s 311 MPs will oppose or abstain on the Greek rescue vote, in the largest act of dissent on Greece that Merkel has seen from her backbenchers. Patience with Greece is running out in Berlin. It is also turning to exasperation because of what is seen as the intemperate tone of Tsipras and his team.
“There can be no reward for cheek,” said the bestselling Bildzeitung tabloid on Thursday under a one-word banner headline of “Nein, no more billions for greedy Greeks.” Wolfgang Schäuble, the finance minister, told Merkel’s backbenchers that the new Greek government was manipulating eurozone largesse to “trample all over European solidarity”, Der Spiegel reported. The Germans expect the Greeks, beneficiaries of a €240bn rescue, to be grateful. Instead they are seen to be impertinent. No sooner was the ink dry on the deal on Tuesday granting Athens a 17-week loan extension than its finance minister, Yanis Varoufakis, upped the ante and demanded the massive debt burden be partly written off. Schäuble virtually accused the Tsipras team of lying. “The question now is whether one can believe the Greek government’s assurances or not. There’s a lot of doubt in Germany.”
The word in Brussels is that Schäuble and Varoufakis can hardly bear to be in the same room together. The confrontation looks certain to get worse over the next month as Tsipras sets out the fiscal and economic reforms he must enact to win the bailout extension and then, over the summer, a new package of financial aid. That things have turned so sour so quickly is less than surprising. The big centrist governments of the eurozone were never likely to do any favours for a new hard-left Syriza movement dedicated to unpicking five years of German-led response to the crisis – fiscal consolidation or austerity. Why would they help Tsipras, seen by the mainstream as a dangerous demagogue? Besides, helping him would encourage others to follow suit and would mean admitting they got their reaction to the euro crisis wrong.
Never sell your country to foreigners.
Greece’s Left-wing Syriza government has vowed to block plans to privatise strategic assets and called for sweeping changes to past deals, risking a fresh clash with the eurozone’s creditor powers just days after a tense deal in Brussels. “We will cancel the privatisation of the Piraeus Port,” said George Stathakis, the economy minister. “It will remain permanently under state majority holding. There is no good reason to turn it into a private monopoly, as we made clear from the first day. “The deal for the sale of the Greek airports will have to be drastically revised. It all goes to one company. There is no way it will get through the Greek parliament.” The new energy minister, Panagiotis Lafazanis, warned that Syriza will not sell the Greek state’s 51pc holding of the electricity utility PPC, power grid ADMIE or state gas company DEPA. “There will be no energy privatisations,” he said.
It is already becoming clear that Syriza’s leadership does not accept a strict, minimalist reading of the Eurogroup text, and is relying on quiet assurances from Brussels and Paris that it has friends in the EU. The defiant signals are making it harder for the German government to dampen criticism over the deal in the Bundestag before it votes on Friday. “Greece will not get a single penny until it complies with its obligations,” said Germany’s finance minister, Wolfgang Schauble. Both the IMF and the ECB say the deal is too loose to pin down Syriza, allowing it to unpick elements of the EU-IMF Troika Memorandum. Mr Stathakis gave strong hints that this is indeed Syriza’s intention. “The Eurogroup meetings went very well,” he said, with a conspiratorial smile. Yet the Syriza leadership risks falling between two stools as it tries to chip away at the austerity regime without triggering Greece’s ejection from the euro.
A closed-door crisis meeting of the party at the Greek parliament erupted in an emotional storm, running for 12 hours as the group’s Left Platform voiced their anger over the retreat in Brussels. “A lot of Syriza MPs are very troubled by the deal and they are being pretty open about it. The fault lines are clear,” said one MP, emerging for a shot of caffeine. “We’re in uncharted territory and we don’t know how this is going to end. But there is a very strong sense that we should hold together come what may. We are not going to split,” he told The Telegraph. Premier Alexis Tsipras sought to rally the troops, assuring them that Syriza had not abandoned its “Thessaloniki Programme” for radical change or capitulated to EMU demands under threat of bankruptcy. Insisting that the document signed in Brussels gives Syriza scope to carry out its democratic revolution, he demanded that rebels stand up and “be counted” if they really mean to vote against the deal.
Dare throw us out…
The Euro Working Group discussed Greece’s imminent funding problems on Thursday amid mounting concern about how the country will meet its obligations next months. Earlier in the day, Minister of State for Coordinating Government Operations Alekos Flambouraris suggested that Greece might delay payment to the International Monetary Fund if it cannot find the necessary money. Greece is due to pay the IMF €1.6 billion euros next month but Flambouraris said that Athens might ask to delay this payment for two months. Greece has a total of €7.27 billion in obligations next month of which €4.6 billion is in treasury bills that are due to be rolled over. The government’s first T-bill issue will have to take place by Thursday as €1.6 billion has to be rolled over the next day.
One of the possible solutions to Greece’s funding problem is for its lenders to raise the €15billion limit on T-bill issues but the European Central Bank has so far refused a Greek request for an increase. The German Parliament is on Friday due to approve the extension to Greece’s loan agreement, which includes another €7.2 billion in loans. In Thursday’s test ballot, 22 of 311 lawmakers in Chancellor Angela Merkel’s conservative bloc, comprising her Christian Democrats (CDU) and their Bavarian sister party, the CSU, opposed the extension and five abstained. Their Social Democrat (SPD) coalition partners, with 193 seats, voted unanimously for the extension in their test vote.
“..exceptionally complicated” with “many obstacles..”
The possibility of Greece postponing the repayment of any debt tranches to the IMF is seen as “exceptionally complicated” with “many obstacles,” according to officials familiar with the subject. They stress that such a move would constitute a “clear default,” with consequences for a large number of other loans Greece has received. A delayed IMF loan repayment would generate multiple consequences, which market professionals estimate would have a negative impact on Greece and its economy, as when the Fund lends money to a country it is always the first to be paid back. If a country forfeits a repayment, this is considered a credit event, or default. Greece is due to pay the IMF €310 million on March 6, €350 million on March 13, €580 million on March 16 and another €350 million on March 20.
Can he bypass Parliament? Wouldn’t that defeat the whole idea?
Prime Minister Alexis Tsipras is to decide in the next 48 hours whether he will allow Parliament to vote on a four-month extension to Greece’s loan agreement or whether he will bypass the House altogether after signs of dissent within his party. The government said on Thursday that it will wait for other eurozone parliaments to vote on the deal, a process which should be completed on Friday, before deciding when or if legislation paving the way for the loan extension would be submitted to the Greek Parliament. Tsipras’s hesitancy comes after a meeting of SYRIZA’s parliamentary group on Wednesday that lasted more than 11 hours. During the debate about Greece’s new agreement with its lenders, a number of MPs expressed disagreement with the deal.
At Tsipras’s insistence, a vote was held at the end of the meeting and some 30 of the party’s 149 lawmakers either voted against the agreement or failed to vote for it. While it is unlikely that there would be such a big rebellion in an actual parliamentary vote, the signs of dissent have been enough to cause concern among Tsipras and his aides, who are even considering the possibility of not bringing the agreement to Parliament and finding another way of ensuring its extension. “My opinion is that it should be brought to Parliament but I cannot tell you what will actually happen,” Minister of State for Coordinating Government Operations Alekos Flambouraris told Mega TV.
He added that he would not expect more than three or four SYRIZA MPs to vote against the deal in a parliamentary ballot. Tsipras also spoke on Thursday at a meeting of the party’s political secretariat, where there was a calmer mood. He is due to appear at SYRIZA’s central committee on Friday and Saturday, and party officials have asked to consult in depth with the body over key decisions. The prime minister is under pressure from opposition parties, which are demanding to know whether he will bring the agreement with the lenders to Parliament. Both New Democracy and PASOK raised questions in the House on Thursday about the government’s intentions.
Zero hour contracts. Beggars and choosers.
Zero-hours contracts are the ultimate expression of Britain’s “flexible” labour market. Deregulate the workforce, free up firms to hire and fire, and they will be less burdened by fixed costs, leaner and more competitive – and create more jobs. So went the post-Thatcherite consensus. So now we have at least 697,000 workers in the economy who don’t know how many hours they’re going to be working from one week to the next, or sometimes even one day to the next. In theory, they might be footloose and fancy-free – using their spare time to launch a dotcom startup or gig with a band.
Yet these workers, many of whom are juggling more than one zero-hours contract, according to the ONS (which explains why there are 1.8m of them) fit exactly the characteristics of the groups that usually do worst out of the labour market. More than half of them are women – 55%, compared with 47% of the workforce as a whole; and more than a third of them are aged 16–24, compared with 12% of the wider workforce. If zero-hours working were a lifestyle choice, surely more of the workforce’s traditional winners would be doing it? There’s a profound human cost here, of the kind detailed over the past decade by London Citizens’ living-wage campaign, which has been as much about the casualisation of jobs as poverty pay; but there’s also a price for the wider economy.
These easy-come-easy-go workers are highly unlikely to build up the work skills they will need to take them through life; and their employers have little incentive to invest in training and equipping them. Yet building up Britain’s “human capital” is critical to boosting our flagging productivity, and ensuring the economy can grow in the long-term, at a time when some experts fear we may be facing a period of stagnation. Our short-termist employers may need to lose a bit in efficiency, for all of us to gain in economic progress – and who knows, by offering their staff predictability and security, they may find they make gains in loyalty and productivity too.
“The federal government should keep its hands off of the Internet!”
Today the Federal Communications Commission (FCC), a non-elected federal government agency, voted three-to-two to reclassify broadband Internet as a common carrier service under Title II of the Communications Act. This means that – without the vote of Congress, the peoples’ branch of government – a federal agency now claims the power to regulate the Internet. I am surprised that even among civil liberties groups, some claim the federal government increasing regulation of the Internet somehow increases our freedom and liberty. The truth is very different. The adoption of these FCC rules on the Internet represents the largest regulatory power grab in recent history.
The FCC’s newly adopted rule takes the most dynamic means of communication and imposes the regulatory structure designed for public utilities. Federal regulation could also open the door to de facto censorship of ideas perceived as threatening to the political class – ideas like the troops should be brought home, the PATRIOT Act should be repealed, military spending and corporate welfare should be cut, and the Federal Reserve should be audited and ended. The one bright spot in this otherwise disastrous move is that federal regulations making it more difficult to use the Internet will cause more Americans to join our movement for liberty, peace, and prosperity. The federal government should keep its hands off of the Internet!
“NATO is exempt from the rules it imposes on its enemies.”
When a Russian bomber flew over international waters some 25 miles off the southwest tip of England last week, UK Defense Secretary Michael Fallon called Russia “a real and present danger.” The UK government scrambled jet fighters to meet the Russian aircraft as a show of force. Said Secretary Fallon of the incident, “NATO has to be ready for any kind of aggression from Russia, whatever form it takes.” He added that, “NATO is getting ready,” warning particularly that Russia may soon move to invade the Baltic countries of Estonia, Latvia, and Lithuania. Reading the feverish Twitter feed of NATO’s Supreme Allied Commander Europe, Gen. Phil Breedlove, one would get the impression that NATO is already at war with Russia.
Fighter jets sit menacingly atop aircraft carriers as the General beams about NATO member countries’ commitment to contribute to the fight. The message is clear: Russia is about to attack! NATO has, for no understandable reason, found itself in Russia’s crosshairs. NATO cannot figure out how it is that Russia could possibly feel threatened by its actions, which, unlike Russia’s are not in the slightest provocative. Russian military plane over international waters 25 miles from the UK coast is “real and present danger” to NATO. Yet… Yet yesterday US combat vehicles conducted a military parade and show of military force in Estonia just 300 yards — yards! — from the Russian border. That is just over 60 miles from downtown St. Petersburg.
This is not a provocation, we are to believe. This is not a “real and present danger” to Russia. NATO is exempt from the rules it imposes on its enemies. In the Guardian’s review of a new book by Politics professor George Sakwa, the current fallout from a near quarter century of post-Cold War NATO policies is perfectly captured:
The hawks in the Clinton administration ignored all this, Bush abandoned the anti-ballistic missile treaty and put rockets close to Russia’s borders, and now a decade later, after Russia’s angry reaction to provocations in Georgia in 2008 and Ukraine today, we have what Sakwa rightly calls a “fateful geographical paradox: that Nato exists to manage the risks created by its existence”.
That line bears repeating: “Nato exists to manage the risks created by its existence.”
Scary that it takes a British paper to unveil this.
The US Department of Justice and embattled mayor Rahm Emanuel are under mounting pressure to investigate allegations of what one politician called “CIA or Gestapo tactics” at a secretive Chicago police facility exposed by the Guardian. Politicians and civil-rights groups across the US expressed shock upon hearing descriptions of off-the-books interrogation at Homan Square, the Chicago warehouse that multiple lawyers and one shackled-up protester likened to a US counter-terrorist black site in a Guardian investigation published this week.
As three more people came forward detailing their stories of being “held hostage” and “strapped” inside Homan Square without access to an attorney or an official public record of their detention by Chicago police, officials and activists said the allegations merited further inquiry and risked aggravating wounds over community policing and race that have reached as high as the White House. Caught in the swirl of questions around the complex – still active on Wednesday – was Emanuel, the former chief of staff to Barack Obama who is suddenly facing a mayoral runoff election after failing to win a majority in a contest that has seen debate over police tactics take a central role.
Emanuel’s office refused multiple requests for comment from the Guardian on Wednesday, referring a reporter to an unspecific denial from the Chicago police. But Luis Gutiérrez, the influential Illinois congressman whose shifting support for Emanuel was expected to secure Tuesday’s election, joined a chorus of colleagues in asking for more information about Homan Square. “I had not heard about the story until I read about it in the Guardian,” Gutiérrez said late Wednesday. “I want to get more information, but if the allegations are true, it sounds outrageous.”
Yes, it can. But it won’t.
More than 3,000 people are estimated to have died in the Mediterranean Sea last year. The Pope has warned the waters are in danger of becoming “a vast cemetery”. People smugglers have been described as the most ruthless travel agents on the planet and the Italian Navy rescue mission has been downsized among claims that helping migrants at sea creates a “pull factor”. What could European countries do to stop these deaths? Four expert witnesses give their perspective with the BBC World Service’s The Inquiry.
Andrea di Nicola: Demand is high for ‘ruthless travel agents’: The Italian criminologist and author spent two years travelling around Africa and the Middle East speaking to smugglers. “When we interview and spend time with the smugglers, they were almost laughing at Europe saying ‘You cannot stop this. If you try and stop this, if you close your border I will earn more, my prices will increase.’ This is what they told us.” Some smugglers pack migrants into unseaworthy boats in the face of winter storms. Others have sent a freighter packed with people on autopilot towards the shore. “Travelling by sea can be the cheapest way into Europe, but a better class of service can be bought.
“A Turkish smuggler made his clients enter Italy on yachts with two or three skippers and they were full of Afghans and Syrians. They were sailing through the Mediterranean Sea during spring time or summer time. It was less risky and more costly for them. “The price paid [by migrants] was something like 7-8,000 euros for each person.” Large, sophisticated networks stretching across continents, comprising thousands of individuals will be hard to stop. “They trust each other. They work together. They are more capable of co-operating among each other in a criminal system than we are among countries of the European Union. This is incredible. “It’s essential [for the EU] to co-operate in terms of judicial and investigative co-operation. For instance, the co-operation with Turkish authorities should be boosted in order to make the life of the smugglers more difficult.”
“Forming such a large black hole so quickly is hard to interpret with current theories.”
Astronomers have discovered a monster black hole at the cosmic dawn of our Universe powering an ultraluminous, high-energy quasar. The humungous black hole has a mass 12 billion times that of the Sun and its associated quasar pumps out energy a million billion times that of the Sun. Quasars are formed as the central supermassive black hole sucks in surrounding materials and gases, which heats up and emits a tremendous amount of light, so much that it actually push away the material getting sucked in behind it. It is quasars that limit the growth of black holes, which is one of the reasons why this ultraluminous quasar around this gigantic black hole is so puzzling. The other reason is how ancient they are. The quasar is in the high redshift of light, which is a measure of how much the wavelength of the light has been stretched by the expansion of the Universe before it reaches us here on Earth.
Using this measure, scientists are able to date quasars and they’ve put this one in the early cosmic dawn, just 900 million years after the Big Bang. “How can a quasar so luminous, and a black hole so massive, form so early in the history of the universe, at an era soon after the earliest stars and galaxies have just emerged?” asked Xiaohui Fan, Regents’ Professor of Astronomy at the University of Arizona’s Steward Observatory, who co-authored the study in Nature. Team member Dr Fuyan Bian, from the Research School of Astronomy and Astrophysics at the Australian National University (ANU) said the discovery challenged theories of how black holes and quasars are made, adding “Forming such a large black hole so quickly is hard to interpret with current theories.” But the scientists aren’t put off by the mystery of the quasar, it’s exactly what they were looking for.
Researchers using spectrometers to measure carbon dioxide levels in Earth’s atmosphere between 2000 and 2010 have confirmed that levels of the greenhouse gas are increasing worldwide. Led by Dan Feldman of the Lawrence Berkeley National Laboratory in California, a team of scientists measured the amount of infrared radiation absorbed by atmospheric gases, specifically carbon dioxide. Increasing levels of atmospheric carbon dioxide are warming the Earth’s surface through a phenomenon known as the greenhouse effect. Carbon dioxide and other greenhouse gases, such as methane, absorb infrared radiation that would ordinarily be sent into space, in a manner similar to the way a greenhouse traps heat, warming temperatures inside it. This phenomenon, known as radiative forcing, occurs when more energy enters the greenhouse–or in this case, the planet–than leaves it.
Feldman and his team measured radiative forcing at two research locations, one in Oklahoma, and the other above the Arctic Circle near Barrow, Alaska. Both sites are owned by the US Department of Energy. Using spectrometers set for accuracy by the United States Office of Weights and Measures, the researchers followed infared radiation arriving on Earth’s surface. That infrared radiation is both absorbed and scattered by greenhouse gases in the planet’s atmosphere. Spectrometers can pinpoint and identify carbon dioxide because like all molecules, it emits and absorbs energy at very specific wavelengths. At both research sites, carbon dioxide in the atmosphere increased by 22 parts per million from 2000 to 2010. The concept of parts per million refers to the volume of carbon dioxide molecules within a million air molecules.
Levels of infared energy directed down to the Earth’s surface also increased at both sites during this period due to being scattered by carbon dioxide. Increasing levels of atmospheric carbon dioxide resulted in more infrared energy being reflected back to Earth instead of being emitted into space. Warming from other sources such as clouds, water vapor, weather, or even faulty instruments was ruled out by the researchers. “This is clear observational evidence that when we add carbon dioxide to the atmosphere, it will push the system to a warmer place,” Feldman said. A report on the study is published in the Feb. 25 issue of the journal Nature. The researchers are now conducting a second study measuring the effect of other greenhouse gases, such as methane, on global warming.