Nov 122018
 
 November 12, 2018  Posted by at 10:54 am Finance Tagged with: , , , , , , , , , , , ,  


Vincent van Gogh Burning weeds 1883

 

Macron: Nationalism Is A “Betrayal Of Patriotism” (Ind.)
Putin Says Had Good Conversation With Trump In Paris (AFP)
Eastern Ukraine Elects Separatist Leaders As West Rejects Polls (AFP)
May Says Britain Open To ‘Different Relationship’ With Russia (R.)
Boris Johnson Says Britain On Verge Of ‘Total Surrender’ In Brexit Talks (R.)
May Shelves Crunch Brexit Talks With Cabinet (Ind.)
Alibaba Has Record $30.8 Billion In Sales In 24 Hours On Singles Day (CNBC)
Foreign Capital Has Propped Up China’s Currency. What If It Leaves? (CFR)
What Plunging Oil Prices Tell Us About The Stock Market And Global Economy (MW)
A Worldwide Debt Default Is A Real Possibility (Mauldin)

 

 

As Macron nears record low approval rating for a French president, he lectures the world through a game of semantics. The ‘brilliance’ is that while not many could have told you the difference between nationalism and patriotism, Macron claims to have it down. Even if it has to be translated into dozens of languages, each of which may have slightly different interpretations of the -local- meaning of the words. Macron has good speech writers, but they don’t write in all the languages involved. So it’s merely semantics. The terms mean to everyone what they want them to mean.

The take-away: according to Macron, patriotism can exist along globalism, nationalism cannot. A jibe against Trump. Which also means that because Xi Jinping touts globalism all the time, we must accept, if we follow Macron, that he is not a nationalist, but a patriot.

Macron: Nationalism Is A “Betrayal Of Patriotism” (Ind.)

Emmanuel Macron has issued a hard-hitting warning about the dangers of nationalism and of countries that put their interests before the collective good – in front of Donald Trump and Vladimir Putin. The French president denounced those who evoke nationalist sentiment to disadvantage others, calling it a “betrayal of patriotism” and moral values. The US and Russian leaders listened in silence as Mr Macron took a swipe at the rising tide of populism in the US and Europe, warning: “The old demons are rising again, ready to complete their task of chaos and of death.” During a gathering of dozens of world leaders to mark 100 years since the end of the First World War, the French president went on: “Patriotism is the exact opposite of nationalism. Nationalism is a betrayal of patriotism.

“In saying, ‘Our interests first, whatever happens to the others’, you erase the most precious thing a nation can have, that which makes it live, that which causes it to be great and that which is most important: its moral values.” [..] In a speech lasting nearly 20 minutes, Mr Macron also called on fellow leaders to fight for peace. “Ruining this hope with a fascination for withdrawal, violence or domination would be a mistake for which future generations would rightly find us responsible,” he said. The French leader also defended the European Union and the United Nations, which he said guaranteed peace and enshrined “a spirit of cooperation to defend the common property of a world whose destiny is inextricably linked”.

Read more …

Okay, is Putin a nationalist or a patriot? He seems to like globalism, but he likes Russia better. And he’s been pushed out of globalism through sanctions and tall tales.

Putin Says Had Good Conversation With Trump In Paris (AFP)

Russian President Vladimir Putin said he had a brief but good conversation with US leader Donald Trump at World War I centenary events in Paris, Russian media reported. When journalists asked Putin whether he managed to speak to Trump on Sunday, he said: “Yes,” Russian state news agency RIA Novosti reported. Asked how it went, Putin said: “Well.” He did not provide further details, but the French presidency said the pair had a wide-ranging discussion during lunch after the commemoration. Host and French President Emmanuel Macron was there and German Chancellor Angela Merkel took part in some of the exchanges, the presidency said.

Subjects discussed included the situation in the Middle East, notably Syria, Iran and Saudi Arabia, and North Korea. White House spokeswoman Sarah Sanders said Trump had sat with world leaders including Putin, Macron and Merkel at lunch and the group had held “very good and productive discussions”. “The leaders discussed a variety of issues, including the INF (nuclear treaty), Syria, trade, the situation in Saudi Arabia, sanctions, Afghanistan, China, and North Korea,” she said. Expectations have been growing for a new Trump-Putin meeting as tensions pile up over the Cold War-era Intermediate-Range Nuclear Forces Treaty (INF) and US sanctions against Moscow.

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Macron and Merkel: “These so-called elections undermine the territorial integrity and sovereignty of Ukraine..”

Wasn’t it John McCain and Vcitoria Nuland who undermined it back in 2014 on Maidan Square?

Eastern Ukraine Elects Separatist Leaders As West Rejects Polls (AFP)

People in Russian-backed areas of eastern Ukraine re-elected separatist leaders at the weekend, according to results released Monday of polls condemned as illegal by Kiev and Western countries. Elections in the Donetsk and Lugansk “People’s Republics”, controlled by separatists since breaking away from Ukraine’s pro-Western government in 2014, took place after the killing of the rebel Donetsk “president” in a bomb attack in August. Security was tight for Sunday’s vote with gun-toting, camouflage-clad guards deployed to ensure order. Denis Pushilin, the 37-year-old acting Donetsk leader, was elected with 61 percent of the vote with almost all ballots counted, the local electoral commission said. Leonid Pasechnik, the acting Lugansk leader, took 68 percent of the vote.

French President Emmanuel Macron and German Chancellor Angela Merkel branded the vote “illegal and illegitimate” following a meeting with Ukraine President Petro Poroshenko on the sidelines of World War I commemorations also attended by Russian leader Vladimir Putin on Sunday. “These so-called elections undermine the territorial integrity and sovereignty of Ukraine,” the pair said in a joint statement. Washington and Brussels had asked Russia not to allow the polls to go ahead, arguing they would further hamper efforts to end a conflict that has killed more than 10,000 people since 2014. “The people in eastern Ukraine will be better off within a unified Ukraine at peace rather than in a second-rate police state run by crooks and thugs, all subsidized by Russian taxpayers,” tweeted Kurt Volker, the US special envoy to Ukraine, on the day of the polls.

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if only they confess to the narratives Britain has spouted without evidence.

May Says Britain Open To ‘Different Relationship’ With Russia (R.)

Prime Minister Theresa May will say on Monday Britain is “open to a different relationship” with Russia if Moscow takes a new path and stops “attacks” that undermine international treaties and security. Just a year ago, May used her annual speech at the Lord Mayor’s Banquet to accuse Moscow of military aggression and of meddling in elections, some of her strongest criticism even before the poisoning of a former Russian spy in Salisbury. This year, she will tell London’s financial center that the action taken since – including the largest ever coordinated expulsion of Russian intelligence officers – has deepened her belief in a “collective response” to such threats.

“We will continue to show our willingness to act, as a community of nations, to stand up for the rules around the world,” May will say, according to excerpts of her speech. Describing evolving threats, May will say the past year, including Salisbury, has “shown that while the challenge is real, so is the collective resolve of likeminded partners to defend our values, our democracies, and our people.” “But, as I also said a year ago, this is not the relationship with Russia that we want … We remain open to a different relationship – one where Russia desists from these attacks that undermine international treaties and international security,” she will say.

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Boris still wants to be King.

Boris Johnson Says Britain On Verge Of ‘Total Surrender’ In Brexit Talks (R.)

Former British foreign minister Boris Johnson accused Prime Minister Theresa May on Sunday of forcing through a deal that would keep the country locked in the European Union’s customs union after Brexit in what he described as a “total surrender”. “I really can’t believe it but this government seems to be on the verge of total surrender,” he wrote in his weekly column in the Telegraph newspaper. “I want you to savour the full horror of this capitulation … we are on the verge of signing up for something even worse than the current constitutional position. These are the terms that might be enforced on a colony.”

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Unsolved issues.

May Shelves Crunch Brexit Talks With Cabinet (Ind.)

Theresa May has been forced to abandon plans for an emergency cabinet meeting to approve a Brexit deal, after fresh opposition at home and abroad plunged her timetable into turmoil. The prime minister shelved the meeting, pencilled in for Monday, slamming on the brakes after fierce resistance in her cabinet and in Brussels threatened to derail the path to an agreement. A government source conceded that an outline deal might not be ready by Tuesday – making it increasingly unlikely that a special EU summit to sign it off can be held in November, as hoped.

That would leave the UK having to ramp up hugely expensive no-deal preparations and in danger of being unable to pass all necessary legislation before the Brexit deadline next March. At home, Ms May faced an open challenge to her plans from Andrea Leadsom, the Commons leader, who vowed the UK “cannot be held against its will” by the backstop plan for the Irish border. Ms Leadsom became the second cabinet minister to insist on a unilateral power to escape being bound in the EU customs union – something explicitly ruled out by Brussels.

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1.35 billion packages delivered.

Alibaba Has Record $30.8 Billion In Sales In 24 Hours On Singles Day (CNBC)

Alibaba on Sunday tore through last year’s Singles Day sales record, racking up more than $30.8 billion in the 24-hour shopping event. Gross merchandise value (GMV), a figure that shows sales across the Chinese e-commerce giant’s various shopping platforms, surpassed last year’s $25.3 billion record at around 5:34 p.m. SIN/HK (4:34 a.m. ET) on Sunday, and kept marching higher through the rest of the day. In Chinese currency terms, GMV totaled 213.5 billion yuan, easily beating last year’s figure of 168.2 billion yuan and representing a nearly 27 percent year-on-year rise. That was, however, smaller than the 39 percent year-on-year growth recorded in 2017.

Alibaba’s Singles Day GMV beat last year’s figure in yuan terms earlier than it toppled the dollar record. The Chinese currency is weaker against the greenback from a year ago, which means more sales in yuan are required to get the same dollar amount. It was the 10th edition of the annual Singles Day event, which is also called the Double 11 shopping festival because it falls on Nov. 11. During the 24-hour period, Alibaba offered huge discounts across its e-commerce sites such as Tmall. Alibaba’s Singles Day sales haul easily exceeded the spending by consumers during any single U.S. shopping holiday.

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Wait! Shadows?

Foreign Capital Has Propped Up China’s Currency. What If It Leaves? (CFR)

“I think China’s manipulating their currency, absolutely,” President Trump said back in August. Yet the People’s Bank of China (PBoC) was, and has been, intervening to keep the RMB up, and not to push it down, as Trump was alleging. And we believe such interventions are about to get much larger. Here is why. Over the past two years, as our left-hand figure below shows, foreign portfolio investors have piled prodigiously into Chinese assets, helping to support the RMB. But history suggests this trend is about to reverse. While inflows have been rising, Chinese stocks have been tumbling—they are down over 20 percent from their January peak. Dreadful performance like this typically drives funds out of emerging markets. We may be seeing the beginning of such outflows in China.

Repatriation of liquid foreign capital will make it far more challenging for China to keep its currency up. Of course, China could change course and let it fall, but that risks exacerbating the foreign-debt burden of its highly leveraged corporates. It could raise interest rates, but that would further slow a slowing economy. It could, to keep capital at home, demand higher returns on its foreign lending, but that would mean sacrificing its efforts to subsidize its companies operating abroad, as well those aimed at putting dollars to the service of geostrategic objectives—like Belt and Road. n short, then, there is every reason to expect that the PBoC will boost its support for the RMB by selling dollar reserves.

This is what it did back in 2015, when a plunging stock market scared away foreign capital. So in spite of President’s Trump’s repeated charges that China is manipulating its currency for competitive advantage in trade, all evidence suggests that it will continue to do the opposite. But if China were to sell reserves at the same pace as in 2015, its reserve levels would, by mid-2020, actually fall below the safety threshold implied by the IMF’s framework for reserve adequacy—as shown in the right-hand figure above.

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Not much for now. Oil rising this morning on Saudi cuts promised.

What Plunging Oil Prices Tell Us About The Stock Market And Global Economy (MW)

What the heck happened to oil prices? But more significantly, what does it mean for the broader stock market and the global economy? That is what has some Wall Street investors scratching their noggins, as crude futures and U.S. stocks staged a tandem tumble this week, just when investors thought the worst was over following a bruising October for risk assets. Now, oil futures are unraveling, down at least 20% after putting in a 52-week high early last month. And it isn’t so much the descent into bear-market territory—as the recent slump for crude can be characterized—as it is the celerity of the selloff that has market participants unsettled.

About five weeks: That’s all it took for bulls to pivot from cavalierly pondering if $100-a-barrel oil was a genuine possibility before the end of 2018 on the back of Iranian oil export sanctions imposed by the U.S. on Nov. 4, to wondering how ugly the current implosion in black gold could get before finding a bottom. On Friday, West Texas Intermediate crude for December delivery lost 48 cents, or 0.8%, to settle at $60.19 a barrel on the New York Mercantile Exchange, for the lowest front-month contract settlement since March 8, according to FactSet data. Prices lost 4.7% for the week, tallying their fifth straight weekly drop. The 10th session decline in a row matched the longest skid since 1984.

But beyond that, the most important question is this: What does oil’s decline really mean? That is the query that Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co., posed to MarketWatch via email last week as the decline in oil was gaining steam. “Very large monthly down moves in crude oil has often heralded something more ominous,” he wrote on Nov. 1. “Most market observers think there is enough damage to see a bottom in stocks. Consensus therefore looks for new record highs or a solid bounce back. We strongly disagree with this perspective.”

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No doubt there. But it’ll start somewhere.

A Worldwide Debt Default Is A Real Possibility (Mauldin)

Is debt good or bad? The answer is “Yes.” Debt is future spending pulled forward in time. It lets you buy something now for which you otherwise don’t have cash yet. Whether it’s wise or not depends on what you buy. Debt to educate yourself so you can get a better job may be a good idea. Borrowing money to finance your vacation? Probably not. The problem is that many people, businesses, and governments borrow because they can. It’s been possible in the last decade only because central banks made it so cheap. It was rational in that respect. But it is growing less so as the central banks start to tighten. Earlier this year, I wrote a series of articles predicting a debt “train wreck” and eventual liquidation. I dubbed it “The Great Reset.”

I estimated we have another year or two before the crisis becomes evident. Now I’m having second thoughts. Recent events tell me the reckoning could be closer than I thought just a few months ago. Central banks enable debt because they think it will generate economic growth. Sometimes it does. The problem is they create debt with little regard for how it will be used. That’s how we get artificial booms and subsequent busts. We are told not to worry about absolute debt levels so long as the economy is growing in line with them. That makes sense. A country with a larger GDP can carry more debt. But that is increasingly not what is happening. Let me give you two data points.

Lacy Hunt tracks data that shows debt is losing its ability to stimulate growth. In 2017, one dollar of non-financial debt generated only 40 cents of GDP in the US. It’s even less elsewhere. This is down from more than four dollars of growth for each dollar of debt 50 years ago. This has seriously worsened over the last decade. China’s debt productivity dropped 42.9% between 2007 and 2017. That was the worst among major economies, but others lost ground, too. All the developed world is pushing on the same string and hoping for results. Now, if you are used to using debt to stimulate growth, and debt loses its capacity to do so, what happens next? You guessed it: The brilliant powers-that-be add even more debt.

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Dec 262016
 
 December 26, 2016  Posted by at 10:09 am Finance Tagged with: , , , , , , , , , , ,  


Paul Gauguin Christmas Night (The Blessing of the Oxen) , 1902-1903

One Industry Will Keep Holding North America Together (CNBC)
China Bank Calls Documents ‘Fake’ After Bond Default Linked To Alibaba (R.)
The Trump Rally Is Young (CNBC)
What Is Productivity And Why Is The UK’s So Poor? (G.)
What’s Behind Obama’s Attacks On Putin (Carley)
British Councils Admit Massive Use Of Spying Powers On Public (G.)
Humankind Has Created 30 Trillion Tons Of Stuff (F.)
Being Busy Is Not Cool (Awl)
The Man Who Saved 200 Syrian Refugees (TL)

 

 

Brilliant headline.

One Industry Will Keep Holding North America Together (CNBC)

Texas-refined gasoline fuels Mexican cars. Natural gas from Canada helps heat the Midwest and cool California. Electricity flows over the northern and southern U.S. borders in both directions. The interconnections in the North American energy industry are huge and growing — and could grow even closer during the Trump administration unless it decides to alter the flow of a key U.S. export (and import) — at the border. The U.S., Canada and Mexico have intentionally worked to combine the advantages of their energy resources. President-elect Donald Trump has said he would renegotiate NAFTA between the U.S., Canada and Mexico. While the new administration seems to be very friendly to the energy sector, there are still questions about whether there could be changes that affect the intricate web of energy connections between the three countries.

“It’s not so simple to say we’re going to renegotiate the trade deals. We set up the system to create those inter-linkages. You just can’t overnight legislate or executive order that away. If you try to do that, it’s going to have negative economic impacts, not just for the economies on the border but for these specific industries, like energy,” said Scott Anderson, chief economist at Bank of the West. Trump’s selection of former Texas Gov. Rick Perry as energy secretary, is seen as a positive for the oil and gas industry. Perry has spoken favorably about North America as an energy power house, including Mexico and Canada. Perhaps one of the most surprising recent developments is the boom in U.S. natural gas that’s flowing across the southern border, and the ambitious plans by the Mexican government to build more pipelines to take U.S. natural gas throughout Mexico and as far as Mexico City.

[..] The energy picture changed dramatically for North America in the last decade. The push by the U.S. energy industry into hydraulic fracking and horizontal drilling unleashed an energy boom, making the U.S. the world’s biggest producer of natural gas and placing it firmly among the top three oil producers. That has changed the situation for all of North America, at a time when Mexico’s oil and gas output was in decline and Canada found some of its potential oil output landlocked. The ties between the three countries go way back. In the early 1900s, the U.S. began sharing electricity with its neighbors, and Canada is now a significant net exporter of electricity to the U.S.

One catalyst has been Mexico’s program of energy reform, intended to break the hold of state-owned Pemex on its industry and bring new private investment to Mexico’s energy industry. The decline in big part was due to a lack of investment by the government in Petroleos Mexicanos, and its increasing reliance on Pemex revenue stream for its own budget. “Before shale, the U.S. was importing a lot more gas from Canada,” said Anthony Yuen, global energy analyst at Citigroup. The U.S. was also worried not that long ago that it would need to import LNG, liquefied natural gas. But the shale boom changed everything.

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Fraud and shadow banking. Makes you wonder how pervasive this is. I have an idea.

China Bank Calls Documents ‘Fake’ After Bond Default Linked To Alibaba (R.)

The fate of a defaulted $45 million Chinese corporate bond sold through an Alibaba-backed online wealth management platform was thrown into doubt on Monday, after a bank said letters of guarantee for the bonds were counterfeit. China Guangfa Bank said guarantee documents, official seals and personal seals presented by the insurer of the bonds “are all fake” and that it has reported the matter to the police. The dispute highlights challenges in China’s loosely regulated online finance industry, where retail investors often buy high-yielding bonds and other assets, expecting them to be “risk-free” due to guarantees provided by various parties. At the center of the latest dispute are 312 million yuan ($45 million) worth of high-yielding bonds issued by southern Chinese phone maker Cosun Group that defaulted this month.

The bonds were sold through Zhao Cai Bao, an online platform run by Ant Financial Services Group, the payment affiliate of e-commerce firm Alibaba. Ant Financial has asked Zheshang Property and Casualty Insurance, which wrote insurance on the bonds, to repay investors. On Sunday, Zheshang Insurance published two documents on its website that it said were from CGB carrying the bank’s official seals, and that guaranteed Zheshang Insurance policies for the Consun bonds. The letters were issued at CGB’s Huizhou branch in December 2014, when the Cosun bonds were sold, Zheshang Insurance said.On Monday, CGB said the documents were fake and that it had reported the incident to police as “suspected financial fraud.” The dispute follows instances of financial fraud this year including forged bond agreements that led to brokerage Sealand Securities sharing potential losses of up to $2.4 billion. In May, the government advised banks to be vigilant after several cases of bill fraud.

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Well, yeah, that too.

The Trump Rally Is Young (CNBC)

A trade war with China – a country with a $473 billion of bilateral trade with America in the first ten months of this year – is an implausible assumption. But a serious conversation about the fact that Chinese exports to America represent three-quarters of that business is long overdue and entirely appropriate. The President-elect Donald Trump is seeking a better deal for America. That should be easy to understand and support for any fair- and free-trader. And, rest assured, Washington’s intent to correct its huge trade imbalance with China is not coming as a surprise to Beijing. The Zhongnanhai mandarins know that their trade surpluses with the U.S. – $366 billion in 2015 and $289 billion in the first ten months of this year – are difficult issues that must be addressed. That is the substance of the problem.The rest is rhetoric.

Mr. Trump’s opening salvo used legitimate trade remedies,such as import tariffs, anti-dumping investigations, and possibly other measures if China was recognized as an exchange-rate manipulator. China has announced that it would respond with unspecified retaliatory measures, but President Xi Jinping talked about the need for Sino-American cooperation in his congratulatory phone call to Mr. Trump. The Chinese also liked the appointment of Iowa Governor Terry Branstad as an envoy to Beijing. They called him a “friend of China” and noted that he has known Mr.Xi since 1985. Difficult trade negotiating rounds are quite common. In this particular case, Washington also has the option of using non-confrontational measures to reduce the existing trade imbalance.

A change in the corporate taxation is one of them. That could bring back American manufacturing producing Chinese exports to the U.S. Some leaders of the U.S. Business Roundtable – a forum of 192 companies that account for most of investment activity in the United States – doubt that a large amount of that business can be quickly repatriated. They feel confident, however, that appropriate corporate tax cuts would keep firms producing and reinvesting their profits in the U.S. The corporate tax reform is at the top of Mr. Trump’s agenda, and that is perhaps one of the most effective trade signals he can send to China. Indeed, reducing the incentive for the exodus of American manufacturing, and bringing some of it back, would also stop large technology transfers that are part of mandatory Sino-American joint ventures for American firms doing business in China.

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Lazy?

What Is Productivity And Why Is The UK’s So Poor? (G.)

Productivity is a guide to how good a country is at delivering the goods and services that are bought and sold. Technically, it is the rate of output per unit of input, measured per worker or by the number of hours worked. In layman’s terms, it is a measure of what goes in and what comes out. In some sectors, productivity is easy to measure. A factory that makes 1,000 cars a day with 50 workers is twice as productive as a factory that requires 100 workers to do the same job. In other parts of the economy, assessing whether productivity has improved is harder and less objective. At face value a fast-food joint that employed the same number of chefs to cook the same number of hamburgers as they did a year earlier would not be showing any increase in productivity.

But if the quality of the hamburgers improved, that would be a productivity gain and statisticians would try to capture the improvement in the official figures. There are a number of ways in which a firm can make itself more productive. It can invest in new machinery that makes the production process more efficient. It can employ more highly skilled staff. It can train workers so that they can fully exploit the equipment they are using. It is through productivity improvements that living standards rise. For many years, the annual increase in productivity in the UK averaged around 2%, although there were periods when it was lower and periods when it was higher. Each year since the early 1990s, the Office for National Statistics has published an international comparison of productivity.

This showed that UK productivity was 9% lower than the average of the other six members of the G7 (the US, Japan, Germany, France, Italy and Canada) but this gap narrowed to 4% by the time of the 2007 financial crisis. Since then, however, productivity in the UK has barely grown and the gap with the rest of the G7 has widened to 18%. The gap with Germany is 35% and with the US 30%. There have been a number of explanations for the dramatic deterioration in productivity: the availability of unskilled cheap labour has deterred firms from investment; the poor quality of UK roads, railways and broadband network; the shrinkage of the financial sector, which had been a source of high-productivity jobs in the boom before the 2007 crisis; and the misallocation of capital to “zombie” firms kept alive by ultra-low interest rates rather than to dynamic new enterprises.

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“Maybe the Americans [..] can use high tech trampolines to get into space and do without Russian technology.”

What’s Behind Obama’s Attacks On Putin (Carley)

Relations between Russian president Vladimir Putin and US president Barack Obama are poisoned and irretrievably damaged. It’s therefore a good thing that Obama is leaving office on 20 January. Bad US-Russian relations are of course nothing new. Since the Anglo-American war against Iraq in 2003, the US-Russian relationship has been headed downhill. For Obama, it appears that everything has gotten personal. The US president often acts like a petulant adolescent, jealous of a high school rival. You know, the kid who does everything better than he does. The lad takes it badly and won’t let it go. He challenges his nemesis to some new contest at every opportunity only to lose again and again. That’s got to be hard on the ego. Between Obama and Putin there have been many such encounters. Nor can it help that western cartoonists so often ridicule Obama as out of his depth in comparison to Putin.

Let’s consider Obama’s remarks at his last press conference on Friday, 16 December. «The Russians can’t change us or significantly weaken us», said Obama: «They are a smaller country. They are a weaker country. Their economy doesn’t produce anything that anybody wants to buy, except oil and gas and arms. They don’t innovate». This was insulting both Putin and his country, but not enough apparently for Obama. «They [the Russians] can impact us if we lose track of who we are. They can impact us if we abandon our values. Mr. Putin can weaken us, just like he’s trying to weaken Europe, if we start buying into notions that it’s okay to intimidate the press, or lock up dissidents, or discriminate against people because of their faith or what they look like».

What on earth is Mr. Obama talking about? Intimidate the press? The Moscow newspapers and television media are loaded with «liberals». Many Russians call them «fifth columnists». They are «people with ‘more advanced’ worldview[s] who do not tolerate ‘Russian propaganda’ themselves», according to one colleague in Moscow. But Mr. Putin tolerates them and pays them no mind. «Lock up dissidents… discriminate against people»? What alternate reality does Mr. Obama live in? Doesn’t produce anything people want to buy? The United States buys rocket engines that it does not now produce at home. Maybe the Americans, a Russian commentator joked, can use high tech trampolines to get into space and do without Russian technology.

[..] You have to give credit to Obama; he was ambitious, aiming for a big prize and the humiliation of Russia and its president. Again, he was thwarted not so much by President Putin but by the Russian people of the Crimea who immediately mobilised their local self-defence units backed by «polite people», Russian marines stationed in Sevastopol, to kick out the Ukrainians with scarcely a shot fired. They organised a referendum to approve entry into the Russian Federation. Reunification was quickly approved by a huge majority and celebrated in Moscow. Putin gave a remarkably candid speech, explaining the Russian position. «NATO remains a military alliance,’ he said, «and we are against having a military alliance making itself at home right in our backyard or in our historic territory. I simply cannot imagine that we would travel to Sevastopol to visit NATO sailors. Of course, most of them are wonderful guys, but it would be better to have them come and visit us, be our guests, rather than the other way round».

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And why not?

British Councils Admit Massive Use Of Spying Powers On Public (G.)

Councils were given permission to carry out more than 55,000 days of covert surveillance over five years, including spying on people walking dogs, feeding pigeons and fly-tipping, the Guardian can reveal. A mass freedom of information request has found 186 local authorities – two-thirds of the 283 that responded – used the government’s Regulation of Investigatory Powers Act (Ripa) to gather evidence via secret listening devices, cameras and private detectives. Among the detailed examples provided were Midlothian council using the powers to monitor dog barking and Allerdale borough council gathering evidence about who was guilty of feeding pigeons. Wolverhampton used covert surveillance to check on the sale of dangerous toys and car clocking; Slough to aid an investigation into an illegal puppy farm; and Westminster to crack down on the selling of fireworks to children.

Meanwhile, Lancaster city council used the act, in 2012, for “targeted dog fouling enforcement” in two hotspots over 11 days. A spokeswoman pointed out that the law had since changed and Ripa could only now be used if criminal activity was suspected. The permissions for tens of thousands of days were revealed in a huge freedom of information exercise, carried out by the Liberal Democrats. It found that councils then launched 2,800 separate surveillance operations lasting up to 90 days each. Critics of the spying legislation say the government said it would only be used when absolutely necessary to protect British people from extreme threats. Brian Paddick, the Lib Dem peer who represents the party on home affairs, said: “It is absurd that local authorities are using measures primarily intended for combating terrorism for issues as trivial as a dog barking or the sale of theatre tickets. Spying on the public should be a last resort not an everyday tool.”

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Masters of destruction. Who think they’re creators.

Humankind Has Created 30 Trillion Tons Of Stuff (F.)

Over the course of history, humans have made a lot of stuff — buildings, bottles, oil tankers, iPhones. Some of it is useful; a lot of it ends up being junk. It’s more than enough to leave behind a fossil legacy, were humanity to disappear. And as a species, our collection of stuff is only getting bigger. Researchers publishing in the peer-reviewed journal The Anthropocene Review now estimate that the sum material output of humankind exceeds 30 trillion tons. Spread evenly, that would amount to 110 lbs of human-made stuff for every square meter of Earth’s surface, as FORBES contributor Eric Mack pointed out. That’s a huge number. Here are some other, totally massive ways to conceive of our collective output: That’s about 16.8% of the weight of Mount Everest.

Now let’s visualize that number in terms of human-made things. It takes 5.9 billion Type D GVWR school buses at 10,000 lbs each to match all of humanity’s creations on Earth. If you’d prefer to view it in terms of larger objects such as Boeing 747-8 jet liners or International Space Stations, you’ll be looking at totals of 123 million and 66 million, respectively. If doomed cruise liners are your preferred unit of measurement, you would need over 647,ooo Titanics to come close to the immense weight of humanity’s creations. Increasing the size of your vessel to a 102-thousand ton Nimitz-class aircraft carrier, and you cut down the number of boats you’ll need to 293 thousand.

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“Oh you’re in a hurry? Now we’re definitely not crossing the river.”

Being Busy Is Not Cool (Awl)

Because I personally only understand the world through different types of animals, I’m going to use an animal analogy to describe what I think. Let’s say you’re leading a horse and a donkey toward a river. When you reach the little slope that dips down to the riverbank, both of them are gonna pause and be like, “Hey, is this a good idea?” Typically, with a horse, maybe you tug the rope a little and, even though he’s still skeptical, a lot of the time he’ll defer to your logic. “I must be missing something here, it must be safe if you’re saying it is.” He’ll walk down the bank to investigate. The donkey is the opposite. If he has stopped to assess a situation and you try to force his hand before he’s ready, he digs in even deeper. “Oh you’re in a hurry? Now we’re definitely not crossing the river.”

Convincing behavior can be a signal of emotional bias, which can be a signal of poor judgment. In other words, if you need me to cross this river so badly, you’re probably not thinking of my best interest too closely, so let me look over your work. And if you want to rush me along? Seems like a tally mark in the “scam” column tbh. Busyness is the river our culture is trying to get us to cross. To use another example, let’s say someone bursts into the office on Monday morning announcing that everyone has to see the new Star Wars movie because it’s amazing and they’ve never seen anything like it. I’d immediately assume, “This person doesn’t know what they’re talking about.” Why? Because I am a donkey. I know anyone who’s seen a movie that moved them emotionally or made them them think some new thoughts doesn’t automatically burst through a door like a manic sitcom character evangelizing everyone they encounter. That’s not how that feeling acts. And it’s the same with being busy: signifying is not the same as being.

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“When we think of Italians or Irish, we don’t think of them as immigrants. They’re just people.”

The Man Who Saved 200 Syrian Refugees (TL)

When Jim Estill decided to sponsor 50 Syrian refugee families, he didn’t tell anyone about it at first—not his accountant, not his friends, not even his wife. It was the summer of 2015, and the death toll in Syria had reached a quarter of a million people, while another four million had fled the country. All summer long, the news reported horror stories of Syrians drowning in the Mediterranean. Humanitarian aid programs were being cut across the Middle East. As he watched the news, Estill got worked up. “I didn’t want to be 80 years old and know that I did nothing during the greatest humanitarian crisis of my time,” he says. Estill was disturbed by the wave of xenophobia that had emerged during the Harper administration.

He wanted to demonstrate how refugees could help enrich our society. One of his best friends, Franz Hasenfratz, was a refugee who fled Communist Hungary. Hasenfratz went on to establish Linamar, a car-parts manufacturer, which is Guelph’s largest employer, with nearly 10,000 employees. “I was trying to drown out the xenophobes,” Estill says. “When we think of Italians or Irish, we don’t think of them as immigrants. They’re just people.” So he did some math. He checked Kijiji to find out how much apartments in Guelph were renting for, googled child tax benefits and GST/HST rebates in Ontario, and formulated a monthly food budget. He estimated that $30,000 could support a family of five for one year. He multiplied that number by 50 and realized the total cost—$1.5 million—was one he could easily afford.

[..] After Labour Day, Estill called a slew of local religious organizations—including three churches, a mosque, a Hindu temple and a synagogue—and aid agencies like the Salvation Army. On September 29, 10 civic leaders sat down in Estill’s boardroom at Danby. He’d made a PowerPoint presentation titled Refugees: The Right Thing to Do. Muhammed Sayyed, the president of the Muslim Society of Guelph, was amazed that so many faith groups were participating, even though most of the refugees would be Muslim. When he met Estill, he was filled with gratitude. “I thought, Wow, there are still people like him,” he said. An hour after the group sat down, the project was launched. The Muslim Society of Guelph would create the infrastructure, handle the paperwork and lead the volunteers. Estill would sustain the program with monthly donations. The group partnered with the Islamic Foundation of Toronto, which was a sponsorship agreement holder. This meant Estill could choose which refugees he wanted to sponsor.

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Jan 252016
 
 January 25, 2016  Posted by at 10:48 am Finance Tagged with: , , , , , , , , ,  


Harris&Ewing “Pennsylvania Avenue with snow, Washington, DC” 1918

Oil Falls 4% On Swelling Oversupply
Commodities Stocks Sink As Oil Resumes Downward Slide (FT)
Oil Price Crash Is Completely Changing The Industry’s Landscape (BIA)
US Short Sellers Target China’s Alibaba (BBG)
China Pledges Steel, Coal Capacity Cuts in Supply-Side Reforms (BBG)
China’s Migrants Go Home – And Stay There (BBG)
China’s Central Bank Prioritizes Strong Yuan (WSJ)
The East Knows The West Is Bankrupt (Holter)
Don’t Forget the Irish When Looking at New Risks in Euro Region (BBG)
There’s a Giant Elephant at the Bank of England (BBG)
The End Of Economic Growth (Robert Gordon)
One Year On, Syriza Has Sold Its Soul For Power (Lapavitsas)
Greece On The Brink Of ‘Education Tragedy’ (EurActiv)
We Produced Enough Plastics Since WWII To Cover The Entire Earth (Guardian)
Racism ‘Is At The Heart Of The Australian Dream’ (Guardian)
Merkel’s Party, Sliding In Polls, Weighs German ‘Border Centres’ (Reuters)
Greek Islanders To Be Nominated For Nobel Peace Prize (Observer)
Sealing Greek Sea Border Is Impossible (AP)

Recovery, anyone? The new slump has smoothed a bit as of now.

Oil Falls 4% On Swelling Oversupply

Oil prices fell 4% on Monday as Iraq announced record-high oil production feeding into a heavily oversupplied market, wiping out much of the gain made in one of the biggest-ever daily rallies last week. Brent crude, the global benchmark, was down $1.35 at $30.83 a barrel at 0851 GMT, losing more than 4% from Friday’s closing price, when Brent surged 10%. U.S. crude traded $1.15 lower at $31.04 a barrel, regaining its unusual premium to Brent prices. Iraq’s oil ministry told Reuters on Monday oil output had reached a record high in December. Its fields in the central and southern region produced as much as 4.13 million barrels a day, the government said.

“The news that Iraq has probably hit another record builds on the oversupply sentiment,” said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam. “The oversupply will keep markets depressed and prices low, and on the other hand short positions are in excessive territory,” he said. Indonesia’s OPEC governor said that support among OPEC for taking steps to prop up crude prices is slim, with only one OPEC country supporting an emergency meeting over the matter.

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Bad Hair Groundhog Day.

Commodities Stocks Sink As Oil Resumes Downward Slide (FT)

Oil prices are sinking again, fast, and miners and commodities stocks are once again finding themselves in that all-too familiar position at the bottom of the FTSE 100. As fastFT reported earlier, oil prices are once again heading south after a short-lived rally last week. Brent crude is falling 3.7% at publication time to $30.99 a barrel while WTI, the US benchmark, is down 3.91% at $30.93 a barrel. There had been hopes that the worst may be over for oil prices but clearly the market didn’t get the memo today. Miners and commodities stocks are once again having another bad today.

At publication time:
Anglo American is 3.4% lower at 219p
BHP Billiton is down 2.6% at 632.1p
Rio Tinto is losing 2.6% to £16.10
Copper miner Antofagasta is off 2.4% at 362.5p.
BP is dropping 2.4% to 344.2p.

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A worldwide event.

Oil Price Crash Is Completely Changing The Industry’s Landscape (BIA)

The crash in oil, which has seen the price of crude fall by more than 75% in the last 18 months, is fundamentally changing the landscape of the resources industry in the UK as big numbers of oil firms go into insolvency, or look to take advantage of rivals’ weaknesses and increase their M&A activity. A survey released by accountancy firm Moore Stephens this week showed that the number of UK-based oil and gas companies folding jumped by more than 55% in 2015, with 28 firms entering insolvency, compared to 18 over the course of 2014. In its report, Moore Stephens called the rise in failing oil and gas firms “an almost inevitable result” of the crash in the price of oil, and said that upwards of £140 billion ($200 billion) worth of projects are likely to have been cancelled thanks to the crash.

Moore Stephens’ head of restructuring and insolvency, Jeremy Willmont said: “Oil and gas service companies expanded their businesses over the last decade based on an oil price well above the current one.” “The pain caused by the oil price fall has translated into a rising tide of financial distress across the sector,” he added. The contrast between 2015, and 2010, when oil was on its way up from its last crash in 2008, is pretty stark. According to the research, just four oil and gas companies went under that year. Essentially, the number of oil companies going bust has increased by 600% in just five years. A separate survey, released by law firm Pinsent Mason, said that 90% of those who responded expect the number of M&A deals to rise in 2016, while 30% think that there’ll be a “major surge” and around two thirds believe that Britain’s oil and gas sector is a good area for acquisitions.

In the last year or so, the number of new oil projects has slowed significantly as fewer and fewer can be profitable thanks to the rock bottom price of the commodity. This is particularly true in Britain, where producing a barrel of oil now costs more than double its market price. 2015 was a record breaking year for mergers and acquisitions, with more than $5 trillion worth of deals taking place last year, largely driven by big healthcare deals, like the join up of pharma firms Pfizer and Allergan. One of the most prominent deals, which is set to be completed pretty soon, is the merger between BG Group and Shell, both FTSE100 listed oil and gas giants.

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A very strong indicator of just how badly China is doing. Alibaba was supposed to be bigger than Apple, Amazon.

US Short Sellers Target China’s Alibaba (BBG)

U.S. short sellers have pushed bets against Alibaba to the highest in more than 14 months on concern that China’s deepest economic slowdown since 1990 will only get worse. Short interest in China’s biggest online retailer surged to 7.5% of shares outstanding on Jan. 21, the highest since November 2014, according to data compiled by Markit and Bloomberg. That is more than double from a Dec. 1 low. Bearish bets on rival JD.com have hovered around 2% since last month. Pessimists are once again taking aim at Alibaba – a bellwether for U.S. investor sentiment on China – as mainland stocks entered a bear market last week. Those wagers are already starting to pay off as a selloff since the start of the year sent the American depositary receipts of Alibaba down more than 13%.

Investors see Alibaba as a stock that reflects the state of the Chinese economy, said Henry Guo at Summit Research, who has a buy rating on the stock. “With China’s economic outlook worsening, that’s just an easy way for people to have short China exposure,”
China’s top leadership has signaled it may accommodate more economic slackness as officials tackle delicate tasks such as reducing excess capacity. The world’s second-largest economy will slow to 6.5% this year and 6.3% next year, according to the median of economist estimates. At a corporate level, counterfeit products and accounting frauds of Alibaba are also on the mind of investors since the company’s record 2014 debut on the New York Stock Exchange. Kynikos Associates LP founder Jim Chanoswarned against the stock in November, according to a CNBC report. In December, Russian billionaire Alisher Usmanov said he has started to sell his stake in the e-commerce giant.

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How to make trouble sound like ‘I meant to do that’.

China Pledges Steel, Coal Capacity Cuts in Supply-Side Reforms (BBG)

China is targeting further cuts in crude steel production capacity by as much as 150 million tons and “large scale” reductions in coal output as part of supply-side measures aimed at curbing overcapacity and excess labor in state-owned industries. The country has lowered steel production by about 90 million tons “in recent years” and will push to cut a further 100 million to 150 million tons, while “strictly controlling” steel capacity increases and halting new coal mine approvals, according to a Sunday statement on the Chinese government’s website, citing a State Council meeting on Jan. 22 chaired by Premier Li Keqiang. No time line was mentioned.

China has vowed in the past to curb capacity in industries such as coal and steel as the world’s second-largest economy slows amid a shift towards consumer-led growth. Still, it has struggled to meet stated coal capacity limits spelled out in the 12th Five-Year plan that ended last year, according to Bloomberg Intelligence. Coal demand in the country is also declining with the government keen to curb pollution. The government plans to set up a fund to help coal miners and steelmakers reduce their workforce and dispose of bad assets, Li said during a meeting in Shanxi province, according to a Jan. 7 China Central Television report. The financial help is dependent on the companies cutting capacity, he said.

As part of re-balancing the economy towards domestic consumption, the country’s cabinet also pledged to ease conditions for rural-to-urban migration and expand “new urbanization” trials to more regions, the government said in Sunday’s statement. China will “more aggressively develop” small- and medium-sized cities and give more administrative authority to areas with populations of more than 100,000, the government said. China will also expand shantytown development in major cities, while reducing the barriers to entry to attract private capital investment in transportation, underground pipe networks and other forms of construction, according to the statement.

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Manufacturing jobs are going going gone.

China’s Migrants Go Home – And Stay There (BBG)

Every year, tens of millions of China’s 246 million migrants return home to celebrate the Chinese New Year. It’s the world’s biggest annual migration, and it typically goes off smoothly. This year, however, something’s amiss. Although the holiday doesn’t start until Feb. 8, millions of workers – especially in the construction and electrical-appliance industries – have already returned home due to the country’s slowing economy. For local governments across China, this is raising a tough question: What happens if these laborers don’t go back to work after the holiday? The concern isn’t a new one. In early 2009, 20 million unemployed migrants returned home for the holidays in the wake of the global financial crisis, raising fears of social unrest. Labor riots did, in fact, take place.

But most of the unemployed appear to have gotten back to work when China’s monster stimulus kicked in later that year. This time is notably different. Prospects for a 2009-style stimulus are slim. More important, China is on the cusp of a long-term trend of reverse migration back to the countryside. This week, the National Bureau of Statistics reported that the migrant population dropped by 5.68 million in 2015 – its first decline in about three decades. Some of that decline is simple demographics, and parallels China’s rapidly shrinking labor force. But much of it is attributable to a slump in the labor-intensive manufacturing sector, and a steady improvement in rural economies.

These trends haven’t caught authorities completely off-guard: Despite a long-term commitment to urbanization (in 1980, China was 19.6% urbanized; today the figure is more than 50%), the government has recently directed more attention and money to rural development projects, ranging from infrastructure improvement to credit support for the country’s hundreds of millions of farmers. This year, rural per-capita income is expected to exceed 10,000 yuan for the first time, surpassing urban income growth for the fifth straight year. But just as economics were never the sole reason for moving to the city, many migrants also have non-economic motives for moving back home, including a desire to care for aging parents left behind and a hunger for uncontaminated food.

“The migrant workers are rooted in the countryside,” said Yang Tuan, a prominent sociologist at the China Academy of Social Science, in a September interview. “They have feelings for the land.” She predicted that reverse migration might peak in the next five to 10 years.

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It makes no difference what Beijing wants.

China’s Central Bank Prioritizes Strong Yuan (WSJ)

China’s central bank faces a tough balancing act, trying to ease credit in the financial system without adding to pressures weakening the Chinese currency. Concerns about the yuan and the annual cash crunch ahead of next month’s Lunar New Year holiday dominated a meeting held by the People’s Bank of China on Tuesday, according to minutes of the meeting reviewed by the WSJ and to accounts from banking executives close to the PBOC. Central bank officials delayed using a traditional credit-easing tool for fear that it could add more downward pressure on the yuan, according to the minutes and the executives. Instead, to meet the rising cash needs from banks, the central bank turned to short-term and medium-term loan facilities to pump about 1.6 trillion yuan ($243 billion) of temporary liquidity into the banking system in the past week.

The decision highlights the bank’s deepening dilemma in helping to cushion the slowing Chinese economy. Just a year ago, the PBOC addressed preholiday cash demands by resorting to a more typical method—cutting the amount banks are required to keep in reserve. Since then, the economic slowdown and volatility in the stock markets have led to a flood of capital leaving China, as Chinese investors seek better returns abroad. The yuan, also known as the renminbi, has been battered harder than the central bank would like, even as it faces calls to keep easing credit and rekindle growth. “Currently, we need to put a high emphasis on maintaining the renminbi’s stability when managing liquidity,” Zhang Xiaohui, an assistant governor at the central bank, said at the Tuesday meeting, according to the minutes.

Ms. Zhang said cutting the reserve requirement would send “too strong an easing signal,” so the bank should turn to other tools. A reduction in so-called reserve-requirement ratio frees up funds for banks to lend on a permanent basis, while injecting liquidity through short-term and medium-term tools means the money can be taken back by the central bank when those loans expire. Ms. Zhang told officials at the meeting that the combination of cuts to interest rates and reserve requirements made by the central bank in late October contributed to the pressure on the yuan. “Because of the double reductions, there was too much liquidity and depreciation pressure on the renminbi,” she said.

Ahead of Tuesday’s meeting, China’s big banks called on the central bank to cut the reserve requirement in the lead-up to the holiday. But the central bank balked at doing that because of worries over the stability of the yuan, the banking executives close to the PBOC said. “They decided to put off the reserve-requirement cut until later,” one of the executives said. The executive said the central bank would have to make the cut “at some point” because the surge in money leaving China, as well as the PBOC’s efforts to buy yuan to prop up its value, are squeezing liquidity.

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The west knows the east is bankrupt, too.

The East Knows The West Is Bankrupt (Holter)

[..] what would the world look like the day following a “truth bomb” dropped by Mr. Putin and the Chinese. Would Americans even notice if he documented several false flags or frauds embedded in U.S. finance such as outright monetization of U.S Treasuries? No, most certainly not. Americans would however notice if financial markets collapsed or were shut down. Russia and China know full well the situation in the West. It is a bankruptcy waiting to happen as everything is fractional reserve and running on maximum margin while the underlying system is shrinking and no longer supplying enough liquidity. The way I see it, the stage is truly set for a financial attack on anything and everything American. Is it implausible for the Saudis to announce they will sell oil in yuan to China?

Or Iran to withdraw their funds from U.S. institutions and then bid for gold with these funds? If the East does in fact have jamming or hacking capability of Western technology, is it far fetched for them to show it very publicly in one or several situations? How would the “bookies” react if they saw a prize fighter enter one of the later rounds with his hands tied behind his back? You can laugh at the above speculation if you choose but it is all quite plausible and actually probable if you look at where things are and what posturing has already been done leading up to this. Western markets, ALL markets are a fraud. Our Treasury market is one where the biggest buyer is “our self” …the Fed and the ESF.

We have already seen $1 trillion of foreign reserves offloaded with no effect on yield nor the dollar itself and NO ACCOUNTING ANYWHERE as to “who” bought these offloaded central bank reserves. Accounting fraud and no rule of law here, nothing to see …please move along! You can laugh if you want and say Saudi Arabia will never move toward the East … Saudi Arabia is now in very dire straits financially, who do you think they will side with when Western markets melt down? Do you really believe they will go down trying to support our dollar?

The stage has already been set. The East knows the West has bankrupted. They know we have no gold left because they have it! They can see the finances of the various cities, states and federal government. They know the situation in derivatives is one giant mountain of dynamite waiting for a spark. They know our rule of law is gone and bail ins of depositor funds is next. We are monetizing their sales of Treasury securities. “We” are fooling no one except ourselves. And by “ourselves” I am talking about the vast majority of the population who have grown to rely on the government for everything. Everyone knows we are broke, yet ask anyone and the odds highly favor you will hear “the government will never let it happen”. Even if you are silly enough to believe this you must ask yourself, what are the ramifications when markets become “make believe”?

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They’ll be picking them off one by one again. Bye, Draghi.

Don’t Forget the Irish When Looking at New Risks in Euro Region (BBG)

Ireland gets to decide on its next government as early as next month, and if elections in other countries once at the heart of the European debt crisis are anything to go by, investors should be wary. Portugal’s vote on Oct. 4 produced an inconclusive result, leading to weeks of brokering before Socialist leader Antonio Costatook power with promises to put the brakes on austerity measures. Bond yields have jumped to the highest in six months since then. In Spain, Prime Minister Mariano Rajoy lost his majority last month after years of belt-tightening and the country still doesn’t have a new government.

Ireland is another European electorate jaded by budget cuts. Polls indicate that Prime Minister Enda Kenny’s ruling coalition will struggle to win a majority, though there’s no clear alternative. The country, European Central Bank President Mario Draghi’s model for economic recovery, saw its 10-year bond yields sink below 1% this month. But banks and brokers are already sounding warnings. “The ballot is the most important potential flash-point of the year,” said Dermot O’Leary, economist at Goodbody Stockbrokers in Dublin. “Investors got caught out by the inconclusive result in Spain, and so there is more focus now on Ireland.”

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EU.

There’s a Giant Elephant at the Bank of England (BBG)

It’s a new year and Bank of England officials have been sharing their views on the outlook for the U.K. and the risks. Well, some of the risks. So far in January, policy makers have spouted more than 20,000 words in three speeches and the minutes of their monthly meeting. They’ve cited a global slowdown, weak wage growth and a slump in oil as key issues for 2016. However, their official communications offer no guidance on what economists say is the top risk facing the U.K.: the forthcoming referendum on its membership in the European Union. Lawmakers could try to change that Tuesday – Governor Mark Carney appears in Parliament to talk about financial-stability risks, and they may well ask him about the elephant in the room.

“It’s such a hot issue, I’d be surprised if it didn’t come up,” said Chris Hare at Investec in London. “Carney would probably try to continue to tread a fine line on potential implications of “Brexit.” You might think they’d want to put some kind of downside skew in to their forecast, but if they really pile into those debates, they’d be criticized. They’ll probably try and stay coy.” It’s certainly on the mind of U.K. economists. They cited the buildup to the vote on EU membership and the potential for Britain to exit as the biggest risks in 2016, according to a Bloomberg News survey. Prime Minister David Cameron has yet to call a date, but it could happen as soon as June.

The absence of “Brexit” analysis from the BOE is getting conspicuous. Last October, Carney skirted the tense political battle with a speech that addressed the U.K.’s relationship with Europe, but offered no final conclusion on its merits. His remarks were accompanied by a 100-page report that assessed the issue but offered no judgment on the impact on the U.K. economy of a British exit. Carney went a step further last week, insisting that not only has he said nothing on “Brexit,” he’s not planning to, either. He told the Wall Street Journal: “We have said all we are going to say about that. We deal with the facts on the ground and the facts on the ground are the status quo. Our job is to make the status quo work as effectively as possible.”

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Recommended read.

The End Of Economic Growth (Robert Gordon)

The idea that a single 100-year period, the “special century,” was more important to economic progress than any other so far, goes against the theory of economic growth as it has evolved over the last 60 years. Growth theory features an economy operating in a “steady state” in which a continuing inflow of new ideas and technologies creates opportunities for investment. But this model does not apply to most of human history. According to Angus Maddison, the great historian of economic growth, the annual rate of growth in the western world from AD 1 to AD 1820 was a mere 0.06% per year, or 6%%ury.

Or, as summed up by the economic commentator Steven Landsburg: “Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Well, not quite nothing. There were wars, political intrigue, the invention of agriculture—but none of that stuff had much effect on the quality of people’s lives. Almost everyone lived on the modern equivalent of $400 to $600 a year, just above the subsistence level… Then—just a couple of hundred years ago—people started getting richer. And richer and richer still.” The designation of a “special century” applies only to the US, which has carved out the technological frontier for developed nations since the Civil War. However, other countries have also made stupendous progress.

Western Europe and Japan largely caught up to the US in the second half of the 20th century, and China and other emerging nations are well on their way. Progress did not suddenly begin in 1870, but the US Civil War (1861-65) provides a sharp historical marker. The first Census of Manufacturing was carried out in 1869; coincidentally, that year brought the nation together in a real sense, when the transcontinental railroad was joined at Promontory Summit in Utah.

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Lapavitsas is one of the guys who left Syrixa, for the left.

One Year On, Syriza Has Sold Its Soul For Power (Lapavitsas)

Today marks a year since a radical left government was elected in Greece; its dynamic young prime minster, Alexis Tsipras, promising a decisive blow against austerity. Yanis Varoufakis, his unconventional finance minister, arrived in London soon after and caused a media sensation. Here was a government that disregarded stuffy bourgeois conventions and was spoiling for a fight. Expectations were high. A year on, the Syriza party is faithfully implementing the austerity policies that it once decried. It has been purged of its left wing and Tsipras has jettisoned his radicalism to stay in power at all costs. Greece is despondent. Why did it end like this? An urban myth propagated in some media circles suggests that the radicals were stopped by a coup engineered by conservative politicians and EU officials, determined to eliminate any risk of contagion.

Syriza was overcome by the monsters of neoliberalism and privilege. Still, it fought the good fight, perhaps even sowed the seeds of rebellion. The reality is very different. A year ago the Syriza leadership was convinced that if it rejected a new bailout, European lenders would buckle in the face of generalised financial and political unrest. The risks to the eurozone were, they presumed, greater than the risks to Greece. If Syriza negotiated hard, it would be offered an “honourable compromise” relaxing austerity and lightening the national debt. The mastermind of this strategy was Varoufakis, but it was avidly adopted by Tsipras and most of Syriza’s leadership.

Well-meaning critics repeatedly pointed out that the euro had a rigid set of institutions with their own internal logic that would simply reject demands to abandon austerity and write off debt. Moreover, the European Central Bank stood ready to restrict the provision of liquidity to the Greek banks, throttling the economy – and the Syriza government with it. Greece could not negotiate effectively without an alternative plan, including the possibility of exiting the monetary union, since creating its own liquidity was the only way to avoid the headlock of the ECB. That would be far from easy, of course, but at least it would have offered the option of standing up to the catastrophic bailout strategies of the lenders. Unfortunately, the Syriza leadership would have none of it.

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Dijsselbloem and Schäuble making sure Greece will never recover as long as it’s in the EU.

Greece On The Brink Of ‘Education Tragedy’ (EurActiv)

The economic crisis has dramatically impacted the already struggling Greek education system, according to a trade union report published last week (19 January). EurActiv Greece reports. The report by the General Confederation of Labour in the area of Education and Lifelong learning ( KANEP-GSEE), examined the state of the Greek primary and secondary education system in the 2002-2014 period. “We are on the brink of an unprecedented education tragedy in recent decades,” the authors of the report warn, underlining that the issue is mainly “political”. “The image of the Greek primary and secondary education, compared to the European mainstream, causes deep concerns for the future of younger generations and for the future of Greece itself.”

The alarming report warned that Athens was a champion in underfunding and inequalities in its education system, as well as a laggard in innovation and learning results at the EU level. The report stressed that actual expenses did not reflect the amount of money earmarked in the annual budget of Greece. Eurostat, the EU’s statistics office, said that public expenditure on education accounted for 4.5% of GDP in 2013. However, it was just 3.2% of GDP, according to official statistics by the State General Accounting Office. “A 1.3% difference is excessively high […] and it cannot be accepted,” the report reads. The underfunding, in combination with the “ineffective study programmes”, resulted in low educational performance. Greek students are amongst the worst performers in basic subjects (mathematics, language, natural sciences).

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And production is soaring.

We Produced Enough Plastics Since WWII To Cover The Entire Earth (Guardian)

Humans have made enough plastic since the second world war to coat the Earth entirely in clingfilm, an international study has revealed. This ability to plaster the planet in plastic is alarming, say scientists – for it confirms that human activities are now having a pernicious impact on our world. The research, published in the journal Anthropocene, shows that no part of the planet is free of the scourge of plastic waste. Everywhere is polluted with the remains of water containers, supermarket bags, polystyrene lumps, compact discs, cigarette filter tips, nylons and other plastics. Some are in the form of microscopic grains, others in lumps. The impact is often highly damaging. “The results came as a real surprise,” said the study’s lead author, Professor Jan Zalasiewicz, of Leicester University.

“We were aware that humans have been making increasing amounts of different kinds of plastic – from Bakelite to polyethylene bags to PVC – over the last 70 years, but we had no idea how far it had travelled round the planet. It turns out not just to have floated across the oceans, but has sunk to the deepest parts of the sea floor. This is not a sign that our planet is in a healthy condition either.” The crucial point about the study’s findings is that the appearance of plastic should now be considered as a marker for a new epoch. Zalasiewicz is the chairman of a group of geologists assessing whether or not humanity’s activities have tipped the planet into a new geological epoch, called the Anthropocene, which ended the Holocene that began around 12,000 years ago.

Most members of Zalasiewicz’s committee believe the Anthropocene has begun and this month published a paper in Science in which they argued that several postwar human activities show our species is altering geology. In particular, radioactive isotopes released by atom bombs left a powerful signal in the ground that will tell future civilisations that something strange was going on. In addition, increasing carbon dioxide in the oceans, the massive manufacture of concrete and the widespread use of aluminium were also highlighted as factors that indicate the birth of the Anthropocene. Lesser environmental impacts, including the rising use of plastics, were also mentioned in passing.

But Zalasiewicz argues that the humble plastic bag and plastic drink container play a far greater role in changing the planet than has been realised. “Just consider the fish in the sea,” he said. “A vast proportion of them now have plastic in them. They think it is food and eat it, just as seabirds feed plastic to their chicks. Then some of it is released as excrement and ends up sinking on to the seabed. The planet is slowly being covered in plastic.”

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“An Indigenous child is more likely to be locked up in prison than they are to finish high school.”

Racism ‘Is At The Heart Of The Australian Dream’ (Guardian)

The veteran journalist and Wiradjuri man, Stan Grant, has told a Sydney audience that racism is “at the heart of the Australian dream,” as he delivered a sobering speech about the impact of colonisation and discrimination on Indigenous people and their ancestors. It has provoked a powerful reaction from Australians, going viral on Facebook with 850,000 views and 28,000 shares, and had been watched more than 50,000 times on YouTube by Sunday night. As part of the IQ2 debate series held by the Ethics Centre, Grant joined immigration lawyer Pallavi Sinha, Herald Sun columnist Rita Panahi and Australian actor Jack Thompson to argue for or against the topic “Racism is destroying the Australian dream”. The event was held last year, but the Ethics Centre only released the video online on Friday.

In his opening address, Grant, who is also Guardian Australia’s Indigenous affairs editor, argued that racism was at “the foundation of the Australian dream”. “The Australian dream,” Grant said. “We sing of it and we recite it in verse; ‘Australians all let us rejoice for we are young and free’. “My people die young in this country. We die 10 years younger than the average Australian, and we are far from free. We are fewer than 3% of the Australian population and yet we are 25% – one quarter – of those Australians locked up in our prisons. And if you’re a juvenile it is worse, it is 50%. An Indigenous child is more likely to be locked up in prison than they are to finish high school.”

He spoke of his Indigenous ancestors, including his grandmother and great-grandmother, who were among those institutionalised in missions, where Indigenous people were forced into unpaid labour and abused. He referenced the “war of extermination” against his ancestors. “I love a sunburned country, a land of sweeping plains, of rugged mountain ranges,” Grant said, referencing the famous poem, My Country, by the Australian writer Dorothea Mackellar. “It reminds me that my people were killed on those plains. We were shot on those plains, diseases ravaged us on those plains.

“Our rights were extinguished because we were not here according to British law, and when British people looked at us, they saw something subhuman. We were fly-blown, Stone-Age savages, and that was the language that was used. Captain Arthur Phillip, a man of enlightenment … was sending out raiding parties with the instruction; ‘bring back the severed heads of the black trouble-makers’.

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What does this make me think of? Just because they don’t call them camps….

Merkel’s Party, Sliding In Polls, Weighs German ‘Border Centres’ (Reuters)

A senior figure in Chancellor Angela Merkel’s conservative party has proposed setting up “border centres” along the frontier with Austria to speed up the repatriation of those asylum seekers deemed unqualified to stay. Julia Kloeckner, leader of Merkel’s Christian Democrats in the western state of Rhineland-Palatinate, was careful to style her proposal as a “Plan A2” rather than a “Plan B”, adding that the chancellor’s push for a European solution to a large influx of asylum seekers into the continent was still right. “We want to complement it,” she wrote in a paper setting out her position, a copy of which Reuters obtained. In the paper, Kloeckner proposed that: “On the German-Austrian border, border centres will be set up.”

The proposal, endorsed by the Christian Democrats’ (CDU) secretary general, highlights the frustration in Merkel’s party with the slow progress in achieving a European Union-wide solution to the refugee crisis, which is straining the infrastructure of many German municipalities. Germany attracted 1.1 million asylum seekers last year, leading to calls from across the political spectrum for a change in its handling of the number of refugees coming to Europe to escape war and poverty in Syria, Afghanistan and elsewhere. Growing concern about Germany’s ability to cope with the influx and worries about crime and security after assaults on women at New Year in Cologne are weighing on support for the CDU and its Bavarian sister party, the Christian Social Union (CSU). An Emnid poll for the newspaper Bild am Sonntag showed support for the CDU/CSU bloc down 2%age points at 36% from the previous week. The right-wing Alternative for Germany (AfD) gained 1 point to 10%. Merkel’s coalition partners, the Social Democrats (SPD), gained a point to 25%.

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Should you really want an award that you share with Obama and Kissinger?

Greek Islanders To Be Nominated For Nobel Peace Prize (Observer)

Greek islanders who have been on the frontline of the refugee crisis are to be nominated for the Nobel peace prize with the support of their national government. Of the 900,000 refugees who entered Europe last year most were received –scared, soaked and travelling in rickety boats – by those who live on the Greek islands in the Aegean Sea. The islanders, including fishermen who gave up their work to rescue people from the sea, are in line to be honoured with one of the world’s most esteemed awards. Eminent academics from the universities of Oxford, Princeton, Harvard, Cornell and Copenhagen are drafting a submission in favour of awarding the prize to the people of Lesbos, Kos, Chíos, Samos, Rhodes and Leros.

The nomination deadline is 1 February, but those behind the plan have already met the Greek minister for migration, Yiannis Mouzalas, who they say has offered his government’s full support. A petition on the website of the grassroots campaign group, Avaaz, in favour of the nomination has amassed 280,000 signatures. According to the petition: “On remote Greek islands, grandmothers have sung terrified little babies to sleep, while teachers, pensioners and students have spent months offering food, shelter, clothing and comfort to refugees who have risked their lives to flee war and terror.”

While the official nomination letter is yet to be finalised, it is understood the academics, whose identities will be revealed in the coming days, will implore the Nobel committee members to accept their nomination. They will say that it must be noted that a people of a country already dealing with its own economic crisis responded to the unfolding tragedy of the refugee crisis with “empathy and self-sacrifice”, opening their homes to the dispossessed, risking their lives to save others and taking care of the sick and injured. [..] One of the organisers of the Solidarity Networks, Matina Katsiveli, 61, a retired judge who lives on Leros, welcomed the move but said there was “reward enough in the smiles of the people we help”.

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That was not clear?

Sealing Greek Sea Border Is Impossible (AP)

Hour after hour, by night and by day, Greek coast guard patrols and lifeboats, reinforced by vessels from the European Union’s border agency Frontex, ply the waters of the eastern Aegean Sea along the frontier with Turkey. They are on the lookout for people being smuggled onto the shores of Greek islands – the front line of Europe’s massive refugee crisis. Although smugglers are often arrested, the task is mainly a search-and-rescue role. Hours spent on patrol shows the near-impossibility of sealing Europe’s sea borders as some have demanded of Greece, whose islands so near to Turkey are the most popular gateway into Europe. Some European countries – notably Hungary and Slovakia – have blasted Greece for being unable to secure its border, which also forms part of the external limits of Europe’s borderless Schengen area.

“We have been saying all along that if the Greeks are unable to protect the borders of their country, we should jointly go down south and protect them,” Hungarian Prime Minister Viktor Orban said in November, with his Slovak counterpart Robert Fico echoing the thought. But such calls ignore the realities at sea. No matter how many patrol boats are out in Greek waters, attempting to force a vessel of asylum-seekers back into Turkish waters is both illegal and dangerous, even in calm seas. So unless a Turkish patrol stops a migrant boat and returns it to Turkey, there is little Greek or Frontex patrols can do once it has entered Greek territorial waters but arrest the smugglers and pick up the passengers or escort the vessel safely to land.

“Greece is guarding the national and European borders,” Greek Alternate Foreign Minister Nikos Xydakis said in a statement Sunday. “What it cannot do and will not do … is to sink boats and drown women and children, because international and European treaties and the values of our culture forbid it.”

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