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NAB’s survey results have highlighted to a trend decline in foreign buying activity in recent quarters resulting from policy changes in China on foreign investment outflows and tighter restrictions on foreign property buyers in Australia. In Q2 2018, there were fewer foreign buyers in the market for Australian property, with their market share dipping to 9.6% (10.9% in Q1 2018) in new housing markets and to 4.8% in established housing markets (5.7% in Q1 2018 and their lowest share since Q1 2012).

In established housing markets, the share of sales to foreign buyers fell in all states. They continued to be most active in VIC but their market share of total sales fell to a 4-year low of 6.2% (8.2% in Q1 2018). The decline was even more pronounced in NSW, where their market share fell to 4.8% (5.4% in Q1 2018) – the lowest level in over 6 years. In QLD, foreign buyers accounted for 5.4% of total sales (5.6% in Q1 2018), while in WA their share fell to 2.2% (4.7% in Q1 2018).

In new property markets, the share of sales to foreign buyers fell in all states except QLD where their share jumped to 22.8% (11.5% in Q1 2018). This may have reflected anecdotal reports of increased Chinese property investment associated with record numbers of Chinese student enrolments in the state. In contrast, the share of foreign buyers fell to 11.7% in VIC (down from an average of 14.4% since the survey started), 7.4% in NSW (from an average of 10.2%) and 4.6% in WA from an average of 6.8%.

Sydney house prices down 11-15%.

• It “Hit the Mortgage Market Over the Head with a Baseball Bat” (WS)

Australia’s housing market is getting rattled. The mortgage industry is in turmoil. Banks are battered by incessant revelations of misconduct. Home prices in the Sydney and Melbourne metros, after surging to an astounding degree, are deflating. And the once splendid and vast game of real-estate speculation just isn’t fun anymore. Lindsay David, of LF Economics in Sydney — who has long played a role in exposing misconduct in Australia’s banking system including, in early 2016, by calling for a Royal Commission investigation into the mortgage sector — put some findings of his boots-on-the-ground analysis into a note to clients. Here are some of them:

1. Drop-off in Speculative Demand: “We spent countless hours” in recent months “observing buyer turnouts to scheduled property inspections of houses for sale,” he writes. “While there may still be a small sum of properties on market that continue to see very large turnouts, there was a clear visual drop-off of engaged interest from buyers and indeed ‘property snoops’ across the majority of properties for sale that we had observed.” “On many occasions, we observed either no interested parties, or less than 4 parties inspecting a property across a very decent chunk of offerings on the market,” he writes. “This lower rate of turnouts was something we simply had not observed over the years at such a dramatic scale.”

2. Sharper drop in selling prices than shown in official data: According to CoreLogic (the official data), home prices in Sydney fell 4.6% in June compared to a year ago, with house prices down 6.2%, and prices of condos down 0.7%. In the most expensive quartile, prices fell 7.3%. But Lindsay David writes: “It is our view based on all the resources made available that house prices in the Sydney area have broadly fallen somewhere between 11% and 15% over the comparison period.”

This one stinks.

• No Evidence In Mueller’s Indictment Of 12 Russians (MoA)

The Special counsel Robert Mueller issued an indictment against 12 Russian people alleged to be officers or personal of the Russian Military Intelligence Service GRU. The people, claims the indictment, work for an operational (26165) and a technical (74455) subunit of the GRU. A Grand Jury in Washington DC issued 11 charges which are described and annotated below. A short assessment follows. The first charge is for a “Conspiracy to Commit an Offense Against the United States” by stealing emails and leaking them. The indictment claims that the GRU units sent spearfishing emails to the Hillary Clinton campaign and the Democratic Party organizations DNC and DCCC. They used these to get access to email boxes of John Podesta and other people.

They are also accused of installing spyware (X-agent) on DNC computers and of exfiltrating emails and other data from them. The emails were distributed and published by the online personas DCLeaks, Guccifer II and later through Wikileaks. The indictment claims that DCLeaks and Guccifer II were impersonations by the GRU. Wikileaks, “organization 1” in the indictment, is implicated but so far not accused. Note: There is a different Grand Jury for the long brewing case against Julian Assange and Wikileaks. Assange has denied that the emails he published came from a Russian source. Craig Murray, a former British ambassador, said that he received the emails on a trip to Washington DC and transported them to Wikileaks.

The indictment describes in some detail how various rented computers and several domain names were used to access the DNC and DCCC computers. The description is broadly plausible but there is little if any supporting evidence.

The Special Counsel was for collusion. There is none.

• Lawmakers Press Trump To Cancel Putin Summit After Mueller Indictments (CNBC)

Lawmakers are calling on President Donald Trump to cancel a meeting with Russian leader Vladimir Putin after special counsel Robert Mueller charged against 12 Russians for interfering in the 2016 U.S. Presidential election Friday. Democratic leadership in the Senate and House of Representatives, alongside a growing list of other Democratic lawmakers, called on the president to abandon the meeting, which is scheduled to take place Monday in Helsinki, Finland. In their statements, many Democrats said they did not trust Trump, who has often expressed a desire to improve U.S.-Russia relations, to confront Putin about Russia’s role in the 2016 election.

They were joined by at least one high-profile member of the opposing party: Republican Sen. John McCain of Arizona, a frequent Trump critic and a Russia hawk, called on the president to cancel the summit if he is “not prepared to hold Putin accountable.” But the Trump administration appears unlikely to do so. White House press secretary Sarah Huckabee Sanders told NBC News on Friday afternoon that the summit is “still on.” The White House downplayed the significance of the indictment, noting there were no allegations against members of Trump’s campaign team. The president’s lawyer, former New York City Mayor Rudy Giuliani, said the charges were “good news for all Americans” and called on the special counsel to end his investigation and declare the president innocent.

“Rosenstein knows that he needs no evidence, because the accused will never be brought to trial.”

• Trump Should Fire Rosenstein Immediately (PCR)

Does Deputy Attorney General Rod Rosenstein’s indictment of 12 Russian military intelligence officers for allegedly hacking Hillary’s emails and interfering in the US election have any purpose other than to throw a monkey wrench in President Trump’s upcoming summit with Putin? Don’t forget that Rosenstein is implicated in the orchestration of Russiagate as a weapon against Trump, a weapon that serves the interests of the Democratic Party and the military/security complex about which President Eisenhower warned us 56 years ago to no avail. Rosenstein’s indictment of 12 Russians for allegedly hacking computers is a political indictment aimed at President Trump. The indictment is otherwise pointless as the Russian government will certainly not turn over its military personnel to a Washington kangeroo court.

The indictment serves no purpose except to poison the atmosphere of the summit. If you read the indictment, you will see that it consists of nothing but improbable accusations. There is no way on earth that the US Justice (sic) Department would be able to acquire the information in this fictional story that Rosenstein has presented. Moreover, there is no sign whatsoever of any evidence in the indictment. Rosenstein knows that he needs no evidence, because the accused will never be brought to trial.

Rosenstein has thrown red meat to the presstitutes, who are assets of the military/security compex and Democratic Party, and the presstitutes will pressure the Republicans to get behind Rosenstein’s call for a united front against Russian interference. You can imagine what would happen if Trump and Putin were to have a successful summit and normalize the relations that Washington ruined between the two countries.

“As a rule, American presidents have departed for summits with bipartisan support and well-wishes.”

• Summitgate and the Campaign vs. ‘Peace’ (Stephen Cohen)

As a rule, American presidents have departed for summits with bipartisan support and well-wishes. Trump’s upcoming meeting with Russian President Putin, in Helsinki on July 16, is profoundly different in two respects. US-Russian relations have rarely, if ever, been more dangerous. And never before has a president’s departure—in Trump’s case, first for a NATO summit and then the one with Putin—been accompanied by allegations that he is disloyal to the United States and thus cannot be trusted, defamations once issued only by extremist fringe elements in American politics. Now, however, we are told this daily by mainstream publications, broadcasts, and “think tanks.”

According to a representative of the Clintons’ Center for American Progress, “Trump is going to sell out America and its allies.” The New York Times and The Washington Post also feature “experts”—they are chosen accordingly—who “worry” and “fear” that Trump and Putin “will get along.” The Times of London, a bastion of Russophobic Cold War advocacy, captures the mainstream perspective in a single headline: “Fears Grow Over Prospect of Trump ‘Peace Deal’ with Putin.”

An anti-“peace” Washington establishment is, of course, what still-unproven Russiagate allegations have wrought, as summed up by a New York magazine writer who advises us that the Trump-Putin summit may well be “less a negotiation between two heads of state than a meeting between a Russian-intelligence asset and his handler.” The charge is hardly original, having been made for months at MSNBC by the questionably credentialed “intelligence expert” Malcolm Nance and the, it seems, selectively informed Rachel Maddow, among many other “experts.” Considering today’s perilous geopolitical situation, it is hard not to conclude that much of the American political establishment, particularly the Democratic Party, would prefer trying to impeach Trump to averting war with Russia, the other nuclear superpower. For this too, there is no precedent in American history.

The fear of peace.

• The Globalist Elite Fears Peace, Wants War (Pieraccini)

Sometimes reality is stranger than fiction. The following so stretches credulity that sources will have to be cited and an exact quotations given to be believed. A case in point is the following title: “Fears growing over the prospect of Trump ‘peace deal’ with Putin”. The Times does not here fear a military escalation in Ukraine, an armed clash in Syria, a false-flag poisoning in England, or a new Cold War. The Times does not fear a nuclear apocalypse, the end of humanity, the suffering of hundreds of millions of people. No, one of the most authoritative and respected broadsheets in the world is fearful of the prospect of peace! The Times is afraid that the heads of two nuclear-armed superpowers are able to talk to each other.

The Times fears that Putin and Trump will be able to come to some kind of agreement that can help avert the danger of a global catastrophe. These are the times in which we live. And this is the type of media we deal with. The problem with The Times is that it forms public opinion in the worst possible way, confusing, deceiving, and disorienting its readers. It is not by accident the world in which we live is increasingly divorced from logic and rationality. Even if the outcome of this meeting does not see any substantial progress, the most important thing to be achieved will be the dialogue between the two leaders and the opening of negotiation channels for both sides. In The Times article, it is assumed that Trump and Putin want to reach an agreement regarding Europe.

The insinuation is that Putin is manipulating Trump in order to destabilize Europe. For years now we have been inundated with such fabrications by the media on behalf of their editors and shareholders, all part of the deep state conglomerate. Facts have in fact proven that Putin has always desired a strong and united Europe, looking to integrate Europe into the Eurasian dream. Putin and Xi Jinping would like to see a European Union more resistant to American pressure and able to gain greater independence. The combination of mass migration and sanctions against Russia and Iran, which end up hurting Europeans, opens the way for alternative parties that are not necessarily willing to Washington’s marching orders.

“..this endgame of competing impossibilisms..”

• Theresa May Is Approaching Her Zero Dark Thirty Moment (G.)

Donald Trump’s outburst may have done Theresa May a fleeting favour. Had the grand Shrek not delivered every imaginable insult (short of impugning St Gareth of Southgate) to his host country yesterday, the story in the spotlight this weekend would have been on the growing disquiet around May’s handling of the Chequers agreement on Brexit, and the darkening mood that has descended on her own benches. As it turned out, May rode out the turbulence. But with the awkward visitor gone, the stony road to Brexit – “a tough deal”, as the US president observed – resumes. What started a mere week ago as applause for the prime minister in facing down her most troublesome ministerial insurgents has slipped into acute agitation.

It turns in part on the convoluted deal itself – but also on a fresh bout of panic about her ability to lead when the pressure is on. The departures of Boris Johnson and David Davis disconcerted Brexiteers – but did not unleash rebellion. Thursday’s white paper was another matter. Its use of the term “association agreement” (not used previously) was a red rag to many bulls. Given that the last one the European Union signed was with Ukraine, it hardly takes a marketing genius to see the problem. In this endgame of competing impossibilisms – hard Brexit versus a byzantine arrangement of near-customs-union “associations”, segmented agreements on goods and services, and somewhat indeterminate reassurance for the City on how its practices will be affected – the prime minister’s nightmare is that both enemy camps conclude they don’t want whatever she is offering.

This is the Zero Dark Thirty moment at which a serious move to oust May becomes probable – unless she can take back control of her disputatious party. May is not quite at that point – but perilously close. As one recently departed senior figure put it, there is no such thing as summer relief “because Graham Brady’s letter box is open over the recess”. Brady is the chair of the backbench MPs’ committee to which no-confidence votes would be submitted.

It’s gotten far too big.

• How Amazon Rules (WS)

Amazon is a Goliath in very different sectors. One is the internet cloud, a booming business. Amazon Web Services has evolved into the single largest player offering cloud computing services to companies, governments, and individuals. In the first quarter, AWS owns 33% share of the cloud infrastructure market, ahead of Microsoft with a 13% share, and Google with a 6% share. Being the biggest kid on the block, it has become the shoo-in for a multi-year $10-billion Pentagon contract. That business is highly profitable.

Less profitable are Amazon’s e-commerce operations. But in terms of magnitude, Amazon totally rules. According to a report from eMarkter, cited by CNBC, Amazon’s online sales in the US are expected to surge 30% in 2018 compared to a year earlier, to $258 billion. This would boost Amazon’s share of US e-commerce sales of 49.1%! The other combatants are fighting over the crumbs in terms of market share. The next nine largest e-commerce operations combined grab about 22% of the market: eBay (EBAY): 6.6% Apple (AAPL): 3.9% Walmart (WMT): 3.7% Home Depot (HD): 1.5% Best Buy (BBY) 1.3% QVC Group (QVCA): 1.2% Macy’s (M): 1.2% Costco (COST): 1.2% Wayfair (W): 1.1%

That leaves 29% of e-commerce for all the other retailers with online operations, from Bed Bath & Beyond (BBBY) to the tiniest home-office operations, millions of them. Amazon online sales fall into two categories: its “direct sales” and the sales from other sellers that use Amazon’s platform and execution (“Marketplace sales”). Both are growing in leaps and bounds, but Marketplace sales are growing the fastest. In 2018, Marketplace sales are expected to account for 68% of Amazon’s e-commerce sales, and direct sales for 32%, according to eMarketer estimates. Overall, e-commerce sales in the US have soared 16% in the first quarter from a year ago and are on track to exceed $500 billion this year.

Sabraw rules again.

• Judge Tells US To Pay Costs Of Reuniting Immigrant Families (R.)

A U.S. judge in California on Friday ordered President Donald Trump’s administration to pay the costs of reuniting immigrant parents with children separated from them by officials at the U.S.-Mexican border, rather than forcing the parents to pay. The U.S. government is working to reunite around 2,000 children with their parents, who were detained and separated as part of Trump’s “zero tolerance” approach to deter illegal immigration. “It doesn’t make any sense for any of the parents who have been separated to pay for anything,” U.S. District Judge Dana Sabraw, who last month ordered that the children be reunited with their parents by July 26, said at a hearing in San Diego.

The government missed a deadline this week for getting the youngest of the children back with their parents. Trump has made his hardline immigration policies a central part of his presidency. His administration adopted the family separation policy as part of its effort to discourage illegal immigration, but Trump bowed to intense political pressure and abandoned the policy on June 20. A lawyer for the American Civil Liberties Union, which has sued the administration over the family separations, said at the hearing that immigrant parents had been told by immigration officials they had to pay for their travel. One parent was initially asked to pay $1,900 to be reunited with a child, according to ACLU court papers.

Trump administration lawyer Sarah Fabian called the judge’s order on paying for the reunifications “a huge ask on HHS,” referring to the U.S. Department of Health and Human Services. Fabian said those decisions were handled at the field level, adding that HHS, which houses the detained children, had limited resources. “The government will make it happen,” Sabraw responded. The judge also agreed to impose timelines on the government for reporting details about its reunification efforts.

Fat Americans can have more tattoos.

• Hope and Change Are At Hand (Kunstler)

It seems unfair that the earnest polymath Elon Musk should go broke in the electric car business while Kylie Jenner becomes a billionaire at age 20 hawking lip gloss on Snapchat, but that’s how the American Dream rolls these late days of empire. Perhaps the lesson here, for all you MBA wannabes, is that Mr. Musk could switch his production facilities from cars to lip gloss. Of course, to successfully market his new line of cosmetics on social media, Elon might have to consider sexual “reassignment” surgery — unless he could persuade American men via Facebook and Twitter, that lip enhancement boosts male self-esteem almost as much as the purchase of a Ford F-450 pickup truck at a laughable fraction of the cost.

Which raises an interesting question: if President Donald Trump’s most winning personal feature is that magnificent golden hair-do, why doesn’t he (or his family) get out of the pain-in-the-ass hotel business, with all its construction and maintenance issues and dirty sheets, and just put out shampoo? He is obviously adept at Twitter marketing and surely scores high in global brand recognition. Which raises any number of other major questions about the proper functioning of the US economy. For instance, millions of Americans, especially of Kylie J’s gen, are wasting their lives working dead-end minimum wage jobs manning (personing?) the nation’s fry-o-lator stations when they could start billion dollar cosmetic companies.

After all, if you really want to be successful in this land of success stories, don’t you have to first look and feel successful? Perhaps that’s all you really need… forget all those pain-in-the-ass products with their vexing assembly-line, packing, and shipping problems. Just get America feeling great about itself, starting with the most important person in the room: YOU! Only two things stand in the way: tattoos and blubber. At the rate our fellow citizens are adorning themselves with inky autobiographies, ever fewer will want to cover up their personal messaging with icky makeup. And the remorseless increase in body size implies a concomitant increase in available epidermal sites for said personal messaging — so maybe the tattoo industry ought to be the basis of the next American economy, not electric cars and journeys to Mars, or even lip gloss. Just think of all those empty brick-and-mortar retail spaces out there begging to become Ink Spots! I may be wrong about this, but I haven’t heard of any tattoo billionaires…yet. Who will dare to be first? (Yet another Kardashian?)

Debt Rattle May 12 2018

May 122018

May 12, 2018 Posted by Raúl Ilargi Meijer at 9:26 am Finance Tagged with: Amazon, Apple, Canada, class action, crypto, Facebook, Maasai, Mariana Trench, PDVSA, plastic, safari, Turkey 11 Responses »

Pieter Bruegel the Elder Dulle Griet, also known as Mad Meg 1563

• If Real Consumer Spending Doesn’t Reverse Course, Look Out Retail Stocks (Street)

• Apple Made More Profit In 3 Months Than Amazon In Its Entire Lifetime (CNBC)

• Facebook Faces Class Action Lawsuit Over Collecting Texts And Call Logs (G.)

• Mark Zuckerberg’s Control Of Facebook Is Like A Dictatorship: CalSTRS (CNBC)

• Facebook ‘Very Serious’ About Launching Its Own Cryptocurrency (CNBC)

• There Will Be No Trade War With Germany, New US Ambassador Promises (R.)

• Turkey Remains A “Priority Market” For British Weapons (MEE)

• Erdogan Slams Rating Agencies For Upgrading ‘Bankrupt’ Greece (K.)

• PDVSA To Shut Curacao Refinery Amid Fight With Conoco (R.)

• Canada Sued Over Years Of Experimentation On Indigenous People (G.)

• Maasai Herders Driven Off Land To Make Way For Luxury Safaris (G.)

• Plastic Bag Found At The Deepest Point In The Ocean (SA)

Remember, 70% of US GDP. Coming from a population whose majority are maxed out.

• If Real Consumer Spending Doesn’t Reverse Course, Look Out Retail Stocks (Street)

With the Amazon beast breathing down their necks, the last thing struggling retailers need is a cautious U.S. consumer. Yet, that’s exactly what they have gotten in recent months — and if it persists, retail stocks are likely to take it on the chin this summer. Real consumer spending took a nosedive in the first quarter (chart below) as consumers assessed the impact President Trump’s tax reform plan. Not helping matters was a more volatile stock market, rising inflation and a cooling U.S. labor market. In turn, consumer sentiment has remained stuck in a range since February. Retail stocks have followed suit.

The VanEck Vectors Retail ETF (RTH) is down about 7% since hitting a high on Jan. 29. This week has brought bearish notes on department stores like Macy’s from Wall Street shops, citing fears of online competition and challenging first quarter sales conditions. Macy’s CEO Jeff Gennette will be speaking at TheStreet’s sister publication, The Deal’s, big corporate governance in June. “We think that real consumption growth will firm from 1.1% annualized in 1Q to 2.3% in 2Q. We continue to see similarities between this year and last that likely are related to abnormal patterns of tax refunds, and like last year, we expect real consumer spending to firm noticeably between 1Q and 2Q,” says JPMorgan & Chase strategist Daniel Silver. But even Silver doesn’t sound 100% convinced.

“But inflation likely will be much stronger in 2Q18 than it was in 2Q17, and higher prices should dampen real spending and erode some of the benefits associated with lower taxes.”

But Bezos is the richest of them all.

• Apple Made More Profit In 3 Months Than Amazon In Its Entire Lifetime (CNBC)

One word may explain Warren Buffett’s investment decisions on Apple and Amazon: profit. Last week Buffett both lamented on not investing in Amazon shares and revealed how he added massively to Berkshire Hathaway’s stake in Apple. The Oracle of Omaha’s moves may be explained by his philosophy of emphasizing a company’s historical financial track record versus putting credence in aggressive future forecasts from analysts. “I think it’s fair to say, we’ve never looked at a [analyst] projection in connection with either a security we’ve bought or a business we’ve bought,” Buffett said during a Berkshire Hathaway annual shareholder meeting in 1995, according to remarks found using CNBC’s Warren Buffett Archive.

Apple “is an unbelievable company,” Buffett told CNBC on May 3. “If you look at Apple, I think it earns almost twice as much as the second most profitable company in the United States.” The smartphone maker generated a $48.35 billion in profit during its fiscal 2017 and made $13.8 billion in net income during the March 2018 quarter. In comparison, Amazon’s total net income since inception is about $9.6 billion. The number was calculated by adding up all of Amazon’s annual net income figures since its inception to the company’s $1.6 billion profit in the March 2018 quarter.

Will a US court now sanction Facebook’s spying?

• Facebook Faces Class Action Lawsuit Over Collecting Texts And Call Logs (G.)

Facebook is facing a class action lawsuit over the revelations that it logged text messages and phone calls via its smartphone apps. In the lawsuit filed in Facebook’s home of the northern district of California, the primary plaintiff, John Condelles III, states that the social network’s actions “presents several wrongs, including a consumer bait-and-switch, an invasion of privacy, wrongful monitoring of minors and potential attacks on privileged communications” such as those between doctor and patient. Facebook collected the logs of text messages and calls, including the recipients and duration of the communications, through its apps for Android including Messenger when users opted into being able to send SMS from the app or give access to their contact lists.

“Facebook has collected and stored information in a scope and manner beyond that which users knowingly authorised. The practice is ongoing,” states the filing first reported by the Register. The extent of the collection was revealed when users began downloading and sifting through the data Facebook held on them following the Cambridge Analytica scandal. The plaintiffs allege that Facebook’s collection of the data from users’ phones breaches California’s Unfair Competition Law on three counts – including fraudulent business practice – in addition to the Consumer Legal Remedies Act and the Electronic Communications Privacy Act. [..] Facebook is also facing a class action lawsuit from both British and US lawyers as part of a case against the social network, Cambridge Analytica and two other companies for allegedly misusing the personal data of 71 million people.

But they won’t sell their shares.

• Mark Zuckerberg’s Control Of Facebook Is Like A Dictatorship: CalSTRS (CNBC)

The capital markets are a democracy, but that’s not how Facebook is being run, said Christopher Ailman, the chief investment officer of the California State Teachers’ Retirement System, known as CalSTRS. “There is something wrong,” he said Thursday on CNBC’s “Closing Bell.” “When Facebook changed its structure to take public money in, they should have changed their structure to a more open board structure, and we think that there’s a problem with having one person in charge of the company,” he added. CEO Mark Zuckerberg owns a majority of the voting rights to the company. That’s because the tech giant has dual-class shares.

Facebook’s Class B shares are controlled by Zuckerberg and a small group of insiders and have 10 votes per share. Class A shares only have one vote per share. The end result is that Zuckerberg and those insiders control almost 70 percent of the voting shares in Facebook. CalSTRS took on the issue in a recent op-ed in the Financial Times. CalSTRS portfolio manager Aeisha Mastagni wrote, “Why does Mr. Zuckerberg need the entrenchment factor of a dual-class structure? Is it because he does not want governance to evolve with the rest of his company? If so, this American dream is now akin to a dictatorship.”

A long way from Satoshi.

• Facebook ‘Very Serious’ About Launching Its Own Cryptocurrency (CNBC)

Facebook is “very serious” about launching its own cryptocurrency, according to a report from Cheddar. It’s not the first time the idea of a Facebook coin has been floated, but the plans take on some greater meaning in light of Facebook’s recently reshuffled executive structure and newly formed blockchain group. Blockchain, the decentralized record-keeping system, could help tackle some of Facebook’s most bothersome problems, like identity verification or advertising sales. It’s also the technology behind most cryptocurrencies, logging ownership and transfers of the digital tokens.

“Like many other companies Facebook is exploring ways to leverage the power of blockchain technology. This new small team will be exploring many different applications,” a Facebook spokesperson told CNBC in a statement. It would likely be years before Facebook’s work on blockchain and cryptocurrency became anything material, Cheddar reports, citing anonymous sources. The business news site also reports Facebook has no plans to hold an ICO, or initial coin offering.

The cover of the new Der Spiegel doesn’t seem convinced.

• There Will Be No Trade War With Germany, New US Ambassador Promises (R.)

The new U.S. ambassador to Germany said the row over Washington’s planned imposition of punitive tariffs on European goods would not trigger a trade war, adding that U.S. President Donald Trump only wanted “a level playing field”. In an interview with the Funke newspaper group, Richard Grenell insisted that the United States was awaiting proposals on how punitive tariffs could be averted. “Germans are doing a phenomenal job on trade,” he said. “There will be no trade war … We are talking with our friends to solve a problem.” The United States wanted to see Europe’s proposals before deciding what would follow the expiry of an already extended June 1 deadline to impose tariffs, he added.

Less than a week into the job, Grenell has already triggered headlines with his demand in a tweet that German companies in Iran should “wind down operations” immediately after Trump withdrew the United States from an international nuclear deal. In the interview, Grenell maintained the hard line on Iran that has caused dismay in Europe’s capitals, restating the U.S. government’s position that Europe must re-impose sanctions on Iran. “We expect our friends and allies to help us to bring Iran back to the negotiating table,” he said, adding that the United States had proof Iran had violated its commitment not to enrich uranium.

Who’s going to protest Erdogan’s visit?

• Turkey Remains A “Priority Market” For British Weapons (MEE)

Theresa May is set to roll out the red carpet for Turkish President Recep Tayyip Erdogan this weekend, as new figures reveal that Britain has sold more than $1bn of weapons to Ankara since the failed 2016 coup and subsequent crackdown under emergency powers, Middle East Eye can reveal. Turkey remains a “priority market” for British weapons, despite concerns from human rights groups and EU officials over the erosion of the country’s rule of law. Turkey is a fellow member of NATO and has cooperated with the EU in tackling the refugee crisis, but critics say that Erdogan’s government has arrested or sacked more than 100,000 state workers and members of the military in the wake of the coup attempt.

Unlike many other Western allies, London spoke out quickly after the coup, in which fighter jets bombed the Turkish parliament and troops opened fire on civilians. But the UK has remained largely silent as Turkey targeted not only the alleged plotters but also political dissidents, journalists and members of pro-Kurdish parties for “supporting terrorism”. Erdogan will meet the Queen and the prime minister during his three-day visit to the UK, starting on Sunday. It comes as the UK is making a Brexit push to boost trade with Ankara, but also in the middle of a snap Turkish parliamentary and presidential campaigns conducted under a state of emergency.

UK weapons sales since the attempted coup include a $667m deal for military electronic data, armoured vehicles, small arms, ammunition, missiles, drones, aircraft and helicopters. It also includes a $135m deal for BAE Systems to fulfil Erdogan’s plan to build a Turkish-made fighter jet. The jet deal was signed by May in January 2017 under an “open licence” to ease the transfer of military technology, and UK officials now reportedly wish to expand the deal by pushing for Rolls-Royce to win the engine contract. Lloyd Russell-Moyle, a Labour MP who recently travelled to northern Syria, where Turkey is involved in operations against the Kurdish YPG militia, told MEE: “The government has been increasing arms sales to Turkey as it has fallen into authoritarianism at home and warmongering abroad.

When under fire…

• Erdogan Slams Rating Agencies For Upgrading ‘Bankrupt’ Greece (K.)

Turkish President Recep Tayyip Erdogan took a fresh swipe at rating agencies on Friday over the recent downgrade and the negative outlook they have assigned for the Turkish economy, using “bankrupt” Greece as an example. “Don’t pay attention to them [the rating agencies]. They upgraded a neighbour [of Turkey] that has gone bankrupt by four points. They receive new debts and live with them,” he reportedly told the Turkish Union of Chambers and Commodity Exchanges (TOBB) Conference Hall. “Excuse me, but we are talking about a country that cannot pay its civil servants. How is this possible? I am talking about Greece”, he said.

And the Dutch government is just standing by?!

• PDVSA To Shut Curacao Refinery Amid Fight With Conoco (R.)

Venezuela’s state-run oil company PDVSA is preparing to shut a Caribbean refinery that is running out of crude amid threats by ConocoPhillips to seize cargoes sent to resupply the facility, according to two sources with knowledge of the situation. Conoco of the United States last week began legal actions in the Caribbean to enforce a $2 billion arbitration award by the International Chamber of Commerce (ICC) over the 2007 nationalization of its projects in Venezuela. The moves have disrupted fuel deliveries throughout the Caribbean, much of which depends on PDVSA. The PDVSA-operated 335,000 barrel-per-day Isla refinery in Curacao, which has not received new shipments from PDVSA since last week, plans to exhaust existing inventories in the coming days, the two sources said.

PDVSA is seeking ways to sidestep legal orders to hand over assets. The Venezuelan firm has transferred custody over the fuel produced at the refinery to the Curacao government, the owner of the facility, the sources said. In another legal move to avoid oil being seized, PDVSA transferred ownership of crude to be refined at Isla to its U.S. unit, Citgo Petroleum, one of the sources added. “The seizure in Curacao was enforced on Thursday, so the inventories’ custody was transferred. The refinery will eventually stop (operations),” the source said.

Until the 1980s.

• Canada Sued Over Years Of Experimentation On Indigenous People (G.)

A class action lawsuit has been filed in a Canadian court on behalf of the thousands of indigenous people alleged to have been unwittingly subjected to medical experiments without their consent. Filed this month in a courtroom in the province of Saskatchewan, the lawsuit holds the federal government responsible for experiments allegedly carried out on reserves and in residential schools between the 1930s and 1950s. The suit also accuses the Canadian government of a long history of “discriminatory and inadequate medical care” at Indian hospitals and sanatoriums – key components of a segregated healthcare system that operated across the country from 1945 into the early 1980s.

“This strikes me as so atrocious that there ought to be punitive and exemplary damages awarded, in addition to compensation,” said Tony Merchant, whose Merchant Law Group filed the class action. The lawsuit, which has not yet been tested in court, alleges that residential schools – where more than 150,000 aboriginal children were carted off in an attempt to forcibly assimilate them into Canadian society – were used as sites for nutritional experiments, where researchers tested out their theories about vitamins and certain foods. “The wrong here is that nobody knew it was happening. Their families didn’t know it was happening,” Merchant said. As the diet at the schools was known to be nutritionally deficient, the children were considered “ideal experimental subjects”, according to court documents.

It cites six schools, stretching from Nova Scotia to British Columbia, and links them to experiments carried out from 1948 to 1953. At times, researchers would carry out what Merchant described as trials aimed at depriving the children of nutrients that researchers suspected were beneficial. “So what they did on a systemic basis … they would identify a group of indigenous children in schools where they were being compulsorily held and they would not give them the same treatment,” said Merchant. “They used them as a control against experiments that they were doing in other places and they also used them to test certain kinds of foods and drugs.”

Ban all hunting in Africa. Just stop it.

• Maasai Herders Driven Off Land To Make Way For Luxury Safaris (G.)

The Tanzanian government is putting foreign safari companies ahead of Maasai herding communities as environmental tensions grow on the fringes of the Serengeti national park, according to a new investigation. Hundreds of homes have been burned and tens of thousands of people driven from ancestral land in Loliondo in the Ngorongoro district in recent years to benefit high-end tourists and a Middle Eastern royal family, says the report by the California-based thinktank the Oakland Institute. Although carried out in the name of conservation, these measures enable wealthy foreigners to watch or hunt lions, zebra, wildebeest, giraffes and other wildlife, while the authorities exclude local people and their cattle from watering holes and arable land, the institute says.

The report, released on Thursday highlights the famine and fear caused by biodiversity loss, climate change, inequality and discrimination towards indigenous groups. “Losing the Serengeti: The Maasai Land that was to Run Forever” uses previously unpublished correspondence, official documents, court testimonies and first-person testimony to examine the impact of two firms: Thomson Safaris based in the United States, and Otterlo Business Corporation based in the United Arab Emirates. It says Thomson’s sister company, Tanzania Conservation Limited, is in a court battle with three Maasai villages over the ownership of 12,617 acres (5,106 hectares) of land in Loliondo which the company uses for safaris.

20 years ago already. Imagine today.

• Plastic Bag Found At The Deepest Point In The Ocean (SA)

Humanity’s toxic addiction to plastic has reached stunning depths, and we only wish we were speaking figuratively. A new study analysing over 30 years’ worth of data on human-made trash found in the deepest parts of the ocean reveals almost 3,500 pieces of plastic and other debris have been discovered littering these remote, fragile ecosystems. If proof were ever needed that there are no more untouched places left on our poor, polluted planet, we now have it in one perfect, twisted symbol: amongst this litany of garbage, the deepest-lurking refuse was a fragmented single-use plastic bag, discarded at a depth of 10,898 metres (35,754 ft) in the Mariana Trench.

The Mariana Trench is the deepest part of the entire ocean, home to distant, alien forms of marine life we know next to nothing about, but its remote, almost unreachable location doesn’t mean we haven’t found ways to carelessly spoil it [..] In the thousands of debris images and videos the researchers compiled in their database, deep-sea organisms were observed in 17% – damning evidence that our throwaway culture entangles, intermingles, and generally affects ocean life in ways we’re not aware of. Because the team’s dataset only includes a visual record of what’s on the sea floor – not what’s drifting and sinking above it – the researchers say they’ve only scratched the (deep) surface of the problem here, although simple physics suggests more garbage is headed this way.

Debt Rattle April 28 2018

Apr 282018

April 28, 2018 Posted by Raúl Ilargi Meijer at 8:21 am Finance Tagged with: Amazon, Brexit, Candace, Fukushima, Kanye, Kim, moon, neonicotinoids, plastics, racism, shadow, tariffs, Trump 4 Responses »

Edgar Degas At the Milliner’s 1905-10

• Happy New Universe Day (Caitlin Johnstone)

• Counter-#Resistance? (Jim Kunstler)

• North Korea Says Historic Summit Opens ‘New Era For Peace’ (AFP)

• Jumping The Great White Shark Of Bubble Finance (David Stockman)

• Structural Racism At Heart Of British Society, UN Human Rights Panel Says (G.)

• Brexit Failure Looks More Likely Every Day (Ritholtz)

• Mayday on May Day? Trump Steel Tariff Deadline Looms (R.)

• Donald Trump and the Next Crash (Nomi Prins)

• US Issues New Warning To China On Its Handling Of Intellectual Property (BBG)

• China Is Bolstering Lenders Before A New Assault On Shadow Banking (BBG)

• World’s Central Banks Just Can’t Quit on Currency Intervention (BBG)

• Hawaii Takes Historic First Step Toward Creating ‘Utility of the Future’ (RE)

• Fukushima is Now Officially Worse Than Chernobyl (CP)

• EU Votes To Ban Bee-Killing Pesticides (AFP)

• The Hills Are Alive With The Signs Of Plastic (G.)

Kanye brings hope.

• Happy New Universe Day (Caitlin Johnstone)

I’m not sure what this is, but it’s definitely different. A bunch of tweets and videos by Mike Cernovich, Scott Adams and Kanye West have been dancing in an unexpected way that has conservatives now talking about a shift in consciousness transforming the way humanity functions in the near future. Liberals and leftists are scoffing at it of course, but it’s definitely a thing, and in my opinion it’s downright fascinating. The MAGA crowd has always impressed me with its ability to energetically and spontaneously unify behind a single theme as a group, like a flock of birds or school of fish changing direction together on a dime. There are certainly worse things they could pour their collaboration into than manifesting a spiritual revolution.

And who the hell am I to say they’re wrong about that? It’s not like we’ve got a choice anyway; either our species will change the way it functions or we’ll wipe ourselves out via nuclear holocaust or climate catastrophe within a few decades, no matter how loudly and smugly we scoff at the guys in MAGA hats. If humanity is going to take a last-ditch, evolve-or-die leap into the unknown and unprecedented, now would surely be the time to do it. If a bunch of right-wingers get it into their heads that humanity is undergoing a spiritual transformation, that certainty could be all it takes to tip us into the shift we all know we need to make anyway.

Could something big be in the works? Something which transcends all our little echo chamber walls and ideological boundaries, which comes not from the repetitive thought loops in our minds but from our deep evolutionary drive to survive? I hope so. And call me naive and deluded if you like, but right now I’m seeing plenty of reasons to hope.

“Candace seems to have drive, guts, and stamina and there’s no sign that she’s going to shut up. Won’t some Ivy League university please invite her to speak, just to see what happens?”

• Counter-#Resistance? (Jim Kunstler)

Who hit Kanye with that white privilege stick? The rapper / fashion maven / theologian / Kardashian arm candyman sent chills through the Twitterverse when he declared himself, somewhat elliptically, off-the-bus of the Progressive #Resistance movement and an admirer of the Golden One in the Oval Office. This came in his endorsement of YouTube blogger Candace Owen, who happens to not be down with the cause of the national victim lottery. Both Kanye and Candace have apparently crossed some boundary into a Twilight Zone of independent thought. Many probably wonder how they are able to get out of bed in the morning without instructions from Don Lemon.

Speaking as a white cis-hetero mammal, I’m not quite as dazzled by the president, but it’s a relief to see, at last, some small rebellion against the American Stasi who have turned the public arena into a giant holding pen for identity offenders — though it is but one corner of the triad-of-hysteria that also includes the Hate Russia campaign and the crusade against men. This nonsense has been going on long enough, while the country hurtles heedlessly into a long emergency of economic disarray. Next in line after Kanye and Candace, a popular Twitter critter name of Chance the Rapper endorsed Kanye endorsing Candace, more or less, by tweeting “black people don’t have to be Democrats.”

The horror this thought aroused! Slavery, these days, it turns out, has a lot of appeal — maybe not so much for laboring in the canefields under the noonday sun as for serving juleps in the DNC plantation house. It happened that Kanye’s mom was a college professor, Chance’s dad was an aide to Chicago Mayor Daley (Jr.), and later worked in Mr. Obama’s Department of Labor. Candace describes her childhood home in Stamford, CT, as “very poor,” but she rose far-and-fast out of college to become an executive on Wall Street in her twenties. What they seem to have in common is being tainted with bourgeois values, horror again!

[..] I dunno about the perpetually scowling Kanye, with his periodic mood problems and spotlight-stealing antics on stage, or Chance the Rapper’s artificial hood raptures, but Candace makes the argument for the value of a common culture that might bind us together as a nation of individuals, not hostile tribes, starting with a language that everybody can understand. Of course, the whole Kanye / Candace dust-up may be forgotten by the middle of next week, and the country can go back to gaslighting itself into either a new civil war or world war three. Candace seems to have drive, guts, and stamina and there’s no sign that she’s going to shut up. Won’t some Ivy League university please invite her to speak, just to see what happens?

Yeah, we’ll have to wait and see. But Kim does what his people want, and more importantly what his father wanted.

• North Korea Says Historic Summit Opens ‘New Era For Peace’ (AFP)

North Korea on Saturday hailed its summit with the South as a “historic meeting” that paved the way for the start of a new era, after the two leaders pledged to pursue denuclearisation and a permanent peace. The official KCNA news agency carried the text of the leaders’ Panmunjom Declaration in full and said the encounter opened the way “for national reconciliation and unity, peace and prosperity”. In the document, North Korean leader Kim Jong Un and the South’s President Moon Jae-in “confirmed the common goal of realising, through complete denuclearisation, a nuclear-free Korean Peninsula”. But the phrase is a diplomatic euphemism open to interpretation on both sides.

Pyongyang has long wanted to see an end to the US military presence and nuclear umbrella over the South, but it invaded its neighbour in 1950 and is the only one of the two Koreas to possess nuclear weapons. Analysts warn that previous displays of inter-Korean affection and pledges by the North ultimately came to naught. For years, Pyongyang insisted it would never give up the “treasured sword” of its nuclear arsenal, which it says it needs to defend itself against a possible US invasion. But it has offered to put it up for negotiation in exchange for security guarantees, according to Seoul – although Kim made no public reference to doing so at Friday’s spectacular summit. In a separate report, KCNA said the two leaders had a “candid and open-hearted exchange of views” on issues including “ensuring peace on the Korean Peninsula and the denuclearisation of the peninsula”.

“..Fully 96% of Amazon’s $5.0 billion of LTM operating income was accounted for by its cloud services business..”

• Jumping The Great White Shark Of Bubble Finance (David Stockman)

Wall Street has now truly jumped the shark – the one jockeyed by Jeff Bezos. Last night Amazon reported a whopping 41% plunge in free cash flow for the March 2018 LTM period compared to prior year. Yet it was promptly rewarded by a $50 billion surge in market cap – with $10 billion of that going to the guy riding topside on the Great White Shark of Bubble Finance. That’s right. Amazon’s relatively meager operating free cash flow for the March 2017 LTM period had printed at $9.0 billion, but in the most recent 12 months the number has slithered all the way down to just $5.3 billion. And that’s where the real insanity begins. A year ago Amazon’s market cap towered at $425 billion – meaning that it was being valued at a downright frisky 47X free cash flow.

But fast forward a year and we get $780 billion in the market cap column this morning and 146X for the free cash flow multiple. Folks, a company selling distilled water from the Fountain of Youth can’t be worth 146X free cash flow, but don’t tell the giddy lunatics on Wall Street because they are apparently just getting started. Already at the crack of dawn SunTrust was out with a $1900 price target – meaning an implied market cap of $970 billion and 180X on the free cash flow multiple. At this point, of course, you could say who’s counting and be done with it. But actually it’s worse – and for both Amazon and the US economy.

That’s because Amazon is both the leading edge of the most fantastic ever bubble on Wall Street and also a poster boy for the manner in which Bubble Finance is hammering growth, jobs, incomes and economic vitality on main street. Moreover, soon enough a collapsing Wall Street bubble will bring the already deeply impaired main street economy to its knees. So Amazon is a double-destroyer. [..] Fully 96% of Amazon’s $5.0 billion of LTM operating income was accounted for by its cloud services business (AWS). The e-Commerce juggernaut, by contrast, posted just $188 million of LTM operating income, which amounts to, well, 0.1% of sales on a computational basis. But we’d round that to zero – especially because Amazon’s e-Commerce business was already almost there in the year ago period when its margin on sales came in a tad higher at 0.6%!

No kidding.

• Structural Racism At Heart Of British Society, UN Human Rights Panel Says (G.)

The disproportionate number of deaths of black and brown people in incidents with the police shows that structural racism remains rooted in the fabric of British society, a panel of UN human rights experts has said. The panel cited data from the Metropolitan police showing a disproportionate number of minority ethnic people – particularly those of African or Caribbean descent – dying due to excessive use of force by the state. Noting that there had never been a successful prosecution of a police officer for a death in police custody, the panel said: “This points to the lack of accountability and the impunity with which law enforcement and state agencies operate.”

The warning from members of the UN human rights council comes before a 12-day visit to the UK by E Tendayi Achiume, the special rapporteur on racism, beginning on Monday. “The deaths reinforce the experiences of structural racism, over-policing and criminalisation of people of African descent and other minorities in the UK,” they said. “Failure to properly investigate and prosecute such deaths results in a lack of accountability for those individuals and state agencies responsible, as well as in the denial of adequate remedies and reparation for the families of the victims.” The panel pointed particularly to the disproportionate use of stun guns. People from black and minority ethnic backgrounds were three times more likely to be subjected to the use of such weapons by police, they said.

The members added: “People of African descent with psychosocial disabilities and those experiencing severe mental or emotional distress reportedly face multiple forms of discrimination and are particularly affected by excessive use of force.” A report last year by David Lammy, the Labour MP for Tottenham, found racial disparities across the criminal justice system. He has consistently said that young black men feel as though they are living in a police state and that a different standard of policing is applied to black youths, compared with whites.

Me, I predict a giant mess.

• Brexit Failure Looks More Likely Every Day (Ritholtz)

Today, I will violate one of my favorite principles, and hereby make this prediction: No Brexit! In other words, the U.K. will not exit the European Union. By 2023, we will look back at the entire ridiculous affair as if it were a rediscovered lost episode of “Fawlty Towers.” Soon after the referendum in which Brits unwisely voted to leave the EU, I suggested there was a 33% chance that Brexit wouldn’t occur. Now, I raise that to 75%, and with each passing day of incompetence shown by Prime Minister Theresa May’s administration, the probabilities move higher.

With that disclosure out of the way, I’d like to explain the thinking behind this not-so-bold forecast. From the very beginning, I have been a skeptic that a full Brexit would occur. The concept was simply so foolish and self-destructive that the reasonable expectation was cooler heads would prevail. But that was a modest assumption and didn’t anticipate the feckless May government making a bad situation even worse. There seem to be several ways this can, and probably will, fall apart. In order of likelihood (recognizing a combination of any and all of these is possible):

1) Doing nothing
2) Snap parliamentary election leading to a May loss
3) New referendum
4) Ireland/Scotland make it too complicated
5) Europe makes it impossible

The EU is ready for a fight.

• Mayday on May Day? Trump Steel Tariff Deadline Looms (R.)

While more than 100 countries take a day off for May Day, U.S. President Donald Trump will spend next Tuesday deciding whether to extend a largely U.S.-China trade standoff into a more global dispute. In a week featuring a Federal Reserve monetary policy meeting, U.S. monthly jobs data and first estimates on euro zone inflation and economic growth, Trump’s decision on metal tariffs may prove to the be biggest market mover. The United States set import tariffs of 25% on steel and 10% on aluminum a month ago, but granted temporary exemptions to the European Union, NAFTA partners Canada and Mexico, as well as Argentina, Brazil, Australia and South Korea. Those exemptions expire on May 1.

Korea secured a permanent exemption for steel within days of agreeing to a revision of its trade pact with the United States. Canada and Mexico may rely on advances in talks on North American Free Trade Agreement (NAFTA) for an extension. Continued exemptions for the other countries, and notably the European Union, remain in doubt. French President Emmanuel Macron and German Chancellor Angela Merkel were meeting Trump in Washington as part of EU lobbying effort in the past week, but German officials played down the chances of a breakthrough before Merkel’s Friday visit. “From today’s point of view, we must reckon that the tariffs will come on May 1,” one official said.

The European Commission, which oversees trade policy for the 28-member bloc, has insisted the United States grant it a permanent exemption without conditions. White House economic adviser Larry Kudlow said on Thursday that Trump wanted concessions on automobiles, for which import duties are higher into Europe than into the United States.

The Fed as a cult.

• Donald Trump and the Next Crash (Nomi Prins)

We have entered a landmark moment: no president since Woodrow Wilson (during whose administration the Federal Reserve was established) will have appointed as many board members to the Fed as Donald Trump. His fingerprints will, in other words, not just be on Supreme Court decisions, but no less significantly Fed policy-making for years to come — even though, like that court, it occupies a mandated position of political independence. The president’s latest two nominees to that institution’s Board of Governors exemplify this. He has nominated Richard Clarida, a former Treasury Department official from the days of President George W. Bush who later became a strategic adviser to investment goliath Pimco, to the Fed’s second most important slot, while giving the nod to Michelle Bowman, a Kansas bank commissioner, to represent community banks on that same board.

Like many other entities in Washington, the Fed’s Board of Governors has been operating with less than a full staff. If Clarida is approved, he will join Trump-appointed Fed Chairman Jerome Powell and incoming New York Federal Reserve Bank head John C. Williams — the New York Fed generally exists in a mind meld with Wall Street — as part of the most powerful trio at that institution. Williams served as president of the San Francisco Fed. Under his watch, the third largest U.S. bank, Wells Fargo, created about 3.5 million fake accounts, gave its CEO a whopping raise, and copped to a $1 billion fine for bilking its customers on auto and mortgage insurance contracts.

Not surprisingly, Wall Street has embraced Trump’s new Fed line-up because its members are so favorably disposed to loosening restrictions on financial institutions of every sort. Initially, the financial markets reflected concern that Chairman Powell might turn out to be a hawk on interest rates, meaning he’d raise them too quickly, but he’s proved to be anything but. As Trump stacks the deck in his favor, count on an economic impact that will be felt for years to come and could leave the world devastated. But rest assured, if the Fed can help Trump keep the stock market buoyant for a while by letting money stay cheap for Wall Street speculation and the dollar competitive for a trade war, it will.

And Canada?!

• US Issues New Warning To China On Its Handling Of Intellectual Property (BBG)

The U.S. issued a new warning to China on its handling of intellectual property as President Donald Trump prepares to dispatch senior advisers to the Asian nation to head off a trade dispute. The U.S. Trade Representative’s office kept China on its “priority watch list” of countries whose IP practices require monitoring. China has an “urgent need” to fix a range of IP-related concerns, including trade-secret theft, online piracy, and forced technology transfer, USTR said in its annual report on IP protection and enforcement. Escalating trade tensions between the world’s two-biggest economies have rattled markets and sparked fears of a trade war. Trump has proposed tariffs on as much as $150 billion of Chinese imports on the grounds of alleged IP theft, while Beijing has vowed to retaliate on everything from American soybeans to airplanes.

The annual list, which carries no immediate penalties, is supposed draw attention to the need for nations to address everything from copyright infringement to online piracy. Trump said this week Treasury Secretary Steven Mnuchin and other senior officials will visit China within days, adding that there’s a “very good chance” the two countries can reach a deal. U.S. Trade Representative Robert Lighthizer and White House economic adviser Larry Kudlow will also be part of the delegation. Kudlow said he expects serious negotiations on a range of trade irritants, including technology-related issues, and the U.S. will be looking for specific actions from China. Officials in Beijing in recent weeks have been announcing steps to further open up the economy, such as gradually scrapping foreign ownership caps on local vehicle companies.

The administration added Canada and Colombia to the highest priority watch list for IP challenges, and it dropped Thailand from the regular watch list. Canada is the only Group of Seven country on the monitoring list. The USTR said the country has failed to resolve “key longstanding deficiencies,” including poor border and law enforcement with respect to counterfeit and pirated goods, weak patent protection and pricing for pharmaceuticals, and inadequate copyright protection.

It’s the shadow banks that have financed that 6.8% growth they miraculously achieve every single month and year.

• China Is Bolstering Lenders Before A New Assault On Shadow Banking (BBG)

Investors who pushed up Chinese bank shares last week on news of lower reserve requirements may have been celebrating too soon. The subtext to Tuesday’s move is an effort to prepare the banks for a painful new phase in China’s campaign to reduce financial-sector risks, as regulators free up deposit rates and accelerate their crackdown on the nation’s $16 trillion shadow banking sector. “China is gearing up to crack a hard nut with deleveraging and financial reforms, and the central bank is offering some coordinated policies to ensure it will be a smooth transition,” said Xia Le, chief Asia economist at Banco Bilbao Vizcaya Argentaria in Hong Kong.

The People’s Bank of China’s decision to free up more liquidity for banks by slashing reserve ratio requirements, at a time when funding conditions are plentiful, shows the central bank is trying to insulate lenders for the next phase of reform, said Ming Ming, head of fixed-income research at Citic Securities. A key element of that reform process is a plan to give banks greater freedom to set interest rates, flagged by PBOC Governor Yi Gang at the Boao forum earlier this month. That will help banks better compete for deposits from Chinese savers and hasten the shift away from shadow instruments such as wealth management products.

Already, China Construction Bank, Bank of China and other large lenders have started trying to attract funding by rolling out certificates of deposit with sharply higher interest rates. But the move away from off balance sheet WMPs to on-balance sheet deposit funding is likely to be painful. Guosen Securities analyst Wang Jian described interest rate liberalization as like “throwing a bomb at banks” in an April 11 note, saying the need to offer higher deposit rates to attract funds could push them into riskier lending, to real estate for example, in order to protect profits.

What are the little ones going to do?

• World’s Central Banks Just Can’t Quit on Currency Intervention (BBG)

History shows that central banks rarely stem a currency’s long-term decline simply by spending foreign-exchange reserves. Yet not stepping in at all can prove far worse. That’s the argument used by authorities in Brazil, Indonesia and most recently Argentina to explain why it makes sense to shower billions of dollars on what looks like a losing bet. This week alone, Argentina spent about $3 billion, or 5% of its reserves, to bolster the peso after it plunged to a record low. Then, wielding another monetary cudgel, it unexpectedly goosed interest rates. In Buenos Aires, the combination worked – at least for today. The peso ended just a blip or two in the green after sliding 1.8% earlier. It’s still this year’s worst-performing major currency, nosing out Russia’s ruble and the Turkish lira.

“It was a success in the sense that it gave two signals to the market,” said Daniel Chodos, a strategist at Credit Suisse based in the Argentine capital. “One is that it can and will use all available instruments to conduct monetary policy, that is, interest-rate and FX interventions. The second signal is that because of the tool kit it has, it can intervene and cause some pain to markets.” Indonesia is a more cautionary tale. The southeast Asian nation’s central bank drained $6 billion of foreign reserves in February and March partly to stabilize the rupiah, and may have further eroded the $126 billion pile as it stepped up intervention this month. But the moves, coupled with a threat to hike rates, didn’t calm volatility. That led the central bank to say it’s preparing a second line of defense to ensure liquidity.

Brazil’s interventions in the foreign-exchange market, using currency swaps, became so regular between 2013 and 2015 that traders started likening them to “ração diária,” the moment each day set aside to feed your pets.

“..for the first time they are going to charge based on factors including affordability, reliability, transparency, renewable energy integration, efficiency..”

• Hawaii Takes Historic First Step Toward Creating ‘Utility of the Future’ (RE)

In what could be the beginning of the new way forward to utilities, on Tuesday, Hawaiian Gov. David Ige signed the Ratepayer Protection Act, a new law that directs utilities in Hawaii to change their business models and fully decouple revenue and capital expenditures. “This is the first jurisdiction that is doing this. It’s a concept that’s been discussed at some length among scholars and experts in the field but no one has actually implemented this so this was definitely a moonshot bill,” said State Sen. Stanley Chang in an interview. “Instead of charging what the market can bear or letting utilities charge on a cost-plus basis to recoup their costs, for the first time they are going to charge based on factors including affordability, reliability, transparency, renewable energy integration, efficiency,” he added.

“That’s a total change to the business model of these utilities.” Today, one of the only ways that utilities all across the world can generate revenue is by rate-basing capital expenditures. What that means in plain English is that the more utilities spend on infrastructure, such as upgrading transmission and distribution equipment (and building new generation plants in some territories), the more money they make because they are allowed to add those capital expenditures to their electric rates plus a healthy margin and recover their costs through ratepayer dollars.

As of July 1, 2020, this model will cease to exist in Hawaii. Under the new law Hawaiian utilities and the public utility commission (PUC) will need to come up with “performance incentives and penalty mechanisms that directly tie an electric utility revenues to that utility’s achievement on performance metrics and break the direct link between allowed revenues and investment levels,” according to the new law.

“Contamination of soil, vegetation and water is so widespread in Japan that evacuating all the at-risk populations could collapse the economy..”

• Fukushima is Now Officially Worse Than Chernobyl (CP)

The radiation dispersed into the environment by the three reactor meltdowns at Fukushima-Daiichi in Japan has exceeded that of the April 26, 1986 Chernobyl catastrophe, so we may stop calling it the “second worst” nuclear power disaster in history. Total atmospheric releases from Fukushima are estimated to be between 5.6 and 8.1 times that of Chernobyl, according to the 2013 World Nuclear Industry Status Report. Professor Komei Hosokawa, who wrote the report’s Fukushima section, told London’s Channel 4 News then, “Almost every day new things happen, and there is no sign that they will control the situation in the next few months or years.”

Tokyo Electric Power Co. has estimated that about 900 peta-becquerels have spewed from Fukushima, and the updated 2016 TORCH Report estimates that Chernobyl dispersed 110 peta-becquerels.[1](A Becquerel is one atomic disintegration per second. The “peta-becquerel” is a quadrillion, or a thousand trillion Becquerels.) Chernobyl’s reactor No. 4 in Ukraine suffered several explosions, blew apart and burned for 40 days, sending clouds of radioactive materials high into the atmosphere, and spreading fallout across the whole of the Northern Hemisphere — depositing cesium-137 in Minnesota’s milk.[2]

The likelihood of similar or worse reactor disasters was estimated by James Asselstine of the Nuclear Regulatory Commission (NRC), who testified to Congress in 1986: “We can expect to see a core meltdown accident within the next 20 years, and it … could result in off-site releases of radiation … as large as or larger than the releases … at Chernobyl.[3] Fukushima-Daiichi came 25 years later. Contamination of soil, vegetation and water is so widespread in Japan that evacuating all the at-risk populations could collapse the economy, much as Chernobyl did to the former Soviet Union. For this reason, the Japanese government standard for decontaminating soil there is far less stringent than the standard used in Ukraine after Chernobyl.

75% of insects are gone in France and Germany and they make this only about the bees?

• EU Votes To Ban Bee-Killing Pesticides (AFP)

European Union countries voted on Friday in favour of a near-total ban on neonicotinoid insecticides which are blamed for an alarming collapse in bee populations. The move comes after the European food safety agency said in February that most uses of the chemicals posed a risk to bees, prompting environmentalists to push the 28-nation EU to immediately outlaw them. Bees help pollinate 90% of the world’s major crops, but in recent years have been dying off from “colony collapse disorder,” a mysterious scourge blamed on mites, pesticides, virus, fungus, or a combination of these factors.

Campaigners dressed in black and yellow bee suits rallied outside the headquarters of the European Commission in Brussels ahead of the vote for a ban on three key pesticide chemicals. EU Environment Commissioner Vytenis Andriukaitis said he was “happy that member states voted in favour of our proposal” to restrict the chemicals and tweeted a picture of the activists.

Time for a very large and thorough study into plastics in humans.

• The Hills Are Alive With The Signs Of Plastic (G.)

Microplastic pollution contaminates soil across Switzerland, even in remote mountains, new research reveals. The scientists said the problem could be worse in other nations with poorer waste management and that research was urgently needed to see if microplastics get into food. In the first major study of microplastics in soil, the researchers analysed soil samples from 29 river flood plains in nature reserves across Switzerland. They found microplastics, fragments under 5mm in size, in 90% of the soils. The scientists believe the particles are carried across the country by the wind. Research on microplastic pollution to date has largely concentrated on the oceans, in which it is found across the globe, including the Arctic. The particles have been shown to harm marine life and can absorb toxins from the water.

Record levels of microplastics were revealed in rivers by research released in March and last year tap water around the world was found to contain plastic fibres. Other studies have found microplastics in bottled water, which prompted the World Health Organization to launch a review, as well as in beer, honey and salt. However, almost no research has yet been done on whether the particles end up being widely consumed by people and whether they are harmful. Michael Scheurer and Moritz Bigalke at the Geographical Institute of the University of Bern, conducted the new research, which is published in the journal Environmental Science and Technology. “These findings are alarming,” Scheurer said. “For example, new studies indicate that microplastics in the soil can be harmful to and even kill earthworms in the soil.”

Microplastics were found even in remote mountain regions that can only be reached by foot. “We were really surprised,” said Bigalke. “All the areas were in national parks. We thought we might find one or two plastic particles, but we found a lot.” [..] One of the very few studies into microplastics in food examined backyard chickens in Mexico. The researchers found 57 particles per gramme in the gizzards of the chickens. “Chicken gizzard is a specialty in the Mexican kitchen and the intake of the present plastics form a strong risk for human health,” the scientists said.

Debt Rattle April 27 2018

Apr 272018

April 27, 2018 Posted by Raúl Ilargi Meijer at 7:57 am Finance Tagged with: Amazon, BoJ, Brexit, DMZ, electricity, Facebook, Greece, Kim, middle class, moon, neonicotinoids, Turkey 13 Responses »

Edward Curtis Red Hawk 1905

• Moon and Kim’s Unprompted DMZ Dance (AFP)

• Sophisticated North Korean Diplomacy Rewards Kim Jong-un (Pieraccini)

• China Open To Trade Negotiations With United States – Li (R.)

• BOJ Maintains Stimulus While Removing Language on Timing of 2% (BBG)

• What’s The Most Important Chart For Investors? (MW)

• A New Type Of Poverty Is Hurting The Middle Class (SMH)

• Amazon Cloud Revenue Jumps 49% In First Quarter (CNBC)

• Facebook Profits Soar 63% Despite Cambridge Analytica (Ind.)

• EU Doesn’t Need The City Of London, Says Chief Brexit Negotiator (G.)

• Turkey Crackdown Suffocates Society, Creates Climate Of Fear (Amnesty)

• Greece’s Economic Crisis Is Over Only If You Don’t Live There (WaPo)

• Greece: Economic Health In Grim State (EN)

• Solar And Wind Really Do Increase Electricity Prices (F.)

• EU Member States To Vote On Near-Total Neonicotinoids Ban (BBC)

Kim needs money.

• Moon and Kim’s Unprompted DMZ Dance (AFP)

It was a historic handshake that Koreans had waited more than a decade to see — and it sparked a completely unscripted dance with the two leaders hopping back and forth over the border that divides their nations. Everything about the inter-Korean summit had been minutely choreographed and rehearsed but the North’s Kim Jong Un went off-script when he invited his southern counterpart Moon Jae-in to join him over the border. After a prolonged clasp lasting almost half a minute over the Military Demarcation Line that acts as the border, a beaming Moon invited his guest over to South Korea. They posed for pictures as Kim became the first Northern leader to set foot in the country since Korean War hostilities ceased in 1953.

Kim then beckoned Moon over to the other side. Moon seemed initially hesitant but the North’s jovial young leader was not taking “no” for an answer, grabbing his hand and accompanying him across the border before they warmly shook hands again. Grinning broadly, the pair then crossed back to the South hand-in-hand, to be presented with flowers by children from a village in the buffer area next to the Demilitarized Zone. It all went to show that even for a moment as carefully planned as the first inter-Korean summit in more than a decade, where the North’s nuclear arsenal will be high on the agenda, the best-laid preparations rarely run completely to schedule. South Korean officials had carried out a full dress rehearsal on the eve of the summit, including stand-ins for the two leaders. “We examined every single detail including lighting and flower decorations,” a Moon spokesman said.

You put your left foot in: Kim Jong Un and Moon Jae-in were engaged in a metaphorical and literal diplomatic dance on Friday when they met at the frontier (AFP Photo/Korea Summit Press Pool)

Sanctions bite too. And “United States with its back against the wall” is perhaps not the right picture.

• Sophisticated North Korean Diplomacy Rewards Kim Jong-un (Pieraccini)

[..] what appears to be emerging is very similar to a strategy cleverly developed by the North Korean leadership over a number of years. As Pyongyang needed to bring the United States to the negotiating table, while at the same time guaranteeing its survival, it pursued its nuclear-weapons program. Since Washington seems to have understood that a military solution is not practicable, especially given the pressure brought to bear by its allies all too cognizant of a nuclear-armed DPRK, Pyongyang is now willing to display its good will, deciding to surprise the world by embarking on negotiations, with the renunciation of its nuclear weapons as a major bargaining chip.

Under these conditions, Pyongyang is willing to cooperate, and South Korea welcomes the initiative with open arms, accelerating the meeting between the two leaders and paving the way for peace on the peninsula. The People’s Republic of China applauds the diplomatic efforts and encourages South Korea, and later America, in these diplomatic efforts. Seoul, Beijing and Pyongyang have every interest in reaching an all-encompassing deal, with or without Washington. The diplomatic ability of this trio has managed to leave the United States with its back against the wall, first of all obliging it to sit down at the negotiating table (something already revolutionary for reasons explained above), and then requiring it to ease sanctions considerably.

Otherwise, North Korea would be seen as the party that is willing to achieve peace, while Washington is left isolated and looking like the warmonger. North Korea finds itself in a win-win situation. If sanctions are eased and peace talks are managed in the right manner, then the process of socio-economic rebirth, which Kim Jong-un considers a priority, can begin. Should the rhetoric of war prevail in Washington, then Washington would find itself at odds with its main ally, Seoul. It is likely that China could even justifiably renounce its sanctions against the DPRK, blaming the US for not making any progress in the face of extraordinary offers by Kim Jong-un to renounce his nuclear weapons.

Win win.

• China Open To Trade Negotiations With United States – Li (R.)

China is open to negotiating with the United States to resolve trade tensions, Premier Li Keqiang was quoted as saying by state media late on Thursday, noting that the countries should manage their conflicts through dialogue. Li made the remarks at a meeting with U.S. Secretary of Transportation Elaine Chao, state broadcaster China Central Television (CCTV) said. U.S. Treasury Secretary Steven Mnuchin is due to lead a delegation to China for talks intended to ease trade tensions. President Donald Trump has threatened a new round of tariffs on $100 billion worth of Chinese products that could target mobile phones, computers and other consumer goods. China retaliated against an initial round of U.S. tariffs on $50 billion in Chinese exports.

“There is no winner in trade conflict, which will not only affect the recovery of the world economy but also the global industrial chain,” Li said in comments reported by the official Xinhua news agency. “It is also what the international community expects from our two countries,” he said. Larry Kudlow, Trump’s top economic adviser, who will join Mnuchin’s delegation in Beijing, said on Thursday he hoped the talks with China would yield progress but that resolving U.S. complaints would be “a long process.” Xinhua cited Li as saying he hoped the two countries would be able to “manage and control” their differences. Li added China would “unswervingly open further to the outside world”, reiterating President Xi Jinping’s assurances over about the country opening more widely to trade.

Abenomics was all about inflation targeting. Silently forgotten.

• BOJ Maintains Stimulus While Removing Language on Timing of 2% (BBG)

The Bank of Japan left its stimulus program unchanged on Friday, while removing language from its statement declaring that it would reach 2% inflation around fiscal 2019. The decision to maintain the yield-curve control program and asset purchases was forecast by all analysts surveyed by Bloomberg. As he enters his sixth year at the helm, Governor Haruhiko Kuroda has the BOJ pushing forward with stimulus even as other major central banks move further toward policy normalization, if at a more moderate pace. Though it removed the language on reaching its 2% target, indicating that more time may be needed, the BOJ left its inflation forecasts largely unchanged. It still forecasts core inflation, which excludes fresh food prices, to reach 1.8% in fiscal 2019.

Still, seven of nine board members said risks to that forecast were weighted to the downside. “The momentum for achieving the inflation target as early as possible is fading,” said Masamichi Adachi, senior economist at JPMorgan Chase. “I take the change as a positive because you can say that their communication is becoming realistic.” Kuroda is expected to reiterate his intention to carry on with the stimulus during his news conference later on Friday. Doing so would likely provide a tailwind for the yen to continue falling, as rising U.S. bond yields widens the gap between returns in the U.S. and Japan.

Pick your favorite.

• What’s The Most Important Chart For Investors? (MW)

Wolf Richter, the man behind the Wolf Street blog, had no trouble zeroing in on the theme for his pick for “chart of the century”: U.S. debt. He did have trouble choosing whether the chart should show ballooning student loans, or ballooning government debt. Either way, ballooning’s the key, as he predicts both narratives will continue to raise alarms. When push came to shove, he opted for the government debt chart.

[..] Spending and debt are also the theme of the chart selected by Lance Roberts, chief strategist for Clarity Financial. But his chart focuses on the consumer side of that picture. Visualized here is the widening gap between cost of living, and the income and credit Americans have at their disposal. Up until the late 1980s, disposable income, savings and debt funded the standard cost of living. Since then, however, this chart shows that hasn’t been the case — and the national personal savings rate has dropped from above 10% in the 1970s to below 4% today.

[..] While we’re on the topic of the dollar and rising rates, Tadas Viskanta of the Abnormal Returns blog says this chart tells “the most important story of the century”. “Central banks engineered 0% or in some cases negative yields on cash for the better part of the decade,” Tadas said. “We’re only now coming out of it. Investors may once again begin to think of cash as a viable investment option.”

From Australia, but applicable anywhere. You’re not poor yet? Give us a minute.

• A New Type Of Poverty Is Hurting The Middle Class (SMH)

The banking and finance royal commission has cast light on a new type of poverty to emerge in our society: middle class poverty. To understand it, we have to go back to an earlier government inquiry: the 1972 Commission of Inquiry into Poverty, conducted by Professor Ronald Henderson [which] gave prominence to the Henderson Poverty Index: a measure of consumption described by Henderson as so austere that it was unchallengeable. Updated versions of this index remain a standard benchmark of poverty. But more than 45 years on, the royal commission into finance is revealing that poverty is no longer just about low income.

The commission has heard that Australian banks have adopted actual lending practices (as distinct from their official lending policies) that claim so much household income for contract payments that borrowers are left without enough money to fund basic consumption levels: they are living in poverty. This isn’t an accident: it is a strategic policy by banks. How much do banks think households need for daily living? According to the Australian Prudential Regulation Authority’s submission to the royal commission, banks “typically use the Household Expenditure Measure [a relative poverty measure] or the Henderson Poverty Index in loan calculators to estimate a borrower’s living expenses”. So measures designed to capture the impacts of low incomes are now targeting financially-enmeshed middle-income households, and not as a statement of social shame, but as strategic objects of bank policy.

This has caused embarrassment to APRA, the regulator charged with overseeing those bank practices. In response, it was permitted to make a supplementary submission to the royal commission in March. A consequence of APRA neglect is that “poverty” now goes significantly up the income scale, well into what we generally call the middle class. Middle income people are the cohort in greatest financial risk. They are highly leveraged: they spend more of their income on loan repayments than do people with higher incomes. Second, their assets are undiversified: they own labour market skills, some home equity and some superannuation. Third, these assets are illiquid (not easily sold): you can’t transfer your skills to another, houses are costly to sell and superannuation is generally inaccessible..

The cloud is not a safe environment.

• Amazon Cloud Revenue Jumps 49% In First Quarter (CNBC)

Amazon’s cloud business exceeded analyst estimates, with revenue climbing 49% in the first quarter. Amazon Web Services reported sales on Thursday of $5.44 billion, compared to the $5.26 billion average estimate of analysts surveyed by FactSet. AWS contributed about 11% of Amazon’s total revenue for the period, up from 8.5% in the prior quarter. AWS continues to be a big revenue driver and even larger profit engine for its parent company, which dominates the low-margin e-commerce market.

In cloud-computing infrastructure, Amazon has a substantial market share lead over Microsoft Azure, Google’s Cloud platform and IBM, as well as other players like Alibaba and Oracle. While AWS has maintained growth above 40%, Microsoft and Google are currently expanding much faster and picking up share. In the first quarter Microsoft’s Azure cloud grew 93%. AWS produced $1.4 billion in operating income in the first quarter. That accounted for 73% of Amazon’s $1.93 billion in operating income.

How much of that comes from selling data?

• Facebook Profits Soar 63% Despite Cambridge Analytica (Ind.)

Facebook profits soared 63% to $5bn (£3.6bn) in the first three months of the year despite the company being engulfed in a data privacy scandal that has angered millions of users. Allegations that up to 87 million Facebook users’ data was collected without their knowledge and then used by Cambridge Analytica to try to sway the US Presidential election and the Brexit vote, did little to slow the tech company’s rapid growth. Total revenues jumped 49% compared to the same three months last year, Facebook reported on Wednesday. Facebook has been scrambling to mollify angry politicians and reassure users that it will safeguard their personal information.

Amid the turmoil, observers were keenly watching the company’s user figures to assess the potential damage and see if the scandal would suppress Facebook’s growth. Despite high-profile social media campaigns calling users to boycott Facebook, user numbers kept in line with expectations. Those results again demonstrated the company’s ability to thrive amid controversy. It continued to grow over the last year despite a steady drumbeat of revelations that Russian-linked actors used the platform to try and fracture the electorate and promote Mr Trump ahead of the 2016 presidential election.

But the CIty still has lots of political power.

• EU Doesn’t Need The City Of London, Says Chief Brexit Negotiator (G.)

The EU does not need the City of London, and Theresa May’s “pleading” for a special deal for the UK’s financial services sector will not be rewarded, the EU’s chief negotiator, Michel Barnier, has said. In his toughest rebuff yet to the demands made by the British prime ministerin her landmark Mansion House speech, Barnier suggested the City would be granted nothing more generous than that enjoyed by Wall Street. “Some argue that the EU desperately needs the City of London, and that access to financing for EU27 business would be hampered – and economic growth undermined – without giving UK operators the same market access as today,” Barnier said at a meeting of finance ministers in Sofia, Bulgaria. “This is not what we hear from market participants, and it is not the analysis that we have made ourselves.”

May had argued in March, in a keynote speech spelling out her vision of a future UK-EU trading relationship, that failing to construct a special deal for the City would hurt economies on both sides. The City provided more than £1.1tn of cross-border lending to the rest of the EU in 2015 alone. May conceded in her speech that the current “passporting” regime, under which UK-based financial services would automatically have the right to operate across the EU, would not survive Brexit. However, she went on to suggest that a mutually agreed system would be necessary that would give the UK’s financial services sector greater assurances over future rules than the current “equivalence regime”.

Our ‘leaders’ look the other way, they have other priorities.

• Turkey Crackdown Suffocates Society, Creates Climate Of Fear (Amnesty)

The report reveals how few areas of Turkey’s once vibrant independent civil society have been left untouched by the ongoing state of emergency. A nationwide crackdown has resulted in mass arrests and dismissals, thehollowing out of the legal system and the silencing of human rights defenders through threats, harassment and imprisonment. “Whilst the jailing of journalists and activists may have hit the headlines, the profound impact that Turkey’s crackdown has had on wider society is harder to quantify but it is no less real,” said Amnesty International’s Europe Director, Gauri van Gulik. “Under the cloak of the state of emergency, Turkish authorities have deliberately and methodically set about dismantling civil society, locking up human rights defenders, shutting down organisations and creating a suffocating climate of fear.”

The state of emergency, declared in July 2016 as a temporary exceptional measure in the wake of the failed coup attempt, was renewed for a seventh time last week. Under its imposition, the rights to freedom of expression to liberty and security and to fair trials have been decimated. In so doing, the last line of defence for any healthy society – namely the work of human rights defenders – has been breached. Blanket bans on public gatherings in cities across Turkey have curtailed the right to assembly and association. Meanwhile more than 100,000 people have faced criminal investigations and at least 50,000 people have been imprisoned pending trial. More than 107,000 public sector employees have been summarily dismissed.

Many of the country’s most prominent journalists and human rights defenders, including Taner Kılıç, honorary chair of Amnesty International Turkey, have been jailed on baseless “terrorism” charges. But their arrests are merely the tip of the iceberg. Anti-terrorism laws and trumped-up coup related charges are used to target and silence peaceful, legitimate dissent. Prominent journalists, academics, human rights defenders and other civil society actors are subjected to arbitrary detention, prosecutions and, if found guilty in unfair trials, face long sentences.

Greek recovery narrative is an insult.

• Greece’s Economic Crisis Is Over Only If You Don’t Live There (WaPo)

Greece’s economic crisis is over only if you don’t live there. Everyone else, in other words, might have moved on because Greece isn’t threatening to knock over the other dominoes that are known as the global economy anymore, but its people are still stuck in what is the worst collapse a rich country has ever gone through. Indeed, if the International Monetary Fund’s latest projections are correct, it might be at least another 10 years before Greece is back to where it was in 2007. And that’s only if there isn’t another recession between now and then. Two lost decades, then, are something of a best-case scenario for Greece. The numbers are staggering. It’s not just that Greece’s economy shrank 26% in per capita terms between the middle of 2007 and the start of 2014.

That, as you can see below, might have put it on par with some of the biggest calamities in economic history — it was a little better than the United States had done in the 1930s, but a little worse than Argentina had done in the 2000s — but it didn’t distinguish it among them. No, it’s that Greece has grown only a total of 2.8% — again, adjusted for its population — in the first four years of what is supposedly a recovery. To give you an idea how miserable that is, 1930s America grew 30.2% and 2000s Argentina grew 26.9% during the first four years of theirs. The result is that, by this point of their recoveries, the United States was nearly all the way back to where it had been before its crash, and Argentina was actually 17.1% richer than it had been. Greece, meanwhile, is still 23.5% poorer than it was.

The IMF somewhat optimistically thinks that Greece will still be 12.8% poorer than it was in 2007 in 2023, which would put it on pace to get back to its pre-recession peak sometime around 2030 or so. They have made a desert, and called it a recovery.

“..33% of Greeks now work for less than 380 euros a month. Gross, before tax…”

• Greece: Economic Health In Grim State (EN)

In an extended interview in Lisbon, Greece’s former finance minister Yanis Varoufakis has given a very grim assessment of his country’s economic health. It came after European Commission President Jean-Claude Juncker said on Thursday, whilst on a visit to Athens, that Greece will become what he termed a “normal” country by the end of the summer. “Everyday is worse than the previous day. All talk of recovery, and of Greece having turned the corner, is to add insult on the injuries of the Greek people,” Varoufakis said. “We have a constant reduction in pensions, in wages. Do you know that 33% of Greeks now work for less than 380 euros a month? Gross, before tax.

“Already the government has committed, even legislated, to introduce pension cuts in January 2019, to introduce a further increase in taxation of the poorest families, after January 2019. They have comitted to escalate exponentially the evictions of poor families from their homes, repossessions. So, of course there will be no changes after the summer of 2018.” In 2016 Varoufakis formed the DiEM25, a pan-European left-wing party which is now asssembling a list of candidates for next’s year’s EU parliamentary elections.

The only thing that counts is the energy that isn’t used.

• Solar And Wind Really Do Increase Electricity Prices (F.)

In my last column I discussed an apparent paradox: why, if solar panels and wind turbines are so cheap, do they appear to be making electricity so expensive? One big reason seems to be their inherently unreliable nature, which requires expensive additions to the electrical grid in the form of natural gas plants, hydro-electric dams, batteries, or some other form of stand-by power. Several readers kindly pointed out that I had failed to mention a huge cost of adding renewables: new transmission lines. Transmission is much more expensive for solar and wind than other plants. This is true around the world — for physical reasons. Think of it this way. It would take 18 of California’s Ivanpah solar farms to produce the same amount of electricity that comes from our Diablo Canyon nuclear plant.

And where just one set of transmission lines are required to bring power from Diablo Canyon, 18 separate transmission lineswould be required to bring power from solar farms like Ivanpha. Moreover, these transmission lines are in most cases longer. That’s because our solar farms are far away in the desert, where it is sunny and land is cheap. By contrast, Diablo Canyon and San Onofre nuclear plants are on the coast right near where most Californians live. (The same is true for wind.) New transmission lines can make electricity cheaper, but not when they are used only part of the time and duplicate rather than replace current equipment. Other readers pointed to cases that appear to challenge the claim that increased solar and wind deployments increase electricity prices.

[..] What is most remarkable about U.S. states heavy in solar and wind is that electricity prices rose so much given the huge decline in natural gas prices. Had natural gas prices not plummeted at what was almost the exact same time as the beginning of the large-scale build-out of solar and wind in the United States, price increases in solar and wind heavy states would have been far larger. Around the world, from Germany and Denmark to Spain and South Australia, even modest penetrations of solar and wind, compared to what advocates claim we will need to decarbonize, lead to large price increases.

It’s a step alright. But it’s far from total.

• EU Member States To Vote On Near-Total Neonicotinoids Ban (BBC)

Member states will vote on Friday on an almost complete ban on the use of neonicotinoid insecticides across the EU. Scientific studies have linked their use to the decline of honeybees, wild bees and other pollinators. The move would represent a major extension of existing restrictions, in place since 2013. Manufacturers and some farming groups are opposed, saying the science remains uncertain. Neonicotinoids are the most widely used class of insecticides in the world, but concerns about their impact on bees have been reinforced by multiple research efforts, including so-called “real world” trial results published last year. Back in 2013 the European Union opted for a partial ban on the use of the three chemicals in this class: Imidacloprid, clothianidin and thiamethoxam.

The restrictions applied to crops including maize, wheat, barley, oats and oil seed rape. The new Commission proposal would go much further, meaning that almost all outdoor uses of the chemicals would be banned. The action has been driven by a recent report from the European Food Safety Authority (Efsa), which found that neonicotinoids posed a threat to many species of bees, no matter where or how they are used in the outdoor environment. Another key element that has pushed the Commission to hold a vote has been the UK’s change of heart on the use of these insecticides. Environment Secretary Michael Gove announced last November that the UK would now support further restrictions. “I think it has helped the dynamic,” Franziska Achterberg from Greenpeace told BBC News.

“It has helped sway Ireland definitely, and then lately, the Germans, the Austrians and the Dutch. I think the fact the UK had come around was a good signal for them as well, that they could not stay behind.” During the partial ban, some countries including the UK were given permission to use neonicotinoids for short periods. However, the EU Commission is now signalling that it is seemingly intent on pushing the proposal through as it stands. “Several countries have said they want exemptions on sugar beet for example,” said Sandra Bell from Friends of the Earth (FOE). “So far the Commission have been very strong on this, because they say the Efsa evidence backs the extension of the ban to sugar beet and therefore they are following the science and won’t put in an exemption for a compromise.”

Growers will be free to use neonicotinoids in greenhouses across the EU, despite some environmental groups having reservations about the chemicals leaching into water supplies. Other neonicotinoids including thiacloprid and sulfoxaflor will continue to be exempt from the ban.

Debt Rattle April 25 2018

Apr 252018

April 25, 2018 Posted by Raúl Ilargi Meijer at 8:27 am Finance Tagged with: Airbnb, Amazon, arctic, Greece, homeless, inflation, plastics, refugees, stagflation, subsidy, trade war 4 Responses »

Amedeo Modigliani Nu allongé 1917

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

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

• Markets Better Prepare for Stagflation (DDMB)

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

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

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

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

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

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

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

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

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

• Greek Government Defies Court on Asylum Seekers (HRW)

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

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

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

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

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

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

Recovery.

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

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

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

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

• Markets Better Prepare for Stagflation (DDMB)

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

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

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

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

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

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

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

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

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

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

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

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

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

Governments are starting to tackle Airbnb.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Failed state.

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

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

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

And another failed state.

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

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

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

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

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

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

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

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

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

• Greek Government Defies Court on Asylum Seekers (HRW)

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

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

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

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

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

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

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

Debt Rattle April 20 2018

Apr 202018

April 20, 2018 Posted by Raúl Ilargi Meijer at 8:32 am Finance Tagged with: Amazon, Brexit, bubble, Comey, cow, elephant, Erdogan, Marx, Palantir, sorghum, surveillance, Tesla, Trump 12 Responses »

Daniel Garber The quarry 1917

• The World’s First Total Bubble (MB)

• Now Even a Fed Dove Homes in on the “Everything Bubble” (WS)

• Recession Risks Are Increasing – Axel Weber (CNBC)

• The Faster Tesla Makes Model 3’s, The More Money They Will Lose (SM)

• Marx Predicted Our Present Crisis – And Points The Way Out (Varoufakis)

• Market Power Wielded By US Tech Giants Concerns IMF Chief (G.)

• Bill Gates Backs Plan to Surveil the Entire Planet From Space (Gizmodo)

• Palantir Knows Everything About You (BW)

• Comey Memos Already Leaked To AP (ZH)

• US Sorghum Armada U-Turns At Sea After China Tariffs (R.)

• EU to Reject UK Brexit Plan for the Irish Border (BBG)

• Turkey Snap Election All About Power And A ‘Deteriorating’ Economy (CNBC)

• Brazil Prosecutor Recommends Denying Total Oil License Near Amazon (AFP)

• Cow Could Soon Be Largest Land Mammal Left Due To Human Activity (R.)

Australians think they won.

• The World’s First Total Bubble (MB)

The regulators, yes, they’ll have to be reformed. But it doesn’t stop there. They were just the elite enablers. The corruption at the heart of the great Australian property bubble seeped into our entire economy and culture. It oozed under every door, entered every home and visited every BBQ. It bent every business. It ruined our media and distorted our politics. It infected our entire place in the world, disenfranchised from the Australian dream entire generations. It has choked our cities. And sold out the national interest to Chinese speculators, threatening our very freedom. There has never been a more comprehensive bubble in any nation. We have been engulfed by it. The world’s first total bubble.

Yet at its heart was not a miracle but prosaic bank corruption. Only the failure to assess expenditures and incomes, the failure to report accurately and honestly, the failure to advise with integrity and responsbility made any of it possible. Everything else flows outward from this black singularity. Your wealth. Your lifestyle. Your retirement plan. The roof over your head not being over someone else’s. All of it stems from the core corruption of a banking system that disgorged massive sub-prime mortgages across our firmament. I really have no idea what attempted snow job we will see next. But it is over. It is now only a matter of time before the Australian housing supernova collapses towards the banking black hole at its centre, sucked back into the void from whence it came. We’re all the royal commission now.

Brainard. Warning about what the Fed itself has built.

• Now Even a Fed Dove Homes in on the “Everything Bubble” (WS)

“If we have learned anything from the past, it is that we must be especially vigilant about the health of our financial system in good times, when potential vulnerabilities may be building,” explained Federal Reserve Board Governor Lael Brainard in a speech in Washington, D.C., this morning. This was a reference to a time-honored banker adage, now mostly forgotten after nearly nine years of easy money: Bad deals are made in good times. Brainard fills one of the seven slots on the Board of Governors. Two slots are filled by Chairman Jerome Powell and by Randal Quarles. Four slots remain vacant, waiting for Trump appointees to wend their way. She is a strong “dove” in the world of central banks, and she just pointed at why the Fed is tightening – and will continue to tighten: the Everything Bubble.

After rattling off a litany of indicators showing why and how the economy’s “cyclical conditions have been strengthening,” she added this gem, there being nothing like Fed-speak to make your day: “Currently, inflation appears to be well-anchored to the upside around our 2 percent target.” “Well-anchored to the upside” of the Fed’s target – and then she moved on to the “signs of financial imbalances.” “Financial imbalances,” in Fed speak, are asset bubbles, a phenomenon when prices are out of whack with economic reality. In a credit-based economy, assets are collateral for debt. And inflated asset prices put the financial system, meaning the lenders, at risk when those asset prices deflate. Since the Fed has to take care of the financial system, and since it blew up so wonderfully last time due to asset bubbles deflating, the Fed is right to be worried about it. At first the hawks, the rare ones; and now even the doves

“Risks will begin materializing in 3 years ‘at the latest..'”

• Recession Risks Are Increasing – Axel Weber (CNBC)

The world economy is set for one of its best years since the global financial crisis, with both developed and emerging countries growing while inflation is still subdued and monetary conditions remain largely accommodative. But such a good run could end in the next two to three years, according to UBS Chairman Axel Weber. “We’re at the end of a long recovery and, two to three years from now, at the latest, some of the risks could materialize. The recession risks are increasing,” Weber told CNBC’s Joumanna Bercetche this week at the Spring Meetings of the IMF and the World Bank. The IMF this week kept its forecast for 2018’s global growth at 3.9 percent which, if it materializes, would be the fastest expansion since 2011.

But the agency warned that global debt levels have hit a record, and governments should start reducing their indebtedness and build buffers for “challenges that will unavoidably come in the future.” Financial institutions should also brace for such risks, said Weber, adding that he thinks banks have become better prepared compared to before the last crisis. Like many in the industry, Weber said he doesn’t think a full-fledged trade war will happen as a result of the ongoing dispute between the U.S. and China. But, he added that it’s time to reassess Beijing’s role in the World Trade Organization, especially given projections that China will one day become the world’s largest economy. Weber added that companies from around the world should be allowed to do business in China more freely.

“..a “they will take over the world” and a “they will save the world” combination of hopes..”

• The Faster Tesla Makes Model 3’s, The More Money They Will Lose (SM)

A few weeks ago, we shared a note about Tesla from the hedge fund Vilas Capital Management. The firm, which is short the shares, said “Tesla is going to crash in the next 3-6 months.” I received an update from Vilas this morning explaining why they’re even more bearish on Tesla today. The firm pared its short positions after the recent selloff. And Telsa now comprises about 98% of their short book. Clearly Vilas thinks Tesla’s reckoning is imminent. You can read the rest of Vilas’ thoughts on Tesla below:

We added meaningfully to our Tesla position in the first quarter at prices in the $340 range. We continue to believe that Tesla is extremely overvalued and that it will experience significant financial difficulties over time. All companies in a capitalistic system need to earn profits and those profits need to be attractive relative to the amount of shareholder capital employed. Tesla has never earned an annual profit. Along with digital currencies and Unicorns, Tesla appears to be caught up in a gold-rush-fever type of emotional response, both from a “they will take over the world” and a “they will save the world” combination of hopes, instead of their owners looking at the numbers.

Tesla bulls will argue that their production will rise to 5000 Model 3’s per week soon and, therefore, the stock will trade meaningfully higher. Given that the company lost $20,000 per Model S and X sold for roughly $100,000 each last year, due to the fact that it cost more to build, sell, service, charge and maintain these cars than they collected in revenue, as it is important to include all costs when evaluating a business, we predict it will impossible for Tesla to make a profit on a $35,000 to $50,000 car. As anyone with automotive experience knows, profit margins are far higher on bigger, more expensive cars. Therefore, the faster Tesla makes Model 3’s, the more money they will lose.

Das Kapital.

• Marx Predicted Our Present Crisis – And Points The Way Out (Varoufakis)

To see beyond the horizon is any manifesto’s ambition. But to succeed as Marx and Engels did in accurately describing an era that would arrive a century-and-a-half in the future, as well as to analyse the contradictions and choices we face today, is truly astounding. In the late 1840s, capitalism was foundering, local, fragmented and timid. And yet Marx and Engels took one long look at it and foresaw our globalised, financialised, iron-clad, all-singing-all-dancing capitalism. This was the creature that came into being after 1991, at the very same moment the establishment was proclaiming the death of Marxism and the end of history.

Of course, the predictive failure of The Communist Manifesto has long been exaggerated. I remember how even leftwing economists in the early 1970s challenged the pivotal manifesto prediction that capital would “nestle everywhere, settle everywhere, establish connexions everywhere”. Drawing upon the sad reality of what were then called third world countries, they argued that capital had lost its fizz well before expanding beyond its “metropolis” in Europe, America and Japan.

Empirically they were correct: European, US and Japanese multinational corporations operating in the “peripheries” of Africa, Asia and Latin America were confining themselves to the role of colonial resource extractors and failing to spread capitalism there. Instead of imbuing these countries with capitalist development (drawing “all, even the most barbarian, nations into civilisation”), they argued that foreign capital was reproducing the development of underdevelopment in the third world. It was as if the manifesto had placed too much faith in capital’s ability to spread into every nook and cranny. Most economists, including those sympathetic to Marx, doubted the manifesto’s prediction that “exploitation of the world-market” would give “a cosmopolitan character to production and consumption in every country”.

As it turned out, the manifesto was right, albeit belatedly. It would take the collapse of the Soviet Union and the insertion of two billion Chinese and Indian workers into the capitalist labour market for its prediction to be vindicated. Indeed, for capital to globalise fully, the regimes that pledged allegiance to the manifesto had first to be torn asunder. Has history ever procured a more delicious irony?

Yeah, sure.

• Market Power Wielded By US Tech Giants Concerns IMF Chief (G.)

The head of the International Monetary Fund, Christine Lagarde, has expressed concern about the market power wielded by the US technology giants and called for more competition to protect economies and individuals. Speaking at a press conference to mark the start of the IMF’s spring meeting in Washington, Lagarde said breaking up companies was not the solution, but added that her organisation was monitoring their impact on prosperity, financial stability and the workplace. “Competition is needed. From competition you get productivity growth and innovation. Too much concentration, too much market power in the hands of the few is not helpful to the economy or to the wellbeing of individuals.”

Pressure has been building in the US for antitrust laws to be used to break up some of the biggest companies, with Google, Facebook and Amazon all targeted by critics. Lagarde said: “I am not sure breaking up some of the tech titans in this country [the US] or in other countries will be the right answer. It used to be the right answer, but when most of the assets are intangible, how do you break them up? How do you facilitate access and allow market disruptors to operate? I think that is where a lot of new thinking has to be done.”

The IMF is carefully monitoring new digital currencies such as Bitcoin, which it says are prone to fraud and can be used for money laundering. “We have seen a flourishing of cryptocurrencies. There are now more than 100. That has stability implications eventually. We do not think it is systemic at this point in time but regulators and supervisors have to be watchful.” Lagarde expressed concern at the growing threat of a trade war between the US and China, saying that protectionism posed a threat to the upswing in the global economy and to an international system that had served countries well.

Facebook is peanuts.

• Bill Gates Backs Plan to Surveil the Entire Planet From Space (Gizmodo)

EarthNow is a new company looking to provide satellite imagery and live video in virtually real-time. Its unsettling pitch describes a network of satellites that can see any corner of the globe and provide live video with a latency of about a second. And a look at the startup’s top investors gives a lot of confidence that this thing is happening. On Wednesday, EarthNow announced that it will emerge from the Intellectual Ventures ISF Incubator to become a full-scale commercial business. Its first round of investors is comprised of a small group of complimentary powerhouses: AirBus, the SoftBank Group, Bill Gates, and satellite-industry vet Greg Wyler.

The amount of the initial investment hasn’t been disclosed, but the announcement says the funding “focuses primarily on maturing the overall system design to deliver innovative and unique real-time Earth observation services.” That makes it sound like the company is in its very early stages, but don’t be so sure. Wyler’s OneWeb has already deployed highly advanced satellites with a blazing fast 130ms latency and its goal is to have a constellation of hundreds of satellites beaming broadband around the globe by 2020.

EarthNow will use an upgraded version of OneWeb’s technology with a lot of hardware power packed into a 500-pound unit. “Each satellite is equipped with an unprecedented amount of onboard processing power, including more CPU cores than all other commercial satellites combined,” the announcement says. The satellites will also do an onboard analysis of the live imagery using machine learning, but the company doesn’t go into detail about what it will analyze or why it would be necessary to dedicate that processing onboard.

“Wall Street meets Apocalypse Now,..”

• Palantir Knows Everything About You (BW)

High above the Hudson River in downtown Jersey City, a former U.S. Secret Service agent named Peter Cavicchia III ran special ops for JPMorgan Chase & Co. His insider threat group—most large financial institutions have one—used computer algorithms to monitor the bank’s employees, ostensibly to protect against perfidious traders and other miscreants. Aided by as many as 120 “forward-deployed engineers” from the data mining company Palantir, which JPMorgan engaged in 2009, Cavicchia’s group vacuumed up emails and browser histories, GPS locations from company-issued smartphones, printer and download activity, and transcripts of digitally recorded phone conversations.

Palantir’s software aggregated, searched, sorted, and analyzed these records, surfacing keywords and patterns of behavior that Cavicchia’s team had flagged for potential abuse of corporate assets. Palantir’s algorithm, for example, alerted the insider threat team when an employee started badging into work later than usual, a sign of potential disgruntlement. That would trigger further scrutiny and possibly physical surveillance after hours by bank security personnel. Over time, however, Cavicchia himself went rogue. Former JPMorgan colleagues describe the environment as Wall Street meets Apocalypse Now, with Cavicchia as Colonel Kurtz, ensconced upriver in his office suite eight floors above the rest of the bank’s security team.

People in the department were shocked that no one from the bank or Palantir set any real limits. They darkly joked that Cavicchia was listening to their calls, reading their emails, watching them come and go. Some planted fake information in their communications to see if Cavicchia would mention it at meetings, which he did. It all ended when the bank’s senior executives learned that they, too, were being watched, and what began as a promising marriage of masters of big data and global finance descended into a spying scandal. The misadventure, which has never been reported, also marked an ominous turn for Palantir, one of the most richly valued startups in Silicon Valley. An intelligence platform designed for the global War on Terror was weaponized against ordinary Americans at home.

It took less than an hour.

• Comey Memos Already Leaked To AP (ZH)

Update 3: President Trump is up late tonight, we suspect reading through former FBI Director Comey’s leaked memos as he exclaims: “James Comey Memos just out and show clearly that there was NO COLLUSION and NO OBSTRUCTION.” Trump is also quick to remind Americans of one of the reasons he fired him: “Also, he leaked classified information,” and ended with a jab at the endless farce: “WOW! Will the Witch Hunt continue?”

Update 2: Less than an hour after Comey’s memos were released by DOJ to Congress, the 15 pages have miraculously “become available” to The Associated Press. Given that no source is provided, we assume they were leaked with the intent to embarrass President Trump. Comey’s memos detail private dinner conversations with the President in January 2017, during which Trump asked him to pledge his loyalty. Another conversation about former White House national security adviser Michael Flynn is also detailed in the memos. In a memo dated Jan. 28, 2017, Comey recounted a dinner he had with Trump at the White House shortly after the president’s inauguration.

Trump asked Comey who he thought he should be in contact with in the administration, and Comey mentioned the national security adviser. The president said Flynn had “serious judgment issues,” Comey wrote in his memo. Trump then explained to Comey that when the president had complimented British Prime Minister Theresa May on being the first to congratulate him on his election, Flynn interjected that another leader had called first. That was the first time Trump learned of the other leader’s call, Comey wrote.

Why is US farmland used to provide Chinese animal feed? Isn’t that perhaps what’s wrong with global trade?

• US Sorghum Armada U-Turns At Sea After China Tariffs (R.)

Several ships carrying cargoes of sorghum from the United States to China have changed course since Beijing slapped hefty anti-dumping deposits on U.S. imports of the grain, trade sources and a Reuters analysis of export and shipping data showed. Sorghum is a niche animal feed and a tiny slice of the billions of dollars in exports at stake in the trade dispute between the world’s two largest economies, which threatens to disrupt the flow of everything from steel to electronics. The supply-chain pain felt by sorghum suppliers on the Pacific, Atlantic and Indian oceans underscores how quickly the mounting trade tensions between the U.S. and China can impact the global agricultural sector, which has been reeling from low commodity prices amid a global grains glut.

Twenty ships carrying over 1.2 million tonnes of U.S. sorghum are on the water, according to export inspections data from the USDA’s Federal Grain Inspection Service. Of the armada, valued at more than $216 million, at least five changed course within hours of China’s announcing tariffs on U.S. sorghum imports on Tuesday, Reuters shipping data showed. The five shipments, all headed for China when they were loaded at Texas Gulf Coast export terminals owned by grain merchants Cargill or Archer Daniels Midland would be liable for a hefty deposit to be paid on their value, which could make the loads unprofitable to deliver. Beijing, which is probing U.S. imports for damage to its domestic industry, announced Tuesday that grains handlers would have to put up a deposit of 178.6% of the value of the shipments.

Thie red lines are far apart. Hard to see how they will resolve this.

• EU to Reject UK Brexit Plan for the Irish Border (BBG)

European Union officials are set to reject a potential U.K. solution to the crucial issue of what happens to the Irish border after Brexit, deepening the stalemate in negotiations. While the U.K. hasn’t made a formal proposal, it has indicated that the bloc’s “backstop” solution for maintaining an invisible border should apply to the whole of the U.K., according to three people familiar with the EU position. It would mean the whole U.K. stays in parts of the single market and customs union as a last resort to avoid a border on the island of Ireland. But the European Commission opposes it and only wants to offer that special status to Northern Ireland, according to the people, who declined to be named.

Finding a way to avoid customs checks on the border between Northern Ireland and Ireland after Brexit is proving the biggest obstacle for U.K. and EU negotiators trying to get a deal on Britain’s divorce from the bloc. While both sides agree that withdrawal treaty must include a “backstop” on Ireland in case a better option doesn’t emerge from the final trade deal, they can’t agree on what it should look like. As talks fail to yield solutions, pressure is mounting on Prime Minister Theresa May at home to backtrack on one her main Brexit pledges and keep the U.K. in the EU’s customs union after Brexit.

That would go a long way to solve the Irish border issue and would also please businesses that are keen on keeping cross-border trade easy. The Commission’s proposal would effectively cut Northern Ireland off from mainland Britain and May has said no British prime minister could accept that. In December, the two sides agreed on a backstop that would have applied to the whole of the U.K., rather than just Northern Ireland. The U.K. stands by that agreement, which also pledged that “no regulatory barriers develop between Northern Ireland and the rest of the United Kingdom.”

Remember: Jim Rickards predicted Turkish default recently. Erdogan may see it too.

• Turkey Snap Election All About Power And A ‘Deteriorating’ Economy (CNBC)

Turkey’s president surprised markets Wednesday by announcing that he would hold snap presidential and parliamentary elections in June with experts saying the move is a sign of both panic and genius. Recep Tayyip Erdogan said elections will be held on June 24, far earlier than previously expected, saying uncertainty over Turkey’s neighbor Syria, and macroeconomic imbalances, were a reason not to delay the vote originally scheduled for November 2019. He also said the country urgently needed to make the switch to an executive presidency, implementing changes to the Turkish constitution which give the president more power.

Fadi Hakura, Turkey analyst at Chatham House, told CNBC Thursday that the move was a sign of panic amid a deteriorating economy. “Erdogan’s calling of the election is a sign of panic and despair. Erdogan has previously viewed early elections as weakness and dishonorable to democracy, but now he’s panicking over the state of the Turkish economy,” Hakura said. “The very fact he’s called brought them forward by almost a year and a half should mitigate the fallout of a worsening economy on his popularity,” he said. [..] If Erdogan wins the election, as widely expected, he will be able to consolidate power following changes to the constitution which have changed Turkey from a parliamentary to a presidential republic, concentrating power in the hands of the president.

It will not be plain sailing for the president, however, with Turkey’s economy dealing with high inflation (at 10.2 percent) fueled by fiscal and monetary policies that have promoted rampant growth — the economy expanding 7.3 percent in the fourth quarter of 2017, according to the last reading available. The Turkish lira has been on a rollercoaster ride in recent months, reflecting wider fears on the prioritization of growth over inflation control, but the announcement of a snap election — and the likelihood that Erdogan will win – has calmed the currency somewhat.

WIth Brazil as corrupt as it is, how long will this hold?

• Brazil Prosecutor Recommends Denying Total Oil License Near Amazon (AFP)

A Brazilian prosecutor warned of “ecocide” in recommending against a drilling license for French oil major Total close to a huge coral reef near the mouth of the Amazon River. The prosecutor’s office for Amapa state said “the only way to guarantee avoiding environmental damage to the area is to deny the license.” “Authorizing oil drilling activity without adequate studies violates the international obligations that Brazil has signed,” the prosecutor’s office said late Wednesday, warning of “large-scale environmental destruction that would amount to ecocide and a crime against humanity.”

The recommendation was sent to the government environmental agency Ibama, which has 10 days to respond. On Tuesday, environmental campaigners Greenpeace said that a previously discovered coral reef had been found to extend right into where Total plans to drill. The enormous reef was found in 2016, but is only now said to overlap directly with Total’s blocks, 75 miles (120 km) off the Brazilian coast, the group said. The finding, made during a research expedition, invalidates Total’s environmental impact assessment, which is based on the reefs being located at least five miles (eight kilometers) from drilling, Greenpeace said.

People say it won’t be that bad, because elephants do well in protected parks. But isn’t that the problem? That the best we can do is build big zoos?

• Cow Could Soon Be Largest Land Mammal Left Due To Human Activity (R.)

The cow could be left as the biggest land mammal on Earth in a few centuries, according to a new study that examines the extinction of large mammals as humans spread around the world. The spread of hominims – early humans and related species such as Neanderthals – from Africa thousands of years ago coincided with the extinction of megafauna such as the mammoth, the sabre-toothed tiger and the glyptodon, an armadillo-like creature the size of a car. “There is a very clear pattern of size-biased extinction that follows the migration of hominims out of Africa,” the study’s lead author, Felisa Smith, of the University of New Mexico, said of the study published in the journal Science on Thursday..

Humans apparently targeted big species for meat, while smaller creatures such as rodents escaped, according the report, which examined trends over 125,000 years. In North America, for instance, the mean body mass of land-based mammals has shrunk to 7.6kg (17lb) from 98kg after humans arrived. If the trend continues “the largest mammal on Earth in a few hundred years may well be a domestic cow at about 900kg”, the researchers wrote. That would mean the loss of elephants, giraffes and hippos. In March, the world’s last male northern white rhino died in Kenya. [..] Smith said “my optimist hat would like to say that it’s not going to happen because we love elephants”. But she said populations of large land mammals were falling and “declining population is the trajectory to extinction”.

The Big Tech Backlash of 2018

Apr 052018

April 5, 2018 Posted by Raúl Ilargi Meijer at 12:11 pm Finance Tagged with: Airbnb, Alphabet, Amazon, Apple, Bayer, DuPont, Facebook, Google, Monsanto, Orwell, Pentagon, Syngenta, Tesla, Uber 2 Responses »

Herbert Ponting Scott’s Terra Nova Expedition, Antarctica 1911

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

Bernie Sanders Agrees With Trump: Amazon Has Too Much Power

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

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

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

The Donald’s Blind Squirrel Nails An Acorn

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

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

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

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

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

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

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

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

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

Silicon Valley Rivals Take Shots At Facebook

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Debt Rattle April 3 2018

Apr 032018

April 3, 2018 Posted by Raúl Ilargi Meijer at 9:30 am Finance Tagged with: Amazon, Antarctic, cashlessness, China, confiscations, debt, dolphins, Erdogan, psychographics, Puigdemont, Sanders, stocks, Trump 7 Responses »

Vincent van Gogh Field with Irises near Arles 1888

• Stocks’ Second-Quarter Start Is the Worst Since the Great Depression (BBG)

• Stocks Lose Critical Buyer at Worst Time (BBG)

• Rising Rates Sounding Alarm Bells for Debt-Laden US Consumers (BBG)

• China’s State-Owned Banks Told To Stop Local Government Loans (SCMP)

• Chinese Families Are Racking Up Debt On An Unprecedented Scale (SCMP)

• Young Lose Out In Britain’s Housing Wealth Boom (Times)

• Swedes Turn Against Cashlessness (G.)

• Bernie Sanders Agrees With Trump: Amazon Has Too Much Power (NW)

• German Prosecutors Ask Court To Extradite Carles Puigdemont To Spain (G.)

• The Peril of Psychographics (New Yorker)

• Erdogan ‘Has Gone Completely Crazy’ – Greek Defense Minister (K.)

• Greek Confiscations Target State Debtors With Small Arrears (K.)

• ‘Sentinel’ Dolphins Die in Brazil Bay. Some Worry a Way of Life Has, Too (NYT)

• Underwater Melting Of Antarctic Ice Far Greater Than Thought (G.)

How’s that for a headline?

• Stocks’ Second-Quarter Start Is the Worst Since the Great Depression (BBG)

If you feel like the second quarter began badly, you’d be right. U.S. stocks had their worst April start since 1929, according to data compiled by Bloomberg. The S&P 500 index slumped 2.2%, a rout exceeded only by its 2.5% decline 89 years ago, a prelude to the devastating crash later that year that brought on the Great Depression. (Back then, the index only comprised 90 stocks.) China’s retaliatory trade tariffs combined with President Donald Trump’s criticism of Amazon.com Inc. to send equities into a tailspin Monday.

Shares in the online retailer tumbled, encouraging a sell-off in consumer discretionary and technology stocks. The S&P 500 closed below its 200-day moving average – a key technical support – and volatility climbed. The stock slide also looked pretty bad when compared to the beginning of other quarters. Equities lost more than on any other quarterly first day since October 2011, when stocks plummeted 2.8%, Bloomberg data show.

Is there a buyback blackout? Or, better question: should stocks depend on buybacks to such an extent?

• Stocks Lose Critical Buyer at Worst Time (BBG)

The stock market’s missing a key participant as the second quarter kicks off with a rout. Corporate America is stuck on the sidelines as the S&P 500 Index plunges to its lowest level since early February. That’s to comply with regulations under which companies refrain from discretionary stock buybacks for about five weeks before reporting earnings through the 48 hours that follow. So, with first-quarter reporting season kicking into high gear in two weeks, companies must sit on their hands while the market fizzles. The timing of discretionary buybacks has gained traction in recent years with corporate appetite dwarfing all other investors as the biggest source of demand for U.S. stocks. Strategists such as Goldman Sachs’s David Kostin have pointed out that it’s no coincidence the late-January selloff occurred during a blackout period.

S&P 500 firms have bought back almost $4 trillion of their own shares since the bull market began nine years ago, data compiled by S&P Dow Jones Indices show. That demand helped mitigate damage in early February when stocks tumbled into the first correction in two years. Goldman Sachs’ buyback desk had its busiest week ever during the rout and companies were called “basically the only buyers.” Volume in S&P 500 stocks was about 7% above the 30-day average Monday. Not everyone agrees that the buyback blackout is partly to blame for Monday’s selloff. According to Marko Kolanovic, JPMorgan’s global head of quantitative and derivative strategy, the majority of buybacks are usually done through preset programs that are not subject to blackout.

Moreover, stocks typically go up more when repurchases are announced than when the transactions actually occur. “The whole story about blackout is misconception,” Kolanovic wrote in an email. So, what could be behind the selloff? Kolanovic’s team last week attributed the recent downturn to an “irrational response” to global trade tensions. The S&P 500 is trading at below-average valuations even as earnings growth is picking up, a sign that any weakness would be worth buying, the strategists wrote in a March 27 note.

“..an estimated $350 trillion of contracts are based on Libor..”

• Rising Rates Sounding Alarm Bells for Debt-Laden US Consumers (BBG)

A healthy economy can be a dangerous thing. Americans have a history of loading up on debt in good times, then paying dearly when the bills come due. Adding to the pain: A booming economy is often accompanied by rising interest rates, which make mortgages, credit cards and other debt much more expensive. As the U.S. Federal Reserve raises rates, there are signs that consumers could be putting themselves in peril. “When consumers are confident, or over-confident, is when they get into credit-card trouble,” said Todd Christensen at Debt Reduction Services in Boise, Idaho. The nonprofit credit counseling service has seen a noticeable uptick in people looking for help with their debt, he said.

Spending on U.S. general purpose credit cards surged 9.4% last year, to $3.5 trillion, according to industry newsletter Nilson Report. Card delinquencies are also rising. U.S. household debt climbed in the fourth quarter at the fastest pace since 2007, according to the Federal Reserve. “There are warning signs out there,” said Kevin Morrison, senior analyst at the Aite Group. Especially concerning is a surge in student and auto loans over the past decade, he said. Meanwhile, the Federal Reserve is steadily hiking rates, most recently on March 21 when the federal funds rate rose a quarter point to a target range of 1.5% to 1.75%.

Libor, a benchmark rate the world’s biggest banks charge each other, is also on the rise. The 3-month Libor reached 2.3% last week, the highest since November 2008. That could be a problem for companies, especially those with lower credit ratings, looking to refinance debt. Overall, an estimated $350 trillion of contracts are based on Libor, according to its administrator, ICE.

So the shadow banks can take over?

• China’s State-Owned Banks Told To Stop Local Government Loans (SCMP)

The central Chinese government has sent a blunt message intended to dissolve the marriage between banks and local governments, the nexus in China’s debt-fuelled growth model. In a directive full of “must nots”and “shalls” posted on its website last week, China’s Ministry of Finance, under the newly appointed minister Liu Kun, told state-owned financial institutions not to provide any funding to local governments, with the exception of buying government bonds. At the first meeting of the Central Economic and Financial Commission, the supreme economic decision making body headed by Xi Jinping on Monday, the Chinese president said local governments and state-owned enterprises must cut debt further.

China’s state-owned banks were told to check the registered capital of projects sponsored by local authorities, to appraise borrowers’ real repayment capabilities and not to accept local government’s guarantees for repayment or return, according to the ministry’s directive. Banks “must not provide any form of funding directly to local governmental departments or directly via local state-owned enterprises and institutions” and “must not increase new loans to local government financing vehicles irregularly”, according to the notice. It added that banks must not lend any money to local governments to be used as capital in projects, government investment funds or public-private partnership projects, it added.

Yin Zhongqing, deputy director of the financial and economic affairs committee at the National People’s Congress, told the South China Morning Post last month that at least 20 trillion yuan of “hidden debt” had been accumulated in the past three years. The national institution of finance and development under the Chinese Academy of Social Sciences last week estimated the total liabilities of local government financing vehicles was 30 trillion yuan, while another 10 trillion yuan of debt could be buried in public-private partnerships.

“A man with a 50,000 yuan debt is responsible; 200,000 yuan of debt is financially savvy; 1 million yuan of debt is a homeowner; 10 million yuan of debt is classy; and a 1 billion yuan debt is chairman of a listed company … if you don’t have any debt, you must be a total loser.”

• Chinese Families Are Racking Up Debt On An Unprecedented Scale (SCMP)

Chinese families with their long tradition of saving money are now accumulating debt at a rate never been seen before, according to data compiled by a state-backed think tank in Beijing. But the National Institution for Finance and Development also said mounting debt was not a concern because Chinese households still had far more savings than debts. The country’s household leverage ratio – or the ratio between debt incurred by families and GDP – surged to 49% at the end of last year from 17.9% at the end of 2008, going up about 3.5 percentage points annually, the think tank said in a report released on Thursday.

So in the period from 1993, when the data became available, to 2008, the household debt ratio went from 8.3% to 17.9%, with an annual rise of 0.65 percentage points. But in 2016 and 2017, that annual increase accelerated to about 4.9 percentage points, the think tank said. The rapid accumulation of household debt was the biggest factor behind the rise in China’s overall leverage last year, as the corporate sector’s debt ratio fell and local government borrowing was reined in, at least on the surface, it said.

Liu Lei, a researcher with the think tank, said at a briefing on Thursday that real household debt could be “8 percentage points” higher if special housing funds, peer-to-peer lending programmes and private micro loans were factored in. In August, Shanghai-based brokerage Haitong Securities said in a report that while China’s actual household debt ratio was not high compared to many developed countries such as the US and UK, its rate of increase was dangerous. “It took 40 years for the household debt ratio in the US to rise from a level of 20% to about 50%, but it took only less than 10 years in China,” according to the Haitong economists led by Jiang Chao.

[..] China’s excessive money printing in the last decade and skyrocketing property prices have benefited those who maximised their leverage to buy real estate, while the country’s savers bore the brunt of monetary easing, leading to a dramatic shift in attitude on saving versus borrowing. That change in attitude can be seen in a popular saying widely circulated on Chinese social media in recent years: “A man with a 50,000 yuan debt is responsible; 200,000 yuan of debt is financially savvy; 1 million yuan of debt is a homeowner; 10 million yuan of debt is classy; and a 1 billion yuan debt is chairman of a listed company … if you don’t have any debt, you must be a total loser.”

There’s so much wrong here, where to begin? Get out while you can.

• Young Lose Out In Britain’s Housing Wealth Boom (Times)

Three quarters of housing wealth in Britain is held by the over-50s, according to research revealing the generational divide in the property market. Such homeowners hold £2.8 trillion of equity. The over-65s own 43 per cent of housing wealth, £1.6 trillion, the study by the estate agent Savills found. Lawrence Bowles, a research analyst at the company, said: “The extent to which wealth is concentrated in older hands is something we have not seen in a long time.” Owners have piled up equity by living longer, paying off their mortgages and watching as prices grew steadily in the final decades of the last century. “It is looking likely that we will see more people downsizing in order to free up that equity,” Mr Bowles said.

At the other end of the spectrum, homeowners under 35 hold just £221 billion of equity but owe £223 billion in mortgage debt. This age group holds £6 of equity in every £100 compared with £75 held by their parents. First-time buyers face prices that are 5.2 times higher than average incomes, while in London prices are about 14 times higher than average earnings. In most regions, it takes about eight years for the typical first-time buyer to save a deposit. This rises to nine years in the southeast and to nearly ten in London, where the average 20 per cent deposit is now above £80,000.

“If Putin invades…”

• Swedes Turn Against Cashlessness (G.)

It is hard to argue that you cannot trust the government when the government isn’t really all that bad. This is the problem facing the small but growing number of Swedes anxious about their country’s rush to embrace a cash-free society. Most consumers already say they manage without cash altogether, while shops and cafes increasingly refuse to accept notes and coins because of the costs and risk involved. Until recently, however, it has been hard for critics to find a hearing. “The Swedish government is a rather nice one, we have been lucky enough to have mostly nice ones for the past 100 years,” says Christian Engström, a former MEP for the Pirate Party and an early opponent of the cashless economy.

“In other countries there is much more awareness that you cannot trust the government all the time. In Sweden it is hard to get people mobilised.” There are signs this might be changing. In February, the head of Sweden’s central bank warned that Sweden could soon face a situation where all payments were controlled by private sector banks. The Riksbank governor, Stefan Ingves, called for new legislation to secure public control over the payments system, arguing that being able to make and receive payments is a “collective good” like defence, the courts, or public statistics. “Most citizens would feel uncomfortable to surrender these social functions to private companies,” he said. “It should be obvious that Sweden’s preparedness would be weakened if, in a serious crisis or war, we had not decided in advance how households and companies would pay for fuel, supplies and other necessities.”

The central bank governor’s remarks are helping to bring other concerns about a cash-free society into the mainstream, says Björn Eriksson, 72, a former national police commissioner and the leader of a group called the Cash Rebellion, or Kontantupproret. Until now, Kontantupproret has been dismissed as the voice of the elderly and the technologically backward, Eriksson says. “When you have a fully digital system you have no weapon to defend yourself if someone turns it off,” he says. “If Putin invades Gotland [Sweden’s largest island] it will be enough for him to turn off the payments system. No other country would even think about taking these sorts of risks, they would demand some sort of analogue system.”

In this sense, Sweden is far from its famous concept of lagom – “just the right amount” – but instead is “100% extreme”, Eriksson says, by investing so much faith in the banks. “This is a political question. We are leaving these decisions to four major banks who form a monopoly in Sweden.”

A few days ago Elizabeth Warren agreed with Trump on China, now Sanders agrees about Amazon. What’s happening to the world?

• Bernie Sanders Agrees With Trump: Amazon Has Too Much Power (NW)

Independent Vermont senator and 2016 presidential hopeful Bernie Sanders echoed President Donald Trump in expressing concern about retail giant Amazon. Sanders said that he felt Amazon had gotten too big on CNN’s “State of the Union” Sunday, and added that Amazon’s place in society should be examined. “And I think this is, look, this is an issue that has got to be looked at. What we are seeing all over this country is the decline in retail. We’re seeing this incredibly large company getting involved in almost every area of commerce. And I think it is important to take a look at the power and influence that Amazon has,” said Sanders. The senator’s comments came on the heels of a number of tweets from Trump, who has long criticized the online retailer.

WIll Europe start chasing elected politicians?

• German Prosecutors Ask Court To Extradite Carles Puigdemont To Spain (G.)

German prosecutors have asked a court to permit the extradition of former Catalan separatist leader Carles Puigdemont to Spain. Prosecutors in the northern town of Schleswig said on Tuesday they have submitted a request to the regional court following “intensive examination” of the European arrest warrant issued by Spain. Puigdemont has been detained in Germany since 25 March. Spain accuses the 55-year-old of rebellion in organising an unauthorised referendum. The Schleswig court is likely to take several days to decide whether to extradite Puigdemont. His lawyers have urged the German government to intervene in the case, citing the “political dimension.”

Just stop collecting the data. Problem solved.

• The Peril of Psychographics (New Yorker)

In September, 2016, Alexander Nix, the C.E.O. of Cambridge Analytica, the data and messaging company that was working at the time with Donald Trump’s supposedly flagging Presidential campaign, explained his firm’s work like this: “If you know the personality of the people you’re targeting, you can nuance your messaging to resonate more effectively with those key audience groups.” The fancy term for this is psychographic targeting. A few weeks later, Trump won the Presidency, against all odds and predictions, sending political operatives and journalists scrambling for explanations. “There was a huge demand internally for people to see how we did it,” Brittany Kaiser, Cambridge Analytica’s former business-development director, told the Guardian last Friday. “Everyone wanted to know: past clients, future clients.”

Whether Cambridge Analytica’s targeting work actually swayed the outcome of the election has been a subject of debate since then—because the firm’s record is spotty, psychographic targeting in political campaigns is a relatively new concept, and it has not yet been definitely shown that C.A. successfully used these methods on behalf of Trump’s campaign. Christopher Wylie, the former C.A. employee who recently came forward to detail how the company improperly acquired personal data from fifty million Facebook users, has said that the company used that data to create a “psychological warfare mindfuck tool.”

But Aleksandr Kogan, the Cambridge University researcher who provided the company with the Facebook data, has described it as “not that accurate at the individual level.” Kogan’s conclusion tracks with research that has been done by the U.K.-based Online Privacy Foundation, whose research director, Chris Sumner, recently told me that psychographics are much more accurate for groups rather than individual people.

The US and France are turning their backs on Turkey. Feel emboldened by that?

• Erdogan ‘Has Gone Completely Crazy’ – Greek Defense Minister (K.)

Raising the incendiary rhetoric another notch, Defense Minister Panos Kammenos lashed out against Recep Tayyip Erdogan Monday, saying that the Turkish president “has gone completely crazy.” Speaking to journalists outside the Parliament in Athens about the fate of the two Greek soldiers held in Turkey and Ankara’s provocations in the Aegean, Kammenos said there are no lines of communication with Erdogan. “We’re talking about Erdogan, who goes out and publicly insults the US and [Israeli Prime Minister Benjamin] Netanyahu,” he said, adding that “Turkey has no courts while its justice system works under the orders of the sultan [Erdogan].”

The two soldiers, he said, could, under these circumstances, be held there for 15 years. “You cannot answer to a madman,” he said, referring to the Turkish leader. The two soldiers have been held for a month in Turkey without any charges being brought against them yet. Kammenos, who is also the leader of the right-wing junior coalition partner, Independent Greeks (ANEL), said Turkish authorities have so far found nothing to prosecute the two soldiers but warned of a worst-case scenario reminiscent of the film “Midnight Express,” based on the travails of an American who served time in a Turkish prison in the 1970s.

“If you watch ‘Midnight Express,’ you will see that they kept on making up charges against him,” he said, adding that “nothing works democratically there [Turkey].” He also expressed concern that an incident could occur in the Aegean. “They may want to provoke this but you must know that the Turkish military is in a dire state at this moment,” he said, adding that, for its part, Greece “is ready.” He clarified that Greece will not take the bait but noted that if Turkey violates Greek national sovereignty, then “we will respond as we should.”

On the poorest in Greece: “..the state conducted 1.72 million confiscations of salaries, pensions and rent payments last year..”

See, the poor owe €1.2 billion. 40,000 rich individuals and companies owe €90 billion.

• Greek Confiscations Target State Debtors With Small Arrears (K.)

Over 3.3 million taxpayers owe the tax authorities amounts of less than 3,000 euros each. According to figures published by the Independent Authority for Public Revenue, the state conducted 1.72 million confiscations of salaries, pensions and rent payments last year, mostly concerning small debtors. Debtors owing up to 3,000 euros account for 80.5% of all debtors, and they owe 1.2 billion euros. These debts were run up in recent years and mainly stem from failure to pay income tax and the Single Property Tax (ENFIA), whereas bigger debts to the tax authorities concern 40,000 individuals and companies and add up to 90 billion euros, originating from fines and activated guarantees. It is quite impressive that the number of state debtors has increased by some 3 million in the years of the financial crisis, climbing from 1 million in 2010 to 4.1 million today.

“Nostalgia aside..” Nostalgia? What? Nostalgic for life? When everything’s dead, we go and be nostalgic?

• ‘Sentinel’ Dolphins Die in Brazil Bay. Some Worry a Way of Life Has, Too (NYT)

Something ominous was happening in the turquoise waters of Sepetiba Bay, a booming port outside Rio de Janeiro. Beginning late last year, fishermen were coming across the scarred and emaciated carcasses of dolphins, sometimes five a day, bobbing up to the surface. Since then, scientists there have discovered more than 200 dead Guiana dolphins, or Sotalia guianensis, a quarter of what was the world’s largest concentration of the species. The deaths, caused by respiratory and nervous system failures linked to a virus, have subsided, but scientists are working to unravel the mystery behind them. How, they ask, did a virus that might ordinarily have claimed a handful of dolphins end up killing scores of them?

And does part of the answer, scientists and local residents ask, lie in the bay itself, at once a testament to Brazil’s economic power and a portent of environmental risk. The dolphins are “sentinels,” said Mariana Alonso, a biologist at the Biophysics Institute at the Federal University of Rio de Janeiro, one of a number groups working to understand the epidemic. “When something is wrong with them, that indicates the whole ecosystem is fractured.” [..] Sepetiba Bay, 40 miles west of downtown Rio, became one of the principal gateways for Brazilian exports over the past generation. In 2017, 39 million tons of iron ore and other commodities shipped from there.

The wooden fishing boats that crisscross the bay now weave around massive merchant ships loaded with iron and steel. Though people still swim in its waters, four ports and a constellation of chemical, steel and manufacturing plants have risen on its shores. One of world’s most prominent iron ore producers, Vale, occupies a new terminal in an old fishing spot on nearby Guaiba Island. “When I was a child, buffalo roamed the farms around my village, and we had apples and coconuts,” said Cleyton Ferreira Figueiredo, 28, a convenience store cashier who, nostalgia aside, also sees advantages in the development. “Now everything is more urban, with schools and facilities. There are more jobs, and it takes me 15 minutes to get home when I finish.”

A little scary.

• Underwater Melting Of Antarctic Ice Far Greater Than Thought (G.)

Hidden underwater melt-off in the Antarctic is doubling every 20 years and could soon overtake Greenland to become the biggest source of sea-level rise, according to the first complete underwater map of the world’s largest body of ice. Warming waters have caused the base of ice near the ocean floor around the south pole to shrink by 1,463 square kilometres – an area the size of Greater London – between 2010 and 2016, according to . The research by the at the University of Leeds suggests climate change is affecting the Antarctic more than previously believed and is likely to prompt global projections of sea-level rise to be revised upward.

Until recently, the Antarctic was seen as relatively stable. Viewed from above, the extent of land and sea ice in the far south has not changed as dramatically as in the far north. But the new study found even a small increase in temperature has been enough to cause a loss of five metres every year from the bottom edge of the ice sheet, some of which is more than 2km underwater. “What’s happening is that Antarctica is being melted away at its base. We can’t see it, because it’s happening below the sea surface,” said Professor Andrew Shepherd, one of the authors of the paper. “The changes mean that very soon the sea-level contribution from Antarctica could outstrip that from Greenland.”

The study measures the Antarctic’s “grounding line” – the bottommost edge of the ice sheet across 16,000km of coastline. This is done by using elevation data from the European Space Agency’s CryoSat-2 and applying Archimedes’s principle of buoyancy, which relates the thickness of floating ice to the height of its surface.

Debt Rattle Easter Sunday 2018

Apr 012018

April 1, 2018 Posted by Raúl Ilargi Meijer at 9:32 am Finance Tagged with: AI, Amazon, ATM, Building Societies, Macron, mortgages, poachers, rhinos, Trump, Varoufakis, VIX, Warren 4 Responses »

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

• US Homes Become ATMs Again (MW)

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

• Fear is Back (MW)

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

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

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

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

• Emmanuel Macron On France’s AI Strategy (Wired)

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

• More Poachers Than Rhinos Killed In India Reserve (BBC)

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

• US Homes Become ATMs Again (MW)

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

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

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

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

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

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

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

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

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

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

Fear is needed.

• Fear is Back (MW)

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

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

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

Rhyme and repeat.

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

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

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

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

This is going to cost Amazon.

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

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

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

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

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

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

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

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

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

A poisonous political climate.

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

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

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

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

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

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

• Emmanuel Macron On France’s AI Strategy (Wired)

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

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

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

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

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

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

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

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

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

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

• More Poachers Than Rhinos Killed In India Reserve (BBC)

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

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

Debt Rattle March 29 2018

Mar 292018

March 29, 2018 Posted by Raúl Ilargi Meijer at 9:33 am Finance Tagged with: Amazon, approval, Assange, Bolton, crisis, dollar, FAANG, household debt, porn, Stormy, Tesla, Trump, Turkey Comments Off

Paul Gauguin The wave 1888

• Trump Approval At 11-Month High – Will The Dollar Follow? (ZH)

• Amazon Loses $53 Billion in Market Value, Becoming FAANG’s Biggest Loser (BBG)

• Fed Mistakes Could Spark ‘Unusually Fast’ Bear Market (MW)

• Tesla Bonds Are in Free Fall (BBG)

• The New Warlord in the White House (Jacobin)

• Skripals Poisoned From Front Door Of Salisbury Home, Police Say (G.)

• May Considers Banning City Of London From Selling Russian Debt (G.)

• Ecuador Cuts Off Julian Assange’s Internet Access At London Embassy (G.)

• The Debt We Don’t Talk About (Vague)

• The European Realistic Disobedience Front (WSJ)

• Concern On Greek Islands As Hundreds Of Refugees Reach Lesbos (K.)

• Greek President Vows Country Will Defend Itself Against Turkey (K.)

• Guardian Pulls Greek Crisis Porn Holiday Package (KTG)

Stormy Daniels boosts Da Donald’s stats. What’s not to like?

• Trump Approval At 11-Month High – Will The Dollar Follow? (ZH)

The last few days have seen a rapid rush to the ‘safe-haven’ dollar, stalling a seemingly non-stop drop in the world’s reserve currency.

Which raises the question, is the correlation between President Trump’s approval rating and ‘king dollar’ about to reignite?

President Trump’s approval rating has been rising since the start of the year, and the results from the most recent presidential job approval survey by CNN shows that Donald Trump is now at an 11-month high. Although he still has majority disapproval, 42% of respondents are currently giving him a thumbs up – the highest rate recorded by CNN since March 2017 where the president was on 44%. So how, during a time of seemingly endless scandals trying to burst their way into the public sphere, is Trump seemingly on the up? [..] Despite being criticized from some corners for his protectionist approach, Trump following through on his America First campaign promises is seemingly helping to win some voters back around. In many ways, the road ahead is looking far from smooth for the president, but having come through scandal and controversy relatively unscathed in the past, who knows where this current wave will lead.

Just on rumors Trump doesn’t like them. Wait till he starts tweeting on the topic.

• Amazon Loses $53 Billion in Market Value, Becoming FAANG’s Biggest Loser (BBG)

Move over, Facebook. U.S. investors have a new punching bag among the FAANGs: Amazon.com, Inc. Facebook Inc. gave up the top loser spot to Amazon.com, which lost $53 billion in market value on Wednesday after Axios reported that President Donald Trump is “obsessed” with regulating the e-commerce behemoth. The social media giant had previously underperformed the tech megacap group amid concern over the company’s handling of its users’ personal information. The FAANG stocks, once assumed to be a monolith of performance, have suffered degrees of decoupling recently, including the outperformance by Netflix Inc. earlier in the year.

Amazon.com fell as much as 7.4% Wednesday before paring some losses to close 4.4% lower after a Stifel Nicolaus & Co. analyst said the weakness created a buying opportunity. Facebook diverged from the group in early trading, rallying 0.5% after announcing it’s redesigning a menu of privacy settings in response to public outrage over the user data practices. Netflix was the second-biggest loser in the FAANG group of stocks, sliding 5% on the heels of the #DeleteNetflix campaign. “Netflix and Amazon haven’t really experienced the intense selling that Facebook did,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. “The ‘flu’ that Facebook got is now spreading to the others.”

There’s only one real mistake here: the Fed itself.

• Fed Mistakes Could Spark ‘Unusually Fast’ Bear Market (MW)

Uncertainty over trade policy may be the primary driver of the U.S. stock market at the moment, but the real policy risk facing equities could be coming from the Federal Reserve, with the potential downside a lot more pronounced than investors are currently anticipating. Last week, Fed Chairman Jerome Powell said the economic outlook had strengthened, but he painted a mixed picture about what policy might look like going forward. The U.S. central bank raised interest rates but indicated it would only do a total of three rate hikes in 2018, which some saw as a dovish signal given that a number of investors had expected four this year. However, the Fed pushed up its expected rate path in 2019 and 2020.

Barry Bannister, head of institutional equity strategy at Stifel, said it was a concern that the Fed’s view for 2019 and 2020 had grown more hawkish, which raised the risk of the central bank making a policy mistake. “What matters for investors is that any decline is likely to be unusually rapid and occur as a result of P/E compression, resulting from policy risks not weak GDP,” he wrote in a research report. “Investors need a bit more acrophobia, as our best model points to a bear market and lost decade for stocks.” Bannister argued the new Fed, under Powell, “wishes to fade the ‘Fed put,’” or the idea that the central bank would step in to prop up falling equity prices. “The cost may be a 16% P/E drop,” he wrote, referring to price-to-earnings, a popular measure of equity valuation.

The Fed is expected to regularly raise rates over the coming years, and some investors think it may hasten its pace of increases to rates in the event that inflation returns to the market in a more pronounced fashion. “Maybe it is not that the Fed has actually made an error, perhaps it is fear the Fed may make an error,” Stifel wrote (emphasis in original). “The late-2010s echo the late-1990s as ‘bookends’ for global imbalances. Unlike the yield curve inversion in [the first half of the 2000s] in anticipation of 2% inflation that led to an S&P 500 peak, investors may simply worry that the same outcome is possible in this cycle, causing equities to decline.”

And now I can’t get that song out of my head anymore.

• Tesla Bonds Are in Free Fall (BBG)

Elon Musk’s creditors are suddenly having a serious bout of buyer’s remorse. In August, they lined up for the chance to finance Tesla’s ambitious rollout of its Model 3 sedan. Wooed by Musk’s personal appeals, bond investors pretty much ignored the carmaker’s prolific cash burn and repeated failures to meet production targets and lent it $1.8 billion at record-low interest rates. But now, after a spate of fresh setbacks in the past week, including a fatal Tesla crash and a credit-rating downgrade, bondholders are asking hard questions about whether Musk can deliver on his bold promise to bring electric cars to the masses before the company runs out of cash. On Wednesday, Tesla’s notes plunged to a low of 86 cents on the dollar, the clearest sign yet creditors aren’t totally sure the company will be money good.

“It’s getting worse and worse every single day” for Tesla, said Bill Zox at Diamond Hill Investment Group. “That’s the nature of being in this negative feedback loop. Everyone is worried.” The consequences are significant. Tesla’s woes have played out most visibly in the stock market, with its shares suffering a two-day, 15% drop that’s the biggest since 2016. But surging borrowing costs, which are now near 8%, could hamper the carmaker’s ability to finance itself at a critical time. The company, which has never shown an annual profit in the 15 years since it was founded, will need to raise over $2 billion to cover not only its cash burn this year, but also about $1.2 billion of debt that comes due by 2019, Moody’s Investors Service analyst Bruce Clark said in a report Tuesday.

One of a million pieces denouncing Bolton. Can’t we send Stormy Daniels to his hotel room?

• The New Warlord in the White House (Jacobin)

There is no daylight between the ethos of a thug with a lead pipe shaking down a pedestrian for money and John Bolton, except that one has a J.D. from Yale. Bolton is particularly dangerous because he combines devotion to the ruthless exercise of power for American interests with a glassy-eyed faith in the durability of that same power. Anyone even remotely in touch with reality will have viewed the past two decades as a profound lesson in the limits of American military might — a fact that, ironically, helped Trump come to power. Not Bolton. Despite the ever worsening failure of the war he so desperately wished for, he has been heedlessly slavering for ever more destruction, still entranced by schoolboy myths about American power that the Right long ago turned into a near-evangelical worldview.

Unless Trump grows tired of Bolton’s mustache in record time, the Korean peninsula or the Middle East is very likely headed for war. Yet despite what Bolton thinks — and despite the Democrats’ abdication of this responsibility under Obama — a president cannot declare war without congressional authorization. The question is whether Congress will finally reassert this role under Trump or simply line up behind him. The good news is that Democrats are poised to make significant gains in this year’s midterms, including possibly retaking the House. The bad news is that if they do, they will do so with one of the most conservative and militaristic batch of new Democrats in modern memory.

Whatever happens, Bolton’s dismaying rise to power couldn’t have happened without the Reagan and Bush presidencies that liberals and centrists are now so eager to rehabilitate. Nor could it have happened without the many news outlets that have provided him a platform and legitimized him as a serious foreign policy thinker, instead of the deluded fanatic that he is. Perhaps this will spur some soul-searching, but let’s take things one day at a time.

Yeah. No. This does it for me. They’re making it up one chapter at a time.

• Skripals Poisoned From Front Door Of Salisbury Home, Police Say (G.)

Detectives investigating the attempted murders of Russian double agent Sergei Skripal and his daughter Yulia Skripal have said they believe the pair were poisoned with a nerve agent at the front door of his Salisbury home. Specialists investigating the poisoning of the the Skripals have found the highest concentration of the nerve agent on the front door at the address, police said. Counter-terrorism detectives will continue to focus their inquiries on the home address for the coming weeks, and possibly months, after the father and daughter were found unconscious on a park bench in Salisbury earlier this month.

Local police have retaken control of The Maltings shopping centre, where the Skripals were first discovered, and London Road cemetery from counter-terrorism detectives, where officers focused their investigation into the nerve agent attack in previous weeks. More than 130 people could have been exposed to the chemical weapon in the aftermath of the poisoning in Salisbury, which the UK government believes was committed by the Russian state. In response to the poisoning, more than 150 Russian officials have been expelled from more than 25 countries, and the UK government is considering further measures to punish Russia, including a ban on the City of London from selling Russian sovereign debt.

Public health experts are still working to establish whether the nerve agent attack presents a long term risks to Salisbury’s residents, which will receive a £1m support package from central government to help recover. Deputy assistant commissioner Dean Haydon, the senior national coordinator for counterterrorism policing, said: “At this point in our investigation, we believe the Skripals first came into contact with the nerve agent from their front door. “We are therefore focusing much of our efforts in and around their address. Those living in the Skripals’ neighbourhood can expect to see officers carrying out searches as part of this but I want to reassure them that the risk remains low and our searches are precautionary.”

Translation: City tells May what to do.

• May Considers Banning City Of London From Selling Russian Debt (G.)

Theresa May has agreed to look into imposing a ban on the City of London from helping Russia to sell its sovereign debt, which prop ups the Russian economy. Last month, City clearing houses, working alongside a major sanctioned Russian bank, helped issue $4bn (£2.83bn) of eurobonds to finance Russian sovereign debt, of which nearly half was sold in London markets. Nearly half the debt was bought by London-based investors, predominantly institutional investors. A loophole in EU and UK legislation has allowed sanctioned Russian banks, primarily VTB bank, to act as the main organisers – known as book runners – for the issuance of Russian debt.

A public call for the loophole to be closed has been made three times in the past week by the foreign affairs select committee chairman, Tom Tugendhat. On each occasion ministers seemed to be unaware of the issue, but the foreign secretary, Boris Johnson, last week described the idea as interesting. Speaking to the liaison committee of MPs on Tuesday, the prime minister said she would report back on the policy options. The foreign affairs select committee is setting up an inquiry into how the UK financially props up Vladimir Putin’s allies, and the measures the UK has taken to clamp down on corrupt Russian money in London.

Tugendhat has been briefed by a British research fellow at the Harvard Society of Fellows, Emile Simpson, who has argued Russia’s greatest weakness is its dependence on western investors. He contends a policy blindness leads the west to sanction individuals, and sometimes sectors, but not to look at sanctioning the Russian state as a whole. He said: “At present, Russia can borrow in EU and US capital markets despite western sanctions and then can support the sanctioned Kremlin-linked banks and energy companies that can no longer do so”. Tugendhat has proposed that Russian bond sales are no longer made available to key western clearing houses such as Euroclear and Clearstream, making them effectively untradeable on the secondary market and so deterring the majority of EU and US investors from buying them.

Know why? Skripal.

• Ecuador Cuts Off Julian Assange’s Internet Access At London Embassy (G.)

Ecuador has cut Julian Assange’s communications with the outside world from its London embassy, where the founder of the whistleblowing WikiLeaks website has been living for nearly six years. The Ecuadorian government said in statement that it had acted because Assange had breached “a written commitment made to the government at the end of 2017 not to issue messages that might interfere with other states”. It said Assange’s recent behaviour on social media “put at risk the good relations [Ecuador] maintains with the United Kingdom, with the other states of the European Union, and with other nations”. The move came after Assange tweeted on Monday challenging Britain’s accusation that Russia was responsible for the nerve agent poisoning of a Russian former double agent and his daughter in the English city of Salisbury earlier this month.

The WikiLeaks founder also questioned the decision by the UK and more than 20 other countries to retaliate against the poisoning by expelling Russian diplomats deemed spies. Assange has lived in the embassy since June 2012 to avoid extradition to Sweden over allegations of sex crimes he denies. Sweden has dropped the case but Assange remains subject to arrest in the UK for jumping bail and fears he will be extradited to the US for questioning about WikiLeaks’ activities if he leaves the embassy building.

[..] Assange’s comments on the nerve agent attack on double agent Sergei Skripal and his daughter Yulia prompted the British foreign office minister Alan Duncan to call him a “miserable little worm” during a Commons debate on Tuesday. Duncan said he should leave the embassy and surrender to British justice. Assange replied: “Britain should come clean on whether it intends to extradite me to the United States for publishing the truth and cease its ongoing violation of the UN rulings in this matter. “If it does this disgraceful impasse can be resolved tomorrow. I have already fully served any theoretical (I haven’t been charged) ‘bail violation’ whilst in prison and under house arrest. So why is there a warrant for my arrest?”

The former Greek finance minister, Yanis Varoufakis, and the music producer Brian Eno said in a statement they had heard “with great concern” about Assange’s lost internet access. “Only extraordinary pressure from the US and the Spanish governments can explain why Ecuador’s authorities should have taken such appalling steps in isolating Julian,” they pair said, adding Assange had only recently been granted citizenship. “Clearly, Ecuador’s government has been subjected to bullying over its decision to grant Julian asylum, support and ultimately, diplomatic status.”

In the end, it’s simple.

• The Debt We Don’t Talk About (Vague)

How do you know a major financial crisis is coming? Look for a spike in privately held debt, by households and corporations. That’s the argument of Richard Vague, author of The Next Economic Disaster: Why It’s Coming and How to Avoid It. Having worked for more than 30 years in consumer banking, Vague describes how he saw the build-up of private debt in the mortgage and credit card industries first hand–even though it’s an issue that neoclassical economists like Milton Friedman barely acknowledge. To avoid another crisis, Vague says firms and governments need to take debt forgiveness–the biblical “jubilee”–seriously. As he says, after the financial crisis “We helped the banks, we didn’t help the households.”

We wish Yanis godspeed.

• The European Realistic Disobedience Front (WSJ)

Yanis Varoufakis is back to rescue Greece and rock the European establishment again. Or so he hopes. On Monday night the flamboyant former finance minister, who enraged European authorities at the height of Greece’s debt crisis in 2015, launched his new Greek political party at a theater here. That year, his country bowed to strict austerity demands. Now his solution to Greece’s sky-high debt is the same as his unsuccessful push before: to show creditors who’s boss. If elected, he told the gathering of around 300 people, he will run looser budgets. Greek banks will be revived with public money. He will swap Greece’s bonds for new ones whose payments depend on economic growth.

These and other policies to end Greece’s “debt colony status” will be implemented on day one, he said. And this time, unlike in 2015, he vowed there will be no negotiation with Europe, no surrender. His party is called the European Realistic Disobedience Front. His refrain is that Europe’s establishment is unrealistic, not him. “When they start sending orders, they will receive strong disobedience,” he said. “They will have to bear the cost of defenestrating us from the euro, or accept our policies,” he said to warm applause.

Here comes Merkel’s biggest nightmare. She deserves it. The refugees do not.

• Concern On Greek Islands As Hundreds Of Refugees Reach Lesbos (K.)

Authorities on the Aegean islands were on standby on Wednesday after nearly 300 migrants reached Lesvos on eight boats following several days without new arrivals from neighboring Turkey. Apart from the 295 people who landed on Lesvos, another 50 migrants arrived on Kos. Sources at the Citizens’ Protection Ministry expressed concern about the spike in arrivals, noting that no boats reached the islands on Monday, when Turkish President Recep Tayyip Erdogan was meeting with European Union leaders in Varna, Bulgaria, for talks that touched on an EU-Turkey migration pact signed in March 2016. The diplomatic stance struck by Erdogan in Varna was in sharp contrast to a string of threats and hostile language against Greece last week. Ministry sources said the next few days would indicate whether the increase in arrivals represents a new trend or not.

I’ve said it many times before: this risks getting terribly out of hand. He doesn’t mention Turkey by name of course.

• Greek President Vows Country Will Defend Itself Against Turkey (K.)

President Prokopis Pavlopoulos on Wednesday sought to send another firm message to Ankara amid increasingly hostile rhetoric from across the Aegean as a Greek military readiness exercise got under way in the southern Aegean. “Greece will strongly support its borders and those of Europe,” Pavlopoulos said during a visit to the Salamina naval base, repeating that “there are no gray zones” in the Aegean. Defending “international legitimacy… is not simply our right, it is also our duty to the international community,” he said. The president, who was accompanied by Defense Minister Panos Kammenos, once again called on Turkey to respect international laws and treaties, noting that the only issue of dispute between the two countries relates to the delineation of the continental shelf.

Pavlopoulos said he observed the “readiness of the country’s navy to defend our national sovereignty and borders, and consequently the borders of the European Union.” Kammenos had ordered the one-day exercise, code-named Pyrpolitis (Fire-raiser), to be carried out in the Aegean, northwest of Rhodes, following a long meeting with military officials on Tuesday night, during which the recent activity of Turkish armed forces in the region was discussed. The exercise involved a Hellenic Navy frigate, assault and transport helicopters and a Zubr military hovercraft carrying members of the special forces, and also saw the participation of Hellenic Air Force planes.

The aim of the exercise was to test the readiness of Greek armed forces in a crisis scenario, such as the need to recapture an islet. It was completed successfully at the end of the day without any signs of Turkish transgressions of Greek air space or territorial waters. However, Turkey’s National Security Council issued a stern message on Wednesday, toward Greece as well as the European Union and US, declaring that it will not give up its claims in the Aegean, the Eastern Mediterranean and northern Syria, where Turkish troops have occupied Afrin.

Well, that was fast… Did make a screenshot last night though.

Surprised? Neh… Some people are just so lost they will never be found.

• Guardian Pulls Greek Crisis Porn Holiday Package (KTG)

The Guardian has taken down its Greece crisis-porn holiday package “Greece and the Euro” after a shitstorm on social media. Not only Greeks but also foreigners, among them many from UK, slammed the daily for offering a vacation tour to the debt-ridden country under the perspective meet the suffering Greeks at £2,500 for 7 days. The tour package was taken down sometime late on Wednesday evening. In a statement to Greek media correspondent in London, Thanassis Gavos, the Guardian said: “The Guardian has been working with Political Tours to provide informative trips to Greece and other countries for people who wish to develop their understanding of the political and social landscapes in these places. On reflection we have now paused this project in order to reconsider our approach. All Political Tours/Guardian packages to Greece, Bosnia, Ukraine have been removed from site.”

In other words what the daily says is we will find other ways, less obviously insulting to exploit the suffering of people in areas of economic crisis and wars in the future. In the company of journalists, including the daily’s correspondent in Athens, the happy but crisis conscious traveler will swill wine and then go visit Greek families who will unfold their daily drama in front of people they have never seen before and who have paid to listen to them. It is unknown whether the Greek crisis victims will get a small commission for being live witnesses of an 8-year-old economic crisis. NGOs on the island of Samos and the port of Piraeus will explain every facet of the Refugee Crisis and drama.

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