Apr 142019
 


Edward Hopper The Sheridan Theatre 1937

 

Draghi Worries About Fate Of Fed’s Independence (MW)
The Most Splendid Housing Bubbles in Canada Deflate (WS)
UK Tories Face European Elections Drubbing (Ind.)
Corbyn Told To Promise Final Say Referendum (Ind.)
It’s The UK Political System, Not Just MPs, That Is Failing (G.)
UK Media, MPs Unveil Latest Assange Deception (Cook)
American Values: Embassies Are For Chopping Up Journalists (McDonald)
Assange Is In The Dock, But Investigative Journalism Is On Trial (Crikey)
The Obvious Dirty Dealings Behind Julian Assange’s Arrest (OG)
Anonymous Attacks Continue Against Ecuadorian Government Websites (Cassandra)

 

 

Independence from what? Reality?

Draghi Worries About Fate Of Fed’s Independence (MW)

Concerns about central-bank independence are on the rise.Take, for example, the cover of this week’s edition of the Economist. And while not solely a U.S. concern, a steady stream of complaints by President Donald Trump about the Federal Reserve’s earlier string of interest-rate hikes and his announcement he would nominate Stephen Moore and Herman Cain — both widely criticized as unqualified and likely to act at the behest of the White house on policy decisions — to the central bank’s governing board have sparked fears the central bank’s policy independence could be at risk. (Four Republican senators have said they would vote against Cain if he were formally put forward, likely sinking his chances.)

On Saturday, European Central Bank President Mario Draghi appeared to take notice: ‘I’m certainly worried about central bank independence in other countries, especially…in the most important jurisdiction in the world.’ Draghi’s remarks, as reported by Reuters, came at a news conference at the spring meetings of the IMF and World Bank in Washington. They also marked a rare instance of a central banker opining about the operations of a foreign central bank. “If the central bank is not independent, then people may well think that monetary policy decisions follow political advice rather than objective assessment of the economic outlook,” said Draghi.

Read more …

Amid all the loud news, both Canada and Australia are slipping fast.

The Most Splendid Housing Bubbles in Canada Deflate (WS)

Canada’s housing markets barely dipped during the Financial Crisis when US housing markets ran into deep trouble, causing the Mortgage Crisis that begat all kinds of other crises. Canadian homeowners and banks watched the mess from across the border and shook their heads. But now, after an 18-year housing boom, the downturn has arrived in Vancouver and Toronto, among the formerly hottest housing bubbles in the world.


The Teranet-National Bank House Price Index tracks single-family house prices, based on “sales pairs,” similar to the S&P CoreLogic Case Shiller index for US housing markets. It compares the sales price of a house in the current month to the prior sale of the same house years earlier. Using “sales pairs” eliminates the issues that affect median-price indices. But the median-price data for Vancouver is a lot more disconcerting than the Teranet data. So let’s compare how Vancouver’s housing bubble stacks up against the legendary but now also deflating housing bubble in San Francisco.

House prices in the Greater Toronto Area fell 0.3% in March from February and are down 4.3% from the peak in July 2017, the steepest 20-month decline since May 2009. From January 2002 through the peak in July 2017, the index soared 218% — meaning that house prices more than tripled. But that pales compared to Vancouver, where house prices more than quadrupled. I converted this Teranet index for Toronto house prices to “percent-change since January 2002” and overlaid the insane mind-boggling housing bubble in the San Francisco Bay Area, and it shows just how majestic the 18-year Toronto housing bubble has been:

Read more …

European elections in Britain do seem surreal.

UK Tories Face European Elections Drubbing (Ind.)

The Conservatives are facing a humiliating defeat at the European elections next month after support for the party slumped to its lowest level since 2013, according to a new poll. The survey shows the Tories on just 28 per cent when it comes to general election voting intention – a four-point fall which leaves them trailing Labour on 32. When voters were asked which party they will vote for at the European elections, Theresa May’s party languished on 16 per cent, eight points behind Labour on 24. In a clear sign support for the Conservatives is crumbling over the failure to deliver Brexit, 56 per cent of people who voted to leave at the 2016 referendum said they would back Ukip or Nigel Farage’s newly formed Brexit Party during next month’s vote.


The Brexit Party is on 15 per cent, while Ukip stands at 14 per cent when it comes to European voting intention, the YouGov poll for The Times indicated. By comparison, the Lib Dems and the Greens are both on 8 per cent, while Change UK has 7 per cent support. No 10 is still hoping to get a deal through parliament in time to avoid participation in the European elections on 23 May. But the UK is formally on track to hold the poll, having informed the EU authorities ahead of Friday’s deadline that it would be taking part. Boris Johnson’s backers have suggested he may not even campaign on behalf of his party next month in an effort to show his displeasure at the UK’s involvement. “Boris won’t campaign in European elections. He believes the prospect of the UK fielding candidates is utterly preposterous,” a source told The Times.

Read more …

Something only a small group wants. But then, that’s true of all Brexit issues and ‘solutions’.

Corbyn Told To Promise Final Say Referendum (Ind.)

Jeremy Corbyn is under intense pressure from within his shadow cabinet to give a strong commitment to a new Brexit referendum as part of Labour’s European election campaign offer. A string of senior shadow ministers are advocating a new public vote, alongside MPs from the left and right of the party, buoyed by a groundswell of support from the membership. The Independent understands Labour is now beginning the process of drawing up its manifesto with those wanting to give the public a final say on Brexit pushing the leader to make a strong bid for the Remain vote on polling day. Mr Corbyn’s team is currently engaged in talks with the Conservatives in an effort to find a Brexit compromise deal that can enjoy majority support in the House of Commons, with a referendum having been discussed during the negotiations.


The leader’s office emphasised that decisions on the manifesto were yet to be discussed, with the party simultaneously defending its majorities against the pro-Remain Change UK party run by Labour defectors and Nigel Farage’s new Brexit Party. One shadow cabinet source told The Independent: “We can’t credibly agree to any deal unless there is a confirmatory referendum attached to it. “We should be telling people about that, the support is there to be had.” The European elections are set to become a rerun of the 2016 referendum campaign with parties positioning themselves along the Brexit spectrum from Leave to Remain.

Read more …

Party before country.

It’s The UK Political System, Not Just MPs, That Is Failing (G.)

Brexit has prompted a recurring nightmare among an increasingly incredulous population: our very own Groundhog Day. Two weeks after the EU granted us an 11th-hour extension to prevent us crashing out without a deal, we are back in exactly the same position. The only thing standing between us and next Friday’s cliff edge is the hope the EU gifts us another extension. Meanwhile, the political turmoil engulfing the country worsens, the two main parties increasingly consumed by division and disarray and the political leadership we so desperately need to avert crisis as elusive as ever. It’s hard to believe that the Westminster model of democracy was one prized by constitutional theorists for the stability it purportedly delivers. As the stakes get higher, our political system has proved less and less capable of delivering a resolution to the gridlock that has infected Westminster.

Brexit has been a story of the favouring of party management over the national interest. From the very beginning, Theresa May’s approach to Brexit – from her premature decision to trigger article 50 to her red lines on freedom of movement and the customs union – has been driven not by a strategy to unite the country in the wake of a divisive referendum but to keep her Brexit ultras on side. Only now it has become clear that there are MPs in her party so fanatically dogmatic that they would rather hold out for no deal than vote for her deal has she opened compromise talks with Labour. But Labour emerged from the talks on Friday complaining that no changes to the political declaration were on offer, suggesting that this move may have been more about trying to lay blame for any further delay on the opposition.

Labour’s strategy has been no less determined by party interest. Jeremy Corbyn has kept a position of barely credible ambiguity for as long as possible to avoid alienating any of its voters. Labour has maintained the charade that it could deliver a Brexit deal that delivers all the benefits of EU membership with none of costs. And Labour has failed to provide any leadership support for a confirmatory referendum on any Brexit deal, with the shadow cabinet split on the issue. Time is running out for Labour to decide once and for all whether it will properly swing its weight behind a referendum. Thanks to the mess the Tories are in, Corbyn is in a position of power, if he only chooses to use it.

Read more …

Another excellent essay from Jonathan Cook.

UK Media, MPs Unveil Latest Assange Deception (Cook)

[..] the public conversation in the UK, sympathetically reported by the Guardian, supposedly Britain’s only major liberal news outlet, is going to be about who has first dibs on Assange. Here’s the first paragraph of the Guardian front-page article: “Political pressure is mounting on [Home Secretary] Sajid Javid to prioritise action that would allow Julian Assange to be extradited to Sweden, amid concerns that US charges relating to Wikileaks’ activities risked overshadowing longstanding allegations of rape.” So the concern is not that Assange is facing rendition to the US, it is that the US claim might “overshadow” an outstanding legal case in Sweden. The 70 MPs who signed the letter to Javid hope to kill two birds with one stone.

First, they are legitimising the discourse of the Trump administration. This is no longer about an illegitimate US extradition request on Assange we should all be loudly protesting. It is a competition between two legal claims, and a debate about which one should find legal remedy first. It weighs a woman’s sexual assault allegation against Assange and Wikileaks’ exposure of war crimes committed by the US military in Iraq and Afghanistan. It suggests that both are in the same category, that they are similar potential crimes. But there should only be one response to the US extradition claim on Assange. That it is entirely illegitimate. No debate. Anything less, any equivocation is to collude in the Trump administration’s narrative. The Swedish claim, if it is revived, is an entirely separate matter.

[..] In another article on Assange on Friday, the Guardian – echoing a common media refrain – reported as fact a demonstrably false claim: “Assange initially took refuge in the Ecuadorian embassy to avoid extradition to Sweden.” There could be no possible reason for its reporters to make this elementary mistake other than that the Guardian is still waging its long-running campaign against Assange, the information revolution he represents and the challenge he poses to the corporate media of which the Guardian is a key part.

[..] Assange was previously wanted for questioning, and has never been charged with anything. If the Swedish extradition request is revived, it will be so that he can be questioned about those allegations. I should also point out, as almost no one else is, that Assange did not “flee” questioning. He offered Swedish prosecutors to question him at the embassy. Even though questioning overseas in extradition cases is common – Sweden has done it dozens of times – Sweden repeatedly refused in Assange’s case, leading the Swedish appeal court to criticise the prosecutors. When he was finally questioned after four years of delays, Swedish prosecutors violated his rights by refusing access to his Swedish lawyer.

Read more …

First amendment anyone?

American Values: Embassies Are For Chopping Up Journalists (McDonald)

202310Fair-minded people across the world have rightly condemned the US-ordered arrest of Julian Assange. However, few have noted how it fits part of a pattern of American hypocrisy when it comes to the treatment of journalists. Only six months ago, Jamal Khashoggi was murdered and hacked to pieces by Saudi agents at the kingdom’s consulate in Istanbul. He was a columnist at the Washington Post and editor-in-chief of the Al-Arab News Channel, known for his sharp criticism of the illegal US-backed Saudi war on Yemen. Despite a CIA conclusion that Crown Prince Mohammed bin Salman ordered the gruesome assassination, President Donald Trump stood by his ally and no meaningful sanctions or penalties were directed towards Riyadh.


Turkey itself remains a NATO member, and close US partner, despite holding more journalists behind bars than any other nation on earth. This figure stood at 68, at the end of last year, around one-quarter of the global total of 251. Now we have the indictment of Assange, which seeks to criminalize basic functions of journalism. For instance, keeping sources anonymous or deleting records of conversations. Indeed, it also appears to be a breach of America’s own First Amendment. He has been targeted by Washington for exposing evidence of appalling atrocities, carried out by the US military, in Iraq and Afghanistan. And, as a result, Assange sought sanctuary in the small London embassy of Ecuador. What followed was relentless pressure on Quito to reverse the asylum it granted the Wikileaks founder and it culminated in his arrest.

Read more …

“That would forestall extradition for long enough for Jeremy Corbyn to become PM, at which point extradition would be refused. But it may be just all screaming chaos.”

Assange Is In The Dock, But Investigative Journalism Is On Trial (Crikey)

Team Assange had a defence on the jumping bail thing: “Your honour, my client had a reasonable fear that from remand he would be extradited to the US.” That was received reasonably. “Also that the previous presiding judge Lady Arbuthnot, did not recuse herself …” That was not. “You had ample time to raise this issue, and now you are traducing the reputation of a fine judge…” Snow went on. I thought of Peter Cook’s great monologue of the summing-up of the Jeremy Thorpe trial: “You have ruined the reputation of one of the most pretty defendants.” Once Assange had been found guilty of skipping bail, it got even weirder. “Your situation is a product of your narcissism,” said the magistrate clearly riled. He did not want the situation of Justice Lady Arbuthnot further explored. I am happy to do so.


Lady Arbuthnot, who ruled on the lawfulness of Assange’s continued criminalisation in the UK in 2015, is the wife of Lord Arbuthnot, a Conservative who has held multiple defence industry posts over the last two decades. This sally got short shrift, but it seemed to me intended to do so. Although when I asked a member of the legal team how it had all gone, they said “well, you saw that shit show in there”. So perhaps not. Assange is now on remand awaiting sentencing for the fleeing bail charge — the Magistrates Court having transferred it to the Crown Court, so a larger maximum sentence of 12 months instead of six, can be awarded. Is that a plan too? That would forestall extradition for long enough for Jeremy Corbyn to become PM, at which point extradition would be refused. But it may be just all screaming chaos.

Read more …

“Of course, the idea that Moreno is handling the economy brilliantly, but somehow also needs over $10 billion dollars in loans is never addressed.”

The Obvious Dirty Dealings Behind Julian Assange’s Arrest (OG)

The US has been planning to have Julian Assange handed over for a longtime, that much is obvious. Mike Pence, the Vice President, was visiting Ecuador last year, notionally to discuss the Venezuela situation, and trade. But it was fairly obvious at the time, and even more so now, that they were discussing the details of Assange being handed over to UK authorities, and eventually extradited to the US. “Trade”, indeed. In terms of quid pro quo, the situation is clear-cut – In February, Ecuador got a $4.2 BILLION loan approved by the International Monetary Fund (amongst other pay-outs). Reuters reported on February 19th of this year:

“Ecuador has reached a $4.2 billion staff-level financing deal with the IMF, President Lenin Moreno said on Wednesday, as the Andean country grapples with a large fiscal deficit and heavy external debt. The country will also receive $6 billion in loans from multilateral institutions including the World Bank, the Inter-American Development Bank, and the CAF Andean development bank…” So, less than 2 months ago, it was announced Ecuador was going to receive over 10 billion dollars of loans. Where all that money will eventually end up is anyone’s guess, it certainly isn’t being spent on infrastructure or state enterprise: “Moreno has begun to implement an austerity plan that includes layoffs of workers at state-owned companies and cuts to gasoline subsidies, also plans to find a private operator for state-run telecoms company CNT and other state-owned firms.”

President Moreno has already been the subject of numerous corruption accusations. So these “loans”, nominally for “[creating] work opportunities for those who have not yet found something stable”, could more realistically be described as “a pay-off”. More than just money, Lenin Moreno has been gifted something all insecure third-world leaders crave: Western approval. The Economist ran a story on April 12th, the day after Assange was arrested, praising Lenin Moreno’s economic policies, and blaming the previous administration for the “mess” that Moreno has to clear up. (Of course, the idea that Moreno is handling the economy brilliantly, but somehow also needs over $10 billion dollars in loans is never addressed. A tiny logical contradiction compared with the nonsense the MSM dish-up on a daily basis).

Read more …

Expect it to be used against Assange.

Anonymous Attacks Continue Against Ecuadorian Government Websites (Cassandra)

Over 30 websites belonging to the Ecuadorian government are now offline — some of them defaced — in protest of the arrest of WikiLeaks founder Julian Assange. The hackers are calling their efforts #OpEcuador, and are also promoting #OpUS and #OpUK. The United States and United Kingdom have not yet been hit with any cyber attacks, that we know of. It is important to note that none of this was directed by WikiLeaks or Assange himself. Supporters are acting on their own with the attacks. A data dump from the hackers warns that “Ecuador Government websites has been taken #Offline with 1 Direct attack. There are few most important websites that’s still down at this time. If some of their servers comes up again, we will fire again to take them down!”

Websites that have been hit include the Central bank of Ecuador, their Ministry of Interior, the Ecuadorian Assembly in UK and the main website for the Government of Ecuador — mot of which had been down for over twelve hours by Saturday evening. The hackers primarily appear to be speaking and coordinating in Spanish — though one of the data dumps was in Indonesia. A Twitter account belonging to the hackers stated that if the websites come back online they will “burn their servers.” The hacking group also called for other supporters to join them.


An InfoSec expert and Assange supporter who has been monitoring the situation told the Gateway Pundit that he is concerned that the attacks will be used against Assange by the media. “My opinion is that it’s deserved karma, but it could enable the anti-Assange media to divert attention away from Julian’s value to journalism by wrongly associating him with reckless hacktivism culture.” He also expressed concern about there being collateral damage within the large data dumps that are being posted online. Other supporters expressed similar concerns, though many still agreed that the attacks are warranted.

Read more …

Jun 282017
 


Willem de Kooning Police Gazette 1955

 

The best comment on the June 13 Jeff Sessions Senate testimony, and I’m sorry I forgot who made it, was that it looked like an episode of Seinfeld. A show about nothing. Still, an awful lot of voices tried to make it look like it was something life- and game-changing. It was not. Not anymore than Comey’s testimony was, at least not in the sense that those eager to have these testimonies take place would have liked it to be.

Comey shone more of an awkward light on himself rather than on Donald Trump, by admitting that he had leaked info on a private conversation with the president he served at the time. Not quite nothing, but very little to satisfy the anti-Trump crowd. It’s just that there’s so many in that crowd, and most in denial, that you wouldn’t know it unless you paid attention.

To cut to the chase of the issue, it’s no longer possible -or at least increasingly difficult- to find coverage in the US -and European- press of anything related to either Trump or Russia that doesn’t come solidly baked in a partisan opinionated sauce.

For instance, I have a Google News page, somewhat personalized, and I haven’t been able to open it for quite some time without the top news articles focusing on Trump and/or Russia, and all the ones at the very top are invariably from the New York Times, Washington Post, CNN, The Hill, Politico et al.

But I am not interested in those articles. These ‘news’ outlets -and you really must ask whether using the word ‘news’ is appropriate here- dislike anything Trump and Putin so much, for some reason, that all they do is write ‘stuff’ in a 24/7 staccato beat based on innuendo and allegations, quoted from anonymous sources that may or may not actually exist.

In the case of Russia, this attitude is many years old; in the case of Trump, it dates back to him announcing his candidacy. And that’s funny, because when you think back to who else was a GOP candidate, how can you not wonder if Ted Cruz or Jeb Bush would really have been better presidents than Trump? The Trump presidency is not an indictment of the man himself, but of the entire US political system.

You only need to think back of the Republican hopefuls who got beaten in the primaries, or the Democratic candidates on the other side of the isle. There are 320 million Americans, and that was the cream of the crop? What does that say about the state of the union? That’s very much true about Trump as well: is that the best you can do?

It’s the story behind the multiple veils, the -political- policy choices of the likes of the New York Times and Washington Post, that is perhaps the most interesting part of this. Their anti-Trump stories are certainly not. They’re utterly boring repetitive propaganda material. Still, there are also reasons behind this that have little to do with politics.

With the advent of the interwebs, the MSM were always going to have a challenging time. As time passed, it became clear they were going to have to compete with 100 million other voices. And while the established media have clear advantages, it was never going to be an easy task. For one thing because unlike most of these 100 million voices, the traditional media have a lot of overhead, fixed costs etc.

They can establish their own web presence, but not much about that is obvious. Some have moved behind a paywall to manage costs, others focus on ads. But none of that really works well. Ad revenue is not enough to keep the vast machinery going, and a paywall limits readership.

Ergo, the MSM has to focus on both 1) what makes it strong, and on 2) what sets it apart from the ‘new competition’. That does seem evident, and it’s therefore surprising that they have elected to do the opposite. A choice that will inevitably hasten their demise.

I’ve long thought that the only way the MSM can survive in the age of the interwebs, for as long as they can indeed survive, is to be uncompromisingly objective, perhaps even to stay away from opinionating, period. Because all other areas, everything that is subjective, will be taken over, and often already is, by the millions who write and post their own opinions on social media.

And no-one will be able to make up their mind any longer about what’s real or not if they can’t figure out from reading between all these lines what is true or not. That is a battle the media establishment cannot win. So it’s more than a bit surprising that it is exactly that which they have elected to pin their futures on.

Media organizations like the New York Times and the Washington Post have over a long time built the contacts, the revenue (for now) and the resources to do what newer media can not: that is for instance, to assign a team of good and smart researchers and/or writers to difficult topics that may take months to cover satisfactorily. It just so happens that is what their entire business model was always based on.

But they’ve thrown it away. They’ve chosen to compete with the entire world, who can all write and all have opinions, in the shadowy realm of fake news, anonymity and mud-slinging. But the opinion of a Washington Post writer, or even its editorial staff, is just another opinion. That’s not where they can stand out. That they can only do in truth-finding. And then they choose not to.

Mainstream media are not short on content, but they ARE short on news. What they do is opinion, propaganda, and that’s not what they’re there for. Both they themselves and their readers should be very worried about that. Because news gathering and dissemination is a vital function in any democratic nation. Taking it away leaves a big hole.

And they’re pouring out so much of the same stuff that even if inside the echo chamber the audience just can’t get enough of it, those on the outside get pushed ever further away. The distance between these groups of people keeps growing, and that’s not what media should be doing, let alone aim for.

There comes a point when people will say: we get it, you don’t like Trump, but we don’t need to see that repeated 100 times a day, and certainly not if you don’t provide facts to base your preferences on. Outside the echo chamber that has already happened. I haven’t read anything in the New York Times or Washington Post forever. If I can’t trust them to write facts on Trump, I can’t trust them, period.

They already have so much going against them. Sales of paper copies are under relentless pressure, because they’re a day old when they’re published, and nobody needs to wait for their news that long anymore. Another kind of pressure comes from the fact that a huge part of their subscribers are older, and the younger stay away from print.

The Hill, a smaller member of the MSM, ran a story over the weekend which said CNN, one of its “brethren in crime”, is clamping down on stories about Russia. All stories have to go through the senior editors now. CNN the next day fired 3 people over one of the many stories. How about the rest? Did they all meet those ‘rigorous editorial standards?

With that Hill piece, you think: someone’s trying to save face… But The Hill would have to come clean about its own coverage of the topic to regain any credibility. As for CNN, have you watched those guys on TV lately? They’re like a firing-squad. Henchmen don’t ask questions either.

Before I forget: Does anyone think there would have been a Special Counsel appointed if the anti-Trump echo chamber press had not incessantly came up, and still does, with new narratives about President Trump, his campaign, his advisers, his staff, and all of the above’s links to Russia? For which to this day no proof has been revealed?!

I find it hard to fathom. I even think it is possible that the feeding frenzy will cost Trump his presidency, not because of evidence but because of neverending innuendo. The frenzy has shown no signs of letting up, and it can continue because it feeds on itself.

While it’s strange that the MSM should risk their own credibility and even survival to be competing, as I said, with a 100 million other ‘sources’, a fight that it can never win, in the short term they have established a loyal echo chamber following that has even ‘miraculously’ increased their subscription numbers.

The flipside of that is they have lost half of their potential readers, but they got so many more from inside the chamber in return that the bottom line looked good. But at some point you will have to prove something, if you want to live. And very little of the ‘material’ on both Trump and Russia has turned out to actually be wearing clothes.

Then again, once you’re inside the chamber, it’s hard to leave. Which is a disgrace for America in all its facets, but there’s not easy way back out. There’s only one, and it’s more out of reach than perhaps ever before: that of the truth, which only the MSM have the resources to provide on a consistent and wide-ranging basis. But they’ve rejected the truth.

They will find out soon enough that the echo chambers are all booked full, with nutjobs and snake oil salesmen. Why they would want to be thrown in with that crowd, who knows? Sure, a quick profit can work miracles. But then you die.

The entire drama has caused an enormous impoverishment of the American media landscape. And it never had much, if anything, to do with news.

The best way to illustrate what’s really going on is probably in these graphs. The negative ‘reporting’ about Trump is off the scale (don’t miss German TV network ARD’s 98% score):

 

 

But when it comes to bombing the Middle East, all the ducks get in line. As ducks do. As behooves ducks. Even when it comes to Trump, they can’t hide their true nature.

We’re done here.

 

 

 

 

May 102017
 
 May 10, 2017  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , ,  Comments Off on Debt Rattle May 10 2017


Dresden February 1945

 

Trump Fires FBI Director Comey, Setting Off US Political Storm (R.)
Turning Gen. Flynn into Road Kill (Robert Parry)
NATO Chief Finds a New Friend in Trump (Spiegel)
Trump Approves Plan to Arm Syrian Kurds (NBC)
Turkey Hopes US Will End Support Of Syrian Kurdish YPG (R.)
Assange: ‘CIA Is Basically Useless, Incompetent’ (Exp.)
Stockman: There Is No Reason To Own Stocks At This Point In The Game (DR)
Shale Drillers Are Outspending the World With $84 Billion Spree (BBG)
UK Tory MPs Could Learn Fate Of Electoral Spending Inquiry By Wednesday (G.)
Anonymous Warns World To ‘Prepare’ For World War 3 (NYP)
French Election A Catastrophe For World Peace (Paul Craig Roberts)
Emmanuel Clinton and the Revolt of the Elites (Escobar)
Paris Afterparty (Jim Kunstler)
Germany: Greek Gold, Real Estate As Collateral If IMF Out Of Program (KTG)
Greek Court Finds New Pension Cuts Illegal Under Greek, European Law (K.)
Damning Findings From EU Audit Of Greek & Italian Refugee “Hotspots” (Oxfam)

 

 

The most striking thing about this is how utterly impossible it has become to find an objective discussion of it. I’ll go with Reuters.

Trump Fires FBI Director Comey, Setting Off US Political Storm (R.)

U.S. President Donald Trump ignited a political firestorm on Tuesday by firing FBI Director James Comey, who had been leading an investigation into the Trump 2016 presidential campaign’s possible collusion with Russia to influence the election outcome. The Republican president said he fired Comey, the top U.S. law enforcement official, over his handling of an election-year email scandal involving then-Democratic presidential nominee Hillary Clinton. The move stunned Washington and raised suspicions among Democrats and others that the White House was trying to blunt the FBI probe involving Russia. Some Democrats compared Trump’s move to the “Saturday Night Massacre” of 1973, in which President Richard Nixon fired an independent special prosecutor investigating the Watergate scandal.

White House officials denied allegations that there was any political motive in the move by Trump, who took office on Jan. 20. Senate Democratic leader Chuck Schumer said he spoke to Trump and told him he was “making a very big mistake” in firing Comey, adding the president did not “really answer” in response. An independent investigation into Moscow’s role in the election “is now the only way to go to restore the American people’s faith,” Schumer said. Though many Democrats have criticized Comey’s handling of the Clinton email probe, they said they were troubled by the timing of Trump’s firing of him.

[..] Pushing back against critics of the move, White House officials said Deputy Attorney General Rod Rosenstein, a career prosecutor who took office on April 25, assessed the situation at the FBI and concluded that Comey had lost his confidence. Rosenstein sent his recommendation to Sessions, who concurred and they forwarded their recommendation to Trump, who accepted it on Tuesday, they said. The White House released a memo in which Rosenstein wrote: “I cannot defend the Director’s handling of the conclusion of the investigation of Secretary Clinton’s emails, and I do not understand his refusal to accept the nearly universal judgment that he was mistaken.”

Read more …

The facts are classified.

Turning Gen. Flynn into Road Kill (Robert Parry)

Not to defend retired Lt. Gen. Michael Flynn for his suspect judgment, but it should be noted that his case represents a disturbing example of how electronic surveillance and politicized law enforcement can destroy an American citizen’s life in today’s New McCarthyism. The testimony on Monday by former acting Attorney General Sally Yates and former Director of National Intelligence James Clapper offered no evidence of Flynn’s wrongdoing – those facts were deemed “classified” – yet the pair thoroughly destroyed Flynn’s reputation, portraying him as both a liar and a potential traitor. That Senate Democrats, in particular, saw nothing troubling about this smearing of the former director of the Defense Intelligence Agency and, briefly, President Trump’s national security adviser was itself troubling. Republicans were a bit more skeptical but no one, it seemed, wanted to be labeled as soft on Russia.

So, there was no skepticism toward Yates’s curious assertion that Flynn’s supposed lying to Vice President Mike Pence about the details of a phone call with Russian Ambassador Sergey Kislyak somehow opened Flynn to Russian blackmail – her core explanation for why she rushed to Trump’s White House with warnings of this allegedly grave danger. Yates also talked ominously about “underlying” information that raised further questions about Flynn’s patriotism, but that evidence, too, couldn’t be shared with the American people; it was classified, leaving it to your imagination the depth of Flynn’s perfidy. Despite the thinness of Yates’s charges – and the echoes of Sen. Joe McCarthy with his secret lists of communists that he wouldn’t release – the mainstream U.S. news media has bestowed on Yates a hero status without any concern that she might be exaggerating the highly unlikely possibility that the Russians would have blackmailed Flynn.

Her supposition was that since Vice President Mike Pence’s account of the Kislyak-Flynn conversation deviated somewhat from the details of what was actually said, the Russians would seize on the discrepancy to coerce Flynn to do their bidding. But that really makes no sense, in part, because even if the Russians did pick up the discrepancy, they would assume correctly that U.S. intelligence had its own transcript of the conversation, so there would be no basis for blackmail. Yates’s supposed alarm might make for a good spy novel but it has little or no basis in the real world. But it is hard for Americans to assess her claims because all the key facts are classified.

Read more …

NATO has become an anti-ISIS vehicle. Wonder if they realize this. Turkey is a member.

NATO Chief Finds a New Friend in Trump (Spiegel)

In Donald Trump’s eyes, NATO Secretary-General Jens Stoltenberg was actually the head of an alliance that history had made superfluous. The new American president made clear during his election campaign that he considered NATO to be a Cold War relic – cumbersome, expensive and useless. But when Stoltenberg appeared at a joint press conference during a visit to the new U.S. leader in the White House, nary a word indicated any resentment over NATO. “I said it was obsolete. It is no longer obsolete,” Trump said in a spectacular turnaround. So what happened? Stoltenberg chuckles at the question before fastening his seat belt. The Belgian air force passenger jet taxis onto the runway at the airport in Rome as it prepares to take off for Brussels. “We learn something new every day,” he says.

“Donald Trump and I discussed how NATO must further develop because the world has changed.” Above all, change means that the Europeans will have to increase their defense spending in the future – both Republican Trump and Social Democrat Stoltenberg are in agreement on the issue. In recent weeks, an alliance has formed between the two, very different men. The blustering U.S. president, who has little foreign policy experience, and the measured secretary-general from Norway are now pulling together, with both desiring more money for the alliance. Stoltenberg, 58, is now paying visits to European capitals in order to drum up the necessary funds. In two weeks, Trump plans to travel to Europe for the first time as U.S. president, and it is no coincidence that one of his first stops on May 25 will be to the massive new NATO headquarters in Brussels.

In addition to his demand for more money from other alliance members, Trump is also hoping NATO will take on a greater role in the fight against Islamic State (IS). He would like to see NATO join the U.S.-led coalition against the terrorist organization. Stoltenberg has long been of the opinion that the era of peace dividends has passed, particularly given Russia’s annexation of Crimea and the IS establishment of a “caliphate” in Syria and Iraq. But it was only with Trump’s election that his demands have gained significant momentum. Ironically, the very man who until recently considered NATO to be superfluous is now one of Stoltenberg’s closest allies.

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And this flies straight in the face of Turkey’s NATO membership.

Trump Approves Plan to Arm Syrian Kurds (NBC)

Two U.S. defense officials tell NBC News that President Donald Trump has approved a plan to arm the Syrian Kurdish militia — an important U.S. ally in Syria in the fight against ISIS. One of the officials said the move is significant because it supports the notion that the Syrian Democratic Force is the fighting force that will eventually go in to Raqqa, a city in Syria’s center which has been under ISIS control since 2014. The move also reinforces the idea that the entire Syrian Democratic Force, Syrian Kurds (YPG) and the Syrian Arab Coalition, has the backing of the U.S. Trump and members of the Cabinet spoke about it during a meeting late yesterday at the White House with Secretary of Defense James Mattis joining by video teleconference.

The order has been signed and that “allows the process to begin to function,” one official said. Once the order comes to the Pentagon, the U.S. can begin providing the Syrian Kurds with arms and equipment fairly quickly since some equipment is pre-positioned. [..] The Turks will be notified about the decision soon and the officials expect a strong reaction from them. In March, Secretary of State Rex Tillerson traveled to Turkey to meet with President Recep Tayyip Erdogan, who sees the YPG as terrorists.

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Erdogan is not amused. And his recent attack on Israel won’t help.

Turkey Hopes US Will End Support Of Syrian Kurdish YPG (R.)

Turkey hopes the United States will end its policy of supporting the Syrian Kurdish YPG militia, Deputy Prime Minister Nurettin Canikli said on Wednesday, adding that Ankara could not accept its NATO ally backing the group. Canikli’s comments are among the first official responses after U.S. officials said on Tuesday that President Donald Trump has approved supplying arms to the YPG to support an operation to retake the Syrian city of Raqqa from Islamic State. Ankara views the YPG as the Syrian extension of the outlawed Kurdistan Workers Party (PKK), considered a terrorist group by the United States, Turkey and Europe. The United States sees the YPG as a valuable partner in the fight against Islamic State in northern Syria.

“We cannot accept the presence of terrorist organizations that would threaten the future of the Turkish state,” Canikli said in an interview with Turkish broadcaster A Haber. “We hope the U.S. administration will put a stop to this wrong and turn back from it. Such a policy will not be beneficial, you can’t be in the same sack as terrorist organizations.” Turkish President Tayyip Erdogan is expected to meet Trump in Washington next week. Erdogan has repeatedly castigated the United States for its support for the YPG, saying its NATO ally should support it fully in the fight against terrorism. The Pentagon has sought to stress that it saw arming the Kurdish forces as necessary to ensure a victory in Raqqa, Islamic State’s de facto capital in Syria and a hub for planning the group’s attacks against the West.

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Extremely incompetent. But the CIA doesn’t have to be competent, all it has to do is be secretive.

Assange: ‘CIA Is Basically Useless, Incompetent’ (Exp.)

Mr Assange, declared by the Donald Trump administration as US public enemy number one, was speaking ahead of a live Spanish television interview. He told current affairs show When It’s Gone: “The CIA is basically useless. They are extremely incompetent as an organisation. “It is the organisation that gave us the end of democracy in Iran, Pinochet, the destruction of Libya, the rise of ISIS within Libya, al-Qaeda, the Syrian disaster and the Iraq war. “It is one of the most useless organisations in the world.” US intelligence agencies have concluded that Russia was behind the hack, and used Wikileaks to harm the chances of Mrs Clinton and favour Mr Trump. Mr Assange said the release was not intended to affect the election.

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“This is the greatest suckers rally we’ve ever seen.”

Stockman: There Is No Reason To Own Stocks At This Point In The Game (DR)

[..] “There will be panic in the financial markets. This is not priced in. The market isn’t expecting anything. I think it will cause some very difficult times.” The interviewer then asked what his expectations on a government shutdown would look like with Trump.” [..] “I doubt he’ll go for a shutdown by choice. The leadership is not going to stand for it. They have a false idea that Republicans can govern by keeping the Washington Monument open even if we’re bankrupting the country by piling spending. I don’t think they’re going to elect to have a shutdown. What I think is going to happen instead is they’re going to run out of borrowing authority with the debt ceiling, it is now frozen on March 15. We’re locked in at $19.8 trillion so when they run out of cash in a few months, they’ll need a majority in both houses to vote through a multi-trillion bill in both houses. They won’t have the votes.”

[..] “The market is pricing itself for perfection for all of eternity. This is crazy. We’ve got headwinds everywhere. The auto industry is now starting to roll over. The red ponzi in China has only a matter of time before it explodes. We now have debt for the household sector above where it was for the 2008 crisis. I think the market could easily drop to 1,300-1,600 by 30% or more once the fantasy ends. The government will show its true colors. We are headed for a fiscal bloodbath.” Stockman voiced his concern for clarity remarking, “This crazy notion that there is going to be a Trump tax cut and fiscal stimulus must be put to rest once and for all. It’s not going to happen. They can’t pass a tax cut that big without a budget resolution that incorporates $10 or $15 trillion of debt over the next decade. Week by week, slowly the market is beginning to figure this out.

What it means is, all of the corporate insiders are selling stock like there is no tomorrow… where institutional sales of stock have been going up since the election and what we have is the usual end of the cycle. This is the greatest suckers rally we’ve ever seen.” When asked what he would recommend to protect yourself he urged, “The main thing is, get out of the markets. These markets are unstable. They’re rigged and unsustainable… there is no reason to own stocks at this point in the game. It is so overvalued that maybe you can get another two or three out but you’re facing a 30% or 40% down. The risk versus reward is horrible. The bond market is one giant bubble because the central bank’s have been buying bonds worldwide. They’re buying a trillion and still buying a trillion or so on an annual basis. All of that is coming to a halt.”

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Credit is still cheap. Even, or especially, depending on how you look at it, for zombies.

Shale Drillers Are Outspending the World With $84 Billion Spree (BBG)

U.S. shale explorers are boosting drilling budgets 10 times faster than the rest of the world to harvest fields that register fat profits even with the recent drop in oil prices. Flush with cash from a short-lived OPEC-led crude rally, North American drillers plan to lift their 2017 outlays by 32% to $84 billion, compared with just 3% for international projects, according to analysts at Barclays. Much of the increase in spending is flowing into the Permian Basin, a sprawling, mile-thick accumulation of crude beneath Texas and New Mexico, where producers have been reaping double-digit returns even with oil commanding less than half what it did in 2014. That’s bad news for OPEC and its partners in a global campaign to crimp supplies and elevate prices. Wood Mackenzie estimates that new spending will add 800,000 barrels of North American crude this year, equivalent to 44% of the reductions announced by the Saudi- and Russia-led group.

“The specter of American supply is real,” Roy Martin, a Wood Mackenzie research analyst in Houston, said in a telephone interview. “The level of capital budget increases really surprised us.” Drilling budgets around the world collapsed in 2016 as the worst crude market collapse in a generation erased cash flows, forcing explorers to cancel expansion projects, cut jobs and sell oil and natural gas fields to raise cash. The pain also swept across OPEC, which in November relented by agreeing with several non-OPEC nations to curb output by 1.8 million barrels a day. Oil prices that initially popped above $55 in the weeks after the cut was announced have since dipped to around $46, reflecting pessimism that the OPEC-led deal can withstand the onslaught of U.S. shale.

[..] EOG, the second-largest U.S. explorer that doesn’t own refineries, plans to boost spending by 44% this year to between $3.7 billion and $4.1 billion. Pioneer is eyeing a 33% increase to $2.8 billion. The sub-group that includes North American shale drillers like EOG and Pioneer is collectively targeting $53 billion in spending this year, up from $35 billion in 2016, according to the Barclays analysts. U.S. oil production is already swelling, even though output from the new wells being drilled won’t materialize above ground for months. The Energy Department’s statistics arm raised its full-year 2017 supply estimate to 9.31 million barrels a day on Tuesday, a 1% increase from the April forecast. Next year, U.S. fields will pump 9.96 million barrels a day, 0.6% more than the department estimated last month.

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What are the odds anyone will be charged that May wants to keep on?

UK Tory MPs Could Learn Fate Of Electoral Spending Inquiry By Wednesday (G.)

Dozens of Conservative MPs expect to learn shortly whether they will be charged with fraud in relation to their spending at the last election, as deadlines for the Crown Prosecution Service to make a decision approaches. MPs and their agents have been under investigation by 14 police forces for more than a year over their spending declarations at the 2015 election. They are now likely to learn their fates before the general election, possibly as soon as Wednesday as the various time limits for bringing charges are coming to an end. If it happens on Wednesday, this could be in time for Theresa May to jettison any candidates facing prosecution before the deadline for final nominations at 4pm on Thursday, but the timeline for replacements would be extremely tight.

Any decision to prosecute them would be an explosive twist in the general election with more than 20 MPs in the last parliament potentially facing charges under the Representation of the People Act. But the bar for prosecution is considered to be high, with the police having to prove intent to submit wrongful expenditure claims. Tory MPs maintain they recorded their spending as directed by the national party. The allegations centre around the declaration of spending on Conservative battle bus tour in 2015, which took activists to dozens of marginal seats before the election. This was declared as national campaign spending, with the Tories some millions below their official limit. But it emerged that the activists had been campaigning on behalf of specific Conservative MPs, rather than the party generally, leading to claims that the spending should have been record as local expenditure.

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Bit of an oddity for now. But events could change that, fast.

Anonymous Warns World To ‘Prepare’ For World War 3 (NYP)

The infamous hacktivist group Anonymous has released a chilling new video — urging people across the globe to “prepare” for World War 3 – as the US and North Korea continue to move “strategic pieces into place” for battle. “All the signs of a looming war on the Korean peninsula are surfacing,” the group says in the ominous six-minute clip, posted on YouTube over the weekend. Using their signature Guy Fawkes character, the hackers make several claims about recent military movements in the region — and alleged warnings made by Japan and South Korea about imminent nuclear attacks from the North — as they deliver their frightening prophecy. “Watching as each country moves strategic pieces into place,” the organization says, in its notorious robotic voice. “But unlike past world wars, although there will be ground troops, the battle is likely to be fierce, brutal and quick. It will also be globally devastating, both on environmental and economical levels.”

According to Anonymous, President Trump’s test of the Minuteman 3 intercontinental ballistic missile last week — coupled with a recent warning from Japanese officials to citizens, telling them to make preparations for a possible nuclear attack — are ultimately proof that all signs are pointing to a major conflict between the US and North Korea. In addition, China reportedly has urged its citizens in the Hermit Kingdom to return home as tensions continue to escalate over their nuclear weapons program. “This is a real war with real global consequences,” the group explains. “With three superpowers drawn into the mix, other nations will be coerced into choosing sides, so what do the chess pieces look like so far?”

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Macron as evil incarnate.

French Election A Catastrophe For World Peace (Paul Craig Roberts)

Marine Le Pen’s defeat, if the vote count was honest, indicates that the French are even more insouciant than Americans. The week before the election the Russian high command announced that Washington had convinced the Russian military that Washington intended a preemptive nuclear first strike against Russia. No European leader saw danger in this annoucement except Le Pen. No European leader, and no one in Washington, has stepped forward to reassure the Russians. In the US apparently only my readers even know of the Russian conclusion. Simply nothing is said in the Western media about the extraordinary risk of convincing Russia that the US is preparing a first strike against Russia. Nothing in the 20th century Cold War comes close to this. Le Pen, as Trump did prior to his castration by the military/security complex, understands that military conflict with Russia means death for humanity.

Why were the French voters unconcerned with what may be their impending deaths? The answer is that the French have been brainwashed into believing that to stand for France, as Marine Le Pen does, is to place patriotism and nationalism above diversity and is fascist. All of Europe, except for the majority of the British, has been brainwashed into the belief that it is Hitler-like or fascist to stand up for your country. For a French man or woman to escape the fascist designation, he or she must be Europeans, not French, German, Dutch, Italian, Greek, Spanish, Portuguese. Brainwashed as the French are that it is fascist to stand up for France, the French voted for the international bankers and for the EU. The French election was a disaster for Europeans, but it was a huge victory for the American neoconservatives who will now be able to push Russia to war without European opposition.

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Macron as a hologram.

Emmanuel Clinton and the Revolt of the Elites (Escobar)

So in the end the West was saved by the election of Emmanuel Macron as President of France: relief in Brussels, a buoyant eurozone, rallies in Asian markets. That was always a no-brainer. After all, Macron was endorsed by the EU, Goddess of the Market, and Barack Obama. And he was fully backed by the French ruling class. This was a referendum on the EU – and the EU, in its current set-up, won. Cyberwar had to be part of the picture. No one knows where the MacronLeaks came from – a last minute, massive online dump of Macron campaign hacked emails. WikiLeaks certified the documents it had time to review as legitimate. That did not stop the Macron galaxy from immediately blaming it on Russia. Le Monde, a once-great paper now owned by three influential Macron backers, faithfully mirrored his campaign’s denunciation of RT and Sputnik, information technology attacks and, in general, the interference of Russia in the elections.

The Macron Russophobia in the French media-sphere also happens to include Liberation, once the paper of Jean-Paul Sartre. Edouard de Rothschild, the previous head of Rothschild & Cie Banque, bought a 37% controlling stake in the paper in 2005. Three years later, an unknown Emmanuel Macron started to rise in the mergers and acquisitions department, soon acquiring a reputation as “the Mozart of finance.” After a brief stint at the Ministry of Finance, a movement, En Marche! was set up for him by a network of powerful players and think tanks. Now, the presidency. Welcome to the revolving door, Moet & Chandon-style. In the last TV face-off with Marine Le Pen, Macron did not shy from displaying condescending/rude streaks and even raked some extra%age points by hammering “Marine” as a misinformed, corrupt, “hate-filled” nationalist liar who “feeds off France’s misery” and would precipitate “civil war.”

That may in fact come back to haunt him. Macron is bound to be a carrier of France’s internal devaluation; a champion of wage “rigor,” whose counterpoint will be a boom of under-employment; and a champion of increasing precariousness on the road to boost competitiveness. Big Business lauds his idea of cutting corporate tax from 33% to 25% (the European average). But overall, what Macron has sold is a recipe for a “see you on the barricades” scenario: severe cuts in health spending, unemployment benefits and local government budgets; at least 120,000 layoffs from the public sector; and abrogation of some key workers’ rights. He wants to advance the “reform” of the French work code – opposed by 67% of French voters – ruling by decree.

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Macron as a greater fool.

Paris Afterparty (Jim Kunstler)

First mistake: Emmanuel Macron’s handlers played Beethoven’s “Ode to Joy” instead of the French national anthem at the winner’s election rally. Well, at least they didn’t play “Deutschland Über Alles.” The tensions in the Euroland situation remain: the 20%-plus youth unemployment, the papered-over insolvency of the European banks, and the implacable contraction of economic activity, especially at the southern rim of the EU. The clash of civilizations brought on by the EU’s self-induced refugee glut still hangs over the continent like a hijab. That there was no Islamic terror violence around the election should not be reassuring. The interests of the jihadists probably lie in the continued squishiness of the status quo, with its sentimental multiculture fantasies — can’t we all just get along? — so En Marche was their best bet. LePen might have pushed back hard. Macron looks to bathe France’s Islamic antagonists in a nutrient-medium of Hollandaise lite.

The sclerosis of Europe is assured for now. But events are in charge, not elected officials so much, and Europe’s economic fate may be determined by forces far away and beyond its power to control, namely in China, where the phony-baloney banking system is likely to be the first to implode in a global daisy-chain of financial uncontrolled demolition. Much of that depends on the continuing stability of currencies. The trouble is they are all pegged to fatally unrealistic expectations of economic expansion. Without it, the repayment of interest on monumental outstanding debt becomes an impossibility. And the game of issuing more new debt to pay the interest on the old debt completely falls apart. Once again, the dynamic relationship between real capital creation and the quandaries of the oil industry lurks behind these failures of economy.

In a crisis of debt repayment, governments will not know what else to do except “print” more money, and this time they are liable to destroy faith in the value of “money” the world over. I put “money” in quotation marks because the dollars, euros, yuan, and yen are only worth what people believe them to be, subject to measurement against increasingly fictional indexes of value, such as interest rates, stock and bond markets, government-issued employment and GDP stats, and other benchmarks so egregiously gamed by the issuing authorities that Ole Karl Marx’s hoary warning finally comes to pass and everything solid melts into air.

Revolving credit seemed like a good idea through the 20th century, and it sure worked to build an economic matrix based on cheap energy, which is, alas, no more. What remains is the wishful pretense that the old familiar protocols can still work their magic. The disappointment will be epic, and the result next time may be political figures even worse than LePen and Trump. Consider, though, that what you take for the drumbeat of nationalism is actually just a stair-step down on a much-longer journey out of the globally financialized economy. Because the ultimate destination down this stairway is a form of local autarky that the current mandarins of the status quo can’t even imagine.

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They want it all, all of Greece. Beware.

Germany: Greek Gold, Real Estate As Collateral If IMF Out Of Program (KTG)

The Bavarian Minister of Finance, Markus Soeder (CSU), a fierce Grexit supporter of Merkel’s CDU sister party apparently has moved away from his demand for a Greek euro exit. During a visit to Athens, Soeder said that the problems around Britain’s exit from the EU showed how difficult a Grexit would be. In addition, the Brexit already causes enough uncertainty. and Germany wants neither problems, nor uncertainty that could harm its profits especially before the parliamentary elections in autumn 2017. As Grexit is out of question, Greece should use gold reserves and real estate as collateral if the IMF stays out of the Greek program. However, Markus Soeder brought back an older idea of his, an idea he openly formulated in February 2017: that Greece pledges Gold, cash and real estate in order to get the bailout tranches, the loans by the European creditors, who love to call them financial aid.

“Soeder did not give up serious demands on Greece wile he was in Athens,” German magazine Der Spiegel writes. If the IMF does not participate in the Greek program, “new money can only be provided against collateral such as cash or real estate,” Soeder said. Soeder referred to Finland that participated in the second aid package for Greece only in 2012 and only after then Greek finance minister Evangelos Venizelos signed a bilateral agreement on colateral. “This worked,” the CSU politician said about the deal. Soeder’s demand is, however, amply theoretical, since he continues to regard an IMF participation as indispensable. He has the same problem as Federal Minister of Finance Wolfgang Schäuble (CDU): He strongly rejects further debt relief, as the IMF makes it a condition. “I have made it quite clear that a debt cut is out of question for Germany, as it the idea about issuing Eurobonds or similar.”

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Brussels pisses on Greek courts.

Greek Court Finds New Pension Cuts Illegal Under Greek, European Law (K.)

The Plenary of the State Audit Council has ruled that the cuts to main and supplementary pensions that the government and its creditors have agreed on contravene the European Convention of Human Rights, sources said on Tuesday night. The council also decided that the fiscal bill containing the cuts, to be implemented from 2019, contravenes Greek legislation as it has been tabled to the audit council without an actuarial study. A bill, outlining the pension cuts and other measures agreed with creditors is due to go to a vote in Parliament next week.

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Nothing new here. WIll anything change now that an EU body finds the same many others have before them?

Damning Findings From EU Audit Of Greek & Italian Refugee “Hotspots” (Oxfam)

1. EU Court of Auditors found “overcrowded” camps, migrants “sleeping rough”, and “scant access to basic services” According to the Court of Auditors, hotspots are seriously overcrowded, particularly on the Greek islands of Lesvos, Chios and Samos. People are fleeing from the camps, because they don’t have sufficient access to water and there are too few doctors to provide adequate health care. People also didn’t feel safe in the hotspots since fights often break out in the camps. Many of these people ended up sleeping on the streets outside the hotspots. The appalling situation in hotspots is also documented by NGOs, who have reported that people in the hotspots have been exposed to degrading conditions and had their rights denied. More than 2,000 people were forced to sleep in barely heated tents during the freezing winter.

2. Children held for months in “inappropriate conditions” against international laws and standards, the auditors say The auditors raised serious concerns about the situation of unaccompanied children in hotspots. In most hotspots children were confined either to fenced areas, or accommodated without protection from adults, exposing them to the risk of abuse. Children were held for three months or more closed in behind fences in the Moria hotspot after it was converted to a de-facto detention centre. In some hotspots, girls and boys were held together, against standard practice. NGOs have been raising concerns about this situation for months. Now the Court of Auditors has confirmed that the welfare of the children in Moria was put at risk.

3. ‘‘No framework for remedying bottlenecks or sharing lessons learnt”, the Court found Overall, the ‘hotspot approach’ has been disorganised and inconsistent, the EU auditors found. The absence of consistent guidelines for the way hotspots should be managed means that responsibilities between the various actors are not clearly defined. Conditions and services are far worse in some hotspots than in others. The unfairness of this inconsistency has been criticised by NGOs, who have also highlighted the lack of oversight over decisions and accountability for human rights violations.

Furthermore, it is difficult to track the situation of people in the hotspots and how the management of the camps affects them – because key data is not shared between authorities. Neither the length of time migrants spend in hotspots while waiting to register and complete their asylum application in Greece, nor the total number of migrants identified, registered, or receiving return orders in Italy was shared. The Court of Auditor’s recommendations to better define the roles of the different agencies involved and to appoint a manager for each hotspot exposes that management is currently lacking.

4. The auditors highlight that the “functioning of hotspots is affected by bottle-necks in the follow-up procedures” The hotspots were meant to be just a first step in the EU’s migration response. Member states should then have stepped in to facilitate the relocation and integration of these people across Europe, or facilitate their safe and dignified return. That has not happened. The set-up of the hotspots is a completely new way for national governments to cooperate with EU institutions and agencies within a member state’s territory. If follow up continues to falter, the pressure on the hotspots will only grow. This could lead to people living in the hotspots being exposed to even more suffering, and the risk that authorities will abandon acceptable legal and living standards increases. This has been evident since December, if not earlier.

5. The EU-Turkey deal “had a major impact on the functioning of hotspots” and on detentions, the auditors say The EU-Turkey deal of March 2016 had a great impact on the functioning of the hotspots, as becomes evident when we look at the details of the auditors’ report. When the deal with Turkey was announced, hotspots turned into de-facto detention centres, provoking criticism from many NGOs. But the current European approach only attempts to increase the use of detention for asylum seekers even further. The auditors have detailed the hotspots procedures in the annex to their report, and reading this makes clear how difficult it is not to be detained in the process they record.

The findings of the European Court of Auditors suggest that hotspots are being made to work at the expense of people, for the sake of fulfilling policy objectives. It is vital that safeguards are in place to ensure that people are not forced to stay in the hotspots under the conditions the EU auditors and NGOs have found to be degrading. Very close scrutiny is needed to protect the rights of those who arrive looking for safety on Europe’s shores.

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Nov 052015
 
 November 5, 2015  Posted by at 9:08 am Finance Tagged with: , , , , , , , ,  3 Responses »


Martha McMillan Roberts Three sisters at Cherry Blossom Festival, Washington, DC” 1941

This Is the Worst U.S. Earnings Season Since 2009 (Bloomberg)
U.S. Posts Record Deficit in Manufacturing Trade (Bloomberg)
German Factory Orders Unexpectedly Drop for Third Straight Month (Bloomberg)
America’s Labour Market Is Not Working (Martin Wolf)
Yellen Signals Solid Economy Would Spur December Rate Hike (Bloomberg)
David Stockman Explains How To Fix The World -In 7 Words- (Zero Hedge)
The Bear Case for China Sees PBOC Following Fed to Zero Rates (Bloomberg)
I’ll Eat My Hat If We Are Anywhere Near A Global Recession (AEP)
VW Could Face Billions In Car Tax Repayments Over Latest CO2 Scandal (Guardian)
VW Scandal Widens Again as India Says Vehicles Exceeded Emission Rules (BBG)
Germany Ups Pressure On VW As Scandal Takes On New Dimension (Reuters)
VW Emissions Scandal Still Obscured By A Cloud (Guardian)
Germany To Retest VW Cars As Scandal Pushes Berlin To Act (Reuters)
Basque Secessionists Follow Catalans In Push For Independence (Guardian)
US Presses Europe To Take Steps To Reduce Greece’s Debt Burden (Bloomberg)
Fannie, Freddie May Need To Tap Treasury, FHFA Director Says (MarketWatch)
Maersk Line to Cut 4,000 Jobs as Shipping Market Deteriorates (WSJ)
2015 Million Mask March: Anonymous Calls For Day Of Action In 671 Cities (RT)
Merkel Overwhelmed: Chancellor Plunges Germany Into Chaos (Sputnik)
Merkel Reasserts Control as Rebellion Over Refugees Fades (Bloomberg)
Rough Seas and Falling Temperatures Fail to Stop Flow of Refugees (NY Times)
800,000 ‘Illegal Entries’ To EU In 2015, Frontex Chief Says (AFP)

Not a freak incident, but a trend.

This Is the Worst U.S. Earnings Season Since 2009 (Bloomberg)

This U.S. earnings season is on track to be the worst since 2009 as profits from oil & gas and commodity-related companies plummet. So far, about three-quarters of the S&P 500 have reported results, with profits down 3.1% on a share-weighted basis, data compiled by Bloomberg shows. This would be the biggest quarterly drop in earnings since the third quarter 2009, and the second straight quarter of profit declines. Earnings growth turned negative for the first time in six years in the second quarter this year. The damage is the biggest in commodity-related industries, with the energy sector showing a 54% drop in quarterly earnings per share so far in the quarter, with profits in the materials sector falling 15%. The picture is brighter for the telecom services and consumer discretionary sectors, with EPS growth of 23% and 19% respectively so far this quarter.

When compared with analyst expectations, about 72% of companies have beaten profit forecasts. That’s only because the consensus has been sharply cut in the past few months, Jeanne Asseraf-Bitton, head of global cross-asset research at Lyxor Asset Management says in a telephone interview. For the year as a whole, S&P 500 earnings are expected to fall 0.5%, data compiled by Bloomberg shows. For 2016, earnings growth is now seen at 7.9%, down from 10.9% in late July. Next year’s consensus is “still very optimistic,” Asseraf-Bitton says, citing the lack of positive catalyst seen for U.S. stocks in 2016 as well as the negative impact from the sharp slowdown in the U.S. energy sector. By contrast, the euro-zone is the only region worldwide where earnings are expected to “grow significantly” in 2015, according to a note from Societe Generale Head of European Equity Strategy Roland Kaloyan.

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Lower oil prices hurt where they were ‘supposed’ to heal.

U.S. Posts Record Deficit in Manufacturing Trade (Bloomberg)

The U.S. trade deficit in manufacturing hit a record $74.7 billion in September, according to an analysis of new Census Bureau data by RealityChek, a reliable blog on manufacturing and trade. That could become fodder for debate in the presidential election, where candidates have been arguing over the plight of American factory workers. The record was spotted by Alan Tonelson, founder of RealityChek. Spotting records involves searching through historical trade data, since the Census Bureau doesn’t make comparisons in its news releases. The swelling of the manufacturing trade deficit is more evidence that while the overall U.S. economy has recovered from the 2007-09 recession, the manufacturing sector continues to lag. While overall employment is up 3% since the start of the recession, in December 2007, manufacturing employment is down 10%.

According to Tonelson, the previous high for the manufacturing trade deficit was $73 billion in August. He says the U.S. appears headed for an annual record deficit in manufacturing. The Alliance for American Manufacturing noted that U.S. imports from China hit a record of $45.7 billion in September, and President Scott Paul said the inflow is “killing America’s manufacturing recovery.” Thanks to the lowest oil imports in a decade, the overall U.S. trade deficit shrank in September to $40.8 billion from $48 billion in August, according to the Census Bureau. But the one-month dip masks a rising trend. “A weakening global economy, soaring dollar, and global petro-recession with an associated inventory overhang are hurting exports and widening the deficit despite the improvement once expected with the big drop in oil prices,” Action Economics said in a statement.

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It’s a global trend.

German Factory Orders Unexpectedly Drop for Third Straight Month (Bloomberg)

German factory orders unexpectedly extended a series of declines in September amid a slump in demand for investment goods in the euro area, highlighting increasing risks for Europe’s largest economy. Orders, adjusted for seasonal swings and inflation, fell 1.7% from August, when they dropped 1.8%, data from the Economy Ministry in Berlin showed on Thursday. That’s the third consecutive decrease and compares with a median estimate of a 1% gain in a Bloomberg survey. Orders declined 1% from a year earlier. The Bundesbank said last month that an upward trend in economic activity in Germany continued in the third quarter, albeit less dynamically. While business confidence as measured by the Ifo institute fell in October for the first time in four months in response to weakening global trade, the slowdown in China in itself should only have a modest impact on the euro-area economy, according to the European Central Bank.

“Manufacturing orders are experiencing a hard time at the moment, which relates primarily to weak demand from outside the euro area,” the ministry said in the statement. “Domestic demand and from within the euro area continue to point moderately upward and supports manufacturing. Sentiment in the industry remains good.” Factory orders dropped 2.8% in the third quarter from the previous one, according to the report. Demand from within the country increased 0.3% and was up 0.9% for the euro area. Non-euro-area orders fell 8.6% in the July-to-September period. In September, orders for investment goods from the euro area fell 12.8%, reflecting a drop in demand for big-ticket items. Excluding bulk orders, demand fell 0.4%.

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There are over 93 million Americans not in the labor force. How can you write about this issue and leave out that number? Wolf says ‘just’ 12% of US men “were neither in work nor looking for it.”

America’s Labour Market Is Not Working (Martin Wolf)

In 2014, 12% — close to one in eight — of US men between the ages of 25 and 54 were neither in work nor looking for it. This was very close to the Italian ratio and far higher than in other members of the group of seven leading high-income countries: in the UK, it was 8%; in Germany and France 7%; and in Japan a mere 4%. In the same year, the proportion of US prime-age women neither in work nor looking for it was 26%, much the same as in Japan and less only than Italy’s. US labour market performance was strikingly poor for the men and women whose responsibilities should make earning a good income vital. So what is going on? The debate in the US has focused on the post-crisis decline in participation rates for those over 16. These fell from 65.7% at the start of 2009 to 62.8% in July 2015.

According to the Council of Economic Advisers, 1.6 percentage points of this decline was due to ageing and 0.3 percentage points due to (diminishing) cyclical effects. This leaves about a percentage point unexplained. Princeton’s Alan Krueger, former chairman of the council, argues that many of the long-term unemployed have given up looking for work. In this way, prolonged cyclical unemployment causes permanent shrinkage of the labour force. Thus unemployment rates might fall for two opposite reasons: the welcome one would be that people find jobs; the unwelcome one would be that they abandon the search for them. Happily, in the US, the former has outweighed the latter since the crisis. The overall unemployment rate (on an internationally comparable basis) has fallen by 5 percentage points since its 2009 peak of 10%.

In all, the proportion of the fall in the unemployment rate because of lower participation cannot be more than a quarter. Relative US unemployment performance has also been quite good: in September 2015 the rate was much the same as the UK’s, and a little above Germany’s and Japan’s, but far below the eurozone’s 10.8%. US cyclical unemployment performance has at least been decent by the standards of its peers, then. Yet as the 2015 Economic Report of the President notes, the UK experienced no decline in labour-force participation after the Great Recession, despite similar ageing trends to those in the US. Even on a cyclical basis, the decline in participation in the US is a concern. It is, however, the longer-term trends that must be most worrying. This is particularly true for the prime-aged adults.

Back in 1991, the proportion of US prime-age men who were neither in work nor looking for it was just 7%. Thus the proportion of vanished would-be workers has risen by 5 percentage points since then. In the UK, the proportion of prime-aged men out of the labour force has risen only from 6% to 8% over this period. In France, it has gone from 5 to 7%. So supposedly sclerotic French labour markets have done a better job of keeping prime-aged males in the labour force than flexible US ones. Moreover, male participation rates have been declining in the US since shortly after the second world war.

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This nonsense keeps on going. Whoever follows it deserves what they get.

Yellen Signals Solid Economy Would Spur December Rate Hike (Bloomberg)

Fed Chair Janet Yellen said an improving economy has set the stage for a December interest-rate increase if economic reports continue to assure policy makers that inflation will accelerate over time. “At this point, I see the U.S. economy as performing well,” Yellen said on Wednesday in testimony before the House Financial Services Committee in Washington. “Domestic spending has been growing at a solid pace” and if the data continue to point to growth and firmer prices, a December rate hike would be a “live possibility,” she said in response to a question from Representative Carolyn Maloney, a New York Democrat. The Federal Open Market Committee in its October statement said it will consider raising interest rates at its “next meeting,” citing “solid” rates of household spending and business investment.

“There are pretty good odds that the Fed will hike rates in December as long as employment perks back up and the unemployment rate slips further, which is what we are looking for,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “She is trying to keep the Fed’s options open in December.” No decision has yet been made on the timing of a rate increase, Yellen cautioned. Yellen appeared before the House Financial Services Committee to testify primarily on the Fed’s supervision and regulation of financial institutions. “What the committee has been expecting is that the economy will continue to grow at a pace that’s sufficient to generate further improvements to the labor market and to return inflation to our 2% target over the medium term,” she said.

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But that wouldn’t make the 1% nearly as much money…

David Stockman Explains How To Fix The World -In 7 Words- (Zero Hedge)

While we are used to David Stockman’s detailed and lengthy “nailing” of the real state of the world, the following brief clip of an interview with Fox Business, in which David explains how to ‘fix’ so many of our problems, can be summarized perfectly in just seven short words: “Replace The Fed with the free market.” Enjoy 4 minutes of refeshing honesty… as the Fox anchor just cannot fathom who or what would “control” rates if there was no Fed…

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“He and colleagues at Fathom reckon its growth rate has slowed to about 3% a year..”

The Bear Case for China Sees PBOC Following Fed to Zero Rates (Bloomberg)

Danny Gabay “bows to nobody” in his pessimism about China’s economy. Gabay, a former Bank of England economist, says the world’s second-biggest economy is barreling toward a hard landing. He and colleagues at Fathom reckon its growth rate has slowed to about 3% a year – less than half the official estimate of 6.9% for the year to the third quarter and the 6.5% the government is aiming for over the next five years. That means desperate measures are in store, he says. The People’s Bank of China will eventually follow its western counterparts by cutting its benchmark interest rate to zero from the current 4.35% and begin buying assets. Politicians will ease fiscal policy and step in to support banks. By cutting so deeply, the PBOC’s main rate will next year fall below that of the Fed for the first time since 2001.

It has already lowered its benchmark six times in a year and devalued the yuan by 3% against the dollar in August. “They will try to do it stone by stone, step by step,” says Gabay, a director and co-founder of Fathom. The authorities also will need to let the yuan slide further, probably by between 2% and 3% a quarter for the next two years and ultimately by about 25% overall to stop it from choking the economy even more. “The rope the Chinese have is currently around their neck and they need to let it go,” said Gabay. “It’s going to hurt.” Fathom’s case conflicts with that of Ma Jun, the PBOC’s chief economist. He said on Tuesday that some market participants are “too bearish” on the economy, where a recovery in property sales alongside recent stimulus should support expansion. The PBOC has repeatedly said it won’t need to do quantitative easing.

Underpinning Gabay’s pessimistic view is his argument that China is no special case and that its policy makers are no better equipped that those elsewhere to prop up a faltering economy. Like the U.S. and U.K. before it, China needs to face life with excess debt.
China’s total government, corporate and household debt load as of mid-2014 was equal to 282% of the country’s total annual economic output, according to McKinsey. “They will be no more adept at stopping an asset price bubble from bursting than the rest of us,” said Gabay. Its banks are now on perilous ground with non-performing loans totaling more than 20% of gross domestic product, more than the level witnessed in Japan in the 1990s before its economy entered deflation, according to Gabay. “We haven’t yet had the final shoe drop,” he said. “There could be a larger further fall in Chinese activity if we’re right and the banking system implodes.”

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Ambrose notes the rise in money supply, but fully ignores that means nothing is it is not spent. A curious oversight.

I’ll Eat My Hat If We Are Anywhere Near A Global Recession (AEP)

The damp kindling wood of global economic recovery is poised to catch fire. For the first time in half a decade of stagnation, government policy has turned expansionary in the US, China and the eurozone at the same time. Fiscal austerity is largely over. The combined money supply is surging. Such optimistic claims are perhaps hazardous, given record debt ratios in most areas of the world and given that we are six-and-a-half years into an aging economic cycle that might normally be rolling over at this stage. It certainly feels lonely. Citigroup’s Willem Buiter has issued a global recession alert. Professor Nouriel Roubini from New York University joined him this week, warning that the odds of a fresh slump have doubled to 30pc. Mr Roubini’s gloom is unsettling for me.

We saw the world in almost exactly the same way in the lead-up to the Lehman crisis, when it seemed obvious to both of us that sharply rising interest rates would prick the US housing bubble and the EMU credit bubble. This time I dissent. Years of fiscal retrenchment and balance sheet deleveraging have prevented the current global economic recovery from gathering speed, and have therefore stretched the potential lifespan of the cycle. The torrid pace of worldwide money growth over recent months is simply not compatible with an imminent crisis. A combined gauge of the global money supply put together by Gabriel Stein at Oxford Economics shows that the “broad” M3 measure grew by 8.1pc in August, and by almost as much in real terms. This is the fastest rate in 25 years, excluding the final blow-off phase of the Lehman boom.

The index has since fallen back slightly as the US settles down but the pattern is clear. It bears no relation to the monetary implosion in early to mid-2008 before the collapse of Fannie Mae and Freddie Mac, the twin mortgage giants that in turn brought down the banking system. It is, of course, possible that money signals have lost their meaning in our brave new world of zero rates and secular stagnation, but the current pace of growth would typically imply a flurry of economic activity over the following year or so. “It is a very benign picture for the world. We should see above trend growth over the next year,” said Tim Congdon from International Monetary Research. Mr Congdon said the expansion of broad money in China has accelerated to an annual pace of 18.9pc over the past three months, thanks in part to equity purchases by the central bank (PBOC), a shot of adrenaline straight to the heart – otherwise known as quantitative easing with Chinese characteristics.

The eurozone is no longer hurtling into a 1930s deflationary vortex. A trifecta of cheap money, cheap oil and a cheap euro have entirely changed the landscape, and now the European Central Bank seems curiously determined to push stimulus yet further by doubling down on QE. Central banks are strange animals, pro-cyclical by nature.

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“VW has now lost €32.4bn, or 40% of its value,..”

VW Could Face Billions In Car Tax Repayments Over Latest CO2 Scandal (Guardian)

Volkswagen could have to repay billions of pounds of tax credits to European governments after finding irregularities in the levels of carbon dioxide emitted by its cars. Shares in the embattled carmaker slumped by 10% on Wednesday, wiping €5bn off the value of the company, as analysts warned that the consequences of rigging CO2 and fuel consumption tests could be worse than the initial scandal around diesel emissions tests. VW has now lost €32.4bn, or 40% of its value, since admitting in September that it installed defeat devices into 11m diesel vehicles. The scandal is dragging down sales of new VW cars, according to industry figures due to be released in Britain on Thursday. Sales data for October from the Society of Motor Manufacturers and Traders is expected to show that VW sales fell by more than 8% year-on-year, with Seat and Skoda also down.

The latest admission about CO2 tests dramatically widens the scandal that VW is facing. Germany, Britain and other countries set vehicle tax rates based on their CO2 emissions. This means that if VW artificially lowered CO2 emissions during testing then its vehicles will have contributed far less in tax than they should have. VW has said that at least 800,000 cars are affected by the CO2 discovery and estimated the economic risks at €2bn. This works out at €2,500 per car, far more than the €609 per car put aside for the cost of the 11m cars involved in the diesel emissions scandal, which was €6.7bn in total. Analysts said these costs were likely to relate to repaying tax credits in Europe rather than customer compensation. [..]

VW could also face compensation claims from motorists over the misstatement of their vehicle’s fuel economy. According to BNP Paribas, the cost of compensation to governments and customers could reach €4bn, on top of the estimated €12bn cost of rigging nitrogen oxide tests. UBS said the total costs of the scandal, including legal claims, could reach €35bn. The discovery about the irregularities in CO2 data emerged from VW’s investigation into the diesel emissions scandal. This found that figures for CO2 and fuel consumption were set too low during CO2 tests. VW is yet to confirm which models are involved or how the misstatement occurred. The majority of the cars have a diesel engine, but petrol vehicles have been dragged into the scandal for the first time.

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The whole world.

VW Scandal Widens Again as India Says Vehicles Exceeded Emission Rules (BBG)

India sought a response from Volkswagen after probes into four car models showed diesel-fuel emissions exceeding permissible limits, and variations in results between on-road tests and those done in laboratories. Investigations into the Jetta, Vento, Polo and Audi A4 marques showed significant variations and about 314,000 vehicles are potentially affected, Ambuj Sharma, an additional secretary in India’s Heavy Industries Ministry, said in an interview in Mumbai. If cars have defeat devices that cheat tests, the matter would become criminal, he said.

Emissions exceeding India’s Bharat Stage IV standards were detected, and VW has 30 days to reply to the findings, Sharma said. The notice adds to Volkswagen’s woes after the automaker admitted in September to cheating U.S. pollution tests for years with illegal software, prompting a plunge in its shares and a leadership change. India’s standards for controlling pollution from exhaust fumes lag behind those in Europe by several years. The company said yesterday it will present its results on the diesel-engine emissions issue by the end of November, and that it’s co-operating fully with the Indian government.

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Merkel is way late on this issue too.

Germany Ups Pressure On VW As Scandal Takes On New Dimension (Reuters)

German officials stepped up the pressure on Volkswagen to clean up its act on Wednesday after it revealed it had understated the fuel consumption of some vehicles, opening a new front in the crisis at Europe’s biggest carmaker. The company said late on Tuesday it had understated the level of carbon dioxide emissions in up to 800,000 cars sold in Europe, and consequently their fuel usage. This means affected vehicles are more expensive to drive than their buyers had been led to believe. The revelations add a new dimension to a crisis that had previously focused on VW cheating tests for smog-causing nitrogen oxide emissions. They are the first to threaten to make a serious dent in the firm’s car sales since the scandal erupted as they could deter cost-conscious consumers, analysts said.

The latest admission provoked some of the strongest criticism yet from the German government of Volkswagen, which is part of an auto industry that employs over 750,000 people in the country, has been a symbol of German engineering prowess and dwarfs other sectors of the economy. Transport minister Alexander Dobrindt said the latest irregularities had caused “irritation in my ministry and with me”. Chancellor Angela Merkel’s spokesman, Steffen Seibert, said the carmaker had to take steps to prevent this happening again. “VW has a duty to clear this up transparently and comprehensively,” he added. “It’s important (for VW) to create structures to avoid such cases.” The latest revelations, which led to Volkswagen adding €2 billion to its expected costs from the scandal, are also the first time gasoline cars have been drawn into the scandal.

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It’s becoming a valid question: can VW survive this?

VW Emissions Scandal Still Obscured By A Cloud (Guardian)

The surprise is that Volkswagen’s shares fell only 10% as the cheating affair deepened in several ways. First, the scandal now covers emissions of carbon dioxide, or CO2, not only nitrogen oxide. Second, some petrol engines are now involved. Third – perhaps most importantly for shareholders who hope VW can recover quickly – the company still seems incapable of giving a straightforward account of what its own investigation has uncovered. Tuesday evening’s statement contained the obligatory expressions of regret and commitment to transparency. Indeed, Matthias Müller, the executive shoved into the hot seat in the first week of the crisis, opted for pomposity overdrive. “From the very start I have pushed hard for the relentless and comprehensive clarification of events,” he declared.

“We will stop at nothing and nobody. This is a painful process, but it is our only alternative. For us, the only thing that counts is the truth.” What, though, did VW actually say beyond the confession that “based on present knowledge” 800,000 vehicles have been affected? Almost nothing. Were cheat devices attached to the vehicles, or were real CO2 emissions disguised by other means? How many petrol cars are affected? Does the phrase “present knowledge” mean most cars in VW’s fleet are in the clear, or that they haven’t yet been examined for CO2? And, since the word “irregularities” is so vague, how severely wrong is the published CO2 data? None of these issues were addressed. A little reticence is understandable while investigations continue but it is not unreasonable to expect VW to explain why it can’t answer questions that would occur to most readers of its statement.

More disgracefully from the point of view of shareholders, the company failed to explain how it derived its estimate that the latest revelations will cost “approximately €2bn”. Does that figure merely cover tax credits that now would appear to have been unfairly earned? Analysts assume so, in which case there could also be a wave of claims from consumers who were encouraged to buy VW vehicles on the basis of bogus claims about fuel efficiency. Analysts at Exane BNP Paribas, for example, added €4bn for recall and compensation costs for customers. That assumption sounds fair. The point, though, is that VW ought to be able to say what its €2bn covers and what it doesn’t.

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They should have done this two months ago, when the scandal broke.

Germany To Retest VW Cars As Scandal Pushes Berlin To Act (Reuters)

Germany is to retest all Volkswagen car models to gauge their genuine emissions levels after new revelations from the carmaker six weeks into its biggest-ever corporate scandal pushed the government to act. Expressing his “irritation” with one of Germany’s biggest employers, Transport Minister Alexander Dobrindt said on Wednesday that all current models sold under the VW, Audi, Skoda and Seat brands – with both diesel and petrol engines – would be tested for carbon dioxide and nitrogen dioxide emissions. As the crisis deepened, VW said it had told U.S. and Canadian dealers to stop selling recent models equipped with its 3.0 V6 TDI diesel engine, while the Moody’s agency downgraded the firm’s credit rating.

The German government’s announcement followed a VW statement on Tuesday that it had understated the level of carbon dioxide emissions in around 800,000 cars sold mainly in Europe, and consequently their fuel usage. This means affected vehicles are more expensive to drive than their buyers had been led to believe. The revelations added a new dimension to a crisis that had previously focused on how Europe’s biggest carmaker cheated in U.S. tests on diesel cars for emissions of nitrogen oxide, which cause smog. Previously the government had said it would review only nitrogen dioxide emissions from VW diesel cars.

“We all have an interest that everything at VW is turned over and reviewed,” Dobrindt said, adding that the government wanted to force the company to pay the extra car taxes which would be incurred by the higher CO2 emissions levels. VW is Europe’s biggest motor manufacturer, employing over 750,000 people in Germany, and has been a symbol of the nation’s engineering prowess.

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Basque independence is not that strong now, but Catalunya may change that.

Basque Secessionists Follow Catalans In Push For Independence (Guardian)

As the central government in Madrid squares off against secessionists in Catalonia, separatists in another Spanish region have begun formally laying the groundwork for their own push for independence. EH Bildu, a leftwing pro-independence party in the Basque country, has submitted a bill to the regional parliament that it hopes will pave the way for consultations to be held in the region. “The aim is to put the political, economic and social future of the Basque country in the hands of its citizens,” EH Bildu’s spokesman, Hasier Arraiz, said as he presented the legislation. The bill mirrors that passed by the Catalan parliament last year, which aimed to create legal cover for a consultation on independence in the region. Spain’s constitutional court suspended the regional law, but Catalonia pressed ahead with the consultation, rebranding it as a symbolic referendum.

The Catalan leader, Artur Mas, and two associates are under investigation for disobedience, abuse of power and obstruction of justice over their actions. Basque separatists have shied away from specifically mentioning independence, but they referred several times to Catalonia as they presented their bill. “It’s time to confront the state democratically. They are doing it in Catalonia and we want to do it in the Basque country,” Arraiz said. The Basque bill has little chance of being passed, because EH Bildu holds only 21 of the 75 seats in the Basque parliament. Its actions, however, confirmed worries in Madrid that any concessions made to secessionists in Catalonia may have to be extended to separatist movements across the country.

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Regurgitated ‘news’.

US Presses Europe To Take Steps To Reduce Greece’s Debt Burden (Bloomberg)

The US is pressing euro-area countries to agree to an overhaul of Greece’s debt to give private-sector investors confidence that the nation’s borrowing burden is sustainable, a US Treasury official said. Europe needs to take action to lower Greece’s overall debt levels, said the official, who asked not to be identified because discussions are in progress. Participation by the European Bank for Reconstruction and Development would also be helpful to restore financial stability in Greece, the official said. The EBRD, which was created to help central and eastern European countries after the Cold War, could lend staff and contribute technical expertise to help the Greek banking system get on firmer footing, according to the official.

Lowering interest rates and extending maturities can ease Greece’s debt burden, and the US and IMF have stopped short of calling for writing down the principal of the loans. Many euro-area nations have indicated that would be a “red line,” while indicating they might agree to better servicing terms. The US call to reduce Greece’s debt burden echoes the position taken by the IMF, which has said it won’t offer new money to Greece unless the euro area commits to a formal debt operation. The US is the largest shareholder in the Washington-based IMF, which lends to countries that run into balance-of-payments troubles. Germany and other creditor nations say bringing the IMF on board is an essential element of the €86 billion bailout that the currency bloc approved in August.

The bailout loans Greece has amassed over its three rescues are the focus in the debt-relief talks, since Greece’s private- sector debt was already restructured in early 2012. Greece’s borrowing outlook gained a boost over the weekend, when the European Central Bank found that capital shortfalls at the four biggest banks won’t require all of the money set aside for financial-sector assistance within the aid program. The banks need €14.4 billion, of which €10 billion is expected to come from the rescue coffers. The European Stability Mechanism said on Saturday that this means Greece won’t draw down the full bailout amount, since it doesn’t appear to need another 15 billion euros that had been earmarked for bank aid if needed. The banks are expected to raise 4.4 billion euros from private-sector sources.

Greek government officials say the EBRD, which took bank stakes in Cyprus, has indicated its willingness to take part in the Greek banks’ search for fresh capital. The EBRD is actively looking at the recapitalization plans of the Greek banks with a view to determining whether we can play a role in the process over the next few weeks, said Axel Reiserer, a spokesman for the London-based development bank. The EBRD has recently established a presence in Greece and is now building relationships and exploring options for investments, Reiserer said. The EBRD handles project finance and does not provide budget support or financial aid.

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Time warp.

Fannie, Freddie May Need To Tap Treasury, FHFA Director Says (MarketWatch)

Fannie Mae and Freddie Mac are at risk of needing an injection of Treasury capital after the latter reported its first quarterly loss in four years, the director of the Federal Housing Finance Agency said Tuesday. FHFA Director Mel Watt issued a statement following mortgage-finance company Freddie Mac’s $475 million third-quarter loss, its first quarterly loss in four years. “Volatility in interest rates coupled with a capital buffer that will decline to zero in 2018 under the terms of the senior preferred stock purchase agreements with Treasury will likely make both Enterprises increasingly susceptible to the possibility of quarterly losses that could result in draws going forward,” Watt said. Freddie Mac said its loss was driven by interest rate changes that soured the value of derivatives it holds.

Watt, in his statement, pointed out that Freddie Mac didn’t report a decline in the credit quality of credit-related losses. The status of Fannie Mae and Freddie Mac has been left in limbo since the government took them under conservatorship in 2008. Efforts to reform the companies have stalled in Congress. But Treasury Secretary Jack Lew and his deputies have pushed back against the idea of privatizing Fannie Mae and Freddie Mac. So-called recap and release could raise the possibility of another bailout, the Treasury says. Freddie Mac has paid $96.5 billion to the U.S. Treasury in dividends. It won’t make any payments to the Treasury for the third quarter, but it won’t have to draw, either, due to the $1.8 billion in reserves.

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This is big. When the supply chain of the global economy starts sputtering, look out below.

Maersk Line to Cut 4,000 Jobs as Shipping Market Deteriorates (WSJ)

The world’s biggest container-ship operator is altering course, slashing jobs and canceling or delaying orders for new vessels after years weathering a sharp downturn in the container-shipping market. Danish conglomerate A.P. Møller-Maersk A/S said Wednesday its Maersk Line container-shipping unit would cut 4,000 jobs from its land-based staff of 23,000. It is also canceling options to buy six Triple-E vessels, the world’s largest container ships, to cope with the deepest market slump in the industry since the 2009 global financial crisis. Maersk said it would also push back plans to purchase eight slightly smaller vessels. The decision to halt its fleet expansion represents a significant U-turn for the company, which had been investing heavily amid the downturn.

Counting on its market-share dominance and deep pockets, it aimed to expand as smaller competitors retrenched. But after issuing a surprise profit warning last month, Maersk signaled it, too, was no longer immune to a combination of slowing global growth and massive container ship overcapacity on many routes. The conglomerate said it would cut its annual administration costs by $250 million over the next two years and would cancel 35 scheduled voyages in the fourth quarter. That is on top of four regularly scheduled sailings it canceled earlier in the year. Maersk has already ordered 27 vessels this year, including 11 Triple-E behemoths, which can carry in excess of 19,000 containers. “Given weaker-than-expected demand, this will be enough for us to grow in line with our ambitions over the next three years or so,” said Maersk Line Chief Executive Søren Skou.

The Triple-E orders were placed at South Korean yard Daewoo Shipbuilding and included a nonbinding option to order six more ships. Maersk officials said that under the terms of the deal, the Danish company isn’t subject to any damages for canceling the option. DSME wasn’t immediately available for comment. Although such options aren’t included in the order books of shipbuilders until they become solid orders, a move like Maersk’s represents a psychological blow for the global shipbuilding industry as well. Ships like the Triple-E go for more than $150 million each, and orders for them have helped cushion the blow for dwindling orders for other ship types.

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Remember remember the 5th of November. Today Anonymous promised to ‘unveil’ 1000 American KKK members.

2015 Million Mask March: Anonymous Calls For Day Of Action In 671 Cities (RT)

Tens of thousands of activists disguised as Guy Fawkes are expected to the flood streets of over 671 cities as the Anonymous-led Million Mask March sweeps the globe. The hacktivist group and its followers will protest censorship, corruption, war and poverty. For the fourth year in a row the “Anonymous army,” as the group likes to call its activists, will rise up and take part in rallies and protests from Sydney to Los Angeles and Johannesburg to London. Hiding their faces behind stylized ‘Anonymous’ masks popularized by the “V for Vendetta” movie, they will come forward to make their voices heard. The Million Mask March is also about letting “various governments” know that “the free flow of information” will never be stopped.

“We now face a dilemma unfamiliar to any previous human civilization, we face this dilemma not simply as a community, nor a nation; rather collectively as a planet. We have something no previous generation has ever had, the internet,” Anonymous said in its 2015 promo video for the Million Mask March. Social media has been their major megaphone calling on people to unite in a global move. Just like last year, London expects one of the most massive marches on its streets. According to the demonstration’s page on Facebook, 18,000 people are going to join the Anonymous-inspired march. “The government and the 1% have played their hand, now it is time to play ours,” a Facebook statement reads. This year’s dress code for the London’s Million Mask March calls for “white judicial wigs, black robes & Anonymous masks for Order of Public Court.”

Activists will start gathering by the Ecuadorian Embassy “to free Robin Hood [Julian Assange]” at 9 am. The Metropolitan Police is bracing for 2015’s Million Mask March with thousands of extra police. Law enforcement will be on stand-by in case activists attack businesses or cause damage to property. Potential targets have been warned. The 2014 Million Mask March in London was marked by scuffles between activists and police. Meanwhile in Washington, the Million Mask March is expected to be attended by 25,000 people, according to Facebook’s number of “going” at the time of publication. Activists plan to meet by the Washington monument not far from the Capitol building and march towards the White House.

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Note how this piece is 180º different from the next one.

Merkel Overwhelmed: Chancellor Plunges Germany Into Chaos (Sputnik)

Merkel’s recent statements about the need to keep German borders open in order to prevent military conflicts in Europe is causing panic and anxiety among the German population, DWN wrote. According to the newspaper, Merkel’s actions have surprised political observers as well, some of whom say that the German Chancellor is “overwhelmed” and that her era will soon come to an end. The author argued that Merkel’s statements about the possibility of a military conflict are causing fear and panic among Germans. “A warning of a war in Europe expressed by the German Chancellor in public is irresponsible,” the article said, adding that in this context Merkel’s statements about the need to keep the borders open sound confusing and ridiculous.

“The reaction of all ordinary people to such a threatening statement would be that they would want the borders to be closed quickly,” the author wrote. The situation in the country is extremely critical. There is aggression and a tense atmosphere between various groups in refugee camps that may lead to an explosion anytime. Some refugees do not view the German authorities as an obstacle and do not take into account the local legislation when initiating violent clashes. “Will Merkel send the Bundeswehr to the camps? The police have already called the Bundeswehr during violent clashes because otherwise they would lose control,” the newspaper wrote.

According to the newspaper, the catastrophic situation has its roots in Merkel’s irresponsible policy of open doors towards all refugees and migrants. Now at a time when the influx of newcomers is still increasing and the country’s authorities are completely overwhelmed, the situation may come out of control any time. Germany and other European countries have been struggling to resolve the refugee crisis for many months, but without much success. Hundreds of thousands of undocumented migrants continue to flee their home countries in the Middle East and North Africa to escape violence and poverty.

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Her power is more important than refugees’ lives.

Merkel Reasserts Control as Rebellion Over Refugees Fades (Bloomberg)

German Chancellor Angela Merkel may have defused one of the biggest bust-ups of her third-term coalition after quelling a political revolt from her Bavarian allies over her handling of the refugee crisis. A nascent deal reached this week indicates Merkel is reasserting her control over the domestic political drift Germany has witnessed recently amid coalition sniping that put her chancellorship in question. While she has said many external factors will determine whether the flow of refugees can be stemmed – from government action in Turkey to a diplomatic solution to end the war in Syria – Merkel can also take heart from the latest polling that suggests her party’s sliding support has halted.

“There were some threats, but Merkel treated it quite calmly,” said Manfred Guellner, head of Berlin-based pollster Forsa, adding that her party’s poll numbers have probably reached the bottom. “As far as power brokers in Berlin are concerned, nobody at the moment wants to risk the coalition in any serious way.” The chancellor struck the agreement with her chief internal critic, Bavarian Premier Horst Seehofer, removing his threat of unilateral action to halt the influx of refugees. Merkel and Seehofer will meet Thursday with Sigmar Gabriel – head of junior coalition partner, the Social Democrats – to hammer out a final deal. All three have signaled in the last two days that they’re aiming to put the dispute behind them. “We will see if we can find common ground,” Merkel told reporters Wednesday in Berlin.

“If we don’t find an agreement, we have to continue negotiating. That wouldn’t be the first time, but everybody wants us to find a logical solution.” [..] Seehofer, the chairman of the Bavarian sister party of Merkel’s Christian Democrat Union, was assuaged by the chancellor’s commitment to reduce the number of refugees. Merkel said that would involve a series of measures including a political agreement with Turkey to protect that country’s border and a resolution of the civil war in Syria, rather than shutting Germany’s frontier or setting upper limits on those who can come in. “No country in the world can accommodate a limitless flow of refugees,” Seehofer said earlier this week, responding to the numbers of refugees arriving in Bavaria from Austria, issuing the biggest challenge yet to Merkel’s open-door policy.

Speaking to business leaders in Dusseldorf Wednesday evening, Merkel reiterated the need to cut the number of asylum-seekers and tackle the refugee crisis at its source in Syria, warning that a restoration of border controls within the European Union would hit the free movement of goods and people. “We probably need a European border guard, agreements with our neighbors and a fair distribution” of refugees in Europe, the chancellor said. “That means we need a change to the existing asylum system, but a change that strengthens Europe and not a change that weakens Europe.”

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“..people will keep coming as long as the smugglers tell them to come, and the smugglers will keep attempting trips as long as the people are coming..”

Rough Seas and Falling Temperatures Fail to Stop Flow of Refugees (NY Times)

The rubber dinghy rolled perilously on the waves and twisted sideways, nearly flipping, as more than three dozen passengers wrapped in orange life vests screamed, wept and cried frantically to God and the volunteers waiting on the rocky beach. Khalid Ahmed, 35, slipped over the side into the numbing waist-high water, struggled to shore and fell to his knees, bowing toward the eastern horizon and praying while tears poured into his salt-stiff beard. “I know it is almost winter,” he said. “We knew the seas would be rough. But please, you must believe me, whatever will happen to us, it will be better than what we left behind.” The great flood of humanity pouring out of Turkey from Syria, Afghanistan, Iraq and other roiling nations shows little sign of stopping, despite the plummeting temperatures, the increasingly turbulent seas and the rising number of drownings along the coast.

If anything, there has been a greater gush of people in recent weeks, driven by increased fighting in their homelands – including the arrival of Russian airstrikes in Syria — and the gnawing fear that the path into the heart of Europe will snap shut as bickering governments tighten their borders. “Coming in the winter like this is unprecedented,” said Alessandra Morelli, the director of emergency operations in Greece for the United Nations High Commissioner for Refugees. “But it makes sense if you understand the logic of ‘now or never.’ That is the logic that has taken hold among these people. They believe this opportunity will not come again, so they must risk it, despite the dangers.”

The surge means that countries throughout the Balkans and Central Europe already under intense logistical and political strain will not find relief — especially Germany, the destination of choice for many of the refugees. Hopes that weather and diplomacy would ease the emergency are unfounded so far, putting more pressure on financially strapped and emotionally overwhelmed governments to quickly find more winterized shelter. The influx also underscores the European Union’s failure to reach a unified solution to the crisis, leaving places like Lesbos struggling to deal with huge numbers of desperate people and raising questions about what will happen not just this winter, but in the spring and beyond.

Early this week, the number of people who had crossed into Greece from Turkey hit 600,000, after having passed 500,000 only a few weeks earlier. Both migrants and relief workers shrug when asked how far into the winter people will try to make the treacherous crossing. “Some of the smugglers, they tell the people who call them, ‘Yes, there will be more trips, you should come,’ and so the people keep coming,” said Abu Jawad, a 28-year-old Palestinian Syrian who works as a broker for Turkish smugglers, recruiting passengers from the crowds in Izmir, Turkey, and other coastal cities. “So what I think is that people will keep coming as long as the smugglers tell them to come, and the smugglers will keep attempting trips as long as the people are coming,” he said.

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Leggeri should be fired from framing the issue this way. But he won’t, because this is Europe’s new normal, this is how politics wants is framed. Still, under international law people fleeing war zones cannot be labeled ‘illegal’.

800,000 ‘Illegal Entries’ To EU In 2015, Frontex Chief Says (AFP)

Migrants have made some 800,000 “illegal entries” to the European Union so far this year, the head of the bloc’s border agency Frontex said in an interview with German newspaper Bild published Wednesday. Warning that the influx of migrants has probably not yet “reached its peak,” Fabrice Leggeri called for European states to detain unsuccessful asylum seekers so they can be “rapidly” sent back to their countries of origin. “EU states must prepare for the fact that we still have a very difficult situation ahead of us in the coming months,” added Leggeri. Last month, Frontex said that 710,000 migrants had entered the EU in the first nine months of the year but cautioned that many people had been counted twice. The agency said on October 13 that “irregular border crossings may be attempted by the same person several times.”

“This means that a large number of the people who were counted when they arrived in Greece were again counted when entering the EU for the second time through Hungary or Croatia,” explained the agency. According to the most recent figures from the UN refugee agency, more than 744,000 people have made the perilous journey across the Mediterranean this year, the majority to Greece. On Wednesday, the first set of 30 migrants was due to leave Athens for Luxembourg under an EU plan to redistribute people throughout the 28-member bloc in order to ease pressure on countries like Greece and Italy. The bloc hopes to transfer some 160,000 people under the plan.

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Apr 122015
 
 April 12, 2015  Posted by at 9:14 pm Finance Tagged with: , , , , , , , ,  3 Responses »


Byron Street haberdashery, New York 1900

Top 20% of US Earners Pay 84% of Income Tax (WSJ)
Stocks Surge: Nikkei Tops 20,000, Europe Hits 15-Year High (Reuters)
Eurozone Officials Shocked By Greece’s Stance, Says German Newspaper (Reuters)
Yanis Varoufakis and Joseph Stiglitz (INET)
ECB Sees Risks In Greece’s Planned Home Foreclosure Law (Reuters)
Druckenmiller: This Could End ‘Very Badly’ (CNBC)
GE Plan Opens Escape Path From Fed Too-Big-To-Fail Label (Bloomberg)
New Zealand Rock Star Economy Takes Centre Stage As Currency Climbs (Guardian)
Italy Rescues 978 Migrants Attempting to Cross the Mediterranean (Bloomberg)
China-Led Infrastructure Bank to Welcome U.S. ‘Anytime’ (Bloomberg)
Anonymous Declares Cyber War On ISIS Twitter Users (RT)
China Said to Use Powerful New Weapon to Censor Internet (NY Times)
The Universe May Not Be Expanding As Fast As We Thought (NatMon)

And get 99% of income?!

Top 20% of US Earners Pay 84% of Income Tax (WSJ)

Who pays what in income taxes? With April 15 just around the corner, filers may be curious about where they fit into the system as a whole. The individual income tax remains the most important levy in the U.S., providing nearly half of federal revenue. This is unusual: On average, developed nations get only one-third of their revenue from income taxes. Typically they also impose national consumption taxes, such as a value-added tax, that raise as much revenue as their income tax. The pressure on the U.S. income tax has prompted lawmakers on both sides of the aisle to seriously consider a national consumption tax. But liberals worry that such a levy could unduly burden the poor, while conservatives fear it would be too easy to dial up the rate and collect more revenue.

As a result, experts say, there is little chance of tax overhaul this year. The data come from estimates by the nonpartisan Tax Policy Center, a Washington-based research group, as Internal Revenue Service data for 2014 won’t be available for at least two years. Unlike IRS data, it includes information about nonfilers—both people who didn’t need to file and people who should have filed but didn’t. The total also includes Americans living overseas and others, which is why it is greater than the U.S. Census estimate of 319 million. Another important difference: The income cited in the tables includes untaxed amounts for employer-provided health coverage, tax-exempt interest and retirement-plan contributions and growth, among other things. This can be significant.

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When this bubble bursts, an awful lot of ‘money’ will be lost.

Stocks Surge: Nikkei Tops 20,000, Europe Hits 15-Year High (Reuters)

World equity markets tested record highs on Friday on hopes of more stimulus from top central banks, while the dollar strengthened on favorable government debt yields compared to those of most other developed countries. Wall Street scored solid gains after U.S. conglomerate General Electric said it plans to sell assets and buy back up to $50 billion of its stock. This propelled GE shares to their highest since September 2008, ending up 10.8% at $28.51 in heavy volume. Earlier, Japan’s Nikkei index rose above 20,000 points for the first time in 15 years while top European shares advanced to their highest since 2000. Oil prices rose on lowered expectations of an Iran nuclear deal that would allow more Iranian oil into the market. Gold rose on the day but snapped a three-week winning streak on a stronger dollar.

“We are in a honeymoon period for risk assets, and will be for another quarter,” said Sandra Crowl, an investment committee member at Paris-based asset managers Carmignac Gestion. The Dow Jones industrial average closed up 98.92 points, or 0.55%, to 18,057.65, the S&P 500 ended up 10.88 points, or 0.52%, to 2,102.06 and the Nasdaq Composite finished 21.41 points, or 0.43%, higher at 4,995.98. Tokyo’s Nikkei closed down 0.2% after breaching the 20,000-point mark. Buoyed by gains in Asia and the renewed drop in the euro, the pan-European FTSEurofirst 300 share index reached a 15-year high of over 1,640 as its ninth week of rises in the last 10 took it to its highest since 2000. Germany’s DAX also scored a record high. The MSCI world equity index, which tracks shares in 45 nations, rose 0.4% to 435.72, a shade below its record high.

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“..in particular its reluctance to talk about cutting civil servants’ pensions.” Ergo, Syriza can’t allow for Greece to remain in the eurozone.

Eurozone Officials Shocked By Greece’s Stance, Says German Newspaper (Reuters)

Eurozone officials were shocked at Greece’s failure to outline plans for structural reforms at last week’s talks in Brussels, a German newspaper on Saturday cited participants as saying, adding the Greek representative behaved like a “taxi driver”. A meeting of deputy finance ministers on Thursday gave Athens a six working day deadline to present revised economic reform plans before eurozone finance ministers meet on April 24 to consider unlocking emergency funding to keep Greece afloat. Eurozone sources told the Frankfurter Allgemeine Sonntagszeitung that they were disappointed and shocked at Athens’ lack of movement in its plans, and in particular its reluctance to talk about cutting civil servants’ pensions.

The mood between Greece’s leftist government and its eurozone partners, especially Germany, has deteriorated in the last few weeks, with personal recriminations flying between ministers and calls from Athens for Berlin to pay war reparations. The paper said at last week’s meeting the Greek representative just asked where the money was “like a taxi driver”, according to sources, and insisted his country would soon be bankrupt. The eurozone sources told the paper that Greece’s creditors do not believe this is the case and that it would be a domestic political issue if Athens is unable to fully pay salaries and pensions. The paper also said that German Finance Minister Wolfgang Schaeuble, who has taken a tough line towards Greece in bailout talks, would have to get the Bundestag lower house of parliament to vote on any fundamental changes to the reform programme.

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Very impressive.

Yanis Varoufakis and Joseph Stiglitz (INET)

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“About 28.1% of home loans extended by Greek banks, which were worth a combined €69 billion, were non-performing or unpaid for more than 90 days, as of September 2014..”

ECB Sees Risks In Greece’s Planned Home Foreclosure Law (Reuters)

Greece’s draft law to protect primary residences from foreclosures goes beyond protecting low-income debtors and could encourage strategic defaults, the ECB said in a legal opinion on Saturday in a potential setback to the plan. Greece’s Economy Ministry had asked for the ECB’s views on the draft legislation, which seeks to protect indebted citizens from losing their primary homes – and fulfills a pledge by the governing SYRIZA party to deal with a humanitarian crisis brought on by the country’s debt crisis. The draft law offers protection to primary homes valued up to €300,000 and requires that borrowers do not have an annual income of more than €50,000 to be eligible. It also sets an upper limit of €500,000 for borrowers’ total wealth, of which bank deposits and other liquid assets cannot exceed €30,000.

The conditions are more generous than under Greece’s previous foreclosure law, which expired last year. It provided protection for homes valued at 200,000 euros or less and required that borrowers had an annual income of 35,000 euros maximum and total wealth of 270,000 euros or less. “The very broad scope of eligible debtors, which goes beyond the protection of vulnerable and low-income debtors, may create moral hazard and could lead to strategic defaults, undermining the payment culture and future credit growth,” the ECB said. “The draft law sets out significantly broader eligibility criteria in terms of the value of the protected property, the annual household income, the value of immovable and movable assets and the amount of deposits,” the ECB said, comparing it to the previous law.

It said that broad-based prohibitions on primary home auctions was not a sustainable solution to tackle the high level of non-performing loans at Greek banks. “It is likely that the prohibitions in the draft law will incentivize debtors who are not in real need of protection to stop meeting their obligations or reduce them significantly, even if they have the means to meet them in full.” The ECB supervises Greek and other eurozone banks. Greek banks’ bad loans rose to 34.2% of their loan portfolios by the end of the third quarter of last year, from 31.9% in December 2013, according to Greek central bank data.

About 28.1% of home loans extended by Greek banks, which were worth a combined €69 billion, were non-performing or unpaid for more than 90 days, as of September 2014, according to latest Bank of Greece data. That was up from 26.1% in 2013. Home loans accounted for a third of banks’ total loans as of last September.

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“..we’ve had money building up four to six years in terms of a risk pattern, I think it could end very badly.”

Druckenmiller: This Could End ‘Very Badly’ (CNBC)

Billionaire investor Stanley Druckenmiller has once again warned that the easy money policies of recent years could end poorly. “I know it’s so tempting to go ahead and make investments and it looks good for today,” the retired founder of Duquense Capital Management said, “but when this thing ends, because we’ve had speculation, we’ve had money building up four to six years in terms of a risk pattern, I think it could end very badly.” The investor’s comments were made at an event in Palm Beach, Florida on Jan. 18, but the transcript was just circulated on Friday. Druckenmiller cited warning signs like the high number of initial public offerings of companies that are unprofitable, and high levels of debt issued to companies, often with poor credit ratings and without many lending restrictions—so called covenants.

Druckenmiller also said that comparing modern day economic policy to that of the Great Depression-era was totally inaccurate. He implied that the U.S. Federal Reserve would not cause to another recession by tightening the flow of money into the system. Druckenmiller showed slides at the event displaying how net worth per household hadn’t returned to pre-1929 levels in 1937, before rates began rising. He compared that to how wealth has risen today far beyond pre-crash levels in 2007. “We’re not even close to the kind of numbers we had in 1937,” he said.

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Fooling the system.

GE Plan Opens Escape Path From Fed Too-Big-To-Fail Label (Bloomberg)

General Electric’s plan to exit most lending operations could make its finance arm the first entity to escape the grip of the Federal Reserve’s too-big-to-fail oversight, a move that would free the company from strict capital requirements and reduce government monitoring. As part of a broad restructuring announced Friday, GE General Counsel Brackett Denniston said the finance unit will apply to lose its systemically important label sometime next year. GE has already discussed its overhaul, which includes the sale of $26 billion of real estate, with U.S. regulators who will decide whether the company can go free. “We think we’ve come a long way and you can argue we’re not systemic right now,” Denniston said an in interview.

“When the plan is further advanced, when we think the argument is even stronger and more compelling, that’s the right way to do it.” GE Capital is one of four non-banks hit with the tighter scrutiny, which applies to firms that regulators believe could threaten the U.S. economy if they failed. Companies have sought to avoid the capital, liquidity and leverage constraints that can come with being selected, with insurer Metlife Inc. suing the U.S. government to try to escape. Instead of fighting, Fairfield, Connecticut-based GE is slimming down. The company’s shares rose $2.48 to $28.21, or 9.6%, at 2:41 p.m. in New York trading. It was the biggest daily increase since March 2009, according to Bloomberg data.

Decisions on which companies are systemically important are made by the Financial Stability Oversight Council, a group of regulators set up under the 2010 Dodd-Frank Act that Treasury Secretary Jacob J. Lew leads. A designation subjects a company to supervision by the Fed, allowing the central bank to scrutinize it the same way it does large banks like Citigroup and JPMorgan. To get out, GE Capital will have to convince the FSOC that its collapse wouldn’t hurt the broader financial system. Once the restructuring is complete, GE’s ending net investment in GE Capital – a balance-sheet gauge that excludes non-interest bearing liabilities and cash – will fall to $90 billion from $363 billion, the company said. Just $40 billion of that will be in the U.S., making it “inconceivable” that the company could be considered systemic, Denniston said.

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NZ exports fell 27% in 2014. What more does anyone need to know?

New Zealand Rock Star Economy Takes Centre Stage As Currency Climbs (Guardian)

Australians are going to have to get used to New Zealanders going on about how much better their economy is. Paul Bloxham, the HSBC economist who first called New Zealand a rock star economy, says the New Zealand dollar is going to be strong for some time because the NZ economy is strong. The New Zealand dollar was at 98.27 Australian cents on Friday, up from 98.18 cents on Thursday and it is expected to reach parity. The last time the New Zealand dollar passed the Aussie dollar was on 18 October 1973 and it only managed it for a few hours, Bloxham said on TVNZ’s Q+A program on Sunday. The New Zealand economy is outperforming every other Organisation for Economic Cooperation and Development (OECD) economy. “That’s why we’ve been describing New Zealand as a rock star,” Bloxham said.

It was the fastest growing of the 34 OECD economies in the past year. “And, we think that situation’s going to continue this year as well,” Bloxham said. The Australian economy, in contrast, is at the end of a mining boom. Mining investment is falling and the rest of the economy is “so-so”. “So it makes sense that the New Zealand dollar is strong relative to the Aussie dollar, and we expect the situation to persist for some time,” Bloxham said. In New Zealand, there was an upturn in construction from the Canterbury rebuild and the housing market was booming in Auckland. Bloxham acknowledged dairy prices had fallen sharply but said dairy production was still rising and the domestic economy was doing very well.

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So what does Brussels say? Nothing.

Italy Rescues 978 Migrants Attempting to Cross the Mediterranean (Bloomberg)

The Italian navy and coast guard engaged in three different rescue operations Friday in order to bring to safety 978 migrants attempting to reach Europe by crossing the Mediterranean Sea, according to a coast guard Twitter post. The migrants were rescued off the Libyan coast following distress calls made from the boats via satellite phone, daily Corriere della Sera reported in its online edition. The government is continuing its “taxi service” to help the criminals that ferry these people over the sea, leader of the opposition Northern League party Matteo Salvini posted on social media following the rescues.

Migration to Europe across the Mediterranean Sea has increased as people flee wars and conflict in countries like Libya, Syria and Somalia. Last year, 218,000 irregular migrants tried to reach Europe, according to the Office of the United Nations High Commissioner for Refugees. The same year, Italy saved 100,250 people through its rescue operation Mare Nostrum at a cost of 114 million euros ($120 million), according to the Italian Interior Ministry. That operation was discontinued in November due to its high cost and criticism from politicians like Salvini that it was helping criminals exploit migrants. Operation Triton, a more limited effort coordinated by European Union border police agency Frontex, has replaced it.

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Ha! Let’s see what Hillary thinks.

China-Led Infrastructure Bank to Welcome U.S. ‘Anytime’ (Bloomberg)

China is keeping the door open for the U.S. to join its new development bank “anytime,” the lender’s chief said, after the Obama administration failed to persuade most allies to snub the lender. The U.S. is “welcome to the kitchen to work with us,’ Jin Liqun, secretary general of the secretariat for establishing the bank, told reporters in Singapore on Saturday. The Asian Infrastructure Investment Bank’s founding membership will probably be ‘‘short of 60,” he said. “China itself has benefited enormously from contributions by the World Bank” and Asian Development Bank, Jin said at a forum in Singapore. “Now it’s time for China to contribute more to this region, and hopefully China’s contributions will spill over to other regions.”

The U.S. suffered a diplomatic setback as allies including Australia, the U.K, and Germany opted to become founding members of the China-led bank. World Bank President Jim Yong Kim said this week he doesn’t view the development lender as heralding an end to the global economic order forged by the U.S. The AIIB will be owned by all members, not solely China, and will have a mandate to promote broad-based socio-economic development, Jin said. As it will focus exclusively on infrastructure funding, while the World Bank and Asian Development Bank address poverty reduction, there is more complementary territory than “head-on competition,” he said.

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Enemies and friends?!

Anonymous Declares Cyber War On ISIS Twitter Users (RT)

Hacktivists from the Anonymous group have attacked hundreds of pro-Islamic State websites and thousands of social networks’ accounts used by the terrorist group. ISIS has hit back though, threatening another 9/11 terror act against the US. A faction of the Anonymous group, called GhostSec, is carrying out a cyber campaign called #OpISIS against the Islamic State (IS). They are looking to target members and supporters of the terrorist organization, who want to spread propaganda over the internet. Anonymous are monitoring social media accounts as well as websites operated by the group formerly known as ISIS/ISIL to disrupt their online operations as they try to “cure the ISIS virus.”

The GhostSec division of Anonymous has been keeping itself busy. They have been compiling a list (f websites “frequently used by the Islamic State through Twitter and other social media platforms for transmission of propaganda, religion, recruitment, communications and intelligence gathering purposes,” the group said in a statement. On Wednesday, the Anonymous group reported of “casualties” among the enemy ranks, which included 233 websites, which had been attacked, 85 websites that had been “destroyed” and 25,000 “terminated” Twitter accounts. Not everyone is happy with the actions undertaken by Anonymous. Security services have criticised the group for taking matters into their own hands. These intelligence bodies say the elimination of jihadist websites and social media accounts prevents them from gathering valuable information concerning their activities.

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“..a “man in the middle attack.”

China Said to Use Powerful New Weapon to Censor Internet (NY Times)

Late last month, China began flooding American websites with a barrage of Internet traffic in an apparent effort to take out services that allow China’s Internet users to view websites otherwise blocked in the country. Initial security reports suggested that China had crippled the services by exploiting its own Internet filter — known as the Great Firewall — to redirect overwhelming amounts of traffic to its targets. Now, researchers at the University of California, Berkeley and the University of Toronto say China did not use the Great Firewall after all, but rather a powerful new weapon that they are calling the Great Cannon. The Great Cannon, the researchers said in a report published on Friday, allows China to intercept foreign web traffic as it flows to Chinese websites, inject malicious code and repurpose the traffic as Beijing sees fit.

The system was used, they said, to intercept web and advertising traffic intended for Baidu — China’s biggest search engine company — and fire it at GitHub, a popular site for programmers, and GreatFire.org, a nonprofit that runs mirror images of sites that are blocked inside China. The attacks against the services continued on Thursday, the researchers said, even though both sites appeared to be operating normally. But the researchers suggested that the system could have more powerful capabilities. With a few tweaks, the Great Cannon could be used to spy on anyone who happens to fetch content hosted on a Chinese computer, even by visiting a non-Chinese website that contains Chinese advertising content.

“The operational deployment of the Great Cannon represents a significant escalation in state-level information control,” the researchers said in their report. It is, they said, “the normalization of widespread and public use of an attack tool to enforce censorship.” The researchers, who have previously done extensive research into government surveillance tools, found that while the infrastructure and code for the attacks bear similarities to the Great Firewall, the attacks came from a separate device. The device has the ability not only to snoop on Internet traffic but also to alter the traffic and direct it — on a giant scale — to any website, in what is called a “man in the middle attack.”

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Guesstimating dark matter.

The Universe May Not Be Expanding As Fast As We Thought (NatMon)

Two papers recently published in the Astrophysical Journal suggest that the universe may not be expanding at the rate that textbooks claim that it is. That conclusion would also imply that the amount of dark energy in the universe is less than current estimates claim it is. The team reached this conclusion by studying Ia supernovae, which are thought to be uniform enough to be used as beacons to measure distances in the cosmos. The team found that the supernovae were not, in fact, uniform but fell into different populations. “ The findings are analogous to sampling a selection of 100-watt light bulbs at the hardware store and discovering that they vary in brightness,” according to a statement. If their findings are correct, it means that a great deal of the math which astronomers use to measure the universe needs to be re-done.

Among other things it would mean that many of the measured distances to objects, the rate at which the universe is expanding and the amount of dark energy involved are currently wrong. “We found that the differences are not random, but lead to separating Ia supernovae into two groups, where the group that is in the minority near us are in the majority at large distances — and thus when the universe was younger. There are different populations out there, and they have not been recognized. The big assumption has been that as you go from near to far, type Ia supernovae are the same. That doesn’t appear to be the case,” said Milne, an associate astronomer with the UA’s Department of Astronomy and Steward Observatory.

The current view of the universe is that it is continuing to expand at an ever increasing rate, pulled apart by dark energy. This view resulted in the Nobel Prize for Physics for Brian Schmidt, Saul Perlmutter and Adam Riess in 2011. The three researchers independently arrived at the conclusion that many supernovae appeared to be fainter than predicted because they had moved farther away than they should have given the accepted rate of universal expansion. “The idea behind this reasoning. is that type Ia supernovae happen to be the same brightness – they all end up pretty similar when they explode. Once people knew why, they started using them as mileposts for the far side of the universe. The faraway supernovae should be like the ones nearby because they look like them, but because they’re fainter than expected, it led people to conclude they’re farther away than expected, and this in turn has led to the conclusion that the universe is expanding faster than it did in the past,” explained Milne.

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Jan 102015
 
 January 10, 2015  Posted by at 11:36 am Finance Tagged with: , , , , , ,  2 Responses »


DPC “Steamer loading grain from floating elevator, New Orleans 1906

Global Economy On The Verge Of A Once-in-a-Generation Transformation (Telegraph)
Oil Derivatives Explosion Double 2008 Sub-Prime Crisis (ETF Daily News)
Energy Stocks Brace For Many Quarters Of Earnings Pressure (MarketWatch)
Don’t Bank on Oil Rebound Says Fund That Foresaw Collapse (Bloomberg)
Oil Glut Spurs Top Traders To Book Supertankers For Storage At Sea (Reuters)
The Oil Industry Still Managed To Add Jobs In December (MarketWatch)
Oil-Price Drop Takes Shine Off Steel Town (WSJ)
Oil Losses Force Norway to Consider Measures to Back Economy (Bloomberg)
Russia Cut to One Step Above Junk by Fitch on Oil, Sanctions (Bloomberg)
Gorbachev Warns Of Major War In Europe Over Ukraine (Reuters)
Empirical Proof of the Giant Con (Beversdorf)
Inner City Turmoil And Other Crises: My Predictions For 2015 (Ron Paul)
Greece’s Leftist Candidate: ‘Markets Won’t Be Rooting for Us’ (Bloomberg)
Eurozone Hit By Germany’s Sliding Exports And Industrial Production (Ind.)
Dutch Pension Fund Giant Drops Use Of Hedge Funds (Reuters)
#OpCharlieHebdo: Anonymous Declares War On Terrorist Websites (RT)
What Radicalized The Charlie Hebdo Terrorists – Try Abu Ghraib (Ray McGovern)
‘Bent Time’ Tips Pulsar Out Of View (BBC)
Would You Be Beautiful In The Ancient World? (BBC)

“There is only so much cost-cutting companies can do to compensate for absent demand.”

Global Economy On The Verge Of A Once-in-a-Generation Transformation (Telegraph)

Few things illustrate the 35-year boom in Western asset prices better than the cost of a London house. In 1980, according to Nationwide data, you could have bought the average home for little more than £30,000. Today, the same property would set you back £407,000, or more than 13 times as much. Even adjusting for inflation, the gains are spectacular. Relative to average earnings – which are themselves up by a lot more than ordinary inflation – house prices have doubled. But it is not just residential property. Equities, bonds, agricultural land, even personalised number plates – virtually all asset prices have sky-rocketed. There have been ups and downs, admittedly, but the direction of travel has been clear. It is as if all the inflation that used to go into consumer prices has been diverted into financial assets and real estate instead.

All this, however, may be about to change – for we could be on the cusp of one of those seminal, once-in-a-generation shifts that completely alters the way we experience, and respond to, the world around us. For the past three and a half decades, the balance of advantage has resided unambiguously with capital. Now, it may be turning back to labour. Such a change has been predicted many times before, only for those prophecies to be proved wrong. It could be that past trends continue for a while longer yet. But a unique array of unfamiliar factors is fast coming into play. So here are the five primary reasons for believing that the long boom in asset prices – on many measures, the biggest the world has ever seen – may finally be drawing to a close. First, low inflation in Europe. The eurozone this week confirmed that it has essentially lost the battle against deflation (in truth, it never really bothered to fight it), with the headline rate turning negative in December.

It is true that “core inflation” – excluding fluctuating costs such as energy and food – remains positive. But even this is very low by historic standards, and has been for a long time now. Companies perform best when inflation is predictable and steady, which is what we had during the “Great Moderation” of the pre-crisis period. Static or falling prices, on the other hand, are always extremely bad for corporate profits in the long term. There is only so much cost-cutting companies can do to compensate for absent demand. In this low-inflation environment, business models that have relied for decades on rising prices begin to look highly vulnerable. New forms of retail competition, both online and physical, have been a blessing for consumers, but for corporate profits they are a nemesis. In a deflationary environment, equities and property will inevitably perform badly: only fixed-interest sovereign bonds, the least risky form of investment, do well.

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“Derivatives can tie a financial instrument to another financial instrument or a financial derivative can be tied to an oil derivative.” “This is just a flavor of how complicated these mathematical equations really are, and no one really knows the risk in them.”

Oil Derivatives Explosion Double 2008 Sub-Prime Crisis (ETF Daily News)

Precious metals expert David Morgan says the plunge in oil prices is not good news for big Wall Street banks. Morgan explains, “The amount of debt that is carried by the fracking industry at large is about double what the sub-prime was in the real estate fiasco in 2008.” “In summary, we’re looking at an explosion in potential that is greater than the sub-prime market of 2008 because, number one, oil and energy are the most important sectors out there.” “Number two, the derivative exposure is at least double what it was in 2008. Number three, the banking sector is really more fragile and we have less ability to weather the storm.” Morgan, who is also “a big-picture macroeconomist,” says oil derivatives could take down the system just like mortgage-backed securities back in the last financial meltdown.”

“The Fed said the sub-prime crisis would be “contained.” It was not. So, could oil derivatives take down other derivatives in a daisy chain type of collapse? Morgan says, “Absolutely, there is no question about it. The main problem is the overleverage of the system as a whole.” “Warren Buffett calls derivatives weapons of financial mass destruction, which is a true statement. Secondly, look at how derivatives are interconnected. Derivatives can tie a financial instrument to another financial instrument or a financial derivative can be tied to an oil derivative.” “This is just a flavor of how complicated these mathematical equations really are, and no one really knows the risk in them.” So, underwater oil derivatives in one bank could bring down the financial system?” “Morgan says, “Absolutely, because it is all tied together, all the banks are interconnected.”

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“.. deeper losses are likely to surface down the road, when companies report first-quarter or second-quarter earnings.“

Energy Stocks Brace For Many Quarters Of Earnings Pressure (MarketWatch)

Wall Street is bracing for a 20% decline in energy companies’ earnings in the fourth quarter — and that’s the good news. “This quarter is not going to be the trough of profitability,” said Pavel Molchanov, an analyst with Raymond James. Rather, deeper losses are likely to surface down the road, when companies report first-quarter or second-quarter earnings. Perhaps more than the sheer numbers, investors will want to hear about belt-tightening measures at companies exposed to the rout in oil prices over the last few months. The giant oil companies will report at the tail end of this earnings season, in the last days of January and the first days of February (Metals manufacturer Alcoa kicks off earnings season on Monday).

Meanwhile, Schlumberger on Thursday will be the first among oil-field services companies to report, while other companies, such as machinery maker Caterpillar, which reports on Jan. 27, are also expected to report pain from falling oil prices. Of course, all the fourth-quarter numbers will reflect the days when New York-traded WTI and London’s Brent, the global crude benchmarks, averaged $73 a barrel and $76 a barrel, respectively. The picture has only worsened. On Friday, Brent crude fell under $50 a barrel, while New York-traded oil struggled to keep above $48 a barrel. With the world awash in oil at least through the first half of the year and no indication that OPEC is even contemplating a production cut in the face of weak global demand, Wall Street has braced for more declines in the price of crude, and therefore gloomy outlooks from energy-related plays.

Falling oil prices, of course, are bound to help some companies — be it airlines, through lower fuel costs, or retailers, as consumers have more in their wallets for other items. Burt White, chief investment office for LPL Financial, said in a note Friday he expects “another good earnings season overall” despite the drag from the energy sector. Consensus estimates call for a 4% year-over-year increase in S&P 500 earnings per share for the quarter, even while absorbing the expected 20% decline in energy-sector earnings, he said.

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The casino goes full steam.

Don’t Bank on Oil Rebound Says Fund That Foresaw Collapse (Bloomberg)

A hedge fund that returned almost 60% last year by betting on oil’s collapse says the slump may have further to run. Crude may drop below $40 a barrel in the next few months without a substantial slowdown of production growth in the U.S. and Canada, said Doug King, London-based chief investment officer of Merchant Commodity Fund. Bearish oil wagers in the second half of 2014 helped the $260 million fund gain 59.3%, the best performance since its June 2004 start. Brent futures lost 48% last year, the most since 2008, as OPEC resisted calls to cut output.

The U.S. is pumping the most crude in more than three decades as horizontal drilling and hydraulic fracturing unlock shale reserves, adding to a global supply glut that Qatar estimates at 2 million barrels a day. “Unless we see real slowdown in production growth in the U.S. and Canada, there’s no point in trying to bottom fish as you are getting no help from the fundamental picture,” King said in an interview in Singapore on Jan. 8. “I wouldn’t be surprised to see the 2008 low of $35 to $30.” Merchant made 19.5% in December by forecasting a slump in crude and coal prices, King said. Brent fell 18% last month, while benchmark European thermal coal for next-year delivery lost 8.4%, according to broker data compiled by Bloomberg.

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Floating casino’s.

Oil Glut Spurs Top Traders To Book Supertankers For Storage At Sea (Reuters)

Some of the world’s largest oil traders have this week hired supertankers to store crude at sea, marking a milestone in the build-up of the global glut. Trading firms including Vitol, Trafigura and energy major Shell have all booked crude tankers for up to 12 months, freight brokers and shipping sources told Reuters. They said the flurry of long-term bookings was unusual and suggested traders could use the vessels to store excess crude at sea until prices rebound, repeating a popular 2009 trading gambit when prices last crashed. The more than 50% fall in spot prices now allows traders to make money by storing the crude for delivery months down the line, when prices are expected to recover.

The price of Brent crude is now around $8 a barrel higher for delivery at the end of 2015, with its premium rising sharply over spot prices this week due to forecasts for a large surplus in the first half of this year, in a market structure known as contango. Brent hit a 5 1/2-year low of $49.66 a barrel on Wednesday. It was trading around $51 a barrel on Thursday. While major energy traders will often hire vessels for long periods as part of their day-to-day operations, industry sources said the fixtures booked in the last week had the option to hold oil in storage. Some could still be used for conventional oil transportation. Vitol, the world’s largest independent oil trader, has booked the TI Oceania Ultra Large Crude Carrier, a 3 million barrel capacity mega-ship that is one of the biggest ocean going vessels in the world by dead weight tonnage (DWT).

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Time lag.

The Oil Industry Still Managed To Add Jobs In December (MarketWatch)

It wasn’t by much, but oil and gas explorers expanded their workforce in December even as energy prices tumbled, according to government data released Friday. The oil and gas extraction industry added roughly 400 positions in December. That is the lowest monthly showing since August, for an industry that employs some 216,000. The industry added 12,000 jobs last year. With crude-oil prices tumbling — down roughly half from a July high — job losses may well be in store.

That’s particularly worrying, because these positions, which include geoscientists, engineers and laborers, pay above-average wages. In November, workers in this sector earned $40.59 per hour, compared to the national average that’s under $25. It’s also a sector that’s been aggressively adding jobs. There’s been jobs growth of 39% over the last five years, compared to 8% for the U.S. overall. The rapid growth in the energy industry — driven by techniques like fracking that have ratcheted up growth in places like North Dakota — has also helped spill over into other sectors, like construction.

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And there go the jobs.

Oil-Price Drop Takes Shine Off Steel Town (WSJ)

Lorain, Ohio—The collapse of oil prices in the past six months is threatening to end a recent industrial revival in manufacturing centers like this town of 64,000 people on the banks of Lake Erie. The U.S. shale-drilling boom lifted Midwest manufacturing economies, enriched property owners with mineral rights and even brought back the fat blue-collar paychecks that once were harder to find. But as drilling and exploration for new oil and gas slow with the drop in energy prices, cutbacks at heavy-industry companies are cropping up. The U.S. Steel Corp. plant here, which depends heavily on oil and gas companies to buy its steel pipe and tubes, warned on Monday it might have to idle the plant in March and lay off 614 of the plant’s 700 workers. The company also said it could temporarily end work at a plant in Houston, affecting 142 workers.

The Pittsburgh-based steelmaker, the second-biggest employer in Lorain after Mercy Regional Medical Center, had recently invested $95 million in a plant upgrade. When energy prices were high and orders robust, workers received generous overtime, sometimes pushing annual salaries into six figures. “We thought this time the going was going to be good for a while,” said Chase Ritenauer, the town’s 30-year-old mayor. “But now Lorain is going to feel the impact of the global economy.” U.S. Steel bet heavily on the energy industry. The company invested $215 million in capital expenditure in its so-called tubular division over the past three years, compared with $113 million in the five years before that. U.S. Steel is trying to get back in the black after five straight unprofitable years, including a $1.7 billion loss last year.

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“Right now, there’s somewhat of a state of emergency in the oil industry – some would call it a panic ..”

Oil Losses Force Norway to Consider Measures to Back Economy (Bloomberg)

Norway is considering tapping reserve funds to shield western Europe’s biggest oil producer from the worst slump in crude prices in more than half a decade. Prime Minister Erna Solberg said the government is now “on alert” to respond to the rout. “If the economic situation requires it, we can react quickly,” she said yesterday at a conference in Oslo organized by Norway’s confederation of industry. A 56% plunge in the price of Brent crude since a June high has undermined Norway’s currency and beaten back its stock market. The krone has lost 20% against the dollar over the period. Norway’s benchmark equity index is down 9%. Oil producers including the country’s biggest, Statoil, and service companies have already cut thousands of jobs to adjust and unions are calling for government measures to protect the industry.

“The decline has been stronger and gone faster than we had expected,” Eldar Saetre, chief executive officer of state-backed Statoil, said yesterday in an interview. “The development we’re seeing is a reminder that we’re in a cyclical industry, and that we need to have a cost level in this industry that can sustain these types of cycles and let us be competitive over time.” Scandinavia’s richest economy is now facing the flipside of an oil reliance that has supported an economic boom over the past decade. Though successive governments have sought to avoid overheating by channeling oil income into the country’s $840 billion sovereign wealth fund, Norway’s plight now shows those efforts weren’t enough to wean it off oil.

“Right now, there’s somewhat of a state of emergency in the oil industry – some would call it a panic,” Walter Qvam, CEO of Kongsberg, a Norwegian defense and oil services company, said in an interview. “Norway needs this reminder, and it’s very good that we’re getting it now. We’re going to stay an oil nation, but we now need to create the next version of Norway, because the version we’ve been living in for the past 35 years is on the wane.” Solberg said her government is working on models that will help the $510 billion economy speed up its shift away from fossil fuels and over to other industries.

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The war on Russia continues: “It will be very difficult to escape being junked.”

Russia Cut to One Step Above Junk by Fitch on Oil, Sanctions (Bloomberg)

Russia’s credit rating was cut to the lowest investment grade by Fitch Ratings after plummeting oil prices and the conflict over Ukraine triggered the worst currency crisis since the country’s 1998 default. Fitch, which last downgraded Russia in 2009, cut the sovereign one step to BBB-, according to a statement issued Friday in New York. The grade, on par with India and Turkey, has a negative outlook. “The economic outlook has deteriorated significantly since mid-2014 following sharp falls in the oil price and the ruble, coupled with a steep rise in interest rates,” Fitch said in the statement. “Plunging oil prices have exposed the close link between growth and oil.” The world’s biggest energy exporter is on the brink of a recession after crude fell more than 50% since June and the U.S. and its allies imposed sanctions following President Vladimir Putin’s annexation of Crimea from Ukraine in March.

The penalties have locked Russian corporate borrowers out of international debt markets and curbed investor appetite for the ruble, stocks and bonds. The downgrade by Fitch puts it in line with the nation’s assessment by Standard & Poor’s, which cut Russia to BBB- in April. Authorities have responded to the currency crisis with emergency moves that included the biggest interest-rate increase since 1998, a 1 trillion-ruble ($17 billion) bank recapitalization plan and measures to force exporters to convert more of their foreign revenue into rubles. “This decision is showing Russia is now caught in a vicious cycle in which the plunge in oil prices, the much harsher sanctions regime, the uncertainty about the entire policy regime and the depth of the recession are all feeding on each other,” Nicholas Spiro, managing director at Spiro Sovereign Strategy, said in a telephone interview from London. “It will be very difficult to escape being junked.”

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“We won’t survive the coming years if someone loses their nerve in this overheated situation ..”

Gorbachev Warns Of Major War In Europe Over Ukraine (Reuters)

Former Soviet leader Mikhail Gorbachev warned that tensions between Russia and European powers over the Ukraine crisis could result in a major conflict or even nuclear war, in an interview to appear in a German news magazine on Saturday. “A war of this kind would unavoidably lead to a nuclear war,” the 1990 Nobel Peace Prize winner told Der Spiegel news magazine, according to excerpts released on Friday. “We won’t survive the coming years if someone loses their nerve in this overheated situation,” added Gorbachev, 83. “This is not something I’m saying thoughtlessly. I am extremely concerned.” Tensions between Russia and Western powers rose after pro-Russian separatists took control of large parts of eastern Ukraine and Russia annexed Crimea in early 2014. The United States, NATO and the European Union accuse Russia of sending troops and weapons to support the separatist uprising, and have imposed sanctions on Moscow.

Russia denies providing the rebels with military support and fends off Western criticism of its annexation of Crimea, saying the Crimean people voted for it in a referendum. Gorbachev, who is widely admired in Germany for his role in opening the Berlin Wall and steps that led to Germany’s reunification in 1990, warned against Western intervention in the Ukraine crisis. “The new Germany wants to intervene everywhere,” he said in the interview. “In Germany evidently there are a lot of people who want to help create a new division in Europe.” The elder statesman, whose “perestroika” (restructuring) policy helped end the Cold War, has previously warned of a new cold war and potentially dire consequences if tensions were not reduced over the Ukraine crisis. The diplomatic standoff over Ukraine is the worst between Moscow and the West since the Cold war ended more than two decades ago.


h/t @PhenomTriune

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Crucial topic. The turning point in debt fueled economies is when additional debt can no longer produce growth.

Empirical Proof of the Giant Con (Beversdorf)

[..] it is important then that we ensure our debt is being allocated effectively so as to avoid devastation. But how do we do that? How do we know debt is being effectively put to work in the economy so that it actually returns both principal and some additional positive return at least sufficient to cover the interest payment on the principal borrowed? Well, I’ve put together a chart. The chart depicts something I’m calling Debt Delta Velocity and M2 Delta Velocity. All I’ve done is used the change in GDP and money stock to get the delta velocity. That is, for each dollar we ve added to money supply in a given period (and I used annual periods) we gauge how much additional output was generated. So then it s change in GDP divided by change in M2 Stock (whereas M2 Velocity is total GDP/total M2).

And so in order to measure the effectiveness of our debt utilization I take change in GDP divided by change in debt. Now the issue with debt is that it needs to be paid back. And so if we are generating anything less than the principle + real interest rate we are actually losing money on each dollar of debt despite official total GDP increasing due to the inclusion of debt principal. So let’s have a look at the chart.

And so what we see is M2 Delta Velocity (green line) showing a positive trend from the late 1960s through the late 1990s at which point it goes into a nose dive that continues today. This means that we re being forced to print proportionately more dollars to generate the same amount of output. But one dollar of additional supply is still generating more than a dollar of output. However that does not appear to be the case with debt delta velocity. The Debt Delta Velocity (blue line) is the change in GDP/ (change in debt + cumulative change in annual interest payments). The idea is that the cost is not only the additional principal debt but the annual interest payment as well. And so even a linear accumulation of debt results in an exponential growth in obligations requiring significantly more GDP growth than does M2 Delta Velocity to generate positive returns. The significance of this chart is that it shows us for every dollar of debt we take on we are generating less than a dollar of GDP.

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“Reality is now setting in for America and for that matter for most of the world. The piper will get his due even if “the children” have to suffer.”

Inner City Turmoil And Other Crises: My Predictions For 2015 (Ron Paul)

If Americans were honest with themselves they would acknowledge that the Republic is no more. We now live in a police state. If we do not recognize and resist this development, freedom and prosperity for all Americans will continue to deteriorate. All liberties in America today are under siege. It didn’t happen overnight. It took many years of neglect for our liberties to be given away so casually for a promise of security from the politicians. The tragic part is that the more security was promised — physical and economic — the less liberty was protected. With cradle-to-grave welfare protecting all citizens from any mistakes and a perpetual global war on terrorism, which a majority of Americans were convinced was absolutely necessary for our survival, our security and prosperity has been sacrificed. It was all based on lies and ignorance. Many came to believe that their best interests were served by giving up a little freedom now and then to gain a better life. The trap was set.

At the beginning of a cycle that systematically undermines liberty with delusions of easy prosperity, the change may actually seem to be beneficial to a few. But to me that’s like excusing embezzlement as a road to leisure and wealth — eventually payment and punishment always come due. One cannot escape the fact that a society’s wealth cannot be sustained or increased without work and productive effort. Yes, some criminal elements can benefit for a while, but reality always sets in. Reality is now setting in for America and for that matter for most of the world. The piper will get his due even if “the children” have to suffer. The deception of promising “success” has lasted for quite a while. It was accomplished by ever-increasing taxes, deficits, borrowing, and printing press money. In the meantime the policing powers of the federal government were systematically and significantly expanded. No one cared much, as there seemed to be enough “gravy” for the rich, the poor, the politicians, and the bureaucrats.

As the size of government grew and cracks in the system became readily apparent, a federal police force was needed to regulate our lives and the economy, as well as to protect us from ourselves and make sure the redistribution of a shrinking economic pie was “fair” to all. Central economic planning requires an economic police force to monitor every transaction of all Americans. Special interests were quick to get governments to regulate everything we put in our bodies: food, medications, and even politically correct ideas. IRS employees soon needed to carry guns to maximize revenue collections. The global commitment to perpetual war, though present for decades, exploded in size and scope after 9/11. If there weren’t enough economic reasons to monitor everything we did, fanatics used the excuse of national security to condition the American people to accept total surveillance of all by the NSA, the TSA, FISA courts, the CIA, and the FBI. The people even became sympathetic to our government’s policy of torture.

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“Holding to a budget balance goal is really a key point in our strategy, as it gives us the possibility to negotiate from a strong position.”

Greece’s Leftist Candidate: ‘Markets Won’t Be Rooting for Us’ (Bloomberg)

Greek anti-austerity Syriza party leader Alexis Tsipras isn’t “frightened” by possible market turmoil in case of victory at the Jan. 25 general election. “We know markets certainly won’t be rooting for us and there’s a chance that initially they will show some aggressiveness toward a left government,” he said, according to excerpts of “Alexis Tsipras, My Left,” a book scheduled to be published in Italy next week. “The more you need money, the higher is the interest markets require.” Prime Minister Antonis Samaras was forced to ask for snap elections on Dec. 29 after failing to get enough lawmakers to support his candidate for the country’s ceremonial presidency.

Greek 10-year government bond yields climbed back above 10% this week as Syriza’s lead in polls was confirmed less than three weeks before the ballot. Samaras has warned the election will determine Greece’s euro membership and raised the specter of default in case of a victory by Tsipras, who advocates higher wages and a write-off of some Greek debt. “Additionally, as to markets perception, the issue of debt negotiation is fundamentally important,” Tsipras told Teodoro Andreadis Synghellakis in the question-and-answer style book. Syriza vows to write down most of the nominal value of Greece’s debt once elected. “That’s what was done for Germany in 1953, it should be done for Greece in 2015,” Tsipras said in a speech in Athens Jan. 3.

“The solution is balanced budgets to strongly limit the need to borrow money,” Tsipras said in the book. “Holding to a budget balance goal is really a key point in our strategy, as it gives us the possibility to negotiate from a strong position. That said, we need to say that budget balance doesn’t mean resorting to austerity per se.” Stavros Theodorakis, leader of To Potami, which is polling in third place ahead of elections, said in an interview in Athens yesterday that he won’t support any coalition willing to gamble with the country’s place in the euro. “The goal is to create a majority of social forces where the Left can be the main actor that will be able to play a fundamental role in changing citizens condition,” Tsipras said, according to the transcripts.

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Germany is losing much of its shine.

Eurozone Hit By Germany’s Sliding Exports And Industrial Production (Ind.)

Germany’s faltering output and exports have capped a week of pain for the eurozone. Germany – which narrowly avoided a triple-dip recession last year – saw industrial output dip 0.1% in November, according to official figures, far weaker than the 0.4% advance pencilled in by pundits. In another blow, Germany’s exports to the rest of the world also tumbled 2.1% over the month. The fall was echoed by a 0.1% decline in the UK’s industrial production during November. Warm weather hit electricity demand, although manufacturers fared better, growing output 0.7%. Britain’s builders sank into reverse, however, as output dropped 2% over the month.

The fresh signs of weakness in the German economy – the eurozone’s biggest – come just days after the struggling single-currency bloc slid into deflation territory for the first time since 2009, heightening speculation that European Central Bank boss Mario Draghi will launch a full-scale, money-printing programme later this month. Germany’s exporters are struggling against a backdrop of Russian sanctions and a weaker Chinese economy. Meanwhile, Greece’s looming election and potential victory for the anti-austerity Syriza party is adding to the uncertainty, although the euro’s collapse to nine-year lows against the dollar should eventually help exporters.

“Today’s data provides further evidence that the German economy has not yet fully recovered from the soft spell of the summer. In fact, the German economy still counts its bruises. Nevertheless, in our view, the economy should gain more momentum in the coming months,” ING Bank’s Carsten Brzeski said. But German economist Alexander Krueger at Bankhaus Lampe added: “Things are certainly not rosy. The geopolitical situation, especially the Russia conflict and the related economic uncertainty, is limiting growth.”

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All pensions funds should.

Dutch Pension Fund Giant Drops Use Of Hedge Funds (Reuters)

The Netherlands’ PFZW has become the latest major pension fund to announce it will no longer use hedge funds to manage investments, citing excessive costs, complexity and a lack of performance. The fund, which represents around 2 million workers in the health care sector, had 156.3 billion euros ($184.7 billion) in assets under management as of September 2014. About 2.7% of the fund’s assets had been invested with hedge funds in the year 2013, but the pension fund said on Friday that it had “all but eradicated” their use by the end of 2014. “With hedge funds, you’re certain of the high costs, but uncertain about the return,” the company’s manger for investment policy Jan Willem van Oostveen said. He added that PFZW wanted to have greater control over of its investments, and that hedge funds’ methods were too complex because of their diverse investment strategies. In September, the $300 billion California Public Employees’ Retirement System said it had scrapped its hedge fund programme, pulling out about $4 billion.

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“Disgusted and also shocked, we cannot fall to our knees. It is our responsibility to react ..”

#OpCharlieHebdo: Anonymous Declares War On Terrorist Websites (RT)

Hacktivist group Anonymous has threatened to avenge the recent terrorist attacks in France by tracking and bringing down jihadist websites. The group’s YouTube message directly confronts Al-Qaeda and Islamic State on the Charlie Hebdo massacre. “We are declaring war against you, the terrorists,” says a figure wearing the symbolic Guy Fawkes mask in a new online clip, released with a statement. The hashtag #OpCharlieHebdo is visible in the video that dedicates the message to: “Al-Qaeda, the Islamic State and other terrorists.” It says that the hacktivist group will be going after and shutting down all terrorist accounts on social media in a mission to avenge those killed in the Charlie Hebdo attacks. The video was uploaded to the group’s Belgian YouTube account.

Earlier, Anonymous posted a statement on Pastebin, titled: “Message to the enemy of the freedom of speech.” “Freedom of speech has suffered an inhuman assault … Disgusted and also shocked, we cannot fall to our knees. It is our responsibility to react,” the statement says. The group has successfully attacked many websites in the past, including government, military, religious, and commercial pages. Anonymous’ signature move is to overwhelm the servers with traffic by sending out distributed denial-of-service (DDoS) attacks, which knocks out the websites.

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Can we learn?

What Radicalized The Charlie Hebdo Terrorists – Try Abu Ghraib (Ray McGovern)

First, a hat tip to Elias Groll, assistant editor at Foreign Policy, whose report just a few hours after the killings on Wednesday at the French satirical magazine Charlie Hebdo, included this key piece of background on the younger of the two brother suspects: “Carif Kouachi was previously known to the authorities, as he was convicted by a French court in 2008 of trying to travel to Iraq to fight in that country’s insurgent movement. Kouachi told the court that he wished to fight the American occupation after viewing images of detainee abuse at Abu Ghraib prison.” The next morning, Amy Goodman of Democracynow.org and Juan Cole also carried this highly instructive aspect of the story of the unconscionable terrorist attack, noting that the brothers were well known to French intelligence; that the younger brother, Cherif, had been sentenced to three years in prison for his role in a network involved in sending volunteer fighters to Iraq to fight alongside al-Qaeda; and that he said he had been motivated by seeing the images of atrocities by U.S. troops at Abu Ghraib.

An article in the Christian Science Monitor added: “During Cherif Kouachi’s 2008 trial, he told the court, ‘I really believed in the idea’ of fighting the U.S.-led coalition in Iraq.” But one would look in vain for any allusion to Abu Ghraib or U.S. torture in coverage by the Wall Street Journal or Washington Post. If you read to the end of a New York Times article, you would find in paragraph 10 of 10 a brief (CYA?) reference to Abu Ghraib. So I guess we’ll have to try to do their work for them. Would it be unpatriotic to suggest that a war of aggression and part of its “accumulated evil” – torture – as well as other kinds of state terrorism like drone killings are principal catalysts for this kind of non-state terrorism? Do any Parisians yet see blowback from France’s Siamese-twin relationship with the U.S. on war in the Middle East and the Mahgreb, together with their government’s failure to speak out against torture by Americans? Might this fit some sort of pattern?

Well, duh. Not that this realization should be anything new. In an interview on Dec. 3, 2008, Amy Goodman posed some highly relevant questions to a former U.S. Air Force Major who uses the pseudonym Matthew Alexander, who personally conducted more than 300 interrogations in Iraq and supervised more than a thousand. AMY GOODMAN: “I want to go to some larger issues, this very important point that you make that you believe that more than 3,000 U.S. soldiers were killed in Iraq — I mean, this is a huge number — because of torture, because of U.S. practices of torture. Explain what you mean.” MATTHEW ALEXANDER: “Well, you know, when I was in Iraq, we routinely handled foreign fighters, who we would capture. Many of — several of them had been scheduled to be suicide bombers, and we had captured them before they carried out their missions.

“They came from all over the area. They came from Yemen. They came from northern Africa. They came from Saudi. All over the place. And the number one reason these foreign fighters gave for coming to Iraq was routinely because of Abu Ghraib, because of Guantanamo Bay, because of torture practices. “In their eyes, they see us as not living up to the ideals that we have subscribed to. You know, we say that we represent freedom, liberty and justice. But when we torture people, we’re not living up to those ideals. And it’s a huge incentive for them to join al-Qaeda.

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Wow.

‘Bent Time’ Tips Pulsar Out Of View (BBC)

A pulsar, one of deep space’s spinning “lighthouses”, has faded from view because a warp in space-time tilted its beams away from Earth. The tiny, heavy pulsar is locked in a fiercely tight orbit with another star. The gravity between them is so extreme that it is thought to emit waves and to bend space – making the pulsar wobble. By tracking its motion closely for five years, astronomers determined the pulsar’s weight and also quantified the gravitational disturbance. Then, the pulsar vanished. Its wheeling beams of radio waves now pass us by, and the researchers have calculated that this can be explained by “precession”: the dying star wobbling into the dip in space-time that its own orbit created. A pulsar is a small but improbably dense neutron star – the collapsed remnant of a supernova.

“They pack more mass than our Sun has in a sphere that’s only 10 miles across,” said the study’s lead author Joeri van Leeuwen, from the Netherlands Institute for Radio Astronomy (Astron). When they occur as binaries, neutron stars come hard up against Einstein’s theory of general relativity, and should generate space-time ripples called gravitational waves, which astronomers hope one day to detect. This particular specimen, Pulsar J1906, popped up unexpectedly during a survey Dr van Leeuwen and colleagues were conducting at the Arecibo Observatory, Puerto Rico. “That was a real Eureka moment that night,” he told journalists at the conference. “It was strange, because that part of the sky’s been surveyed lots of times – and then something really bright and new appears.” They soon discovered the pulsar had a companion star, and that it was pushing the boundaries of what astronomers know of these bizarre systems.

The pair circle each other in just four hours – the second fastest such orbit ever seen – and the pulsar spins seven times per second, sweeping its two beams of radio waves across space to Earth. Dr van Leeuwen’s team set about monitoring those waves, nearly every night for the next five years, using the world’s five biggest radio telescopes. All told, they clocked one billion rotations of the pulsar. “By precisely tracking the motion of the pulsar, we were able to measure the gravitational interaction between the two highly compact stars with extreme accuracy,” said co-author Prof Ingrid Stairs of the University of British Columbia, Canada. Each is approximately 1.3 times heavier than our Sun, but they are only separated by about one solar diameter.“The resulting extreme gravity causes many remarkable effects,” Prof Stairs said. Chief among those is the time-space warp and the wobble that has now caused J1906 to shine its light elsewhere – for the time being.

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About as off-topic as I could find.

Would You Be Beautiful In The Ancient World? (BBC)

In ancient Greece the rules of beauty were all important. Things were good for men who were buff and glossy. And for women, fuller-figured redheads were in favour – but they had to contend with an ominous undercurrent, historian Bettany Hughes explains. A full-lipped, cheek-chiselled man in Ancient Greece knew two things – that his beauty was a blessing (a gift of the gods no less) and that his perfect exterior hid an inner perfection. For the Greeks a beautiful body was considered direct evidence of a beautiful mind. They even had a word for it – kaloskagathos – which meant being gorgeous to look at, and hence being a good person. Not very politically correct, I know, but the horrible truth is that pretty Greek boys would have swaggered around convinced they were triply blessed – beautiful, brainy and god-beloved.

So what made them fit? For years, classical Greek sculpture was believed to be a perfectionist fantasy – an impossible ideal, but we now think a number of the exquisite statues from the 5th to the 3rd Centuries BC were in fact cast from life – a real person was covered with plaster, and the mould created was then used to make the sculpture. Those with leisure time could spend up to eight hours a day in the gym. An average Athenian or Spartan citizen would have been seriously ripped – thin-waisted, small-penised, oiled from his “glistening lovelocks” down to his ideally slim toes. A rather different story though when it comes to the female of the species. Hesiod – an 8th/7th Century BC author whose works were as close as the Greeks got to a bible – described the first created woman simply as kalon kakon – “the beautiful-evil thing”. She was evil because she was beautiful, and beautiful because she was evil. Being a good-looking man was fundamentally good news. Being a handsome woman, by definition, spelt trouble.

And if that wasn’t bad enough, beauty was frequently a competitive sport. Beauty contests – kallisteia – were a regular fixture in the training grounds of the Olympics at Elis and on the islands of Tenedos and Lesbos, where women were judged as they walked to and fro. Triumphant men had ribbons tied around winning features – a particularly pulchritudinous calf-muscle or bicep. My favourite has to be the contest in honour of Aphrodite Kallipugos – Aphrodite of the beautiful buttocks. The story goes that when deliberating on where to found a temple to the goddess in Sicily it was decided an exemplar of human beauty should make the choice. Two amply-portioned farmer’s daughters battled it out. The best endowed was given the honour of choosing the site for Aphrodite’s shrine. Fat-bottomed girls clearly had a hotline to the goddess of love.

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