Mar 152019
 


Raphael The miraculous draught of fishes 1515

 

 

There are days, though all too scarce, when very nice surprises come my way. Case in point: yesterday I received a mail from David Holmgren after a long period of radio silence. Australia’s David is one of the fathers of permaculture, along with Bill Mollison, for those few who don’t know him. They first started writing about the concept in the 1970s and never stopped.

Dave calls himself “permaculture co-originator” these days. Hmm. Someone says: “one of the pioneers of modern ecological thinking”. That’s better. No doubt there. These guys taught many many thousands of people how to be self-sufficient. Permaculture is a simple but intricate approach to making sure that the life in your garden or backyard, and thereby your own life, moves towards balance.

My face to face history with David is limited, we spent some time together on two occasions only, I think, in 2012 a day at his home (farm) in Australia and in 2015 -a week- in Penguin, Tasmania at a permaculture conference where the Automatic Earth’s Nicole Foss was one of the key speakers along with Dave. Still, despite the limited time together I see him as a good and dear friend, simply because he’s such a kind and gracious and wise man.

In his mail, David asked if I would publish this article, which he originally posted on his own site just yesterday under the name “The Apology: From Baby Boomers To The Handicapped Generations”. I went for a shorter title (it’s just our format), but of course I will.

Dave has been an avid reader of the Automatic Earth for the past 11 years, we sort of keep his feet on the ground when they’re not planted and soaking in that same ground: “Reading TAE has helped me keep up to date..”

In light of the children’s climate protests today, which I have yet to voice my qualms about (and I have a few), it only makes sense to put into words a baby boomer’s apology. To have that phrased by someone with the intellect and integrity of David should have everyone sit up and pay attention, if you ask me. And perhaps it would be good if more people would try and do the same: apologize to those kids.

Here’s my formidable friend David Holmgren:

 

 

David Holmgren: It is time for us baby boomers to honestly acknowledge what we did and didn’t do with the gifts given to us by our forebears and be clear about our legacy with which we have saddled the next and succeeding generations.

By ‘baby boomers’ I mean those of us born in the affluent nations of the western world between 1945 and 1965. In these countries, the majority of the population became middle class beneficiaries of mass affluence. I think of the high birth rate of those times as a product of collective optimism about the future, and the abundant and cheap resources to support growing families.

By many measures, the benefits of global industrial civilisation peaked in our youth, but for most middle class baby boomers of the affluent countries, the continuing experience of those benefits has tended to blind us to the constriction of opportunities faced by the next generations: unaffordable housing and land access, ecological overshoot and climate chaos amongst a host of other challenges.

I am a white middle class man born in 1955 in Australia, one of the richest nations of the ‘western world’ in the middle of the baby boom, so I consider myself well placed to articulate an apology on behalf of my generation.

In the life of a baby boomer born in 1950 and dying in 2025 (a premature death according to the expectations of our generation), the best half the world’s endowment of oil – the potent resource that made industrial civilisation possible – will have been burnt. This is tens of millions of years of stored sunlight from a special geological epoch of extraordinary biological productivity. Beyond our basic needs, we have been the recipients of manufactured wants and desires. To varying degrees, we have also suffered the innumerable downsides, addictions and alienations that have come with fossil-fuelled consumer capitalism.

It is also true that our generation has used the genie of fossil fuels to create wonders of technology, organisation and art, and a diversity of lifestyles and ideas. Some of the unintended consequences of our way of life, ranging from antibiotic resistance to bubble economics, should have been obvious, while others, such as the depression epidemic in rich countries, were harder to foresee. Our travel around the world has broadened our minds, but global tourism has contaminated the amazing diversity of nature and traditional cultures at an accelerating pace. We have the excuse that innovations always have pluses and minuses, but it seems we have got a larger share of the pluses and handballed more of the minuses to the world’s poorest countries and to our children and grandchildren.

We were the first generation to have the clear scientific evidence that emergent global civilisation was on an unsustainable path that would precipitate an unravelling of both nature and society through the 21st century. Although climate chaos was a less obvious outcome than the no-brainer of resource depletion, international recognition of the reality of climate change came way back in 1988, just as we were beginning to get our hands on the levers of power, and we have presided over decades of policies that have accelerated the problem.

Over the years since, the adverse outcomes have shifted from distant risks to lived realities. These impact hardest on the most vulnerable peoples of the world who have yet to taste the benefits of the carbon bonanza that has driven the accelerating climate catastrophe. For the failure to share those benefits globally and curb our own consumption we must be truly sorry.

 


David Holmgren

 

In the 1960s and 70s, during our coming of age, a significant proportion of us were critical of what was being passed down to us by our parent’s generation who were also the beneficiaries of the western world system, which some of us baby boomers recognised as a global empire. But our grandparents and parents had been shaped by the rigours and grief of the first global depression of the 1890s, the First World War, The Great Depression of the 1930s and, of course, the Second World War. Aside from those who served in Vietnam, we have cruised through life avoiding the worst threats of nuclear annihilation and economic depression, even as people in other countries suffered the consequences of superpower proxy wars, coups, and economic and environmental catastrophes.

While some of us were burnt by personal and global events, we have mostly led a charmed existence and had the privilege to question our upbringing and culture. We were the first generation in history to experience an extended adolescence of experimentation and privilege with little concern or responsibility for our future, our kin or our country.

Most baby boomers were raised in families where commuting was the norm for our fathers but a home-based lifestyle was still a role model we got from our mothers. In our enthusiasm for women to have equal access to productive work in the monetary economy, few of us noticed that without work to keep the household economy humming we lost much of our household autonomy to market forces. By our daily commutes, mostly alone in our cars, we entrenched this massively wasteful and destructive action as normal and inevitable.

As we came into our power in middle age, the new technology of the internet, workshop tool miniaturisation and other innovations provided more options to participate in the monetary economy without the need to commute, but our generation continued with this insane collective addiction. In Australia, we faithfully followed the American model of not investing in public transport, which moderated the adverse impacts of commuting in European and other countries not so structurally addicted to road transport. By failing to build decent public transport and the opportunities for home-based work, and wasting wealth in a frenzy of freeway building that has choked our cities, our generation has consumed our grandchildren’s inheritance of high quality transport fuels and accelerated the onset of climate chaos. For this we are truly sorry.

In pioneering the double income family, some of us set the pattern for the next generation’s habit of outsourcing the care of children at a young age, making commuting five days a week an early childhood experience. This has left the next generation unable to imagine a life that doesn’t involve leaving home each day.

These patterns are part of a larger crisis created by the double income, debt-laden households with close to 100% dependence on the monetary economy. Without robust and productive household economies, our children and grandchildren’s generations will become the victims of savage disruptions and downturns in the monetary economy. For failing to maintain and strengthen the threads of self-provision, frugality and self-reliance most of us inherited from our parents, we should be truly sorry.

 

Some of us felt in our hearts that we needed to create a different and better world. Some of us saw the writing on the walls of the world calling for global justice. Some of us read the evidence (mostly clearly in the 1972 Limits To Growth) that attempting to run continuous material growth on finite planet would end in more than tears.

Some of us even rejected the legacy of previous generations of radicals’ direct action against the problems of the world, and instead decided we would boldly create the world we wanted by living it each day. In doing so, we experienced hard-won lessons and even created some hopeful models for succeeding generations to improve on in more difficult conditions. That our efforts at novel solutions often created more sound than substance, or that we flitted from one issue to another rather than doing the hard yards necessary to pass on truly robust design solutions for a world of less, leaves some of us with regrets for which we might also feel the need to apologise.

These experiences are shared to some degree by a minority in all generations but there is significant evidence that the 1960s and 70s was a time when awareness of the need for change was stronger. Unfortunately, a sequence of titanic geopolitical struggles that few of us understand even today, a debt-fuelled version of consumer capitalism, and propaganda against both the Limits to Growth and the values of the counterculture, saw most of us following the neoliberal agenda like sheep into the 1980s and beyond.

 

 

After having played with the privilege of free tertiary education, most of us fell for the propaganda and sent our children off to accumulate debts and doubtful benefits in the corporatised businesses that universities became. We convinced our children they needed more specialised knowledge poured down their throats rather than using their best years to build the skills and resilience for the challenges our generation was bequeathing to them. For this we must be truly sorry.

Many of us have been the beneficiaries of buying real estate before the credit-fuelled final stages of casino capitalism made that option a recipe for debt slavery for our children. Without understanding its mechanics we have contributed to – and fuelled with our faith – a bubble economy on a vast scale that can only end in pain and suffering for the majority. While some of us are members of the bank of Mum and Dad, when the property bubble bursts we could find ourselves following the bank chiefs apologising for the debt burden we encouraged our children to take on. Some of us will also have to apologise for losing the family home when we went guarantor on their mortgages. For not heeding the warnings we got with the GFC, we will be truly sorry.

Some of us have used our windfall wealth from real estate and the stock market to do good works, including creating small models of more creative and lower footprint futures that have inspired the minority of the next generations who can also see the writing on the wall. But most of us used our houses as ATMs for new forms of consumption that were unimaginable to our parents, from holidays around the world to endless renovations and a constant flow of updated digital gadgets and virtual diversions. For this frivolous squandering of our windfall wealth we must be truly sorry.

 

While our parents’ generation experienced the risks of youth through adversity and war we used our privilege to tackle challenges of our own choosing. Although some of us had to struggle to free ourselves from the cloying cocoon of middle class upbringing, we were the generation that flew like the birds and hitchhiked around the country and the world. How strange that on becoming parents (many of us in middle age) we believed the propaganda that the world was too dangerous for our children to do the same around the local neighbourhood. Instead we coddled them, got into the chauffeuring business, and in doing so encouraged their disconnection from both nature and community. As we see our grandchildren’s generation raised in a way that makes them an even more handicapped generation, we must be truly sorry for the path we took and the dis-ease we created.

After so many of us experimented with mind-expanding plants and chemicals, some of us were taken down in chemical addictions, but it was dysfunctional and corrupt legal prohibitions more than the substances themselves that were to blame for the worst of the damage. So how strange that when in middle age we got our hands on the levers of power, most of our generation decided to continue to support the madness of prohibition. For this we must be truly sorry: to have seen the light but then continued to inflict this burden on our children and grandchildren. For having acquiesced in the global ‘war on drugs’ that spread pain and suffering to some of the poorest peoples of the world we should be ashamed.

When the ‘war on drugs’ (a war against substances!) became the model for the ‘war on terror’ (war against a concept!) some of us reawakened the anti-war activism of the Vietnam years but in the end we mostly acquiesced to an agenda of trashing international law, regime change, shock and awe, chaos, and the death of millions; all justified by the 9/11 demolition fireworks that killed a small fraction of the number of citizens that die each year as a result of our ongoing addiction to personal motorised mobility.

While the shadow cast by climate change darkens our grandchilden’s future, the shadow of potential nuclear winter that hung over our childhood as not gone away. Many of us were at the forefront of the international movement to rid the world of nuclear weapons and thought the collapse of the Soviet Union had saved us from that threat. Coming into our power after the end of the cold war, our greatest crime on this geopolitical front has perhaps been the tacit support of our generation for first, the economic rape of Russia in the 1990s, and then its progressive encirclement by the relentless expansion of NATO. In Australia we have meekly added our resources and youth to more or less endless wars in the Middle East and central Asia justified by the fake ‘war on terror’. For this weakness as accessories to global crimes wasting wealth and lives to consolidate the western powers’ control of the first truly global empire, we should hang our collective heads in shame.

While some of our generation’s intellectuals continued to critique the ‘war on terror’ as fake, the vast majority of the public intellectuals of our generation, including those on the left, have supported the rapid rise of Cold War 2.0 to contain Russia, China and any other country that doesn’t accept what we now call ‘the rules based international order’ (code for ‘our empire’). This is truly astonishing when looked at in the context of our lived history. Let us hope that sanity can prevail as our empire fades and future generations don’t brand us as the most insane, war-mongering generation of all time. For our complicity in this grand failure of resistance we should be truly sorry.

 


click to order David’s latest

 

On another equally titanic front, the mistake of giving legal personhood to corporations was not one that our generation made. However most of us have contributed our work, consumption and capital to assist these self-organising, profit-maximising, cost-minimising machines of capitalism morphing into emergent new life forms that threaten to consume both nature and humanity in an algorithmic drive for growth. At a time of our seniority and numbers, we failed to use the Global Financial Crisis as an opportunity to bring these emergent monsters to heel. Do our children have the capacity to tame the monsters that we nurtured from fragile infants to commanding masters?

And if they do find the will to withdraw their work, consumption and capital enough to contain the corporations, will the economy that currently provides for both needs and wants unravel completely? This is a burden so great most of us continue to believe we have no responsibility or agency in such a dark reality. We trust that history will not place the burden of responsibility on our generation alone. But for our part in this failure of agency over human affairs we apologise. Further, we should accept with grace the consequences for our own wellbeing.

Most of us feel impotent when thinking of these failures to control the excesses of our era, but on a more modest scale we have mindlessly participated in taking the goods and passing on the debt to future generations. No more so than in our habitual acceptance of antibiotics from doctors to fix the most mundane of illnesses. For our parents’ generation, antibiotics represented the peak of medical science’s ability to control what killed so many of their parents and earlier generations.

For us, they became routine tools to keep us on the job and our children not missing precious days at school. Through this banal practice we have unwittingly conspired with our doctors to rapidly breed resistance to the most effective and low-cost antibiotics. We took for granted that future generations would always be able to work out ways to keep ahead of diseases with an endless string of new antibiotics. For having squandered this gift we are truly sorry.

 

Further, despite the fact that some of us have became vegetarian or even vegan, our generation’s demand for cheap chicken and bacon has driven the industrial dosing of animals with antibiotics on a scale that has accelerated the development of antibiotic resistance far faster than would have been the case from us dosing ourselves and our children. For supporting this and other such obscene systems of animal husbandry we apologise to our grandchildren and succeeding generations and hope that somehow an accommodation between humanity, animals and microbes is still possible.

We experienced and benefited from the emergent culture of rights and recognition for women, minorities and the people of varied abilities, and many of us who fought to extend and deepen those rights have pride in what we did. However some of us are beginning to fear that in doing so we contributed to creating new demands, disabilities, and fractious subcultures of fear and angst unimagined in previous generations. While we might not be in the driving seat of identity politics and culture wars, we raised our children to demand their rights in a world that is unravelling due to its multiple contradictions.

In this emerging context, strident demands for rights are likely to be a waste of valuable energy that younger people might better focus on becoming useful to themselves and others. For overemphasising the demand for rights and underplaying the need for responsible self- and collective-reliance, perhaps we should also be sorry.

And is this escalating demand for rights by younger people itself connected, even peripherally, to the increasing callous disregard for the rights of others? Especially in the case of refugees, this careless disregard has allowed political elites to use tough treatment of the less fortunate to distract from the gradual loss of shared privilege that once characterised the ‘lucky country’. To the shame of those in power over the last two decades (mostly baby boomers) those policies are now being adopted on a larger scale in Europe and the US.

 

 

In our lifetimes religious faith has declined. For many of our generation, this change represents a measure of humanity’s progress from a benighted past to a promising future. But the collective belief in science and evidence-based decision making has now become a new faith, “Scientism”, which seeks to drive out all other ways of thinking and being from the public space. At the same time, religious fundamentalism is now resurgent. Is this too something that our generation unleashed by preaching tolerance while enforcing an ideology we didn’t even recognise as such?

A significant sign of the good intentions of our generation has been our recognition that the ancient war against nature, which has plagued human life since the beginnings of agriculture, and indeed civilisation, must end. One powerful expression of our efforts has been the valuing of the biodiversity of life, especially local indigenous biodiversity. In the ‘New Europes’ of North America and the Antipodes, seeking to save indigenous biodiversity has grown into an institutionalised form of atonement for the sins of the forefathers.

While this seems like one of our achievements, even this we have bastardised with a new war against naturalised biodiversity. Perhaps the worst aspect of this renewed war against novel ecologies is that we have accepted the helping hand of Monsanto in using Roundup as the main weapon in our urban and rural habitats. The mounting evidence that Roundup may be worse than DDT will be part of our legacy. While history may excuse our parent’s generation for naïve optimism in relation to DDT, our generation’s version of the war on nature will not save us from harsh judgement. For this we should be truly sorry.

Of course any public apology in this country invites comparisons to the apology by governments to the stolen generation of Australian indigenous peoples for the wrongs of the past. This unfinished sorry business is beyond the scope of this apology, but it is an opportunity to reflect critically on our common self-perception of supporting indigenous peoples’ rights in contrast to the normalised racism of previous generations.

 

Our generation’s invitation to, and enabling of, Australians of indigenous descent to more fully participate in mainstream Australian society may have been a necessary step towards reconciliation; or could it have been a poison chalice drawing them even deeper into the dysfunctions of industrial modernity that I have already outlined. We can only hope that people with such a history of resilience and understanding in the face dispossession will take these additional burdens in their stride.

In any case, this apology is not one that comes from a position of invulnerable privilege, giving succour to those who are no threat to that privilege. For many baby boomers, now caring for parents and dealing with their deaths, we are more inwardly focused. For some of us, especially those estranged from parents, through this both painful and tender processes we are finally growing up. But a comic tragedy could play out in our declining years if a combination of novel disabilities, the culture of rights and amplified fears lead to our children and grandchildren’s generations mostly experiencing harder times as far worse than they might really be, and deciding we are the cause of their troubles.

We baby boomers will increasingly find that in our growing dependence on young people we will be subject to their perspectives, whims and prejudices. Hopefully we can take what we are given on the chin and along with our children and our grandchildren’s generations we can all grow up and work together to face the future with whatever capacities we have.

We might hope this apology is itself a wake-up call to the younger generations that are still mostly sleepwalking into the oncoming maelstroms. In raising the alarm we might hope our humble apology will galvanise the potential in young people who are grasping the nettle of opportunities to turn problems into solutions.

We hope that this apology might lead to understanding rather than resentment of our frailty in the face of the self-organising forces of powerful change that have driven the climaxing of global industrial civilisation. Finally, the task ahead for our generation is to learn how to downsize and disown before we prepare to die, with grace, at a time of our choosing, and in a way that inspires and frees the next generations to chart a prosperous way down.

 

 

May 172018
 
 May 17, 2018  Posted by at 8:40 am Finance Tagged with: , , , , , , , , , , , , ,  7 Responses »


Vincent van Gogh Daubigny’s garden 1890

 

Housing ATM is Back – But It Won’t Work Any Better This Time (Mish)
Will the New Fed Get Rid of All its Mortgage-Backed Securities? (WS)
Venezuela’s State Oil Company PDVSA Faces Collapse (PaP)
Births Plunge To Record Lows In United States (AFP)
Open Letter From M5S To The Financial Times (IBDS)
Ecuador’s Ex-President Denounces Treatment of Julian Assange as “Torture” (GG)
New Zealand ‘People’s’ Budget Puts Billions More Into Health And Education (G.)
Lords Inflict 15th Defeat On Theresa May Over EU Withdrawal Bill (G.)
Western Countries Have Known Novichok Formula For Decades – German Media (RT)
31,000 Unaccompanied Minors Applied For Asylum In EU in 2017 (K.)
DR Congo Ebola Outbreak Spreads To Mbandaka City (BBC)
Mysterious Return Of Ozone-Destroying CFCs Shocks Scientists (G.)
Startling National Geographic Cover Photo Captures The Plastic Crisis (NZH)

 

 

“People are further and further in debt and need to pull out cash to pay the bills.”

Housing ATM is Back – But It Won’t Work Any Better This Time (Mish)

With mortgage rates rising, one would expect refi activity to slow. And it has: Refi Applications are at an 8-Year Low. But why is there any refi activity all at all? In September 2017 the MND mortgage rate rate was 3.85%. In June 2016, the MND rate was 3.43%.

It makes little sense to refi at 4.70% when one could have done it less than two years ago a point and a quarter lower. At these rates, refi activity should be in the low single digits. Yet, 36% of mortgage applications are refis.

Are people pulling money out of their houses to pay bills? That’s how it appears as Cash-Out Mortgage Refis are Back. What’s Going On?
• People feel wealthy again and are willing to blow it on consumption
• People pulling money out to invest in stocks or Bitcoin
• People are further and further in debt and need to pull out cash to pay the bills.

I suspect point number three is the primary reason. Regardless, releveraging is as wrong now as it was in 2007. Totally wrong.

Read more …

Dump and dump.

Will the New Fed Get Rid of All its Mortgage-Backed Securities? (WS)

Like Powell, Clarida said he “absolutely” supports the Fed’s normalization of interest rates and the balance sheet. Like Powell, he said that the normalized balance sheet should be “a lot smaller,” and that Powell’s suggestion of a range of $2.4 trillion to $2.9 trillion, down from its peak-level of $4.5 trillion, “makes sense.” Like Powell, he said stock market volatility itself – that’s downward volatility, the only volatility that matters on Wall Street – shouldn’t determine the Fed’s policy decisions. On banking regulation too he mirrored Powell. So in this sense, what he said about mortgage-backed securities on the Fed’s balance sheet is fascinating: The Fed should shed them entirely, down to zero.

Clarida explained that there are “benefits and costs” of QE, and that as more layers of QE were piled on, “the benefits of QE diminished and the costs went up.” And as vice chairman, he’d “have to take a serious look at the costs of QE.” Then he was asked about “non-Treasury instruments, like mortgage-backed securities,” for QE – that the Fed, when selecting non-Treasury securities, would be getting into something that it shouldn’t, namely “allocating credit.” “Yes, absolutely,” Clarida replied: “My preference would be for the Fed to end up with a Treasury-only portfolio.” He then added that, “as a general proposition, my preference would be to have the balance sheet as much as possible in Treasury securities.”

Shedding MBS from the balance sheet entirely and keeping them off could have a big impact. Currently, the Fed holds $1.74 trillion of MBS. That’s about 26% of all residential mortgage-backed securities outstanding. The Fed is the elephant in the MBS room.

Read more …

“..the company that 20 years ago, was the second largest in the world..”

Venezuela’s State Oil Company PDVSA Faces Collapse (PaP)

In less than a month, Venezuela’s state oil company, Petróleos de Venezuela (PDVSA), faces three lawsuits that may end up taking all of the oil giant’s international assets, leaving it bankrupt. According to the economist and opposition congressman, Ángel Alvarado, the company that 20 years ago, was the second largest in the world, is about to disappear. Alvarado says that the state has no way to pay all its outstanding debts or the legal judgments that are looming. In an ominous sign, creditors today attempted to collect USD $2.9 billion that the oil company has failed to pay in debt obligations. The bankrupt company not only must face ConocoPhillips, after having lost a lawsuit where it was ordered to pay the US oil company USD $2 billion.

PDVSA now must also respond to a wave of similar claims, as it looks for a way to pay bondholders after default, and tries to restart refineries that are about to close because of diminished production caused by abandonment and embezzlement. In short, PDVSA faces the perfect storm for falling into bankruptcy, with no credible path for solvency. According to OPEC, Venezuela is the country with the largest proven reserves of crude oil in the world with 296 billion barrels. However, paradoxically, the export of crude oil is not a profitable business for the South American country after years of neglect by the socialist government. Recently the US company ConocoPhillips decided to seize the PDVSA’s assets in the Caribbean, a dangerous precedent that could influence other plaintiffs to take similar measures.

Read more …

Joining the rest of the world.

Births Plunge To Record Lows In United States (AFP)

Births in the United States have plunged to record lows not seen in decades, marking a profound cultural shift that could have ramifications for the future economy, experts said Thursday. The overall fertility rate, which essentially shows how many babies women are having in their childbearing years, and indicates whether the population is replenishing itself, fell to 1.76 births per woman last year, down 3% from the rate of 1.82 in 2016. That marks “the lowest total fertility rate since 1978,” said the report by the National Center for Health Statistics, part of the US Centers for Disease Control and Prevention. Meanwhile, the US birth rate plunged to a 30-year low.

The 3.85 million US births in 2017 were the fewest since 1987, as American women under 40 continued to delay childbearing. About 77,000 fewer babies were born last year than in 2016 – about a 2% drop year-on-year. The latest downward trend began around the onset of the global financial crisis in 2007 and 2008, but has not abated even as US jobs rebounded and the economy has improved. “To me the biggest surprise is the continuing decline of fertility rates among young women,” said William Frey, a demographer and senior fellow of the Metropolitan Policy Program at The Brookings Institution. “About 10 years since the Great Recession we still see this declining fertility among women in their 20s and that could be problematic if it continues for another three or four years.”

Read more …

“The last 30 years in Italy have been characterized by a constant mixture of politics, the mafia and occult affairs that have literally shattered our country to the bone..”

Open Letter From M5S To The Financial Times (IBDS)

Letter to CEO John Ridding and editors of the Financial Times. Dear Sirs, I have read your article “Rome opens its gates to the modern barbarians” and, with all due respect to an important newspaper like yours, honestly I think you need to better understand what is taking place in Italy. And I suggest you get to know the 5 Star MoVement a little more closely. The last 30 years in Italy have been characterized by a constant mixture of politics, the mafia and occult affairs that have literally shattered our country to the bone, marking every possible negative record in our history. Nowadays, Italy has about 6 million people under the absolute poverty threshold and about 100,000 young people every year expatriating to try their luck elsewhere, often in your country.

All this is the result of barbarians, old barbarians about whom I have never read as many negative things in your editorials as I am reading these days against us. The 5 Star Movement was born in 2009 with a specific aim: to bring the popular will back to the centre of the political debate and the decisions of the central government. In just 9 years we have grown so much that we can now see what we have accomplished, with over 11 million people who trusted us in the last elections. We succeeded by working hard, with our heads down, studying, always struggling to defend Italian citizens. We succeeded with the youngest, most educated and most gender-balanced parliamentary group that the history of Italy has ever seen. Italians have always believed us based on the awareness that everything we have promised or written in a program, has become a reality on the first occasion we have had to make it happen.

In your article you are talking about a contract of government that is difficult to implement and economically unsustainable: what a pity you have not read this contract yet! And this is an offence to professional journalism, also. But there is one thing you are right about. The contract we are writing is challenging and it will not be easy to remedy the damage caused by political barbarians governing our country for the past 30 years. But we are doing our best to restore hope and to give Italians a brighter future. If you want to better understand how we will acccomplish this, I suggest you do not waste time publishing false news created ad-hoc by the Italian media system, get to know the 5 Star Movement and report the truth instead. Good luck!

Read more …

On the Guardian’s hit pieces yesterday.

Ecuador’s Ex-President Denounces Treatment of Julian Assange as “Torture” (GG)

Former Ecuadorian President Rafael Correa, in an exclusive interview with The Intercept on Wednesday morning, denounced his country’s current government for blocking Julian Assange from receiving visitors in its embassy in London as a form of “torture” and a violation of Ecuador’s duties to protect Assange’s safety and well-being. Correa said this took place in the context of Ecuador no longer maintaining “normal sovereign relations with the American government — just submission.” Correa also responded to a widely discussed Guardian article yesterday, which claimed that “Ecuador bankrolled a multimillion-dollar spy operation to protect and support Julian Assange in its central London embassy.”

The former president mocked the story as highly “sensationalistic,” accusing The Guardian of seeking to depict routine and modest embassy security measures as something scandalous or unusual. On March 27, Assange’s internet access at the Ecuadorian Embassy in London was cut off by Ecuadorian officials, who also installed jamming devices to prevent Assange from accessing the internet using other means of connection. Assange’s previously active Twitter account has had no activity since then, nor have any journalists been able to communicate with him. All visitors to the embassy have also been denied access to Assange, who was formally made a citizen of Ecuador earlier this year.

[..] Correa continues to believe that asylum for Assange is not only legally valid, but also obligatory. “We don’t agree with everything Assange has done or what he says,” Correa said. “And we never wanted to impede the Swedish investigation. We said all along that he would go to Sweden immediately in exchange for a promise not to extradite him to the U.S., but they would never give that. And we knew they could have questioned him in our embassy, but they refused for years to do so.” The fault for the investigation not proceeding lies, he insists, with the Swedish and British governments.

But now that Assange has asylum, Correa is adamant that the current government is bound by domestic and international law to protect his well-being and safety. Correa was scathing in his denunciation of the treatment Assange is currently receiving, viewing it as a byproduct of Moreno’s inability or unwillingness to have Ecuador act like a sovereign and independent country.

Read more …

Hopeful.

New Zealand ‘People’s’ Budget Puts Billions More Into Health And Education (G.)

The first Labour government in close to a decade has pledged to make New Zealand a kind and equitable nation where children thrive, and success is measured not only by the nation’s GDP but by better lives lived by its people. Finance minister Grant Robertson said the Labour coalition government didn’t want to “manage” issues such as child poverty and homelessness – it wanted to end them. Although the 2018 budget was focused on rebuilding vital public services – particularly the health care sector – Robertson said next year’s budget would be the first in the world to measure success by its people’s wellbeing. “We want New Zealand to be a place where everyone has a fair go, and where we show kindness and understanding to each other,” said Robertson.

“These changes are about measuring success differently. Of course a strong economy is important but we must not lose sight of why it is is important. And it is most important to allow all of us to have better lives … the government is placing the wellbeing of people at the centre of all its work. The 2018 budget had been preceded by weeks of cautious rhetoric by the government, which repeated time and again that before embarking on its ambitious social policies such as ending child poverty, tackling climate change and housing every New Zealander, it first had to invest in upgrading public services such as hospitals and schools.

Labour’s first budget was viewed as restrained and fiscally cautious, with Robertson forecasting a NZ$3bn ($2bn) surplus this year, increasing to $7bn in 2020. Prime Minister Jacinda Ardern said her government’s first budget was not focused on the election cycle, but generational improvement in New Zealanders’ lives. “Rebuild what?” said Ardern, defending her government’s budget and rounding on the opposition leader, Simon Bridges. “Well let’s start with New Zealand’s reputation shall we? We are rebuilding a government that thinks about people.” “In 15 or 20 or 30 years’ time I want my child to look back on the history books and judge me and this government favourably, rather than deciding to change their name.”

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A sad comedy.

Lords Inflict 15th Defeat On Theresa May Over EU Withdrawal Bill (G.)

Peers have inflicted a 15th defeat on the government’s key Brexit bill, underlining the acute political challenge Theresa May faces in seeking a deal that both parliament and her warring ministers can live with. The latest amendment, aimed at bolstering environmental protection after Brexit, was carried by 294 to 244 votes on Wednesday. Peers argued that enforcement measures proposed in a consultation document published last week were inadequate and that the environment had been subordinated to housing and economic growth. With her cabinet still deadlocked over customs arrangements, the prime minister must now decide when to bring the legislation back to the House of Commons and seek to undo the changes made by peers.

Martin Callanan, the Conservative leader in the Lords, said: “During the bill’s journey through the House of Lords, some changes have been made that conflict with its purpose or are designed to frustrate the entire exit process, and so we are considering the implications of those decisions.” The backbench pro-Brexit European Research Group, chaired by Jacob Rees-Mogg, wants to see the votes brought forward as soon as possible to scotch the idea that there is a majority against hard Brexit among MPs. They point to a pair of recent Commons victories, over the release of Windrush documents and a , as evidence that the government’s majority is more secure than moderate backbenchers claim.

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“Some NATO countries were secretly producing the chemical agent in small quantities..”

Western Countries Have Known Novichok Formula For Decades – German Media (RT)

A sample of Novichok, the nerve agent allegedly used to poison the Skripals, was obtained by German intelligence back in the 1990s, local media report. The substance has since been studied and produced by NATO countries. Western countries, including the US and the UK, have long been aware of the chemical makeup of the nerve agent known as Novichok, a group of German media outlets reported following a joint investigation. The inquiry, based on anonymous sources, gives new insights into the issue of the nerve agent said to have been used in the poisoning of former double agent Sergei Skripal and his daughter Yulia in Salisbury, UK, in March.

Western governments were able to lay their hands on the formula of what is described as “one of the deadliest chemical weapons ever developed” after the German foreign intelligence service, the BND, obtained a sample of the nerve agent from a Russian defector in the early 1990s. A Russian scientist provided German intelligence with information on the development of Novichok for some time following the collapse of the Soviet Union, the German NDR and WDR broadcasters, as well as Die Zeit and Suedeutsche Zeitung dailies, report, citing unnamed sources within the BND. At some point, the man offered to bring the Germans a sample of the chemical agent in exchange for asylum for him and his family.

A sample was eventually smuggled by the wife of the scientist and sent by the Germans to a Swedish chemical lab, according to the reports. Following the sample analysis, the Swedish experts established the formula of the substance, which they then handed over to Germany. By the order of the then German Chancellor Helmut Kohl, the BND then shared the formula with Berlin’s “closest allies,” including the intelligence services of the US and the UK. Later, the UK, the US and Germany reportedly created a special “working group” tasked with studying the substance, which also included representatives from France, Canada and the Netherlands.

“Some NATO countries were secretly producing the chemical agent in small quantities,” the four media outlets reported, adding that it was allegedly done to develop the necessary countermeasures. However, it remains unclear which particular states were involved in the Novichok production.

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Let’s make sure they are protected.

31,000 Unaccompanied Minors Applied For Asylum In EU in 2017 (K.)

Some 2,500 unaccompanied minors applied for asylum in Greece last year, around 8% of the total 31,400 child refugees who sought asylum in European Union countries in 2017. Italy received a relatively large chunk of applications for asylum – more than 10,000, or 32% of the total – followed by Germany, with 9,100 applications (29%). The United Kingdom received 2,200 applications (7%), while Austria received 1,400 (4%), Sweden 1,300 and the Netherlands 1,200. The number of child refugees seeking asylum in EU countries in 2017 almost halved compared to the previous year. In 2016 there were 63,200 applications, while there were 95,200 in 2015. However, the total number of applications in the EU last year was still double the annual average of 12,000 between 2008 and 2013.

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On the river.

DR Congo Ebola Outbreak Spreads To Mbandaka City (BBC)

The Ebola outbreak in Congo has spread from the countryside into a city, prompting fears that the disease will be increasingly difficult to control. Health Minister Oly Ilunga Kalenga confirmed a case in Mbandaka, a city of a million people about 130km (80 miles) from the area where the first cases were confirmed earlier this month. The city is a major transportation hub with routes to the capital Kinshasa. Forty-two people have now been infected and 23 people are known to have died. Ebola is a serious infectious illness that causes internal bleeding and often proves fatal. It can spread rapidly through contact with small amounts of bodily fluid and its early flu-like symptoms are not always obvious.

Senior World Health Organization (WHO) official Peter Salama said the outbreak’s shift to a major city meant there was the potential for an “explosive increase” in cases. “This is a major development in the outbreak”. “We have urban Ebola, which is a very different animal from rural Ebola. The potential for an explosive increase in cases is now there.” Mr Salama, the WHO’s Deputy Director-General of Emergency Preparedness and Response, said Mbandaka’s location on the Congo river, widely used for transportation, raised the prospect of Ebola spreading to surrounding countries such as Congo-Brazzaville and the Central African Republic as well as downstream to Kinshasa, a city of 10 million people. “This puts a whole different lens on this outbreak and gives us increased urgency to move very quickly into Mbandaka to stop this new first sign of transmission,” he said.

[..] On Wednesday more than 4,000 doses of an experimental vaccine sent by the WHO arrived in the country with another batch expected soon. The vaccine from pharmaceutical firm Merck is unlicensed but was effective in limited trials during the Ebola outbreak in West Africa. It needs to be stored at a temperature of between -60 and -80 C. Electricity supplies in Congo are unreliable.

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Curious.

Mysterious Return Of Ozone-Destroying CFCs Shocks Scientists (G.)

A sharp and mysterious rise in emissions of a key ozone-destroying chemical has been detected by scientists, despite its production being banned around the world. Unless the culprit is found and stopped, the recovery of the ozone layer, which protects life on Earth from damaging UV radiation, could be delayed by a decade. The source of the new emissions has been tracked to east Asia, but finding a more precise location requires further investigation. CFC chemicals were used in making foams for furniture and buildings, in aerosols and as refrigerants. But they were banned under the global Montreal protocol after the discovery of the ozone hole over Antarctica in the 1980s. Since 2007, there has been essentially zero reported production of CFC-11, the second most damaging of all CFCs.

The rise in CFC-11 was revealed by Stephen Montzka, at the US National Oceanic and Atmospheric Administration (NOAA) in Colorado, and colleagues who monitor chemicals in the atmosphere. “I have been doing this for 27 years and this is the most surprising thing I’ve ever seen,” he said. “I was just shocked by it.” “We are acting as detectives of the atmosphere, trying to understand what is happening and why,” Montzka said. “When things go awry, we raise a flag.” Erik Solheim, head of UN Environment, said: “If these emissions continue unabated, they have the potential to slow down the recovery of the ozone layer. It’s therefore critical that we identify the precise causes of these emissions and take the necessary action.”

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Profound.

Startling National Geographic Cover Photo Captures The Plastic Crisis (NZH)

A haunting cover image on the June issue of National Geographic is circulating online, suggesting the plastic pollution we see is just the tip of the iceberg. Such is the extent of Earth’s mind-boggling plastic problem that scientists recently found a plastic bag in the Mariana Trench — the deepest point in the ocean, sitting nearly 11 kilometres below the surface. The Nat Geo cover image was shared by the magazine’s senior photo editor Vaughn Wallace on Twitter this morning who called it “one for the ages”.

[..] The latest edition of the magazine is dedicated to Earth’s plastic consumption and is filled with striking images and infographs that show the immense scale of plastic pollution plaguing our planet. As a small part of addressing the problem, the magazine has committed to delivering its issues in paper wrappers rather than plastic wrappers moving forward. One million plastic bottles are bought every minute around the globe and most of them end up in landfill where they take a significant time to break down, or in the ocean where they kill marine life.

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Apr 012018
 


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

 

US Homes Become ATMs Again (MW)
The Housing Crisis – There’s Nothing We Can Do… Or Is There? (Steve Keen)
Fear is Back (MW)
The S&P’s 200-DMA: Why It Ain’t No Maginot Line (Stockman)
Trump Renews Amazon Attack, Says ‘Post Office Scam’ Must Stop (BBG)
Senator Warren, In Beijing, Says US Is Waking Up To Chinese Abuses (R.)
Yanis Varoufakis: ‘Greece Is A Debtors’ Prison’ (G.)
Emmanuel Macron On France’s AI Strategy (Wired)
Conservationists Call For Urgent Action To Fix ‘America’s Wildlife Crisis’ (G.)
More Poachers Than Rhinos Killed In India Reserve (BBC)

 

 

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

US Homes Become ATMs Again (MW)

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

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

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

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

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

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

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

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

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

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

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Fear is needed.

Fear is Back (MW)

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

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

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

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Rhyme and repeat.

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

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

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

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

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This is going to cost Amazon.

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

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

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

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

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

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

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

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

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

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A poisonous political climate.

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

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

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

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

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

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

Emmanuel Macron On France’s AI Strategy (Wired)

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

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

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

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

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

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

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

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

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

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

More Poachers Than Rhinos Killed In India Reserve (BBC)

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

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

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May 292017
 
 May 29, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , , , , ,  1 Response »


Hokusai Views of Mount Fuji: Ejiri in Suruga Province 1831

 

Europe “Must Take Its Fate Into Its Own Hands” – Angela Merkel (AFP)
Stocks Won’t Crash Spectacularly but May Zigzag Lower (WS)
The Great Aussie Recession-Free Run Is Looking Shaky – Again (BBG)
Australia Retail Sector Shudders (Aus.)
US Homeowners Are Again Pocketing Cash as They Refinance Properties (WSJ)
The Guardian Mourns Corbyn’s Polling Surge (Cook)
Tories Pledge New Law Over Domestic Violence Directed At Children (G.)
US Should Focus On The Economy And Skip Irrelevant Talking Forums (CNBC)
Camille Paglia: Democrats Are Colluding With The Media To Create Chaos (WE)
How Team Obama Tried To Hack The Election (NYP)
Syria’s Assad Explains How The US Really Works (ICH)
Macron Promises Tough Talk At First Putin Meeting (R.)
Economists Have to Embrace Complexity to Avoid Disaster (Steve Keen)
Greek Archbishop: ‘I See a Europe of Exploitation, not Solidarity’ (GR)

 

 

I’ve seen a dozen versions of this. Few people seem to know how to properly translate Merkel’s comments, let alone interpret them. Well, let’s just say Merkel is in election mood, and stuff like this does well in Germany.

Europe “Must Take Its Fate Into Its Own Hands” – Angela Merkel (AFP)

Europe “must take its fate into its own hands” faced with a western alliance divided by Brexit and Donald Trump’s presidency, German Chancellor Angela Merkel said Sunday. “The times in which we could completely depend on others are on the way out. I’ve experienced that in the last few days,” Merkel told a crowd at an election rally in Munich, southern Germany. “We Europeans truly have to take our fate into our own hands,” she added. While Germany and Europe would strive to remain on good terms with America and Britain, “we have to fight for our own destiny”, Merkel went on. Special emphasis was needed on warm relations between Berlin and newly-elected French President Emmanuel Macron, she said. The chancellor had just returned from a G7 summit which wound up Saturday without a deal between the US and the other six major advanced nations on upholding the 2015 Paris climate accords.

Merkel on Saturday labelled the result of the “six against one” discussion “very difficult, not to say very unsatisfactory”. Trump offered a more positive assessment on Twitter Sunday, writing: “Just returned from Europe. Trip was a great success for America. Hard work but big results!” The US president had earlier tweeted that he would reveal whether or not the US would stick to the global emissions deal – which he pledged to jettison on the campaign trail – only next week. On a previous leg of his first trip abroad as president, Trump had repeated past criticism of NATO allies for failing to meet the defensive alliance’s military spending commitment of 2% of GDP. Observers noted that he neglected to publicly endorse the pact’s Article Five, which guarantees that member countries will aid the others they are attacked.

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When shorts defeat their own goals: “..the more investors prepare for this by putting large amounts of money aside to plow into a crashing market to pick up the pieces, the more likely they will be to stop the crash in its tracks. “

Stocks Won’t Crash Spectacularly but May Zigzag Lower (WS)

The market is like a “coiled spring” after eight years of QE and interest rate repression, Singer said in the email announcing the $5-billion offering. His firm wants to have the liquidity to capitalize on a “possibly large opportunity set that could emerge when investor confidence is impaired, recent correlations and assumptions don’t work, and prices are changing rapidly.” He added: “The nature of modern markets is that rich opportunity sets seem to be ephemeral, providing surprising volatility, bargains and dislocations for only brief periods of time before governments, aware of the politically destructive effects of extreme volatility, rally to take stern actions to keep the balls up in the air.” So they’d have to act fast to front-run the Fed.

It will be an event that could produce extraordinary returns by picking up the pieces before central banks jump in and once again bail out stockholders and bondholders. That’s the theory. But here’s the thing: the more investors prepare for this by putting large amounts of money aside to plow into a crashing market to pick up the pieces, the more likely they will be to stop the crash in its tracks. As a sharp sell-off unfolds and after regular dip-buyers are crushed, the nervous crash buyers that don’t want to miss this opportunity will start buying. They’re nervous because the Fed could jump in and reverse the crash, and they want to pick up the pieces before that happens. So they’ll jump in early and the intense buying will stop the crash. This includes short-sellers who want to take profits and cover their positions during a crash.

They’re the most nervous bunch of them all. Under this buying pressure, asset prices would begin to bounce before the Fed steps in, and given the bouncing prices, it might not step in, though prices might not reach prior highs. Then, after a period of calm which the smart money will use to unload these positions and take profits, the sell-off would start all over again until crash-buyers pile in again to front-run the Fed. This can go on for many years – a brutal zigzagging lower that never quite offers the buying opportunities because too much money jumps in too soon to turn selloffs into rallies that then fail. Japanese stocks have gone through this since 1989 despite the Bank of Japan’s umpteen rounds of QE and endless interest rate repression. And they’re still going through it, with the Nikkei down nearly 50% from its peak almost three decades ago.

Given the smart money’s fervent intentions to capitalize on these crashes and given investors’ eagerness to put a lot of money behind this strategy in advance, I think a long drawn-out Japan-like downtrend in asset prices with dizzying ups and even bigger downs is a likely if terrible scenario that may well crush how investors feel about buying and holding these assets, as it did in Japan.

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The foundations are crumbling.

The Great Aussie Recession-Free Run Is Looking Shaky – Again (BBG)

Weak signals from Australia are forcing economists to revisit their Q1 growth forecasts. Some are even suggesting a contraction. Home building, net exports and household consumption could be a drag on GDP for the first three months of 2017, according to some estimates. A negative print would raise the specter of recession, especially as a cyclone that ripped through Queensland’s key coal mining region is tipped to subtract from growth in the three months through June. Sluggish data “all points to growth being only marginally positive at this stage and there’s certainly the risk of a negative quarter,” said Shane Oliver, chief economist at AMP in Sydney, who now expects first-quarter GDP growth of around 0.2% rather than the 0.5-0.6% he previously penciled in.

Australia’s enviable track-record in avoiding two straight quarters of contraction since 1991 is on shaky ground. While the economy grew a solid 1.1% in the final three months of last year, it was rebounding from a shock 0.5% decline. Australia & New Zealand Bank last week said growth could be just 0.1% in the first quarter of this year. That would be an annual rate of 1.5%, the lowest since 2009. While the Reserve Bank of Australia has said holding its benchmark interest rate at a record low 1.5% since September is appropriate for “sustainable growth” and meeting its inflation target, a soft GDP number won’t go unnoticed.

Oliver says anemic growth in the first half means the risks are still to the downside for borrowing costs, even if the market sees about a 20% chance of a cut this year. A weak number would likely cast further doubt on the government’s growth forecasts, delivered in its annual budget this month, as Prime Minister Malcolm Turnbull’s ruling coalition struggles in the polls. The Treasury is forecasting GDP growth of 1.75% in the 12 months through June, accelerating to 3% by fiscal 2019. “We’ve long held the view that sub-trend growth is likely to persist. This idea of a return back to 3%-plus growth looks a little ambitious at this stage,” said Su-Lin Ong at Royal Bank of Canada.

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There’s so much money locked up in the housing bubble, spending can only go down. Bubbles are never innocent.

Australia Retail Sector Shudders (Aus.)

“It’s no secret it’s tough in retail at the moment and the share prices of traditional retail business models are reflecting that”, said Andrew Mitchell, portfolio manager at Ophir Asset Management. “The reality is the Australian consumer just isn’t spending right now.” “Household disposable income growth is at the lowest point since the GFC (global financial crisis). Higher utility prices and higher petrol prices continue to create an impact and the out-of-cycle rate rises from banks won’t help either. When you have wage growth sitting at the lowest levels in 30 years, it s going to affect the discretionary spend.” Economic statistics point to some of the toughest times in the sector as shoppers go on strike, not even being swayed by heavily discounted sales as stores make room for winter stock.

Retail spending has slumped, according to UBS economist Scott Haslem. He noted that three of the past four months had seen month-on-month falls in national retail spending for the first time in almost six years, sending the year-on-year pace of sales to just 2.1% in March, its slowest since mid-2013. Mr Haslem admitted the weakness had been surprising, especially given the general level of consumer confidence, which seems to have stabilised of late. “This has caught us somewhat by surprise. Not least because overall consumer confidence, while modestly lower, remains around average and this (month s) wage data also show more evidence quarterly wage growth is ‘basing’ “, he said.

Mr Haslem pointed to the cashflow of the average Australian home as the culprit. “While low interest rates and falling petrol costs have softened the blow from slowing wage growth in recent years, with still low wages growth, and renewed rises across utilities, debt interest and petrol costs, household cashflow is now under significant renewed downward pressure”, he said. “Overall, the recent sharp weakening in consumer cashflow sheds much insight into the recent weakening in early 2017 retail sales. While households have broadly maintained their real consumption growth into late 2016, this has been significantly achieved by drawing on their saving. But with cashflow growth continuing to slow, and savings intentions rising, it’s likely this drawdown in saving rate will end.”

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The dumbest possible comment: this time is different.

US Homeowners Are Again Pocketing Cash as They Refinance Properties (WSJ)

Americans refinancing their mortgages are taking cash out in the process at levels not seen since the financial crisis. Nearly half of borrowers who refinanced their homes in the first quarter chose the cash-out option, according to data released this week by Freddie Mac. That is the highest level since the fourth quarter of 2008. The cash-out level is still well below the almost 90% peak hit in the run-up to the housing meltdown. But it is up sharply from the post-crisis nadir of 12% in the second quarter of 2012. In a cash-out refi, a borrower refinances an existing mortgage with a new one, typically at a lower borrowing cost, that has a higher principal balance than the existing one. This allows the homeowner to pay off the old mortgage and still have cash left over for other uses.

The growing popularity of cash-out refis has helped buoy refinance activity. After booming for several years, demand for refinance mortgages had begun to slow as the Federal Reserve began increasing short-term interest rates and longer-term bond yields moved higher. Mortgage rates remain low by historical standards, though. The average rate for a fixed, 30-year mortgage was 3.95%, Freddie Mac reported this week. Meanwhile, rising home prices have helped increase the equity homeowners have in their houses. This allows more people to refinance to capture the benefit of lower mortgage rates. And borrowers whose homes are rising in value are often more likely to be interested in refinancing for cash. For example, in Denver and Dallas, where home prices have jumped, more than half of refinancers opted for cash last year, according to Freddie Mac.

To some housing-market observers, the fact that more homeowners are tapping their homes for cash represents a healthy confidence in the economy. It comes against a backdrop of continued gains in employment. At the same time, the increasing use of cash-out refis causes some concern since, in the run-up to the financial crisis, borrowers used their homes like veritable ATMs. Len Kiefer, Freddie Mac’s deputy chief economist, says this time has been different. Borrowers now are subject to stricter standards when they get a loan or refinance a mortgage. There is also less money at stake now than a decade ago.

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Corbyn is making UK media nervous: A Telegraph headline today: “Jeremy Corbyn has long hated Britain”

The Guardian Mourns Corbyn’s Polling Surge (Cook)

It is quite extraordinary to read today’s coverage in Britain’s supposedly left-liberal newspaper the Guardian. In the “man bites dog” stakes, the day’s biggest story is the astounding turn-around in the polls two weeks before the British general election. Labour leader Jeremy Corbyn has narrowed the Conservatives’ lead from an unassailable 22 points to 5, according to the latest YouGov survey. It looks possible for the first time, if the trend continues, that Corbyn could even win the popular poll. (Securing a majority of the British parliament’s seats is a different matter, given the UK’s inherently undemocratic electoral system.) Is the news that the “unelectable” Corbyn has dramatically closed the gap with the Tories front page news for the Guardian? Well, only very tangentially. It is buried in the paper’s lead story, which is far more interested in issues other than the new poll finding.

The story – headlined “May puts Manchester bombing at heart of election with attack on Corbyn” – largely adopts Conservative leader Theresa May’s line of attack against Corbyn for his suggestion that there might be a link between long-term western violence in the Middle East (now usually referred to as “intervention”) and terror attacks like the one in Manchester last week. Labour’s dramatic rise in the polls is briefly mentioned 12 – yes, 12! – paragraphs into the story. It is almost as though the Guardian does not want you to know that Corbyn and his policies are proving far more successful in the election campaign than the Guardian predicted or ever wanted. In fact, the Guardian’s only story on the poll – buried deep on the inside pages – could not be less enamoured with the polling turn-around. The story – headlined “Labour poll rise suggests Manchester attack has not boosted Tories” – is again framed as a story about Conservative failure rather than the draw of Corbyn and his policies.

Here is as excited as the Guardian can get about the Tories’ highly diminished 5-point lead: “It was always going to be the case that the polls would narrow during the course of the campaign, as Labour’s policies received greater media exposure, but the YouGov poll implies that public opinion is more volatile.” It sounds almost as though the Guardian, which has been denigrating Corbyn since his election as Labour leader nearly two years ago (along with the rest of the British media), does not want him to win. Let’s put that another way. It’s almost as though Britain’s only supposedly left-liberal newspaper would prefer that May and the Conservatives won. This, let us remind ourselves, is the same Conservative party that has made the once-surging, far-right UKIP party largely redundant by adopting many of its ugliest policies.

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Seeking publicity dead ahead of an election with plans to protect children from X,Y,Z, is a dead give away spindoctors are involved. Bill Clinton ‘launched’ a V-chip plan ahead of the 1996 election. when he was under severe pressure, which supposedly allowed parents to control what their kids could watch on TV. Great success voting wise, but never heard from again.

Tories Pledge New Law Over Domestic Violence Directed At Children (G.)

Theresa May has pledged to create a new aggravated offence when domestic violence is directed towards a child, in order to allow perpetrators to be punished for longer. She also confirmed that a Tory government would introduce a statutory definition for domestic violence and establish a special commissioner to stand up for victims. “We will launch a relentless drive to help survivors find justice and increase the number of successful prosecutions. This hidden scandal, that takes place every day in homes across Britain, must be tackled head on,” said May. “And we must respond to the devastating and lifelong impact that domestic abuse has on children, who carry the effects into adulthood.”

She argued that the Conservative party had delivered “real steps towards tackling domestic violence” over seven years, but wanted to go further. The Tory manifesto promised to support victims to leave abusive partners and to review the funding for refuges. However, the Labour party has analysed domestic violence rates since 2009, with an increase in violence against women perpetrated by their acquaintances. There has been a levelling off of violence against women by strangers and a fall in violence against men. Sarah Champion, the shadow women’s minister, has campaigned against the loss of 17% of specialist refuges for domestic violence victims in England since 2010.

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“..tweeting would have saved a lot of money and an embarrassing French and German media portrayal of a “confused and isolated America.”

US Should Focus On The Economy And Skip Irrelevant Talking Forums (CNBC)

Seeking to cut $610 billion from health care for the poor, and $192 billion from food assistance to 43 million Americans struggling to make ends meet, while spending millions of dollars on European jamborees will probably strike most people as an example of bad and insensitive public policy. Given the vacuity of last week’s European meetings, one may question why was it necessary for the U.S. president to spend four days and all that money to repeat for the nth time to people who took $165 billion net out of their U.S. trade in 2016 what he has been telling them over the last two years. No European leader has been in any doubt for quite some time that (a) trillions of dollars in U.S. trade deficits and a soaring net foreign debt of $8.1 trillion could not continue, (b) trade policies would be reviewed with particular attention to countries running systematic and large trade surpluses with the U.S., (c) the treaty on global warming would be closely scrutinized and (d) U.S. would insist on all member countries honoring their financial obligations to the NATO alliance.

All these issues have been explained in bilateral and multilateral forums and constantly amplified by the European media. The White House should have taken a cue from Italy’s former (and most probably future) Prime Minister Matteo Renzi. Outraged by do-nothing summits in Brussels, he scolded the spendthrift Eurocrats for squandering public money and precious time on matters where a simple SMS could have taken care of their trivial agenda. Yes, tweeting would have saved a lot of money and an embarrassing French and German media portrayal of a “confused and isolated America.” That would have also spared Washington the German G-7 lecture about the virtues of free trade. Lacking no chutzpah, the German chancellor Angela Merkel told President Trump last week that the U.S. should not complain about trade deficits with Germany.

Why? Simple, she said: Germany is a big investor in the U.S. creating thousands of jobs. There was no repartee from the U.S. side because our trade experts failed to slip a note to the president to tell him that these investments were financed with the money we gave them to buy German goods. Running large trade deficits with Germany enables German companies to recycle their dollar earnings in the U.S., killing whatever is left of jobs and incomes in our manufacturing – Detroit automakers being one of the prominent cases in point. Yes, we are giving them the rope … and the German chancellor apparently wanted more of it. Thanks in large part to these kinds of trade policies we now have the stock of human and physical capital that sets the limits to potential (and noninflationary) growth rate at a miserable 1.5%.

Undeterred, our free-traders insist that we should focus on services, leave the manufacturing sector to Germans and the Chinese, keep piling on foreign debt and still think that we can make the country safe and secure, maybe even run the world on the side. A wonderful picture, isn’t it? Hospitality industries, Silicon Valley and Hollywood will be our big money spinners. Maybe. But that’s not the public policy platform that won the presidency last year. So, let’s see what the vox populi says during the all-important mid-term Congressional elections in November 2018. These elections could seal the fate of this administration and of the legislative control by the Republican Party.

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“I am appalled at the behavior of the media,” she declared. “It’s the collapse of journalism.”

Camille Paglia: Democrats Are Colluding With The Media To Create Chaos (WE)

Camille Paglia is much more worried about the media than about the steady string of Trump-related scandals they claim to be uncovering. In a Tuesday interview with the Washington Examiner, Paglia excoriated the press for its coverage of Trump’s decision to fire FBI Director James Comey and his alleged sharing of classified information with Russian officials. Fresh off a spirited panel with Christina Hoff Sommers hosted by the Independent Women’s Forum, the iconic feminist dissident, who serves as a professor of media studies at the University of the Arts, accused journalists of colluding with the Democratic Party in an effort to damage the Trump administration. “Democrats are doing this in collusion with the media obviously, because they just want to create chaos,” she said when asked to comment on the aforementioned stories.

“They want to completely obliterate any sense that the Trump administration is making any progress on anything.” The popular author, whose latest book was released in March, pointed to early struggles experienced by previous presidential administrations to illustrate the media’s bias against Trump. “Obama’s administration for the first six months was chaos,” Paglia recalled. “Bill Clinton’s was chaos for six months. Nobody holds that against a new person.” “Those two guys had actually been politicians!” she continued, noting Trump’s relative inexperience with government operations. Paglia’s assessment of media bias in the Trump era leaves little room for optimism.

“I am appalled at the behavior of the media,” she declared. “It’s the collapse of journalism.” As the Examiner reported in April, Paglia, who cast her ballot for Jill Stein last November, is predicting Trump will win re-election in 2020. “I feel like the Democrats have overplayed their hand,” she said at the time. Though the news cycle has moved through plenty of additional scandals in the past month, it appears as though Paglia’s assessment of the president’s prospects has not changed. “I’m looking forward to voting Democrat again,” the acclaimed philosopher explained. “But the point is I feel that the media has so utterly lost its credibility that I think people are going to vote against the media again.”

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This fun is far from over.

How Team Obama Tried To Hack The Election (NYP)

New revelations have surfaced that the Obama administration abused intelligence during the election by launching a massive domestic-spy campaign that included snooping on Trump officials. The irony is mind-boggling: Targeting political opposition is long a technique of police states like Russia, which Team Obama has loudly condemned for allegedly using its own intelligence agencies to hack into our election. The revelations, as well as testimony this week from former Obama intel officials, show the extent to which the Obama administration politicized and weaponized intelligence against Americans. Thanks to Circa News, we now know the NSA under President Barack Obama routinely violated privacy protections while snooping through foreign intercepts involving US citizens — and failed to disclose the breaches, prompting the Foreign Intelligence Surveillance Court a month before the election to rebuke administration officials.

The story concerns what’s known as “upstream” data collection under Section 702 of the Foreign Intelligence Surveillance Act, under which the NSA looks at the content of electronic communication. Upstream refers to intel scooped up about third parties: Person A sends Person B an e-mail mentioning Person C. Though Person C isn’t a party to the e-mail, his information will be scooped up and potentially used by the NSA. Further, the number of NSA data searches about Americans mushroomed after Obama loosened rules for protecting such identities from government officials and thus the reporters they talk to. The FISA court called it a “very serious Fourth Amendment issue” that NSA analysts — in violation of a 2011 rule change prohibiting officials from searching Americans’ information without a warrant — “had been conducting such queries in violation of that prohibition, with much greater frequency than had been previously disclosed to the Court.”

A number of those searches were made from the White House, and included private citizens working for the Trump campaign, some of whose identities were leaked to the media. The revelations earned a stern rebuke from the ACLU and from civil-liberties champion Sen. Rand Paul. We also learned this week that Obama intelligence officials really had no good reason attaching a summary of a dossier on Trump to a highly classified Russia briefing they gave to Obama just weeks before Trump took office. Under congressional questioning Tuesday, Obama’s CIA chief John Brennan said the dossier did not “in any way” factor into the agency’s assessment that Russia interfered in the election. Why not? Because as Obama intel czar James Clapper earlier testified, “We could not corroborate the sourcing.”

But that didn’t stop Brennan in January from attaching its contents to the official report for the president. He also included the unverified allegations in the briefing he gave Hill Democrats. In so doing, Brennan virtually guaranteed that it would be leaked, which it promptly was. In short, Brennan politicized raw intelligence. In fact, he politicized the entire CIA.Langley vets say Brennan was the most politicized director in the agency’s history. Former CIA field-operations officer Gene Coyle said Brennan was “known as the greatest sycophant in the history of the CIA, and a supporter of Hillary Clinton before the election. I find it hard to put any real credence in anything that the man says.”

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“..it is unrealistic and a complete waste of time to make an assessment of the American President’s foreign policy..”

Syria’s Assad Explains How The US Really Works (ICH)

While Americans endlessly battle each other over seemingly important choices like Clinton and Trump or Democrats and Republicans, it is clear that the majority of the population has little understanding of how the U.S. government operates. Yet, for those who pay the price for the apathy and confusion of the general population of the West, it often becomes stunningly obvious that neither presidents nor political parties in America represent any discernible difference in the ongoing agenda of the Deep State and the rest of the oligarchical apparatus. Indeed, that agenda always marches forward regardless of who is president or which political party is in control.

Syria’s president Bashar al-Assad has thus had the unique position of not only being on the receiving end of American imperialism by virtue of not only being a citizen of a target country but also by being the head of the country, steeped in politics in his own right and thus understanding how certain factors come into play at the national level. With that in mind, it is worth pointing out a recent statement made by Assad during the course of an interview regarding the opinion of the Syrian government on Donald Trump. Assad stated,

“The American President has no policies. There are policies drawn by the American institutions which control the American regime which are the intelligence agencies, the Pentagon, the big arms and oil companies, and financial institutions, in addition to some other lobbies which influence American decision-making. The American President merely implements these policies, and the evidence is that when Trump tried to move on a different track, during and after his election campaign, he couldn’t. He came under a ferocious attack. As we have seen in the past few week, he changed his rhetoric completely and subjected himself to the terms of the deep American state, or the deep American regime. That’s why it is unrealistic and a complete waste of time to make an assessment of the American President’s foreign policy, for he might say something; but he ultimately does what these institutions dictate to him. This is not new. This has been ongoing American policy for decades.”

Assad also addressed the Western media’s portrayal of him as a “devil” who kills and oppresses his own people. He stated,

“Yes, from a Western perspective, you are now sitting with the devil. This is how they market it in the West. But this is always the case when a state, a government, or an individual do not subjugate themselves to their interests, and do not work for their interests against the interests of their people. These have been the Western colonial demands throughout history. They say that this evil person is killing the good people. Okay, if he is killing the good people, who have been supporting him for the past six years? Neither Russia, nor Iran, nor any friendly state can support an individual at the expense of the people. This is impossible. If he is killing the people, how come the people support him? This is the contradictory Western narrative; and that’s why we shouldn’t waste our time on Western narratives because they have been full of lies throughout history, and not something new.”

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Russiagate in France. Macron better not walk his talk.

Macron Promises Tough Talk At First Putin Meeting (R.)

New French President Emmanuel Macron is promising tough talk at his first meeting with Vladimir Putin on Monday, following an election campaign when his team accused Russian media of trying to interfere in the democratic process. Macron, who took office two weeks ago, has said that dialogue with Russia is vital in tackling a number of international disputes. Nevertheless, relations have been beset by mistrust, with Paris and Moscow backing opposing sides in the Syrian civil war and at odds over the Ukraine conflict. Fresh from talks with his Western counterparts at a NATO meeting in Brussels and a G7 summit in Sicily, Macron will host the Russian president at the palace of Versailles outside Paris. Amid the baroque splendor, Macron will use an exhibition on Russian Tsar Peter the Great at the former royal palace to try to get Franco-Russian relations off to a new start.

“It’s indispensable to talk to Russia because there are a number of international subjects that will not be resolved without a tough dialogue with them,” Macron said. “I will be demanding in my exchanges with Russia,” the 39-year-old president told reporters at the end of the G7 summit on Saturday, where the Western leaders agreed to consider new measures against Moscow if the situation in Ukraine did not improve. Relations between Paris and Moscow were increasingly strained under former President Francois Hollande. Putin, 64, canceled his last planned visit in October after Hollande said he would see him only for talks on Syria. Then during the French election campaign the Macron camp alleged Russian hacking and disinformation efforts, at one point refusing accreditation to the Russian state-funded Sputnik and RT news outlets which it said were spreading Russian propaganda and fake news.

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Shamelessly promoting Steve’s new book “Can we avoid another financial crisis?”, of which this is an excerpt.

Economists Have to Embrace Complexity to Avoid Disaster (Steve Keen)

With a higher propensity to invest comes the debt-driven crisis that Minsky predicted, and which we experienced in 2008. However, something that Minsky did not predict, but which did happen in the real world, also occurs in this model: the crisis is preceded by a period of apparent economic tranquillity that superficially looks the same as the transition to equilibrium in the good outcome. Before the crisis begins, there is a period of diminishing volatility in unemployment: the cycles in employment (and wages share) diminish [..] But then the cycles start to rise again: apparent moderation gives way to increased volatility, and ultimately a complete collapse of the model, as the employment rate and wages share of output collapse to zero and the debt to GDP ratio rises to infinity.

This model, derived simply from the incontestable foundations of macroeconomic definitions, implies that the “Great Moderation”, far from being a sign of good economic management as mainstream economists interpreted it (Blanchard et al., 2010, p. 3), was actually a warning of an approaching crisis. The difference between the good and bad outcomes is the factor Minsky insisted was crucial to understanding capitalism, but which is absent from mainstream DSGE models: the level of private debt. It stabilizes at a low level in the good outcome, but reaches a high level and does not stabilize in the bad outcome. The model produces another prediction which has also become an empirical given: rising inequality. Workers’ share of GDP falls as the debt ratio rises, even though in this simple model, workers do no borrowing at all. If the debt ratio stabilises, then inequality stabilises too, as income shares reach positive equilibrium values.

But if the debt ratio continues rising—as it does with a higher propensity to invest—then inequality keeps rising as well. Rising inequality is therefore not merely a “bad thing” in this model: it is also a prelude to a crisis. The dynamics of rising inequality are more obvious in the next stage in the model’s development, which introduces prices and variable nominal interest rates. As debt rises over a number of cycles, a rising share going to bankers is offset by a smaller share going to workers, so that the capitalists share fluctuates but remains relatively constant over time. However, as wages and inflation are driven down, the compounding of debt ultimately overwhelms falling wages, and profit share collapses. Before this crisis ensues, the rising amount going to bankers in debt service is precisely offset by the declining share going to workers, so that profit share becomes effectively constant and the world appears utterly tranquil to capitalists—just before the system fails.


Figure 5: Rising inequality caused by rising debt

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Mob or Salvation Army? Al Capone posed as both at the same time…

Greek Archbishop: ‘I See a Europe of Exploitation, not Solidarity’ (GR)

Europe’s current face was not one of solidarity and support but more one of exploitation, Archbishop of Athens and All Greece Ieronymos suggested on Sunday, in an interview broadcast by the state television channel ERT1. “Today, I do not see a Europe of solidarity but I see every day, more often and more clearly, the Europe of exploitation,” he said. The foundations of this Europe had to “go back to the starting point, from where it began, with the same thoughts and the same purpose,” the head of the Orthodox Church of Greece added. The Archbishop also commented on the recent terrorist strike in Manchester, expressing his horror and condemnation and noting that “terrorism is one of the worst repercussions of war.”

It was necessary, he said, “to also look at the other side, to see who are those leading these people to become terrorists.” On Church-State relations, he said the role of the Church was to talk to everyone, including those responsible for the state, because the Church was not a political party and “cooperation is therefore necessary”. On the issue of Church property, he noted that the Church’s spiritual mission could not be carried out without economic support. “The Church must be free and financially independent,” he said. With regard to refugees, Ieronymos said the Church sees them as “people in need” and that their final destination “should be their own country.” In the future, he added, we must consider whether “refugees have also become a part of the exploitation of humanity.”

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Feb 162017
 
 February 16, 2017  Posted by at 10:31 am Finance Tagged with: , , , , , , , , ,  2 Responses »


Pablo Picasso Femme 1930

 

 

Great read from Ed. “..while Brazil and Greece faced the same type of downturn in dollar terms — about 45% in GDP per person — Brazilian living standards only deteriorated about 2%, compared to 26% in Greece.” Good part on Dutch elections too.

Europe’s Delusional Economic Policies (Edward Harrison)

This chart encapsulates the narrative in Matt’s post – namely that Greece has underperformed other emerging market crisis countries on post-crisis growth. Here’s how Matt put it: Greece had a very different post-crisis experience: it never recovered. By contrast, all the other countries were well past their pre-crisis peak after this much time had elapsed. On average, Argentina, Brazil, Indonesia, Thailand, and Turkey have outperformed Greece by more than 40 percentage points after nine years. The reasonable question is why. Matt answers that in the paragraph before, saying: “But unlike those countries, Greece lacked the ability to use the exchange rate as a shock absorber. So while Brazil and Greece faced the same type of downturn in dollar terms — about 45% in GDP per person — Brazilian living standards only deteriorated about 2%, compared to 26% in Greece. The net effect is that Greece had a relatively typical crisis in dollars but an unprecedently painful one in the terms that matter most”.

My view is that what we are seeing, therefore, is the difference monetary sovereignty can make in post-crisis recovery because the currency does a lot of the heavy lifting. And this is true for developed economies as well. For example, we saw the UK and Sweden recover after a housing bubble and EMU turmoil in the early 1990s in part because of currency depreciations. But of course, Greece doesn’t have its own currency so the currency can’t depreciate. Greece must use the internal devaluation route, which makes its labor, goods and services cheaper through a deflationary path – and that is very destructive to demand, to growth, and to credit. This, in my view, accounts for much of Greece’s underperformance relative to emerging market crisis countries.

In response to my tweet on Greece, Danish economist Lars Christensen pointed out to me that he had compared Greece to Turkey in 2015 and Greece came out poorly too. And his post noted that: “14 years later Turkey is still in many ways politically dysfunctional – in fact it has gotten worse in recent years – there has been rumours of plans of military coups, there has been major corruption scandals even involving the Prime Minister (now president Erdogan) and the governing AKParty and lately the civil war in Syria has created a massive inflow of refugees and increased tensions with Turkish Kurdish population.” Translation: it’s not about reforms, people. It’s about growth. And the euro – and the policies tied to membership – is anti-growth, particularly for a country like Greece that is forced to hit an unrealistic 3.5% primary surplus indefinitely. And there will be no debt forgiveness either, as the IMF has said is necessary.

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The WaPo takes a break from its political campaign and shows it still has at least one person left who can write an actual -and execellent- report.

Austerity Was A Bigger Disaster Than We Thought (WaPo)

We now take a break from your regularly scheduled scandals to bring you some not-so-breaking news: austerity was as big a disaster as its biggest critics said it was. That, at least, is what economists Christopher House and Linda Tesar of the University of Michigan and Christïan Proebsting of the École Polytechnique Fédérale de Lausanne found when they looked at Europe’s budget-cutting experience the last eight years. It turns out that cutting spending right after the worst crisis in 80 years only led to a lower GDP and, in the most extreme cases, higher debt-to-GDP ratios. That’s right: trying to reduce debt levels sometimes increased debt burdens. Other than that, how was the policy, Mrs. Lincoln? But let’s back up a minute. This isn’t something that’s always true. In fact, it almost never used to be.

Cutting spending, you see, shouldn’t be a problem as long as you can cut interest rates too. That’s because lower borrowing costs can stimulate the economy just as much as lower government spending slows it down. What happens, though, if interest rates are already zero, or, even worse, you’re part of a currency union that means you can’t devalue your way out of trouble? Well, nothing good. House, Tesar and Proebsting calculated how much each European economy grew — or, more to the point, shrank — between the time they started cutting their budgets in 2010 and the end of 2014, and then compared it with what actually realistic models say would have happened if they hadn’t done austerity or adopted the euro.

According to this, the hardest-hit countries of Greece, Ireland, Italy, Portugal and Spain would have contracted by only 1% instead of the 18% they did if they hadn’t slashed spending; by only 7% if they’d kept their drachmas, pounds, liras, escudos, pesetas and the ability to devalue that went along with them if they hadn’t become a part of the common currency and outsourced those decisions to Frankfurt; and only would have seen their debt-to-GDP ratios rise by eight percentage points instead of the 16 they did if they hadn’t tried to get their budgets closer to being balanced. In short, austerity hurt what it was supposed to help, and helped hurt the economy even more than a once-in-three-generations crisis already had.

[..] the euro really has been a doomsday device for turning recessions into depressions. It’s not just that it caused the crisis by keeping money too loose for Greece and the rest of them during the boom and too tight for them during the bust. It’s also that it forced a lot of this austerity on them. Think about it like this. Countries that can print their own money never have to default on their debts — they can always inflate them away instead — but ones that can’t, because, say, they share a common currency, might have to. Just the possibility of that, though, can be enough to make it a reality. If markets are worried that you might not be able to pay back your debts, they’ll make you pay a higher interest rate on them — which might make it so that you really can’t. In other words, the euro can cause a self-fulfilling prophecy where countries can’t afford to spend any more even though spending any less will only make everything worse.

That’s actually a pretty good description of what happened until the ECB belatedly announced that it would do “whatever it takes” to put an end to this in 2012. Which was enough to get investors to stop pushing austerity, but, alas, not politicians. It’s a good reminder that you should never doubt that a small group of committed ideologues can destroy the economy. Indeed, it’s the only thing that ever has. That’s true whether you’re talking about the European politicians who pushed for the creation of the euro itself – they ignored the economists who warned them that it might turn out just as badly as it has – or the ones who pushed for austerity a few decades later. After all, it shouldn’t have been a surprise that trying to balance your budget when interest rates were zero would end badly.

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What’s lacking in Europe is self-reflection. Maybe that’s because it has no flexibility in its policies. But that still doesn’t make Malloch wrong.

‘The European Project Has Failed’ – Trump EU Envoy Pick Malloch (Exp.)

Donald Trump’s likely EU ambassador has launched a blistering attack on the “undemocratic” bloc and its “elitist” leaders.In comments that will terrify Brussels, Ted Malloch said the EU had become “bloated” by bureaucracy and “anti-Americanism”. And he called for member states to hold their own Brexit-style referendums – which could spark the break-up of the union. It comes after Mr Trump hailed Brexit as a “blessing to the world” and said the UK would be far stronger outside the bloc. Mr Malloch, who is the President’s pick to become Washington’s envoy to Brussels, made the comments in The Parliament magazine.

He said: “Put the EU to a referendum vote in every member country. “It is time for greater scepticism and realism about the European Union and its not so hidden agenda and ever closer union.” He added: “The failure of the European integration project should by now be self-apparent to everyone. “This is simply not something Churchill or Roosevelt would countenance. “The European Union has become undemocratic and bloated by both bureaucracy and rampant anti-Americanism.” He said: “We want democracy and accountability, while the EU is intrinsically undemocratic and unaccountable. “So should the US continue to promote such a damaged European model, which is alien to our own traditions? Is it not working against US interests to do so?”

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It may be an option considered fleetingly, but that’s it.

Greece ‘May Ditch Euro In Favour Of The Dollar’ – Malloch (Ind.)

The man tipped to be Donald Trump’s ambassador to the European Union has said that Greece is contemplating leaving the euro in favour of the US dollar. According to the transcript of a translated interview with Greek local online news site ekathimerini.com, Professor Ted Malloch claimed Greek economists are looking into taking on the US banknotes if the country turns its back on the European single currency in a move that he said would “freak out” Germany. He said: “I know some Greek economists who have even gone to leading think tanks in the US to discuss this topic and the question of dollarisation. “Such a topic of course freaks out the Germans because they really don’t want to hear such ideas.”

Mr Malloch added that a “Grexit” would be the best options for Greek people as the current situation is “unsustainable”. Mr Malloch, a strident Brexiteer, has indicated he is no fan of Brussels on several occasions. Earlier this month, in an interview with Bloomberg, Mr Malloch said that he didn’t want to speak on behalf of the Greek people but “I think there is probably – from an economist’s perspective – a very strong reason for Greece moving away from the euro.” Last month, Mr Malloch said the euro “could collapse” in the next 18 months. “The one thing I would do in 2017 is short the euro,” he said. “I think it is a currency that is not only in demise but has a real problem and could in fact collapse in the coming year, year and a half,” he added.

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‘He will die in jail’:

US Intelligence Community Ready To ‘Go Nuclear’ On Trump (RawS)

U.S. national security officials are reportedly ready to “go nuclear” after President Donald Trump’s latest attack on the intelligence community. In a series of tweets on Tuesday and Wednesday, Trump insisted that the “real scandal” was not that former National Security Adviser Michael Flynn lied about his contact with Russia. Instead, the president blasted what he said were “un-American” leaks that led to Flynn’s ousting.On Wednesday, former NSA intelligence analyst John Schindler provided some insight into the reaction of national security officials. “Now we go nuclear,” he wrote on Twitter. “[Intelligence community] war going to new levels. Just got an [email from] senior [intelligence community] friend, it began: ‘He will die in jail.’” “US intelligence is not the problem here,” Schindler added in another tweet. “The President’s collusion with Russian intelligence is. Many details, but the essence is simple.”

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No matter where you stand, this must be of concern. A state within the state is not what the founders had in mind.

Spies Keep Intelligence From Donald Trump on Leak Concerns (WSJ)

U.S. intelligence officials have withheld sensitive intelligence from President Donald Trump because they are concerned it could be leaked or compromised, according to current and former officials familiar with the matter. The officials’ decision to keep information from Mr. Trump underscores the deep mistrust that has developed between the intelligence community and the president over his team’s contacts with the Russian government, as well as the enmity he has shown toward U.S. spy agencies. On Wednesday, Mr. Trump accused the agencies of leaking information to undermine him. In some of these cases of withheld information, officials have decided not to show Mr. Trump the sources and methods that the intelligence agencies use to collect information, the current and former officials said.

Those sources and methods could include, for instance, the means that an agency uses to spy on a foreign government. A White House official said: “There is nothing that leads us to believe that this is an accurate account of what is actually happening.” A spokesman for the Office of Director of National Intelligence said: “Any suggestion that the U.S. intelligence community is withholding information and not providing the best possible intelligence to the president and his national security team is not true.” Intelligence officials have in the past not told a president or members of Congress about the ins and outs of how they ply their trade. At times, they have decided that secrecy is essential for protecting a source, and that all a president needs to know is what that source revealed and what the intelligence community thinks is important about it.

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Fewer reserve requirements means less Treasury appetite.

How Trump Could Trigger A Massive Wave Of Selling In The Treasury Market (CNBC)

Since the financial crisis, banks have been stockpiling Treasurys because they qualify as “safe” assets that count toward required regulatory capital levels. U.S. commercial banks now hold $2.4 trillion in government debt and agency securities, more than double the total from nine years ago, according to the St. Louis Fed. But House Republicans – with the support of the administration – are pushing to roll back parts of the Dodd-Frank regulations that were put in place after the 2008 financial crisis. That means banks could get a reprieve from those capital level requirements, and they could reduce their Treasury holdings as a result. In a report, RBC managing director and banking analyst Gerard Cassidy calculates the 24 largest bank holding companies already hold $100 billion in excess capital, with Citigroup and JPMorgan Chase having the highest dollar amount.

As regulation eases, the capital that was once used as a large cushion against a future recession could be funneled into stock buybacks. Those Treasury-heavy portfolios “will certainly be the source of cash to use to buy back stock,” Cassidy wrote in an e-mail to CNBC. Banks have already been slowly selling off the debt, which causes yields to rise. Between the middle of 2013 and 2014, Bank of America’s holdings of U.S. Treasurys grew from $2.9 billion to $58 billion. At the end of 2016, that figure had dropped to $48 billion, according to the bank’s earnings. Wells Fargo’s $26 billion Treasury balance in September is down nearly 30% from a year ago. Not all banks break out the specific balance, but the totals as of the third quarter of 2016 range from $23 billion (Morgan Stanley) to $111 billion (Citigroup).

But banks are just one source of possible selling en masse. China is a creditor of a different magnitude: The country held $1.05 trillion in Treasurys as of November, down by $215 billion from a year earlier. It dumped $41 billion in U.S. debt in October alone, a move that relinquished its ranking as the largest foreign creditor to the United States. One reason for the country selling U.S. debt previously was its need to raise cash to prop up its currency, the yuan, after years of seeking to devalue it to make its exports more attractive. Its intervention in the currency markets led President Donald Trump, while campaigning, to label China a currency manipulator and threaten a 45% tariff on products made in China but sold in the United States.

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Interesting phenomenon, but the writers have a hard time explaining.

Houses as ATMs No Longer (NYFed)

Housing equity is the primary form of collateral that households use for borrowing. This makes it a potentially important source of consumption funding, especially for younger households. In a previous post we showed that owner’s equity in residential real estate has finally, thanks to increasing home prices, rebounded to and essentially re-attained its 2005 peak level. Yet in spite of a gain of more than $7 trillion in housing equity since 2012, so far homeowners haven’t been tapping this equity at anything like the pace we witnessed during the housing boom that ended in 2006. In this post, we analyze the changes in equity withdrawal.

The blue line in the chart below shows total owner’s equity in real estate from the Flow of Funds—this is the same series as in our previous post. It shows a dramatic rebound in aggregate home equity over the last several years. The red line shows the combination of two ways that households can withdraw equity—assuming they have some—without selling the house: they can originate a junior lien against the property or they can refinance using a cash-out refinancing of an existing first-lien mortgage. The series in the chart, which we have shown in an earlier post on household debt, captures both of these, while excluding the equity withdrawal associated with selling a home.

The first observation that’s striking about the chart is the dramatic change in borrower behavior with respect to home equity. During the boom between 2000 and 2006, household equity and its extraction were both rising rapidly. From 2003 to 2007, homeowners were extracting more than $350 billion per year, resources that were available for use in a variety of purposes from home improvement to consumption. The second major point of the chart is the effect of the housing and financial crises. Beginning in 2008, equity extraction began to decline quickly and was hovering around zero by 2010, where it remained through 2012. The virtual elimination of equity withdrawal was a big contributor to the household deleveraging that ultimately shaved more than $1.5 trillion from household debt. It also likely contributed to the sharp decline of consumption during the Great Recession and its subsequent sluggish recovery.

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Looks dangerous. Fighting bubbles with bigger bubbles is always a bad idea.

Fed Frets about $2 Trillion Commercial Real Estate Bubble (WS)

Boom and bust: that’s the material CRE is made of. We had seven years of boom, and now the Fed is worried about the bust. Yellen didn’t mention CRE in her prepared testimony on Tuesday before the Senate Committee on Banking, Housing, and Urban Affairs. But it featured in the twice-yearly report that the Fed delivered to Congress in support of Yellen’s testimony. And it wasn’t the first time that it was mentioned in these twice-yearly reports – but the fifth time in a row. In its February report two years ago, the Fed first pointed at “valuation pressures” in CRE. And warnings about CRE have appeared since then in every report, twice a year, with growing sharpness, including in the report issued in June 2016, which warned that “valuations in the CRE sector appear increasingly vulnerable to negative shocks….”

Other Fed governors have also warned about the CRE boom and a potential bust, particularly Boston Fed governor Eric Rosengren, who was gazing with amazement at a stunning crane forest in his own city. What concerns the Fed about CRE aren’t the valuations per se, but the fact that the sector is highly leveraged, and that when prices collapse, which they tend to do, the collateral value gets crushed, and banks are left to twist in the wind. That’s what happened during the Financial Crisis. Just how badly can prices get crushed? The national averages hide the drama that happens on the ground in particular cities. But even these national averages still show enough drama, as per data from the Green Street Commercial Property Price Index. The index shows that overall prices across the major markets in the nation plunged nearly 40% during the Great Recession and have since more than doubled:

So that’s why the Fed is fretting about it. This time around, the Fed report said: “Commercial real estate (CRE) valuations, which have been an area of growing concern over the past year, rose further, with property prices continuing to climb and capitalization rates decreasing to historically low levels.” Then the report discusses the debt that nurtured this boom to these heights. This debt has ballooned to $1.98 trillion, and is now 14% higher than during the crazy peak of the prior bubble that collapsed with such spectacular results:

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All of a sudden Hamon has 38%?! Oh wait, the numbers don’t add up at all. More countries should discuss their colonial past- and present.

France’s Colonial Past Muscles Into Presidential Race (AFP)

French presidential frontrunner Emmanuel Macron drew a storm of criticism Wednesday after calling France’s colonisation of Algeria a “crime against humanity”. In a TV interview in Algiers this week, the centrist said French actions in Algeria, which achieved independence in 1962 after eight years of war, were “genuinely barbaric, and constitute a part of our past that we have to confront by apologising”. His visit also included a stop at the Martyrs’ Memorial in Algiers, saying he wanted to promote a “reconciliation of memories” between the two countries. His rivals on the right for the French presidency – due to be decided in a first round election in April and a run-off between the two top candidates in May – pounced on the comments.

Les Republicans candidate Francois Fillon on Wednesday denounced what he called “this hatred of our history, this perpetual repentance that is unworthy of a candidate for the presidency of the republic”. Wallerand de Saint-Just, an official in Marine Le Pen’s far-right National Front party, accused Macron of “shooting France in the back”, while Gerald Darmanin, an ally of ex-president Nicolas Sarkozy, tweeted “Shame on Emmanuel Macron for insulting France while abroad”. It was the not the first time Macron, who currently leads the polls for the two rounds of voting in April and May, has touched on the livewire issue. “Yes, there was torture in Algeria, but there was also the emergence of a state, or wealth, of a middle class,” he told the magazine Le Point in October.

“This is the reality of colonialism. There are elements of civilisation and elements of barbarism.” And Fillon has been tripped up by his own comments on French colonialism. In August, he drew claims of trying to sanitise history, claiming that “France is not guilty of having wanted to share its culture with the peoples of Africa”. Macron remains the frontrunner in the presidential race, with 39% of those surveyed in the latest survey by pollsters Ipsos giving him a favourable opinion. In the poll released by the magazine Le Point on Wednesday, Macron was followed by Socialist candidate Benoit Hamon, with 38%, while Fillon tumbled 18 percentage points to 25%, just behind Le Pen, on 26%.

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One step away from a formal investigation. Does he really want it that bad?

French Prosecutor Keeps Fillon Fake Work Probe Open (R.)

France’s financial prosecutor announced on Thursday that an investigation into fake work allegations surrounding presidential candidate Francois Fillon would remain open, in a new blow to the ex-prime minister’s campaign. A three week-old scandal over hundreds of thousands of euros in taxpayers’ money which his wife was paid for work she may not have done has cost conservative Fillon his status as favorite to win the French presidency in May. “It is my duty to affirm that the numerous elements collected (by investigators) do not, at this stage, permit the case to be dropped,” prosecutor Eliane Houlette said in a statement, after receiving an initial police report on the subject.

The prosecutor did not announce any further steps, but among the choices before it are dropping the case, taking it further by appointing an investigating magistrate, or sending it straight to trial. Fillon, 62, has said he would step down should he be put under formal investigation, but his camp has also challenged the legitimacy of the probe. The first round of the election is less than 10 weeks away.

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Oct 122016
 
 October 12, 2016  Posted by at 9:28 am Finance Tagged with: , , , , , , , , , ,  3 Responses »


NPC “Largest electric locomotive and Congressman John C. Schafer” 1924

October 14 Is A $7 Trillion Moment of Truth in Markets (BBG)
Pound Sterling Behaves Like An Emerging Market Currency (Ind.)
Royal Bank of Scotland’s Vampire Unit Guilty Of Financial Terrorism (Fraser)
China Weakens Yuan Fixing for Sixth Day, Fuels Depreciation Talk (BBG)
China Banks May Need $1.7 Trillion Capital Injection To Cover Bad Loans (R.)
China Cities Face End of Fairy Tale as Default Risks Rise (BBG)
Tokyo Apartment Prices To Fall 20% Or More: Deutsche (BBG)
Are Rising House Prices Good For The Economy? (Ahuri)
Bank of Russia Governor Says Oil Rally Can Mean Much Faster Easing (BBG)
The Truth About the War in Aleppo (David Stockman)
Oops! – A World War! (Dmitry Orlov)
Wounded Elephant (Jim Kunstler)
Neoliberalism Is Creating Loneliness That’s Wrenching Society Apart (Monbiot)
Obituary: Great Barrier Reef – 25 Million BC-2016 – (OO)
More Than 11,200 Migrants Stranded On Aegean Islands (Kath.)

 

 

The return of LIBOR.

October 14 Is A $7 Trillion Moment of Truth in Markets (BBG)

If the London Interbank Borrowing Rate was a musical artist, or an actor, or a sports team, we’d be calling 2016 its comeback year. Not since the financial crisis of 2008 has Libor, to which almost $7 trillion of debt including mortgages, student loans and corporate borrowings, is pegged – experienced such a surge. The three-month U.S. dollar Libor rate has jumped from 0.61% at the start of the year to 0.87% currently – a 42% rise – ahead of money market reform that’s due to come into effect on Oct. 14. The new rules require prime money market funds – an important source of short-term funding for banks and companies – to build up liquidity buffers, install redemption gates, and use ‘floating’ net asset values instead of a fixed $1-per-share price.

While the changes are aimed at reinforcing a $2.7 trillion industry that exacerbated the financial crisis, they are also causing turmoil in money markets as big banks adjust to the new reality of a shrinking pool of available funding. Some $1 trillion worth of assets have shifted from prime money market funds into government money market funds that invest in safer assets such as short-term U.S. debts. The exodus has driven up Libor rates as banks and other corporate entities compete to replace the lost funding. Now, analysts are debating whether the looming Oct. 14 deadline will mark a turning point for the interbank borrowing rate, as money markets acclimatize to a new reality.

While analysts at Deutsche Bank believe that Libor may be poised to tighten when compared to other benchmark interest rates after Oct. 14, their counterparts at TD Securities speculate that Libor will “head higher” and the spreads won’t “compress anytime soon.”

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But Britons just keep fighting and blaming each other.

Pound Sterling Behaves Like An Emerging Market Currency (Ind.)

Is the British pound the Mexican peso? Amid rising fears that the UK will take a big economic hit from its move to leave the European Union, the correlation between the pound and an index of emerging-market currencies has jumped to levels last seen in the run-up to the Brexit vote. “Investors are increasingly casting UK assets in an emerging-market light, amid a fundamental re-appraisal of the country’s medium- to long-term economic fortunes,” Chris Scicluna, London-based strategist at Daiwa Capital Markets, said. On Tuesday, the pound fell for a fourth day, tumbling 0.49% to below $1.23, bringing its year-to-date fall against the dollar to 17% — the worst among 16 major peers.

“The pound is the purest expression of investors’ fears about political risk in developed markets,” Nicholas Spiro at Lauressa Advisory wrote in a note to clients on Monday. “While the Mexican peso — the most liquid emerging market currency and the most reliable gauge of ‘Trump risk’ — has given sterling a run for its money this year, it’s the pound that has become a proxy for politically-driven volatility in markets.” While developed-country government bonds typically benefit from safe-haven buying during bouts of market nerves, the dynamic is now in reverse, with the pound and government bonds falling in tandem, and the UK 10-year note yielding 0.98% compared with 0.52% in mid-August. While global bond markets have sold off this month, amid expectations of tighter monetary policies, UK yields have outpaced rises in the US and euro-area countries.

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This story is fast moving beyond belief. A state owned bank that kills off 1000s of businesses to make a quick buck?!

Royal Bank of Scotland’s Vampire Unit Guilty Of Financial Terrorism (Fraser)

We all know that the Royal Bank of Scotland went rogue under Fred Goodwin. What was less clear – until yesterday anyway – was that, eight years after it was saved from oblivion thanks to Gordon Brown and Alistair Darling’s £850 billion bailout package, the bank appears be no less of a rogue institution today. A data dump of thousands of RBS documents leaked to Buzzfeed News and the BBC has demonstrated that the bank had a policy of pushing small business customer firms to the wall in order to grow its own profits, increase bonuses for staff and rebuild its tattered balance sheet in the wake of its near collapse. There have been many, many credible reports of such activity – essentially killing viable businesses for profit – over the past five years or so but, as the former business secretary Vince Cable told Newsnight last night, “there is now a smoking gun”.

What Kremlinologists of the bank knew before yesterday was that RBS, today 73% owned by UK taxpayers, together with its sister banks NatWest and Ulster Bank, had left a trail of destruction which some have described as a corporate holocaust across the UK’s and Ireland’s small and medium-sized company base, that they had been seeking to save their own skins at their customer firms’ expense, and that tens of thousands of business customers had been affected. For example, I revealed in my book Shredded: Inside RBS The Bank That Broke Britain how RBS was engaged in a form of “financial terrorism” with a view to bolstering its own balance sheet from August 2008 onwards.

In the book, I revealed that, in May 2009, RBS instituted a policy of cherry-picking businesses from across its UK and Irish customer base operating in sectors including care homes, pubs, nurseries, nightclubs, hotels, retail units, industrial units and farms etc. – for referral to its “vampire unit”, global restructuring group. The referrals often followed what I called “manufactured defaults”, which meant the bank engineered a covenant breach or an LTV breach either through a phoney “drive by” valuation of the customer’s property assets delivered by a tame firm of chartered surveyors or in some instances a missold swap.

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“They do want the depreciation; they just don’t want it to happen quickly..”

China Weakens Yuan Fixing for Sixth Day, Fuels Depreciation Talk (BBG)

China’s central bank weakened the yuan’s reference rate for a sixth day, the longest run of cuts in nine months, amid speculation policy makers will allow further declines as the dollar rises. The next possible target is 6.83 against the greenback, with a potential Federal Reserve interest-rate increase supporting the dollar, said Shaun Osborne at Bank of Nova Scotia in Toronto. The People’s Bank of China may need to step up efforts to prevent market fears over any sharp depreciation, according to a Scotiabank report written by Singapore-based foreign-exchange strategist Qi Gao. The PBOC set its daily fixing at 6.7258 against the dollar, extending a six-day weakening run to 0.9%.

The onshore yuan extended declines from a six-year low to drop 0.06% to 6.7228 as of 9:49 a.m. in Shanghai, while the offshore rate climbed 0.07%. The Chinese currency has fallen 6.5% against a 13-currency index this year. “The yuan’s depreciation against the dollar and versus a trade-weighted basket are both intentional policy choice,” said Cliff Tan, a currency strategist in Hong Kong at Bank of Tokyo-Mitsubishi UFJ. “They do want the depreciation; they just don’t want it to happen quickly. Our forecast is still 6.80 at the end of this year, and it looks like the currency is headed there.”

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“S&P expects Beijing will continue to allow rapid credit growth over the next 12-18 months before attempting to rein it in…”

China Banks May Need $1.7 Trillion Capital Injection To Cover Bad Loans (R.)

Rising debt levels will worsen the credit profiles of China’s top 200 companies this year, requiring the country’s banks to raise as much as $1.7 trillion in capital to cover a likely surge in bad loans, S&P Global said in reports on Tuesday. The study sees little scope for improvement in 2017 amid worsening leverage and excess capacity in almost all sectors. Debt has emerged as one of China’s biggest challenges, with the country’s debt load rising to 250% of GDP. Excessive credit growth is signaling an increasing risk of a banking crisis in the next three years, the Bank of International Settlements (BIS) warned recently. 70% of the companies in the S&P survey were state owned, and they accounted for $2.8 trillion or 90% of the total respondents’ debt.

S&P estimated the problem credit ratio at Chinese banks was already at 5.6% at end-2015. In a downside scenario of unabated credit growth, that could worsen to 11-17%. In such a situation, banks would need as much as $1.7 trillion in recapitalization by 2020, S&P estimated. Even under a base case scenario, they would require $500 billion. That compares with China’s last big bank debt cleanup some two decades ago, when an estimated 4 trillion yuan ($600 billion) was spent on restructuring as of late 2005, according to a report for French economics thinktank CEPII. S&P expects Beijing will continue to allow rapid credit growth over the next 12-18 months before attempting to rein it in, implying risks would heighten in one to two years.

The IMF has warned China its credit growth is unsustainable, with companies sitting on $18 trillion in debt, equivalent to about 169% of GDP. Chinese banks’ non-performing loans are already at nearly 2%, the highest since the global financial crisis in 2009, according to the China Banking Regulatory Commission (CBRC). But some analysts believe the ratio could be as high as between 15 and 35%, as many banks are slow to recognize problem loans or park them off balance sheet, and as lenders come under political pressure from local governments to roll over bad loans to prevent job losses and defaults.

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LGFVs are the domain of shadow banks.

China Cities Face End of Fairy Tale as Default Risks Rise (BBG)

Finance firms that help keep cash flowing to China’s towns, cities and provinces face rising risks of landmark bond defaults just as they turn to global markets for funds. China’s economic slowdown is weighing on revenue at regional governments, hampering their ability to support the 5.3 trillion yuan ($789 billion) of outstanding onshore notes from local-government financing vehicles, which have yet to suffer nonpayments. Such issuance fell 18% last quarter as regulators curbed sales, forcing some to seek funds overseas. Financing units in provinces including Hunan, Jiangsu, Hubei and Sichuan are considering or planning U.S. currency notes, people familiar with the matters have said.

Warning signs are spreading. In the nation’s northeast, Changchun Urban Development & Investment Holdings Group was downgraded by Fitch Ratings last month. In the once-booming coal town of Ordos in Inner Mongolia, Yijinhuoluoqi Hongtai City Construction Investment & Development Co. had 189.5 million yuan of borrowings overdue as of March 31, according to Pengyuan Credit Rating, which downgraded it to A+ from AA- in May. “I don’t believe in the fairy tale that no LGFV will default,” said Terence Cheng, chief investment officer in at HuaAn Asset Management in Hong Kong. “Even China’s state-owned enterprises have been allowed to default. There is no absolute guarantee that an LGFV will not default.”

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Japan’s a big risk for bursting bubbles.

Tokyo Apartment Prices To Fall 20% Or More: Deutsche (BBG)

The Bank of Japan’s shift to controlling bond yields is driving up mortgage rates, prompting Deutsche Bank to predict Tokyo apartment prices may fall 20% or more by 2018. The BOJ’s negative-rate policy was already hurting buyer sentiment, and its move to boost longer-term yields is a double-blow to the industry, according to Yoji Otani, a real estate analyst at Deutsche Bank in Tokyo. The 35-year fixed mortgage rate has climbed for two straight months after touching a record low of 0.9% in August, and sales of new condominiums in Tokyo this year have fallen to the lowest since the nation’s property bubble collapse in the early 1990s.

“The one positive thing about negative rates was that it lowered borrowing costs, and now that is going to end,” said Otani, who expects prices to fall 20% to 30% by the end of 2018. “The collapse of this silent bubble has begun.” Banks have already started raising fixed-mortgage interest rates and some lenders may be charging customers 2% or more within two years under the BOJ’s current yield policy, according to Credit Suisse. The adoption of the new monetary policy is in effect a form of tapering and the cost of home loans will rise as the central bank becomes less aggressive in its bond purchase program, according Masahiro Mochizuki, a real estate analyst at the Swiss bank.

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Interesting findings on how Australia is the nation full of ATMs. Perverse consequences (“why Australian multi-factor productivity stopped growing at the turn of the millennium.”). h/t Yves

Are Rising House Prices Good For The Economy? (Ahuri)

Overall, the results indicate that a $1,000 increase in housing wealth is associated with an increase in debt of approximately $240 per annum. This is a large response compared to the magnitudes found in studies in the United States and United Kingdom… House price increases are associated with larger increases in total indebtedness for home owners with higher initial loan-to-value (LTV) ratios. Home owners with larger values of non-mortgage debt as well as higher LTV ratios are more sensitive to house price movements compared to other home owners… The take-up of further mortgage debt among vulnerable highly leveraged households exposes them to income, housing and financial market shocks.

The results are in contrast to the general belief in Australia that debt is held by those most able to service it—higher income and high-wealth households. Macroeconomic policy-makers should interpret high levels of debt and rising household debt-to-income ratios in Australia carefully. Overall, the findings show that house price changes influence household debt through two channels: a direct wealth effect and an indirect collateral effect via the household’s borrowing capacity. That is, some households face borrowing constraints and, for these households, rising house prices increase the value of their property that may be used as security for a loan and thereby loosen the borrowing constraints… Our results indicate that in response to increasing house prices, some home owners, especially home owners with low debt, engage in debt financing of consumption (involving extracting equity from their home).

Other home owners, especially those with relatively high debt levels refinance existing mortgages or adjust existing debt portfolios. The most important responses are in labour participation and hours of work by women, both partnered and single. The effect is strongest among the older cohort of women and is associated with early retirement for those experiencing above average housing wealth gains. Younger partnered men and women exhibit a reduction in hours of work in response to the gain in housing wealth. That is, these gains in wealth effectively fund time away from work to undertake non-market activities such as providing household care for children, ageing parents, undertaking volunteer work or enjoying more leisure.

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Putin and his people are talking up the price of oil. So far, it works to an extent.

Bank of Russia Governor Says Oil Rally Can Mean Much Faster Easing (BBG)

Russian central bank Governor Elvira Nabiullina is growing confident that her country’s biggest vulnerability can turn into an asset. The Bank of Russia, which last month issued an unprecedented commitment to leave borrowing costs unchanged the rest of the year, will face an easier path to interest-rate cuts if oil prices rise further, Nabiullina said in a Bloomberg Television interview in Moscow on Tuesday. While Brent crude has almost doubled from a 12-year low in January, the central bank’s “moderately tight” stance allowed for only two reductions in 2016 before policy makers all but shut the door on more monetary easing this year.

“If there is a higher oil price, then it can lead to a stronger ruble, and – through the foreign-exchange channel – that in turn can cause a more rapid decline in inflation expectations, slowing inflation,” Nabiullina said. “Then we can ease monetary policy much faster.” The outlook marks a rare signal by the central bank that it’s open to deeper monetary easing as its chase of an inflation goal enters the final stretch. Policy makers are targeting price growth of 4% by end-2017 and see it reaching 5.5% to 6% in 2016 after overshooting their forecasts for a fourth consecutive year in 2015. Oil traded near a 15-month high after rising 3.1% Monday, when Putin said at a conference in Istanbul that his country is willing to join efforts by OPEC to stabilize the market through a production freeze or cut.

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The War Party. Read. Time to venture outside the narrative machine.

The Truth About the War in Aleppo (David Stockman)

This is starting to sound pretty ominous. The Washington War Party is coming unhinged and appears to be leaving no stone unturned when it comes to provoking Putin’s Russia and numerous others. The recent collapse of cooperation in Syria – based on the false claim that Assad and his Russian allies are waging genocide in Aleppo – is only the latest example. So now comes the U.S. Army’s chief of staff, General Mark Milley, doing his best imitation of Curtis LeMay in a recent speech dripping with bellicosity. While America has no industrial state enemy left on the planet that can even remotely challenge its economic might, technological superiority and overwhelming military power, General Milley unloaded a fusillade of bluster at the Association of the United States Army’s annual meeting in Washington DC:

“The strategic resolve of our nation, the United States, is being challenged and our alliances tested in ways that we haven’t faced in many, many decades,” Army Chief of Staff Gen. Mark Milley told the audience. “I want to be clear to those who wish to do us harm … the United States military – despite all of our challenges, despite our [operational] tempo, despite everything we have been doing – we will stop you and we will beat you harder than you have ever been beaten before. Make no mistake about that.” That is rank nonsense. We are not being “tested” by anyone. To the contrary, Imperial Washington is provoking tensions and confrontations everywhere – from the South China Sea to Syria, Iraq, Yemen, Libya, the Black Sea, the Baltics and Ukraine – that have no bearing whatsoever on the safety and security of the citizens of Spokane WA, Topeka KS and Springfield MA.

Indeed, the clear and present danger to peace and freedom in the homeland lies not in the machinations of foreign capitals, but in the arrogant and bombastic groupthink that has overtaken the denizens of the Imperial City. The latter is again on display in the full-throated fulminations about the siege of Aleppo being emitted by the Washington War Party and its trained poodles in the establishment media – most especially the New York Times. We are told that the Russian Air Force and Assad’s military are targeting schools, hospitals and the 200,000 or so civilians of Eastern Aleppo for indiscriminate bombing and slaughter.

It’s shades of Benghazi 2011 all over again – an incipient genocide that Washington must stop in the name of R2P (Responsibility to Protect). No it’s not! What is happening in Aleppo is a raging sectarian civil war and a proxy battleground for the regional political maneuvers of Turkey, Saudi Arabia and Iran. They are none of America’s business and haven’t been since the so-called Arab spring uprising spread to Syria in 2011. Indeed, Syria is a lawless, bombed-out, economically decimated failed state today owing to Washington’s heavy-handed intervention at the behest of the War Party’s bloody twin sisters. That is, the neocons and the R2P liberal interventionist claque around Hillary Clinton, including UN Ambassador Samantha Powers and National Security Council head Susan Rice.

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Does Dmitry rely too much on Russian rationalism as the main factor?

Oops! – A World War! (Dmitry Orlov)

Over the past week or so I’ve been receiving a steady stream of emails demanding to know whether an all-out nuclear war is about to erupt between the US and Russia. I’ve been watching the situation develop more or less carefully, and have been offering my opinion, briefly, one on one, to a few people’s great relief, and now I will attempt to spread the cheer far and wide. In short, on the one hand, all-out nuclear annihilation remains quite unlikely, barring an accident. But, on the other hand, such an accident is by no means impossible, because when it comes to US foreign policy “Oops!” seems to be the operative term.

One reason to be cheerful is that any plan to attack Russia is bound to become mired in bureaucracy. Battle plans are developed by mid-rank people within the US military establishment, approved and forwarded up the chain of command by higher-rank people and finally signed off on by the Pentagon’s top brass and their civilian political accomplices. The top brass and the politicians may be delusional, megalomaniacal and inadvertently suicidal, but the mid-rank people who develop the battle plans are rarely suicidal. If a particular plan has no conceivable chance of victory but is quite likely to lead to them and their families and friends becoming vaporized in a nuclear blast, they are unlikely to recommend it.

Another reason to be cheerful is that Russia has carefully limited the Pentagon’s options. One plan that, in the popular imagination, could lead to an all-out war with Russia, would be the imposition of a no-fly zone over Syria. What many people miss is that it is not possible to impose a no-fly zone on a country with a sufficiently powerful air defense system, such as Syria. As a first step, the air defense system would have to be taken out, and the air campaign to do so would be very expensive and incur massive losses in both equipment and personnel. But then the Russians made this step significantly worse by introducing their S-300 system. This is an autonomous, tracked, mobile system that can blow objects out of the sky over much of Syria and some of Turkey. It is very difficult to keep track of, because it can use “shoot and scoot” tactics, launching an attack and crawling away in a random direction over rough terrain.

Last on my list of reasons why war with Russia remains unlikely is that there isn’t much of a reason to start one, assuming the US behaves rationally. Currently, the biggest reason to start a war is that the Syrian army is winning the conflict in Aleppo. Once Aleppo is back in government hands and the US-supported jihadis are on the run, the Syrian civil war will largely be over, and the rebuilding will begin.

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“..who will emerge from the rubble? I suspect it will be someone we haven’t heard of before, just as Bonaparte was unheard of in France in 1792..”

Wounded Elephant (Jim Kunstler)

It is getting to be too late to sort out all the confusion sown by this horrific campaign. From here on its really more a matter of the dust settling. In background of it all looms the train-wreck of global finance, which will be the true determinant of what the American people will have to do in the years ahead. During the weeks of the election distraction, the European banks struggle to conceal their insolvency while the politicians of Euro-land desperately try to paper over the cracks in these fracturing institutions. Few can tell what is actually happening in China’s banking system, but it’s sending out ominous tremors that are hard to ignore.

But be sure it is all daisy-chained right into Wall Street and the US banks. The potential for wrecking markets and currencies around the world is extreme at this moment. It may only be a matter of whether it happens before or after the election. Then we’ll see what happens when financial institutions can’t trust each other. Trade stops. Economies crumble. Pretenses evaporate. If it gets bad enough, the shelves of the supermarkets go bare in three days and you’re living in a permanent hurricane disaster without the wind and rain. Believe me, that will be bad enough. Hillary, if elected, will not get to play FDR-2. Rather, she’ll be stuck in the role of Hoover, the Return, presiding over a freight elevator of an economy with a broken cable.

Expect problems with the US dollar. Expect “emergency” actions. Expect the unintended consequences of those actions. If there is one outstanding upshot of these “debates” it must be their staggering failure to reassure the American public that they can expect effective leadership through the hardships ahead. There must be many others out there like myself wondering who will emerge from the rubble? I suspect it will be someone we haven’t heard of before, just as Bonaparte was unheard of in France in 1792. This is not entirely a nation of clowns, though it feels like that lately.

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Uh, no, George; that’s quite a big miss. The process of loneliness emerging as a result of breaking social ties goes back way further than neoliberalism. Try the nuclear family. Try how we design our homes and cities.

Neoliberalism Is Creating Loneliness That’s Wrenching Society Apart (Monbiot)

What greater indictment of a system could there be than an epidemic of mental illness? Yet plagues of anxiety, stress, depression, social phobia, eating disorders, self-harm and loneliness now strike people down all over the world. The latest, catastrophic figures for children’s mental health in England reflect a global crisis. There are plenty of secondary reasons for this distress, but it seems to me that the underlying cause is everywhere the same: human beings, the ultrasocial mammals, whose brains are wired to respond to other people, are being peeled apart. Economic and technological change play a major role, but so does ideology. Though our wellbeing is inextricably linked to the lives of others, everywhere we are told that we will prosper through competitive self-interest and extreme individualism.

In Britain, men who have spent their entire lives in quadrangles – at school, at college, at the bar, in parliament – instruct us to stand on our own two feet. The education system becomes more brutally competitive by the year. Employment is a fight to the near-death with a multitude of other desperate people chasing ever fewer jobs. The modern overseers of the poor ascribe individual blame to economic circumstance. Endless competitions on television feed impossible aspirations as real opportunities contract. Consumerism fills the social void. But far from curing the disease of isolation, it intensifies social comparison to the point at which, having consumed all else, we start to prey upon ourselves.

Social media brings us together and drives us apart, allowing us precisely to quantify our social standing, and to see that other people have more friends and followers than we do. As Rhiannon Lucy Cosslett has brilliantly documented, girls and young women routinely alter the photos they post to make themselves look smoother and slimmer. Some phones, using their “beauty” settings, do it for you without asking; now you can become your own thinspiration. Welcome to the post-Hobbesian dystopia: a war of everyone against themselves. Is it any wonder, in these lonely inner worlds, in which touching has been replaced by retouching, that young women are drowning in mental distress?

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One in a long line of obituaries, but a significant one. Many thousands of spcies will die with the reef.

Obituary: Great Barrier Reef : 25 Million BC-2016 (OO)

The Great Barrier Reef of Australia passed away in 2016 after a long illness. It was 25 million years old. For most of its life, the reef was the world’s largest living structure, and the only one visible from space. It was 1,400 miles long, with 2,900 individual reefs and 1,050 islands. In total area, it was larger than the United Kingdom, and it contained more biodiversity than all of Europe combined. It harbored 1,625 species of fish, 3,000 species of mollusk, 450 species of coral, 220 species of birds, and 30 species of whales and dolphins. Among its many other achievements, the reef was home to one of the world’s largest populations of dugong and the largest breeding ground of green turtles.

The reef was born on the eastern coast of the continent of Australia during the Miocene epoch. Its first 24.99 million years were seemingly happy ones, marked by overall growth. It was formed by corals, which are tiny anemone-like animals that secrete shell to form colonies of millions of individuals. Its complex, sheltered structure came to comprise the most important habit in the ocean. As sea levels rose and fell through the ages, the reef built itself into a vast labyrinth of shallow-water reefs and atolls extending 140 miles off the Australian coast and ending in an outer wall that plunged half a mile into the abyss. With such extraordinary diversity of life and landscape, it provided some of the most thrilling marine adventures on earth to humans who visited. Its otherworldly colors and patterns will be sorely missed.

[..] The Great Barrier Reef was predeceased by the South Pacific’s Coral Triangle, the Florida Reef off the Florida Keys, and most other coral reefs on earth. It is survived by the remnants of the Belize Barrier Reef and some deepwater corals.

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And winter is coming, also in Greece.

More Than 11,200 Migrants Stranded On Aegean Islands (Kath.)

Authorities say 162 migrants and refugees have arrived on Greece’s Aegean islands in the past 24 hours, raising the total number to 11,215. Authorities say 38 arrivals were reported on Samos, 38 on Chios and 22 on Lesvos. The number of individuals sheltered on Samos has increased by about 40% over the past 10 days, officials say. On Tuesday, State Minister Alekos Flabouraris chaired a meeting on immigration strategy where it was decided that migrants will be gradually moved out of an overcrowded facility on the island, while there are plans to build a second facility to detain migrants who commit violations.

Read more …

Jul 112015
 
 July 11, 2015  Posted by at 4:51 pm Finance Tagged with: , , , , , , ,  6 Responses »


Kostas Tzioumakas Constantinos Polychronopoulos 2015

I made a new best friend this week. Constantinos Polychronopoulos, Kostas for short, is an inspirational man. And a dynamo and magnet all in one at the same time. He’s a source for hope and change and dignity for literally countless people around him in the city of Athens.

Kostas’ story goes a bit like this, as far as I have been able to gather (he speaks two words of English, but when I went to see him, my friend and photographer and interpreter Dimitri was with me, a good thing):

Kostas lost his job as a marketing specialist in a big firm in Athens early on when the financial crisis broke. Gradually, he had no choice but to move back in with his mother and was forced to share her ever more meagre pension. He must have been close to 45 at the time, he’s 50 now.

Then one day in 2011, as he tells it, he saw two kids fighting over some food they found in a dumpster (yes, that is Athens, even back then). The next day, he decided to go to a farmer’s market and ask the stall keepers for leftover food. Right then and there, he started to cook a meal with what they gave him, and to give it away to anyone who wanted to eat, to share.

His main motto still is: Free Food For All! He will not tolerate discrimination of any kind. And he always eats along with the people he feeds. We share!

Kostas now cooks ‘in the street’, and I mean that literally, every day. In the beginning, he was arrested multiple times on health related charges etc, but he successfully defended his case saying there was no law against cooking food in the street and giving it away.

Today, his statement reads:

The idea of Society Kitchen “The Other Human”

In an action of solidarity and a manifestation of love towards our fellow men, with the hope to awaken consciousness and for there to be other similar actions form other individuals and from groups.

These actions are not philanthropic or charity.

We cook “live”, we eat together and we live together.

A lunch with our fellow men on the street.

Join us to make each day more beautiful.

These days, he feeds over 300 people every day. Athens is the city of homeless people. And they’re not winos or people with mental issues, as we know from North American and European cities, though some of them inevitably are.

In Athens, they’re the people who not long ago had good jobs and good prospects, and often families to raise, and who now find themselves with nothing left. Many many people have moved (back) in with parents or family or friends, but not all have that choice. And even if they do, there is no future anywhere to be seen.

A big thing for Mr. Polychronopoulos (I love that say that name) is that he’s able to provide them with a goal in life, with something useful to do, so maybe one day they can go back into a normal functioning society, instead of only sinking ever deeper into a bottomless hole.

Today, these are the people that Kostas can count on to be his volunteers. He now has 3 crews cooking meals outside, in squares and streets, every day in various places in the city. There are a few spots where he’ll be every Tuesday, or every Thursday, but the rest are all different places all the time. Because the need is everywhere.

The food he cooks is all donated. By individuals, supermarkets, restaurants, wherever he can get it. A huge task all in itself. But he and his people get it done, 24/7. Kostas is not a big fan of soupkitchens, because since Athens never had a need for them, they have no cooking facilities and instead get catered to by professional enterprises who work for profit and in his eyes provide poor quality.

That’s not to say they’re not desperately needed, mind you, he simply feels there’s a better way to do it. To get the perspective, there are easily over 100,000 people in Athens alone who need to be fed every day. Half the population of Greece, some 6 million people, live on or below the edge of poverty.

I don’t know about you, but it feels to me like these people have already been told they don’t belong to Europe, no matter what proposals and negotiations are flying over the table. They are effectively living in the third word. Or perhaps even a fourth world.

Dimitri and I went to see Kostas on Wednesday in a sort of apartment building where his organization -that’s what it’s become by now-, named O Allos Anthropos, The Other Human, rents a space where homeless people can go for a meal, or to take a shower, or even, and I must admit I wouldn’t have thought of that, to let their children enjoy a real playroom:

There are clothes being donated -though I understand any and all donations become harder to come by even if ever more people want to donate, everyone simply has less and less-:

There’s a computer where everyone who walks in can go look for job applications -there are few, though it’s no exception to find people with university degrees here-, and of course there’s a kitchen:

Obviously, there’s the proverbial me and him -and furry cuteness- picture:

And the receipt:

As you may be able to decipher between all that Greek, I donated €500 to Kostas and his organization. I thought it good to be careful with your money (I always will), but now I think I should give him more. I can hardly think of anyone more deserving, or anyone who I’d trust more to make sure it’s used in the best possible way. And he insisted on seeing me again anyway before I go.

Which brings me to the next point. I have a ticket out of here on Thursday. So time is becoming an issue. I could get an extension, but I think I’d rather come back. Also because Nicole is in Europe now, and it would be nice to bring her along. Don’t worry, we cover our own travel costs, not a penny of the money you donated to the AE for Athens Fund goes to anyone or anything but the appropriate organizations in the city. Word. Cross my heart.

But there are other snags. For one, the euro may not be legal tender here much longer. I don’t think that’s a big risk, but it’s there. Also, ATMs may stop working altogether a few days from now (Monday?). And ironically, while apparently huge amounts of bank cards are being issued in the city, the organizations we donate to plead for cash euros. Because everything has become a cash economy. It’s hard to know what to do from one day to the next.

So I will have to see what is going to happen. I’m due to visit another clinic on Monday. I have the meeting with Kostas on Tuesday. Dimitri and I are looking hard for an organization that helps refugees, and that we like. Kostas wants to steer clear of all NGOs and government help, and that seems like a good idea. But it has to be possible. There are 1000s of refugess arriving in Greece every day, and €1000 is nothing in that respect.

As you may see, this occupies a lot of my time by now, But I also have to keep The Automatic Earth running. And see some daylight from time to time. Oh, and boy, this city is hot!

After my article on the clinic Wednesday, more money rolled in. You guys are truly something else. The total donations for the AE Fund for Athens have now gone over $8000 US!!! That’s still well over €7000. So I have some big decisions, and big responsibilities, by now. And I will live up to them as best I can. Look, the clinics will need money, and badly, at any given point in time, and for a long time to come. Kostas can and will only do good with anything we give him.

So it’s not that big a problem, but the idea of course is to spread the good around. I’m looking at organizations that take care of children. Very important too. I have a phone number for a lady who runs a private initiative for street kids. There’s so many of them… Will call her tomorrow.

Please keep donating, the need is immense, and may get even bigger as the negotiations over Greek budget cuts wrangle on. And even if the Troika decided to give the government another $100 billion, which I strongly doubt, next to nothing would go to where it’s needed most, it would all go to pay off debt, and your money would be much more efficient in helping where it counts.

I’ve been here for two weeks now, and I’ve found it takes time to find the proper ‘targets’ -and I refuse to waste any of your donations-. But we’re closing in on those targets, so by all means don’t stop now. I’ll always keep you posted on where every single dollar went. Your generosity has turned this into a mission for me.

By the way, a commenter at AE said this after my last AE Fund post, and I’m sorry if that still wasn‘t clear enough:

For those who crave more specific instructions: In the left column of this site, towards the top of the page, there is a section for making donations. If you would like to donate to the Greek cause use this section…BUT MAKE SURE YOUR DONATION AMOUNT ENDS WITH .99. Donations ending with any other decimal values will go to the AE site itself.

Most people already got that, as I can see from what comes in, but it may be good to repeat it once more.

And to quote myself from a while ago: Let’s leave the political ramifications alone for the moment, I deal with that on an almost daily basis here at the Automatic Earth already. Let’s for a moment focus on the more immediate. Let’s see what we can do here and now.

Please support the AE for Athens fund. You can donate through our Paypal widget at the top of the left sidebar. Make sure if you want to donate to Greece, to end the amount with $.99 (TAE itself needs funding too).

You can also donate bitcoin at this address: 1HYLLUR2JFs24X1zTS4XbNJidGo2XNHiTT.

Thank you from a city under siege.

You wouldn’t know that, by the way, from the number of tourists, but ironic as it may be, they’re probably the only thing that keeps this city, and the country, barely alive. Double irony: I can take as much out of an ATM as I like, though not all at once, (which allows me to make cash donations..), while my Greek friends are limited to €60 a day.

So the tourists empty the ATMs, bringing the moment that much closer that the Greeks themselves can’t get any anymore. There even seems to be an app now where people can check which ATMs still have cash in them, and which don’t.

Let’s try and help them through these crazy times as best we can. And we can.

Jul 032015
 
 July 3, 2015  Posted by at 8:53 am Finance Tagged with: , , , , , , ,  8 Responses »


Dorothea Lange Miserable poverty. Elm Grove, Oklahoma County, OK 1936

So now they do it. Now the IMF comes out with a report that says Greece needs hefty debt restructuring.

Mind you, their numbers are still way off the mark, in the end it’s going to be easily double what they claim. Not even a Yanis Varoufakis haircut will do the trick.

But at least they now have preliminary numbers out. The reason why they have is inevitably linked to the press leak I wrote about earlier this week in Troika Documents Say Greece Needs Huge Debt Relief. If that hadn’t come out, I’m betting they would still not have said a thing.

It’s even been clear for many years to the IMF that debt restructuring for Greece is badly needed, but Lagarde and her troops have come to the Athens talks with an agenda, and stonewalled their own researchers.

Which makes you wonder, why would any economist still want to work at the Fund? What is it about your work being completely ignored by your superiors that tickles your fancy? How about your conscience?

Why go through 5 months of ‘negotiations’ with Greece in which you refuse any and all restructuring, only to come up with a paper that says they desperately need restructuring, mere days after they explicitly say they won’t sign any deal that doesn’t include debt restructuring?

By now I have to start channeling my anger about the whole thing. This is getting beyond stupid. And I did too have an ouzo at the foot of the Acropolis, but I’m not sure whether that channels my anger up or down. The whole shebang is just getting too crazy.

For five whole months the troika refuses to talk debt relief, and mere days after the talks break off they come with this? What then was their intention going into the talks? Certainly not to negotiate, that much is clear, or the IMF would have spoken up a long time ago.

At the very least, all Troika negotiators had access to this IMF document prior to submitting the last proposal, which did not include any debt restructuring, and which caused Syriza to say it was unacceptable for that very reason.

Tsipras said yesterday he hadn’t seen it, but the other side of the table had, up to and including all German MPs. This game obviously carries a nasty odor.

Meanwhile, things are getting out of hand here. It’s not just the grandmas who can’t get to their pensions anymore, rumor has it that within days all cash will be gone from banks. And then what? Oh, that’s right, then there’s a referendum. Which will now effectively be held in a warzone.

It’s insane to see even Greeks claim that this is Alexis Tsipras’ fault, but given the unrelenting anti-Syriza ‘reporting’ in western media as well as the utterly corrupted Greek press, we shouldn’t be surprised.

The real picture is completely different. Tsipras and Varoufakis are the vanguard of a last bastion of freedom fighters who refuse to surrender their country to an occupation force called the Troika. Which seeks to conquer Greece outright through financial oppression and media propaganda.

Tsipras and Varoufakis should have everyone’s loud and clear support for what they do. And not just in Greece. But where is the support in Europe? Or the US, for that matter?

There’s no there there. Europeans are completely clueless about what’s happening here in Athens. They can’t see to save their lives that their silence protects and legitimizes a flat out war against a country that is, just like their respective countries, a member of a union that now seeks to obliterate it.

Europeans need to understand that the EU has no qualms about declaring war on one of its own member states. And that it could be theirs next time around. Where people die of hunger or preventable diseases. Or commit suicide. Or flee.

All Europeans on their TV screens can see the line-ups at ATMs, and the fainting grandmas at the banks, the hunger, the despair. How on earth can they see this as somehow normal, and somehow not connected to their own lives?

They’re part of the same political and monetary union. What happens to Greece happens to all of you. That’s the inevitable result of being in a union together.

Don’t Europeans ever think that enough should be enough when it comes to seeing people being forced into submission, in their name? Or are they too fat and thick to understand that it’s in their name that this happens?

The July 5 referendum here in Greece is not about whether the country will remain in the EU, or the eurozone, no matter what any talking head or politician tries to make of it. The narrow question is about whether Greeks want their government to accept a June 26 Troika proposal that Tsipras felt he could not sign because it fell outside his mandate.

That the Troika after the referendum was announced then pulled a Lucy and Charlie Brown move on Syriza, and retracted the proposal, is of less interest. Lucy always pulls away the football, and Charlie Brown always kicks air. He should wisen up at some point and refuse to play ball.

However, at the same time, though it’s highly unfair to burden the Greeks’ shoulders with this, the referendum has a far broader significance. It is about what and who will rule Europe going forward, and we’re talking decades here.

It will either be a union of functioning democracies, or it will be a totalitarian regime in which all 28 nations surrender their independence, their sovereignty, their votes and then their lives to Brussels and Berlin.

Democracies are about one thing first and foremost: the people decide. If you can’t have that, than why would you have elections and referendums? Those then become mere theater pieces. Like we already have in the US, where if anyone can explain to me the difference between the Clintons and the Kardashians, by all means give it a go.

Since it’s clear that Berlin is by far the strongest voice in the three-headed monster the Troika has become, it’s no exaggeration to say that what we see unfold before our eyes is yet another German occupation of Greece. There are no tanks and boxcars involved yet, but wars can be fought in many ways. And scorched earth can take up many different forms too. It’s the result that counts.

In the meantime it has somehow become entirely acceptable for politicians and media from foreign countries to tell the Greeks what to do, who to vote for, and what to make sure happens after.

European Parliament chief Martin Schulz even dares claim that Syriza should resign if the vote is yes, and it should be replaced with a bunch of technocrats. It’s none of your business, Martin. Or yours, Bloomberg writers, or Schäuble, or anyone else who’s not Greek. Shut up! You’re all way out of -democratic- line.

It’s up to Greeks to decide what happens in their country. It’s both a sovereign state and a democracy. The utmost respect for this should be the very foundation of everything we do as free people, whose ancestors fought so hard to make us free.

How come we moved so far away from that, so fast? What happened to us? What have we become?

Jun 082015
 
 June 8, 2015  Posted by at 11:10 am Finance Tagged with: , , , , , , , , , , ,  9 Responses »


Unknown Army of the James, James River, Virginia. 1865

The Troika Is Supposed To Build Greece Up, Not Blow It Apart (Guardian)
Greece Updating Proposals It Sent To Lenders (Kathimerini)
Young Greek Radicals Don’t Just Want Power – They Want To Remake The World (PM)
VAT Rate Hikes Always Reduce State Revenues (Thanos Tsiros)
Juncker Vents Fury Over Greek Bailout Talks At G7 Summit (Guardian)
If You Think Greece’s Crisis Will End Any Time Soon, Think Again (Bloomberg)
103 Years Later, Wall Street Turned Out Just As One Man Predicted (Zero Hedge)
Obama Sidelines Kerry On Ukraine Policy (Eric Zuesse)
Masked Attackers Break Up Tent Camp On Kiev’s Maidan (RT)
Literally, Your ATM Won’t Work… (Bill Bonner)
Banks’ Post-Crisis Legal Costs Hit $300 Billion (FT)
Will China’s Stock Market Explode On Wednesday? (MarketWatch)
China Imports Fall 17.6%, Exports Decline 2.5% (AFP)
Deutsche Bank CEO’s Forced to Resign Over Imminent Derivatives Melt-Down? (Doc)
The Bristol Pound Is Giving Sterling A Run For Its Money (Guardian)
Max Keiser’s Bitcoin Capital Continues to Attract Investors (NBTC)
Canada to Train Ukrainian Police as Russia Conflict Worsens (Bloomberg)
Greek Island Gateway To EU As Thousands Flee Homelands (Irish Times)

A voice of reason, but the troika is not about reason.

The Troika Is Supposed To Build Greece Up, Not Blow It Apart (Guardian)

The phrase “trench warfare” comes to mind. On Friday evening the Greek prime minister, Alexis Tsipras, lobbed some choice words at his foes in Brussels, calling their proposed debt deal “absurd”. Days earlier, the IMF had joined its allies in Brussels to fire a volley of criticism at Athens. The Greeks already had “significant flexibility” to get out of their budget mess, IMF boss Christine Lagarde said, as she urged Athens to repay the €300m instalment of its bailout loan due on Friday. This could go on for several more weeks: Greece told the IMF it will have to wait until the end of the month to get its money, when it will “bundle” four payments together. And should the sides become more entrenched, this long-running war could still end in the disaster of Greek default.

In Washington, where the IMF is hunkered down, and in Europe’s finance ministries, the Greek stance is considered wilfully unreasonable. The Syriza government’s demand for the return of national pay bargaining, a relaxed timetable for pension reform and a lower budget surplus than that demanded by the EU, the IMF and the European Central Bank are all but ridiculed in Berlin, Helsinki and Riga. As Greece’s chief creditors, the EU and the IMF want Greece to adopt flexible labour markets, immediate restrictions on early retirement and a budget surplus big enough to accommodate some debt repayments.

While much of what the radical leftists want seems unreasonable – especially the slow pace of pension reform, which in effect would allow tens of thousands of people in their late 50s to grab early retirement – it is the demands being made by Brussels and the IMF that are unconvincing and, worse, untenable. Running a larger budget surplus is only going to destroy Greece, not build it up. As US economist Joseph Stiglitz and many others, including former IMF staffers, have pointed out, the troika of creditors badly misjudged the economic effects of the programme they imposed in 2010 and 2012. “They believed that by cutting wages and accepting other austerity measures, Greek exports would increase and the economy would quickly return to growth,” Stiglitz said last week.

“They also believed that the first restructuring would lead to debt sustainability. The troika’s forecasts have been wrong.” The current proposals repeat the same mistake. Seven years after the crash, the Greek economy is still 25% smaller than it was at its previous peak, 10% of households have no electricity and youth unemployment is running at more than 50%. Tsipras and his finance minister, Yanis Varoufakis, may specialise in needling their creditors, but the troika also need to take into account the fact that Syriza has formed a legitimate, democratically elected government and cannot be told that its electoral programme is irrelevant.

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826th edition.

Greece Updating Proposals It Sent To Lenders (Kathimerini)

The Greek government is redrafting the 47-page proposal it sent to lenders last week with the aim of securing an agreement that would allow the disbursal of €7.2 billion in bailout funding. Kathimerini understands that Athens is focussing its attention on adjusting the fiscal measures it proposed with the aim of getting closer to the revenue target set by lenders. However, the coalition is reluctant to adjust its VAT proposal, which sees three brackets (6, 11 and 23%) rather than the two proposed by lenders (11 and 23). Greece also seems prepared to raise slightly its primary surplus proposals from 0.6% of GDP this year and 1.5% next year. The institutions proposed 1% for 2015 and 2% for 2016.

The updated suggestion from the Greek side is not expected to reach these targets. While Athens is prepared to change the law regarding early retirement, saving 100 million euros, it does not seem willing to go as far as lenders are demanding in terms of pension reform. There are also substantial differences between Greece and its creditors on the issue of labour market regulations. The updated proposals are expected to be discussed between Greek officials and representatives of the institutions over the next few days, ahead of a meeting between Prime Minister Alexis Tsipras, German Chancellor Angela Merkel and French President Francois Hollande in the Belgian capital on Wednesday.

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They want to make sure this sort of crisis will not happen again.

Young Greek Radicals Don’t Just Want Power – They Want To Remake The World (PM)

At some point, as the Greek crisis lurches to its crescendo, Syriza – the radical left party – will call a meeting of something called a central committee. The term sounds quaint to 21st-century ears: the committee is so big that it has to meet in a cinema. You will not be surprised to learn that the predominant hair colour is grey. These are people who were underground activists in a military dictatorship; some served jail time, and in 1973 many were among the students who defied tanks and destroyed a junta. But they think, speak and act in a way shaped by the hierarchies and power concepts of 50 years ago.

The contrast with the left’s mass support base, and membership, is stark. In the average Greek riot, you are surrounded by concert pianists, interior designers, web developers, waitresses and actors in experimental theatre. It is usually 50:50 male and female, and drawn from a demographic as handy with a smartphone as the older generation are with Lenin’s selected works. Like young radicals across Europe and the US, they have been schooled in the ways of the modern middle classes: launching startup businesses, working two or three casual jobs; entrepreneurship, loose living and wild partying are the default way of life. Of course, every generation of radicals looks different from the last one, but the economic and behavioural contrasts that are obvious in Greece are also present in most other countries.

And this prompts the question: what do the radicals of this generation want when they win power? The success of Syriza, of Podemos in Spain and even the flood of radicalised young people into the SNP in Scotland makes this no longer an idle question. The most obvious change is that, for the rising generation, identity has replaced ideology. I don’t just mean as in “identity politics”. There is a deeper process going on, whereby a credible identity – a life lived according to a believed truth – has become a more significant badge in politics than a coherent set of ideas.

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Just ask Abe and Kuroda.

VAT Rate Hikes Always Reduce State Revenues (Thanos Tsiros)

Greece’s value-added tax rates have been raised three times since 2010, all within the space of one year: in March and July 2010 and then in January 2011. The hike that the government is negotiating with the country’s creditors will be the fourth in five years. Already the low and very low VAT rates have gone up by 44% since early 2010 – i.e. from 4.5 to 6.5% and from 9 to 13% respectively – while the main rate has grown 22%, from 19 to 23% nowadays. Those hikes, intended to increase the state’s income takings, in fact reduced revenues by 20%: In 2014 VAT revenues dropped below €14 billion, to €13.6 billion.

For this year, the budget had provided for VAT revenues of €14.4 billion, but in the first five months there has already been a shortfall of 350 million compared with the target for that point of the year. In comparison with 2008, the year that the recession started, VAT revenues shrank by €5 billion in 2014 in spite of the major hike in the rates. Modern Greek economic history has shown that any indirect tax rate increase leads to a reduction in consumption and an increase in tax evasion, meaning that revenues go down instead of up.

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A rehearsed ploy.

Juncker Vents Fury Over Greek Bailout Talks At G7 Summit (Guardian)

European Union officials delivered a blistering attack on the Greek government at the G7 summit in Bavaria, and world leaders including Barack Obama sought to avoid a transatlantic split over Ukraine by agreeing to maintain sanctions against Russia. In a day of secluded talks in the Alpine resort of Schloss Elmau, the biggest drama was provided by a verbal attack on the Greek prime minister, Alexis Tsipras, by the European commission president, Jean-Claude Juncker. The summit’s host, Angela Merkel, had hoped to solve the Greek bailout crisis before the summit, but instead Juncker felt forced to open proceedings by staging a press conference accusing Tsipras of undermining negotiations over new terms for a bailout and of effectively lying to the Greek parliament.

A visibly angry Juncker said he had told Tsipras during a meeting last Wednesday evening that there was room to negotiate but said the Greeks had been unwilling to take part in in-depth discussions at the meeting. Instead, he said, Tsipras had promised to send him his proposals the following day, but he was still waiting for them on Sunday. “Alexis Tsipras promised that by Thursday evening he would present a second proposal. Then he said he would present it on Friday. And then he said he would call on Saturday. But I have never received that proposal, so I hope I will receive it soon. I would like to have that Greek proposal,” he said. He told reporters he had said to Tsipras that he continued to exclude the idea of a Grexit – “because I don’t want to see it” – but that he could not “pull a rabbit out of a hat”.[..]

Juncker, perceived until now as an honest broker in the crisis – taking a softer approach than the Germans, who are viewed in Greece as the architects of austerity – has rarely been seen in such an irate state, sources close to the EU in Garmisch-Partenkirchen said. They warned that Greece might have lost its closest ally in its long fight to secure a rosier deal. Juncker said he had been disappointed by a speech Tsipras had given to the Athens parliament on Friday. “He was presenting the offer of the three institutions as a leave-or-take offer. That was not the case … He knows perfectly well that is not the case.” Juncker said Tsipras had failed to mention to parliament his (Juncker’s) willingness to negotiate over Greek pensions. [..]

In Athens Mega TV reported that relations between Berlin and Washington over Greece had become increasingly frosty – despite the exhortation from Barack Obama at the G7 for a quick solution to the European debt crisis. The Greek television channel, citing a senior German official, described the US treasury secretary, Jack Lew, imploring his German counterpart Wolfgang Schäuble to “support Greece” only to be told: “Give €50bn euro yourself to save Greece.” Mega’s Berlin-based correspondent told the stationthat the US official then said nothing “because, as is always the case according to German officials when it comes to the issue of money, the Americans never say anything”.

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We have at least 3 weeks left. But after that, of course, Greece will have to plod on for many years.

If You Think Greece’s Crisis Will End Any Time Soon, Think Again (Bloomberg)

Frustrated by Greece’s cat and mouse game with its creditors? Get used to it. Even if PM Alexis Tsipras clinches the €7.2 billion that creditors are withholding, he’s going to need another cash infusion shortly thereafter. What will ensue is a renewed battle after almost five months of trench warfare. The beleaguered country requires a third bailout of about €30 billion, according to Nomura analysts Lefteris Farmakis and Dimitris Drakopoulos. Tsipras says any aid must be on his terms rather than those of governments whose taxpayers have forked out billions in the past five years to keep Greece in the euro. “Any plausible deal at this stage is unlikely to do enough and it’s unlikely to be the end of the matter,” said Simon Tilford, deputy director of the Centre for European Reform in London.

“This could just play out again and again.” The latest episode in the five-year saga has focused on releasing the final tranche of Greece’s second bailout, which expires at the end of June. The amount at stake roughly equates to the bond repayments that Greece needs to make to the ECB in July and August. Here’s the problem for the policy makers struggling to avoid a default in Athens: Even if Greece muddles through until August, it faces a financing shortfall of at least €25 billion euros through the end of 2016. That’s likely to worsen as the economy slides deeper into recession and tax revenue shrivels. [..] “The dependence on our creditors will remain for two years in the best-case scenario,” said Aristides Hatzis, associate professor of law and economics at the University of Athens. “Greece is going to need cheap loans for the next two years.”

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It was all there right from the start.

103 Years Later, Wall Street Turned Out Just As One Man Predicted (Zero Hedge)

In 1910, three years before the US Federal Reserve was founded, Senator Nelson Aldrich, Frank Vanderlip of National City (Citibank), Henry Davison of Morgan Bank, and Paul Warburg of the Kuhn, Loeb Investment House met secretly at Jekyll Island in Georgia to formulate a plan for a US central bank just years ahead of World War I. The result of their work was the so-called Aldrich Plan which called for a system of fifteen regional central banks, i.e., National Reserve Associations, whose actions would be coordinated by a national board of commercial bankers. The Reserve Association would make emergency loans to member banks, and would create money to provide an elastic currency that could be exchanged equally for demand deposits, and would act as a fiscal agent for the federal government.

In other words, the Aldrich Plan proposed a “central bank” that would be openly and directly controlled by Wall Street commercial banks on whose behalf it would solely operate, instead of doing so indirectly, behind closed doors and the need for criminal probe of Yellen’s Fed seeking to find who leaked what to whom. The Aldrich Plan was defeated in the House in 1912 but its outline became the model for the bill that eventually was adopted as the Federal Reserve Act of 1913 whose passage not only unleashed the Fed as we know it now, but the entire shape of modern finance.

In 1912, one person who warned against the passage of the Aldrich Plan, was Alfred Owen Crozier: a man who saw how it would all play out, and even wrote a book titled “U.S. Money vs Corporation Currency” (costing 25 cents) explaining and predicting everything that would ultimately happen, even adding some 30 illustrations for those readers who were visual learners. The book, which is attached at the end of this post, is a must read, but even those pressed for time are urged to skim the following illustrations all of which were created in 1912, and all of which predicted just what the current financial system would look like. Or, in the words of Overstock’s CEO Patrick Byrne, “that’s uncanny”

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“..she also famously said “F—k the EU!” Obama is now seconding that statement of hers.”

Obama Sidelines Kerry On Ukraine Policy (Eric Zuesse)

On May 21st, I headlined “Secretary of State John Kerry v. His Subordinate Victoria Nuland, Regarding Ukraine,” and quoted John Kerry’s May 12th warning to Ukrainian President Petro Poroshenko to cease his repeated threats to invade Crimea and re-invade Donbass, two former regions of Ukraine, which had refused to accept the legitimacy of the new regime that was imposed on Ukraine in violent clashes during February 2014. (These were regions that had voted overwhelmingly for the Ukrainian President who had just been overthrown. They didn’t like him being violently tossed out and replaced by his enemies.) Kerry said then that, regarding Poroshenko, “we would strongly urge him to think twice not to engage in that kind of activity, that that would put Minsk in serious jeopardy.

And we would be very, very concerned about what the consequences of that kind of action at this time may be.” Also quoted there was Kerry’s subordinate, Victoria Nuland, three days later, saying the exact opposite, that we “reiterate our deep commitment to a single Ukrainian nation, including Crimea, and all the other regions of Ukraine.” I noted, then that, “The only person with the power to fire Nuland is actually U.S. President Barack Obama.” However, Obama instead has sided with Nuland on this. Radio Free Europe, Radio Liberty, bannered, on June 5th, “Poroshenko: Ukraine Will ‘Do Everything’ To Retake Crimea’,” and reported that, “President Petro Poroshenko has vowed to seek Crimea’s return to Ukrainian rule. … Speaking at a news conference on June 5, … Poroshenko said that ‘every day and every moment, we will do everything to return Crimea to Ukraine.’”

Poroshenko was also quoted there as saying, “It is important not to give Russia a chance to break the world’s pro-Ukrainian coalition,” which indirectly insulted Kerry for his having criticized Poroshenko’s warnings that he intended to invade Crimea and Donbass. Right now, the Minsk II ceasefire has broken down and there are accusations on both sides that the other is to blame. What cannot be denied is that at least three times, on April 30th, then on May 11th, and then on June 5th, Poroshenko has repeatedly promised to invade Crimea, which wasn’t even mentioned in the Minsk II agreement; and that he was also promising to re-invade Donbass, something that is explicitly prohibited in this agreement. Furthermore, America’s President, Barack Obama, did not fire Kerry’s subordinate, Nuland, for her contradicting her boss on this important matter.

How will that be taken in European capitals? Kerry was reaffirming the position of Merkel and Hollande, the key shapers of the Minsk II agreement; and Nuland was nullifying them. Obama now has sided with Nuland on this; it’s a slap in the face to the EU: Poroshenko can continue ignoring Kerry and can blatantly ignore the Minsk II agreement; and Obama tacitly sides with Poroshenko and Nuland, against Kerry. The personalities here are important: On 4 February 2014, in the very same phone-conversation with Geoffrey Pyatt, America’s Ambassador in Ukraine, in which Nuland had instructed Pyatt to get “Yats” Yatsenyuk appointed to lead Ukraine after the coup (which then occured 18 days later), she also famously said “F—k the EU!” Obama is now seconding that statement of hers.

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Absolutely in chracter.

Masked Attackers Break Up Tent Camp On Kiev’s Maidan (RT)

Unidentified assailants wearing balaclavas assaulted and destroyed a tent camp set up on Sunday by protesters on Kiev’s landmark Maidan Square. Activists at the camp had been calling on the Ukrainian President to report on progress since taking office. The attack happened late Sunday evening, when a gang stormed the activist camp, forcefully removing tents and dispersing protesters. Police officers were reportedly stationed right next to the site and did nothing to stop the violent group. The organizer of the action, Rustam Tashbaev, was arrested, RIA Novosti reported. There were also blasts heard on Institutskaya Street near the Maidan. In Ruptly’s video, assailants are seen ripping through the camp, tearing everything apart, and dragging protesters out of the tents, while they can be heard screaming in the background.

“They took me and dragged me like I was in a sleigh. I screamed, thinking they would beat me up, but they quickly dispersed. It looked like a theater production because the police were nearby and did nothing,” one of the demonstrators told Ruptly video news agency. Earlier on Sunday, about 100 protesters set up several tents on Maidan, demanding President Petro Poroshenko and his cabinet report on what progress has been made in implementing the reforms which were promised last year. “We have launched this campaign, set up tents, and called this protest Maidan 3,” one of the organizers, Rustam Tashbaev, told Ruptly. “We demand these people perform the duties which they are obliged to perform.” Placards at the protest read “Out with [PM Arseny] Yatsenuk and his reforms” and “I’m on hunger strike against administrative dereliction.”

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“..it costs the banks almost nothing to create new credit. That’s why we have so much of it.”

Literally, Your ATM Won’t Work… (Bill Bonner)

While we were thinking about what was really going on with today’s strange new money system, a startling thought occurred to us. Our financial system could take a surprising and catastrophic twist that almost nobody imagines, let alone anticipates. Do you remember when a lethal tsunami hit the beaches of Southeast Asia, killing thousands of people and causing billions of dollars of damage? Well, just before the 80-foot wall of water slammed into the coast an odd thing happened: The water disappeared. The tide went out farther than anyone had ever seen before. Local fishermen headed for high ground immediately. They knew what it meant. But the tourists went out onto the beach looking for shells! The same thing could happen to the money supply…

Here’s how.. and why: It’s almost seems impossible. Hard to imagine. Difficult to understand. But if you look at M2 money supply – which measures coins and notes in circulation as well as bank deposits and money market accounts – America’s money stock amounted to $11.7 trillion as of last month. But there was just $1.3 trillion of physical currency in circulation – about only half of which is in the US. (Nobody knows for sure.) What we use as money today is mostly credit. It exists as zeros and ones in electronic bank accounts. We never see it. Touch it. Feel it. Count it out. Or lose it behind seat cushions. Banks profit – handsomely – by creating this credit. And as long as banks have sufficient capital, they are happy to create as much credit as we are willing to pay for.

After all, it costs the banks almost nothing to create new credit. That’s why we have so much of it. A monetary system like this has never before existed. And this one has existed only during a time when credit was undergoing an epic expansion. So our monetary system has never been thoroughly tested. How will it hold up in a deep or prolonged credit contraction? Can it survive an extended bear market in bonds or stocks? What would happen if consumer prices were out of control?

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Jailing them would be better for shareholders value. And who in their right mind can claim it’s time to go easy on the banks?

Banks’ Post-Crisis Legal Costs Hit $300 Billion (FT)

The total cost of litigation aimed at a group of the biggest global banks since 2010 has broken the £200bn ($306bn) barrier, according to a new study that challenges assumptions that banks are through the worst of post-crisis reparations. The annual study, carried out by the UK-based CCP Research Foundation, uses regulatory notices, annual reports and other public disclosures to tally the cost of fighting claims of misconduct over rolling five-year periods. In the latest report, which runs until the end of last year, the total for 16 banks stands at £205.6bn of fines, settlements and provisions — up almost a fifth from the previous year.

Despite that trend, many bank executives continue to act as if these are irregular charges from “legacy” issues, said Chris Steares, research director at the foundation. He noted that a recent flurry of settlements for currency manipulation cited abuses continuing until 2013. “If you ask the banks if their reputational risk is going to change, they’d have to say yes,” he said. “[But] with conduct costs continuing to be incurred, year after year, it does beg the question whether behaviours are being changed for the better.”

Some politicians in the US and UK have tried to draw a line under years of heavy lawmaking, taxes and fines, arguing that regulators should now go easier on the banks. Executives, too, have signalled that expenses have begun to fall, particularly after the resolution of cases linked to the mis-selling of residential mortgage-backed securities. Presenting earnings in April, for example, Bruce Thompson, Bank of America’s finance chief, noted two “much lighter” quarters of legal expenses which he hoped would allow the bank to hold less capital under international standards on operational risk.

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Not unlikely.

Will China’s Stock Market Explode On Wednesday? (MarketWatch)

Wednesday could be huge for Chinese stocks. On that day, about four hours before Shanghai opens for trade, MSCI will announce whether it will welcome China’s top yuan-denominated stocks into its extremely influential Emerging Markets Index, tracked by a mountain of roughly $1.7 trillion in assets worldwide. Such a move would be expected to ignite a significant rally in Shanghai blue chips, and a recent Wall Street Journal report cited major funds such as those of Vanguard Group Inc. planning to purchase Chinese equities ahead of the MSCI decision, which is due to be revealed Tuesday at about 5:30 p.m. EDT (Wednesday 5:30 a.m. in Shanghai) on the financial company’s website.

Hong Kong-listed shares of Chinese companies – known as “H-shares” – are already a sizeable presence in the MSCI EM Index. Rival FTSE Group (owned by the London Stock Exchange) recently added the mainland-listed stocks – known as “A-shares” – into transitional global indexes, and may add them to its benchmark EM index this September, according to HSBC. The possible MSCI move has been making big headlines in China’s news media, but that said, many analysts are not so sure the index compiler will take the plunge into Chinese equities this week, suggesting it will wait a little longer for the country’s financial reforms to solidify further.

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Ironically, this means a huge increase in the trade surplus…

China Imports Fall 17.6%, Exports Decline 2.5% (AFP)

Chinese imports fell for a seventh straight month in May while exports also sank, according to official data, as the world’s second-biggest economy shows protracted weakness even in the face of government measures to stimulate growth. The disappointing figures, out on Monday, also come as leaders try to transform the economy to one where growth is driven by consumer spending rather than government investment and exports. Imports slumped 17.6% year on year to $131.26bn, the Chinese customs department said in a statement. The decline was much sharper than the median forecast of a 10% fall in a Bloomberg News poll of economists, and followed April’s 16.2% drop.

“The May trade data … suggest both external and domestic demand remain weak,” said Julian Evans-Pritchard, an analyst with the research firm Capital Economics. Exports dropped for the third consecutive month, falling 2.5% to $190.75bn, customs said, although that was better than the median estimate of a 4% fall in the Bloomberg survey. The sharp decrease in imports meant the trade surplus expanded 65.6% year on year to $59.49bn, according to the data. In yuan terms, imports fell 18.1%, exports decreased 2.8% and the trade surplus expanded 65%. The figures provided further evidence that frailty in the Chinese economy, a key driver of world growth, has extended into the current quarter despite intensified government stimulus measures.

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“Deutsche Bank is sitting on a powderkeg of derivatives dynamite..”

Deutsche Bank CEO’s Forced to Resign Over Imminent Derivatives Melt-Down? (Doc)

The co-CEOs of Deutsche Bank unexpectedly stepped down. Recall that Deutsche Bank is now the largest holder of derivatives in the world. The ONLY reason these resignations would have been unexpectedly coerced like this is if Deutsche Bank was having a potentially uncontrollable problem in its OTC derivatives holdings. Because of accounting rules, we have no possible way of knowing what DB’s OTC derivatives book looks like. Although Jain oversaw the build-up of the book, it’s likely that not only does he not know where all the bodies are buried, he has lied to the board of directors and shareholders about the riskiness of the bank’s holdings. I know Jain from personal experience with him right after Deutsche Bank acquired Bankers Trust for BT’s derivatives capabilities.

It instantly put Deutsche Bank in the forefront of the fraud-based OTC derivatives business. Jain has lost money wherever he worked. He was brought over to DB from Merrill when Edson Mitchell assumed the reigns at Deutsche Bank’s US unit. I just remember thinking Jain was about as sleazy as they come. His sole charge was to build Deutsche’s derivatives book of business into the biggest in the world. From there he sleazed his way into the CEO position, a few years after Mitchell went down in plane accident. He then proceeded to climb to the top of Deutsche Bank by conspiring to “shoot” then-CEO Josef Ackerman in the back. Deutsche Bank is sitting on a powderkeg of derivatives dynamite. DB is also the entity that has leased out most of Germany’s sovereign gold.

From a good friend of mine who worked at DB and still keeps in touch with former colleagues: “Deutsche Bank is sitting on a lethal amount of derivatives and everyone at the bank knows it.” [..] “Like I said many times over the past 6 months…the derivatives in Europe have gone SIDEWAYS and there is blood in the back rooms of the world’s biggest derivative traders! News yesterday that $6B in derivatives were being “internally investigated” at the world’s largest derivative holder, Deutsche Bank, is followed today by the resignation of BOTH of it’s CEO’s!! Anshu Jain has thus overseen the world’s largest arsenal of deadly financial derivatives. When Deutsche Bank goes down in flames, the Jain’s bank account should be the first source of funding the losses. May whatever Higher Power there may be up above help us all when the derivatives financial nuclear daisy-chain starts to blow…

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Moany spent locally is worth many times what is spent into box stores. Shopping at Wal-Mart impoverishes your economy, and ultimately you yourself.

The Bristol Pound Is Giving Sterling A Run For Its Money (Guardian)

When his firm was going up against national companies for contracts to manage waste, Jon Free needed an edge to win the pitches. The answer he found was in the sense of community that existed among small businesses like his. By using his local currency, the Bristol pound, he saw companies were more willing to give their business to him and keep money flowing in the area. Launched almost three years ago, the community currency aims to keep money circulating among independent retailers and firms by encouraging people to use the local ‘cash’ instead of sterling, an idea that has inspired other towns and cities to take up similar schemes in the UK and abroad. “To be able to drop in and create a link to make [the money] a circular thing is a big part of it,” the managing director of Waste Source said.

“To say that we are registered with the Bristol pound shows that we are more community based.” In use since 2012, the system operates as both notes and in electronic form with each Bristol pound equal to one pound sterling. Some 800 businesses in the Bristol area now use the community currency, with coffees, meals, council tax and even pole-dancing lessons paid for with it. “The practical vision was to get something which would connect local communities with their businesses in a way which kept money building up in their local communities,” the currency’s co-founder, Ciaran Mundy, said. “What happens is that if you spend it at a large supermarket chain, 80% of that will exit the economy very quickly.”

While community currencies have a history going back to Victorian times, there has been a resurgence in recent years, with Bristol emerging as the standard-bearer in the UK. The system works by people exchanging their sterling for paper Bristol pounds – in single, five, 10 and 20 denominations – or by opening an account at the Bristol Credit Union. The currency can then be spent in participating businesses, or between businesses, in return for goods or services. So far, some £1m has been issued in the community currency, according to Mundy, of which about £700,000 is still in circulation. As it is a voluntary scheme, the currency can switch between sterling and Bristol pounds, he said.

The thinking behind the creation of the new currency, said Mundy, was to make a minor change to allow for more money to be spent in local areas. “I was looking for a technological and cultural innovation which allows people to conduct themselves in a way which is more sustainable. A big part of that is being aware of the impact of your economic activity,” he said.

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Just did an interview with Max. Airs tomorrow on RT.

Max Keiser’s Bitcoin Capital Continues to Attract Investors (NBTC)

Bitcoin Capital, a venture capital fund initiated by the celebrated finance journalist Max Keiser, is hinting to close on a very optimistic note. According to the details available at BnkToTheFuture.com, the VC fund has already generated a little over $1 million upon receiving support from 580 backers (at press time), especially when there are still three days left to the curtain call. The reports also claim that each investor has injected over $1,000 into the Bitcoin Capital, for which they are offered a 50% equity in the fund. A third part of the generated funds are promised to be invested in Bitcoin Capital’s Bitcoin mining rig in Iceland, a place which will also make sure that investors get to receive daily dividends in the form of newly-minted Bitcoins.

This step is planned to ensure speedy investment returns for the investors, something that puts Bitcoin Capital’s plan in an altogether different category, as it seems. But more than its promises, the VC fund is riding high on its backer’s reputation in the market. Max Keiser is known to be one of the most celebrated faces in the finance sector, for his previous professional collaborations with BBC News, Al Jazeera, Resonance FM and Huffington Post. He currently works for the last two, and also hosts a self-branded financial program on RT, titled Keiser Report. His activism for the cryptocurrency sector however was something that earned him a reputation inside the Bitcoin sector. He supported the idea of decentralization when every government and bank was rubbishing it right away.

“I have been critical of the traditional financial system for many years on my show” Keiser said. “I was the first global news outlet to cover bitcoin when it was trading at $3, recognizing its potential to change the world. Many startups in the bitcoin space credit Keiser Report for getting them started in the business. Bitcoin Capital allows the founders and investors to experiment with new crypto financial business models and currencies to transform global finance.”

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Canada was once a nice country. Harper changed all that.

Canada to Train Ukrainian Police as Russia Conflict Worsens (Bloomberg)

Canada will send officers and provide funding to bolster the Ukrainian police force, Prime Minister Stephen Harper said in his latest show of support for Ukraine on the eve of a Group of Seven nations summit. Canada will never accept the Russian occupation of Crimea or parts of eastern Ukraine, Harper said after meeting Ukraine President Petro Poroshenko on Saturday in Kiev. Work continues between the countries on trade talks and visa restrictions. “I’m proud to be here with you again to demonstrate our continued resolve in the face of the enormous challenge you and all Ukrainians are confronted with,” Harper said after earlier announcing the funding to help train Ukrainian police.

The conflict with Russia is “very high on Canada’s agenda” heading into the G7 summit in Germany, which begins Sunday, Harper said. He called on Russian President Vladimir Putin to withdraw all troops, equipment and support for separatists in Ukraine. “Canada will not, and the world must not, turn a blind eye to the near-daily attacks that are killing and wounding Ukrainians here on their own soil, soldiers and civilians alike,” Harper said. Poroshenko thanked Canada, and said he spoke Saturday with the leaders of the U.S., Japan and Germany. “The support by Canada in this very difficult and decisive time is very important for every Ukrainian,” Poroshenko said. “The relentless violation of international norms will not stand without punishment.”

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Brussels lets others do its job and washes its hands.

Greek Island Gateway To EU As Thousands Flee Homelands (Irish Times)

“Excuse me. Is this Greece?” asked a 24-year-old Pakistani man, whose suit was soaked to his waist. Behind him, a group of young Somali men struggled to lift the sole woman passenger from the boat to her wheelchair, the only possession she managed to bring from the other side. Later, Riyan (30), would explain that she had been shot in the back 15 years previously. She said she was making the journey on her own, and her aim was to reach Germany where she hoped she could have an operation. This migrant vessel was one of four to land last Tuesday morning near the beautiful town of Molyvos, with its medieval hilltop fortress that can be seen from miles around.

Tourism is the lifeblood of the place and the permanent population of about 1,500 relies almost exclusively on the money they make during the summer to keep them going during the difficult winter months after the tourists have gone. For weeks, Kempson, a British painter and sculptor who made his home in Molyvos 16 years ago, and his wife Philippa have been daily witnesses to the rapid increase in the numbers of refugees and migrants arriving from Turkey. “It’s been a nightmare for the last few weeks. We really need some help. Only a few of us have been trying to help. This story needs to get out there and Europe really needs to send some help,” he says.

About 70% of those arriving on the boats are Syrian refugees, including many families with young children. They are fleeing the four-year civil war that has devastated their country and, according to the United Nations, triggered the largest humanitarian crisis since the second World War. An estimated 7.6 million people are now displaced within Syria, while almost four million have fled to neighbouring countries, mostly to Turkey, Lebanon and Jordan, where the vast majority have remained, often in appalling conditions. Syrians in Molyvos say only Europe – by which they usually mean Germany or Sweden – can offer them and their families the safety and opportunities they desperately seek.

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