Global dividends rose 7.7% to an all-time high of $1.25 trillion (1 trillion euros) last year boosted by a buoyant world economy and rising corporate confidence, Janus Henderson said on Monday, predicting another record year ahead. The surge – the strongest since 2014 – was driven by increases in every region and almost every industry with record showings in 11 countries including the United States, Japan, Switzerland, Hong Kong, Taiwan and the Netherlands, the investment manager added. For 2018 Janus Henderson expects dividends to keep the same 7.7% growth rate to reach around $1.35 trillion, as corporate and economic growth remains strong even in more volatile financial markets. “Companies are seeing rising profits and healthy cash flows, and that’s enabling them to fund generous dividends.
The record payout last year was almost three-quarters higher than in 2009, and there is more to come,” Ben Lofthouse, Director of Global Equity Income at Janus Henderson, said. “The next few months are set fair, and we expect global dividends to break new records in 2018.” Adjusting for movements in exchange rates, special one-off dividends and other factors, global dividends rose 6.8% last year and are expected to rise another 6.1% in 2018. Janus said 2017’s dividend growth showed less regional divergence than in previous years, reflecting the broadly based global economic recovery, though Europe lagged behind. European dividends rose just 1.9% to $227 billion, weighed down by cuts from a handful of large companies in France and Spain, lower special dividends and a weak euro during the second quarter, when most dividends are paid, it said.
Bond investors, who have been on edge over signs of growing inflation and a possibly more aggressive Federal Reserve, will have their work cut out for them as the U.S. government seeks to sell $258 billion worth of debt this coming week. The Treasury Department began ramping up its debt issuance earlier this month to fund the expected growth in borrowing tied to the biggest tax overhaul in 30 years and a two-year federal spending package. Last year’s tax reform is expected to add as much as $1.5 trillion to the federal debt load, while the budget agreement would increase government spending by almost $300 billion over the next two years. Analysts worry the combination of a rising budget deficit, faster inflation and more Fed rate increases have ratcheted up the risk of owning Treasuries. Those concerns pushed benchmark 10-year Treasury yields up to 2.944%, a four-year peak last week.
Treasury bill and two-year yields have reached their highest level in more than nine years. The five-year Treasury yield is hovering at its highest levels in nearly eight years, while seven-year yield climbed to levels not seen since April 2011. The increase in U.S. yields may entice investors seeking steady income in the wake of the rollercoaster sessions on Wall Street and other stock markets this month, analysts said. [..] The heavy Treasury supply will kick off on Tuesday with $151 billion worth of bills including record amounts of three-month and six-month T-bills. The rest of the debt sales will spread over a holiday-shortened week with $28 billion of two-year fixed rate notes on Tuesday; $35 billion in five-year debt on Wednesday and $29 billion in seven-year notes on Thursday. The Treasury Department also plans to add $15 billion to an older two-year floating-rate issue.
Clearly, debt has surged since 2000 and particularly since 2008 versus decelerating net full time jobs growth. The number of full time employees is economically critical as, generally speaking, only these jobs offer the means to be a home buyer or build savings and wealth in a consumer driven economy. Part time employment generally offers only subsistence level earnings. But if we look at the change over those periods highlighted, we get a clear picture. Full time jobs are being added at a rapidly declining rate while federal debt is surging in the absence of the growth of full time employees.
And if we look at the federal debt added per full time job added (chart below)…broken arrow…broken arrow!!! That is $1.92 million dollars in new federal debt per net new full time employee since 2008. Compare that to the $30 thousand per net new full time employee from ’70 to ’80…or $140 thousand from ’80 to ’90…and nearly quadruples the $460 thousand per from ’00 to ’08. Despite a far larger total population and after ten years of “recovery” since ’08, this is likely as good as it gets. We are likely at or very near the top of this economic cycle. This pattern is likely to carry forward over the next decade and economic cycle…likely with disastrous results.
[..] US population growth has been decelerating since 1790 and debt to GDP rising (chart below). Originally, the combination of a relatively small population, high immigration, and high birth rates meant annual population growth in excess of 3% and relatively low debt to GDP. Over time, as the population grew, immigration slowed, and birth rates collapsed; US population growth tumbled. Since 1950 total annual population growth (black line in chart below) has decelerated almost 75% (from 2% to 0.6%) but more critically the annual population growth among the under 65 year old population has essentially ceased (as the yellow line in the chart shows) and more debt has been the resounding “solution”. Massive interest rate cuts to incent debt creation have been substituted for the decelerating organic growth.
London’s property market has moved out of its boom phase and home sellers need to be more realistic about their price demands, according to Rightmove. The February report from the home-listing website shows that asking prices were down 1% from a year earlier, a sixth consecutive fall. They rose 4.4% on the month, reflecting the usual jump at the start of the spring season. While multiple reports point to a cooling in London housing, the damage is being limited by cautious sellers, who aren’t flooding the market in a panic to dump property. That means the long-running supply-demand imbalance in the city is providing some support to prices. “End-of-the-boom prices normally readjust more quickly if there is an over supply,” Miles Shipside, Rightmove director, said in the report. However, “some would-be sellers are holding back, preventing a glut of competition from forcing prices downward,” he said.
The capital’s housing market was the worst performing in the U.K. in 2017 and there’s little to suggest any upturn is in store. Brexit uncertainty has damped demand, while years of rampant inflation has pushed ownership out of reach for many. The mean asking price in London this month was almost 630,000 pounds ($885,000), more than 20 times average U.K. earnings. For those who need a fast sale, Shipside’s advice is to “sacrifice some of the substantial price gains of the last few years.” The average time to sell a property in London is now 83 days, up from 73 days a year ago. Nationally, asking prices increased 0.8% in February from January, though that was below the 10-year average for the time of year. The average price of 300,000 pounds is up 1.5% year-on-year. That compares with gains of about 6% seen less than two years ago.
The average price of a UK property coming on to the market has risen by more than £2,400 in a month to just over £300,000 amid evidence of “record” levels of house-hunting activity, according to Rightmove. The website, which tracks 90% of the UK property market, said the national average asking price for a home had increased by 0.8% during the past month, following the 0.7% rise it reported in mid-January. However, some sellers may be over-pricing their properties: the average time to sell has risen once again and is now 72 days, compared with 67 days a month ago and 55 during the summer of 2017. In London, the average has climbed to 83 days. Rightmove said that while it was the norm for new sellers’ asking prices to be buoyant at the start of a new year, “this first complete month in 2018 is seeing more pricing optimism than the comparable period in 2017”.
In general, however, sellers were not being over-ambitious or setting too high a price, it added. The website, which claims to display a stock of more than one million properties to buy or rent, said the average asking price now stood at £300,001, compared with £297,587 a month ago. It described January as its “busiest month ever”, with a record 141m website visits. In all the UK regions it tracks, the typical price of a newly-marketed property rose during the past month, with the exception of south-west England, where the figure slipped back slightly. Scotland saw the biggest monthly increase, at 5.1%, while the north-east and Wales managed 3.6% and 3.5%. However, on a national basis, the annual rate of price growth “remains subdued” at 1.5%, said the website.
Take off the terrorist’s mask, and it’s the CIA. Take off the revolutionary’s mask, and it’s the CIA. Take off the Hollywood producer’s mask, and it’s the CIA. Take off the billionaire tech plutocrat’s mask, and it’s the CIA. Take off the news man’s mask, and guess what? It’s the motherfucking CIA. CIA influence is everywhere. Anywhere anything is happening which could potentially interfere with the interests of America’s unelected power establishment, whether inside the US or outside, the depraved, lying, torturing, propagandizing, drug trafficking, coup-staging, warmongering CIA has its fingers in it. Which is why its former director made a cutesy wisecrack and burst out laughing when asked if the US is currently interfering in other democracies.
Fox’s Laura Ingraham unsurprisingly introduced former CIA Director James Woolsey as “an old friend” in a recent interview about Special Prosecutor Robert Mueller’s indictment of 13 alleged members of a Russian troll farm, in which Woolsey unsurprisingly talked about how dangerous Russian “disinformation” is and Ingraham unsurprisingly said that everyone should really be afraid of China. What was surprising, though, was what happened at the end of the interview. “Have we ever tried to meddle in other countries’ elections?” Ingraham asked in response to Woolsey’s Russia remarks. “Oh, probably,” Woolsey said with a grin. “But it was for the good of the system in order to avoid the communists from taking over. For example, in Europe, in ’47, ’48, ’49, the Greeks and the Italians we CIA-”
“We don’t do that anymore though?” Ingraham interrupted. “We don’t mess around in other people’s elections, Jim?” Woolsey smiled and said said “Well…”, followed by a joking incoherent mumble, adding, “Only for a very good cause.” And then they both laughed. They laughed about this. They thought it was funny and cute. They thought it was funny and cute that the very allegation being used to manufacture support for world-threatening new cold war escalations against a nuclear superpower was something they both knew the United States does constantly, usually through Woolsey’s own CIA. The US government’s own data shows that it has deliberately meddled in the elections of 81 foreign governments between 1946 and 2000, including Russia in the nineties. That isn’t even counting the coups and regime changes it facilitated, including right here in my home Australia in the seventies.
The US meddles constantly in other democracies, not “for a good cause” as Woolsey claims, but to advance the agendas of the loosely allied plutocrats, intelligence and defense agencies which comprise America’s permanent government. It does this not to improve or protect the lives of ordinary Americans, but to make the rich richer and the powerful more powerful, usually at the expense of the money, resources, homes, governments, livelihoods and lives of people in other countries. It does this with impunity and without hesitation.
A court will decide on Thursday whether German cities can ban heavily polluting cars, potentially wiping hundreds of millions of euros off the value of diesel cars on the country’s roads. Environmental group DUH has sued Stuttgart in Germany’s carmaking heartland, and Duesseldorf over levels of particulate matter exceeding EU limits after Volkswagen’s 2015 admission to cheating diesel exhaust tests. The scandal led politicians across the world to scrutinize diesel emissions, which contain the matter and nitrogen oxide (NOx) and are known to cause respiratory disease. There are around 15 million diesel vehicles on German streets and environmental groups say levels of particulates exceed the EU threshold in at least 90 German towns and cities.
Local courts ordered them to bar diesel cars which did not conform to the latest standards on days when pollution is heavy, startling German carmakers because an outright ban could trigger a fall in vehicle resale prices, and a rise in the cost of leasing contracts, which are priced on assumed residual values. The German states concerned, where the carmakers and their suppliers have a strong influence, appealed against the decisions, leaving Germany’s federal administrative court – the court of last resort for such matters – to rule on whether such bans can legally be imposed at local level.
“The key question is whether bans can already be considered to be legal instruments,” said Remo Klinger, a lawyer for DUH. “It’s a completely open question of law.” Paris, Madrid, Mexico City and Athens have said they plan to ban diesel vehicles from city centers by 2025, while the mayor of Copenhagen wants to ban new diesel cars from entering the city as soon as next year. France and Britain will ban new petrol and diesel cars by 2040 in a shift to electric vehicles.
‘“No cash accepted” signs are becoming an increasingly common sight in shops and eateries across Sweden as payments go digital and mobile. But the pace at which cash is vanishing has authorities worried. A broad review of central bank legislation that’s underway is now taking a special look at the situation, with an interim report due as early as the summer. “If this development with cash disappearing happens too fast, it can be difficult to maintain the infrastructure” for handling cash, said Mats Dillen, the head of the parliamentary review. He declined to get into more details on what types of proposals could be included in the report. Sweden is widely regarded as the most cashless society on the planet. Most of the country’s bank branches have stopped handling cash; many shops, museums and restaurants now only accept plastic or mobile payments.
But there’s a downside, since many people, in particular the elderly, don’t have access to the digital society. “One may get into a negative spiral which can threaten the cash infrastructure,” Dillen said. “It’s those types of issues we are looking more closely at.” Last year, the amount of cash in circulation dropped to the lowest level since 1990 and is more than 40 percent below its 2007 peak. The declines in 2016 and 2017 were the biggest on record. An annual survey by Insight Intelligence released last month found only 25 percent of Swedes last year paid in cash at least once a week, down from 63 percent just four years ago. A full 36 percent never use cash, or just pay with it once or twice a year.
The EU can act in unison at times – for example, on Russia sanctions or, at least so far, on Brexit. But as French President Emmanuel Macron and German Chancellor Angela Merkel try for a closer union in the next few years, they will need to be mindful of the fact that there is no single narrative among the publics in different European countries on matters of economic importance. A recent paper for Bruegel, a Brussels-based think tank, vividly shows this by analyzing coverage of Europe’s recent financial crisis by four important centrist newspapers: Germany’s Sueddeutsche Zeitung, France’s Le Monde, Italy’s La Stampa and Spain’s El Pais. The total data set encompassed 51,714 news stories. The researchers fed them to a content analysis algorithm and then analyzed the results to construct generalized narratives. Their focus was on how blame for the crisis was attributed.
They found that only El Pais consistently attributed blame to Spain itself for its financial troubles during the euro crisis. “In Spain, the connection between the global financial crisis, the local housing bubble and the mismanagement of a previous period of impressive growth was more visible,” Porcaro explained to me. As one might expect, Sueddeutsche Zeitung blames the crisis on a departure from the traditional German social market economic model. Everyone except Germany seems to have contributed, according to the Munich paper — from greedy financial market players to financially imprudent Greeks to the ECB with its loose monetary policy. Le Monde, too, blamed the banks and speculators, but also German intransigence in handling the indebted southern Europeans.
And La Stampa focused on Italy’s role as a victim of circumstance, namely globalization and German-imposed austerity. Banks and financiers didn’t get much attention as culprits from the Italian newspaper, but the Italian political system and government did get some blame, as in Spain. Le Monde and La Stampa, according to the Bruegel paper, both “embrace a sense of desperation that goes far beyond purely economic considerations but calls into question the entire political system and social fabric.” It’s as if the euro area’s four biggest economies didn’t share a reality. The four quality dailies resemble the blind men in the Indian parable, feeling different parts of an elephant’s body, declaring the whole animal should look like a tree or a snake, then coming to blows when they can’t agree.
China’s economy has managed a curiously singular feat for any country: Growing a steady rate of 6.7% for the third quarter in a row. “It’s definitely unusual in an international context,” noted Julian Evans-Pritchard, a China economist at Capital Economics on Wednesday. “There are almost no countries that have such stable GDP growth rates.” The GDP trifecta is the first since at least 1992 when Reuters began compiling data. “It suggests quite significant smoothing of the data behind the scenes. Even by Chinese standards, this is quite rare,” Evans-Pritchard said. [..] “In China, these numbers don’t tend to bounce around a lot. They tend to be remarkably smooth,” said Louis Kuijs, head of Asia economics at Oxford Economics.
“The authorities feel so strongly about the GDP numbers that the whole government apparatus are always doing everything they can, especially in terms of policies and stimulating growth to make sure that the activity numbers, the economic growth numbers are pretty close to what it’s targeting.” Kuijs said he viewed the focus on meeting the 6.5-7.0% economic growth target as a setback. He noted that last year, high-level policymakers had indicated that it would be acceptable to miss growth targets, but then late in 2015, the government returned to a rigid interpretation. “Many economists find that unfortunate,” Kuijs said. “If you have organic growth in your economy of around 5.5% in a context of a pretty subdued global economy, if you continue to insist on 6.5% growth, that means you have to rely on rapid credit growth and other macro-economic stimulus to achieve it.”
The value of China’s new home sales rose 61% in September from a year earlier, defying policymakers’ moves earlier this year to cool the property market. The value of homes sold rose to 1.2 trillion yuan ($178 billion) last month from a year earlier, according to Bloomberg calculations based on data the National Bureau of Statistics released Wednesday. The increase compares with a 33% gain the previous month. Residential transactions surged in an extended real-estate bull market, prompting local authorities in late September to roll out tougher curbs in big cities. At least 21 cities have introduced purchase restrictions and toughened mortgage lending since late September, reversing two years of easing to support buyers. Property-development investment growth, which expanded at the slowest pace in 15 years in December, was running at 5.8% in the first three quarters of this year, up from 5.4% in the first eight months.
When our buttoned-down economic guardians start using words like “disruptive adjustment” it’s a sign something’s amiss. Over the past few weeks both the Reserve Bank and the IMF have used that same ominous phrase with reference to Australia’s biggest trading partner, China. In essence, the problem is a corporate debt binge. Credit growth in China has accelerated and is growing at twice the pace of its economic growth rate. Debt levels have ballooned to 250% of GDP and alarm bells are ringing. So how worried should we be here in Australia? No one knows for sure, but probably a fair bit. Economists often resort to the term “uncharted waters” to describe unusual conditions but in this case the cliche is apt.
It is notoriously hard to predict how and when debt bubbles will unwind in the most transparent of democratic systems. In a huge one-party-state like China it’s even more mysterious. Few institutions have invested as much over recent years in understanding the Chinese economy as the Reserve Bank of Australia. In its regular review of financial stability, released on Friday, it described China as “a key locus of risk” given its increasing size in the global economy and the run-up in borrowing. “The potential for a disruptive adjustment in China remains pronounced, given the ongoing increase in debt,” it said. The sheer pace of lending growth makes it likely many loans are going to marginal borrowers or unprofitable projects.
China’s growth is slowing and that will make it harder for highly leveraged firms to service their debts, especially if loans have funded unviable projects. To make matters worse much of the rapid growth has been from China’s less regulated “shadow banking” sector. China’s financial system “has become increasingly large, opaque and interconnected,” the Reserve warned.
Our old friend Michael David White has this: “Greece is a savvy tycoon sitting on piles of money compared to the United States. Detroit is a model of careful planning. Venezuela is smooth and efficient in its operation.”
Every person in America can sell everything they own two times — every house, car, bicycle, tent, stock, bond, blanket and kitchen sink — send all the money to the federal government, and Medicare and social security will almost be in good standing. Americans have $90 trillion of personal wealth and $210 trillion of federal debt. We are a dead man. We rest peacefully, in a lead coffin, at the bottom of the sea. We are underwater and we can’t pay our bills. We are dead broke. Plan B is now our destiny. The federal government’s debt of $210 trillion is two times greater than all of the personal wealth of all Americans combined. The federal government’s debt is 11 times greater than the debt of a country in bankruptcy.
And the federal government’s debt is more than 20 times greater than the mortgage debt on every American home. The Democratic Party, led by the progressive Big Media, whose signature legislation is social security and Medicare, has bankrupted the wealthiest country in the history of the world. The “social justice” initiatives of President Roosevelt and Johnson will end with the greatest financial crisis ever. The Roosevelt-Johnson global depression will spread poverty misery and violence far and wide. Socialism bankrupts host countries. America is going to learn the hard way and the world will be forced to go with us for a very long ride. Big Media will bury the story until the cities are burning.
Mike shows you how much the government controls the economy today. And why it will be very difficult to get out of this mind-boggling level of debt. You’ll see this is not just a problem in the Western world, it’s the entire world. As Mike says, “this is going to be a global recession and it’s going to be bad.”
France produced the most power from fossil fuels for September in 32 years to help meet demand as nuclear generation dropped. Output from coal and gas plants more than doubled as Paris-based Electricite de France was forced to keep reactors offline for inspections. French month-ahead power prices have risen to near the highest since 2009. “The availability of French nuclear continues to alarm market participants,” said Bruno Brunetti, managing director of global power at Pira Energy Group in New York. “With the lack of French exports supporting thermal generation, we have revised upward forecasts of coal-fired dispatching by roughly 5 terawatt-hours through 2017 in western Europe.”
EDF’s reactors produced 26.6 terawatt-hours of electricity in September, the least since August 1998, prompting “heavy use” of stations burning coal and gas in a trend that has been increasing since April, according to a report by French grid operator Reseau de transport d’electricite. Thermal power generation was 4,132 gigawatt-hours, or 11% of the total. France has seven fewer reactors available than at the same time last year after EDF announced it needed more time to carry out inspections to rule out potential anomalies on steam generators at 18 of its 58 units ordered by the nation’s nuclear regulator.
The constitutional argument against Brexit is clever and powerful. It’s being made by David Pannick, a member of the House of Lords and a particularly skilled and brilliant barrister. As articulated before the court it runs like this: A well-recognized principle of the U.K. constitution is that one law enacted by Parliament may only be changed by another law. Parliament enacted the European Communities Act in 1972. That law, which opened the way for the U.K. to join the European Economic Community, says that European laws apply in the U.K. European law today includes lots of individual rights, including those found in the European Declaration of Human Rights. Once the U.K. leaves the EU, the rights will no longer apply to Britons. Hence, Pannick says, the U.K. can’t leave the EU without a law authorizing withdrawal. And a law requires an act of Parliament.
If accepted by the courts, Pannick’s argument would have the effect of blocking PM Theresa May’s government from invoking Article 50 of the EU treaty, which allows member states to withdraw. The government would need to go to Parliament, which would say no – and Brexit would be blocked. So is Pannick right? There’s a somewhat plausible technical response to his claims. It says essentially that since the 1972 law incorporates European law, and Article 50 of the EU treaty is European law, there’s no need for another act of Parliament, because the 1972 law isn’t really being revoked but simply relied upon to withdraw. This would be a pretty cheap way for courts to solve the deeper problem, and I suspect the judges won’t want to reject Pannick’s claim on a technicality – or at least they shouldn’t.
The better, more substantive answer to Pannick’s argument is that while Parliament hasn’t enacted a new law for EU withdrawal, there has been a public pronouncement on the topic: the Brexit referendum. True, a referendum isn’t a law. But it is the voice of the people, at least as expressed on the fateful day of the vote. Here’s where things get really interesting from a constitutional standpoint. If the U.K. had a written constitution, it would probably say whether a referendum should be treated the same as a legislative vote. But because it doesn’t, the courts will have to decide whether a referendum is just as good as a legislative vote, or better, or worse. And that judgment will require some serious thought about the true nature of democracy.
Homeless people are being told by councils to sleep rough so they can get help, research by a charity has found. People who turned to their local authority for help were often sent packing without support or instructed to sleep rough in order to access services, according to a report by St Mungo’s. The findings, based on interviews with 40 St Mungo’s clients, suggested that three-quarters of homeless people had slept rough the night after they asked a council for help because they had nowhere to stay. One of those interviewed by St Mungo’s said: “We decided to go to the local council and they told us that we had to sleep rough for three nights in a row before they could actually do anything to help us. We just felt complete despair.”
The charity is calling on the government to ensure that no one is sent away by local authorities when they have nowhere to go. St Mungo’s will take part in a mass lobby of Parliament on Wednesday in support of the Homelessness Reduction Bill. The research also found that 129 rough sleepers have died in London since 2010, while a quarter reported being physically assaulted when they were on the streets. One interviewee said: “I’ve been beaten up quite a few times sleeping in doorways, or even in cars, they smash the window in on top of you, spit on you, urinate on you, try and set you on fire. I’ve had all of those things happen to me.” In the past five years, the number of people sleeping rough has more than doubled – with a 30% increase in the past year alone.
All agencies are quietly being armed just in case there may be civil unrest which arises by rigging the election to defeat Donald Trump. Even Ben Carson has come out and explained why Trump beat everyone in the Republican field: “the people themselves have just gotten disgusted with being manipulated and controlled”. There is no question that we have entered a new age post-2015.75 that is one of betrayal and deception. Many people assume that Obama would never declare martial law and that the proposition is simply a conspiracy theory. This is simply not true. Martial law in the United States has been declared several times, so it is by no means off the table. The martial law concept within the United States legally is very closely linked with the right of habeas corpus, which has been suspended and reduced in many cases over the years.
That is why they keep Guantanamo open for if they are not on US soil, they cannot file a habeas corpus. Effectively, the right to a hearing on “lawful” imprisonment is embodied in the essence of habeas corpus that is under the supervision of law enforcement by the judiciary, which of course has been stacked with pro-government judges. The constitutional ability to suspend habeas corpus is related to the imposition of martial law. Under the Constitution, Article 1, Section 9 states; “The Privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it.” There you have the authority to suspend the law if there is a “rebellion” based upon civil unrest that is political in nature. Obama can also claim “public safety” is at stake if Trump supports riot.
Therefore, under United States law, martial law is very limited by several court decisions that were handed down between the American Civil War and World War II. Don’t forget the Japanese Internment camps during World War II. You were locked up just because of your heritage without any rioting or committing some threatening act. It was just “presumed” you “might” do something and that was as good as guilt.
Half of all American adults are included in databases police use to identify citizens with facial recognition technology, according to new research that raises serious concerns about privacy violations and the widespread use of racially biased surveillance technology. A report from Georgetown Law’s Center on Privacy and Technology found that more than 117 million adults are captured in a “virtual, perpetual lineup”, which means law enforcement offices across the US can scan their photos and use unregulated software to track law-abiding citizens in government datasets. Numerous major police departments have “real-time face recognition” technology that allows surveillance cameras to scan the faces of pedestrians walking down the street, the report found.
In Maryland, police have been using software to identify faces in protest photos and match them to people with warrants, according to the American Civil Liberties Union (ACLU). The report’s findings, along with revelations from the ACLU on police monitoring in Baltimore, suggest that the technology may be violating the rights of millions of Americans and is disproportionately impacting communities of color, advocates said. “Face recognition, when it’s used most aggressively, can change the nature of public spaces,” said Alvaro Bedoya, executive director of Georgetown’s privacy and technology center. “It can change the basic freedom we have to go about our lives without people identifying us from afar and in secret.”
The center’s year-long investigation, based on more than 100 police records requests, has produced the most comprehensive survey of facial databases to date and raises numerous questions about the lack of transparency and privacy protections. Law enforcement biometric databases have traditionally captured DNA profiles related to criminal arrests or forensic investigations. What’s alarming about the FBI’s “face recognition unit”, according to the report, is that it is “overwhelmingly made up of non-criminal entries”.
While Hillary Clinton has spent the presidential campaign saying as little as possible about her ties to Wall Street, the executive who some observers say could be her Treasury Secretary has been openly promoting a plan to give financial firms control of hundreds of billions of dollars in retirement savings. The executive is Tony James, president of the Blackstone Group. The investment colossus is most famous in politics for its Republican CEO likening an Obama tax plan to a Nazi invasion. James, though, is a longtime Democrat — and one of Clinton’s top fundraisers. The billionaire sculpted the retirement initiative with a prominent labor economist whose work is supported by another investment mogul who is a big Clinton donor. The proposal has received bipartisan praise from prominent economic thinkers, and James says that Clinton’s top aides are warming to the idea.
It is a plan that proponents say could help millions of Americans – but could also enrich another constituency: the hedge fund and private equity industries that Blackstone dominates and that have donated millions to support Clinton’s presidential bid. The proposal would require workers and employers to put a%age of payroll into individual retirement accounts “to be invested well in pooled plans run by professional investment managers,” as James put it. In other words, individual voluntary 401(k)s would be replaced by a single national system, and much of the mandated savings would flow to Wall Street, where companies like Blackstone could earn big fees off the assets. And because of a gap in federal anti-corruption rules, there would be little to prevent the biggest investment contracts from being awarded to the biggest presidential campaign donors.
[..] Recently, [..] regulators, pension trustees, investment experts and academics have questioned whether retiree savings should be invested with firms like Blackstone in the first place. Some pensions are pulling out their money. Other pension systems have been turned into 401(k)-style plans, which are difficult for the alternative investment industry to break into because of federal laws that discourage those plans from buying into riskier, illiquid investments. In the face of these challenges, James’ proposal could provide a government-mandated flow of money from workers’ paychecks into the high-fee alternative investment industry.
Earlier today we wrote about a new Project Veritas undercover video that uncovered several democratic operatives openly discussing, in explicit detail, how to commit massive voter fraud. One of the operatives was a person by the name of Robert Creamer who is a co-founder of a democratic consulting firm called Democracy Partners. Within the video, an undercover journalist details a plan to register Hispanic voters illegally by having them work as contractors, to which Creamer can be heard offering support saying that “there are a couple of organizations that that’s their big trick”. Unfortunately, the embarrassing video caused Creamer to subsequently resign from consulting the Hillary campaign as he issued a statement saying that he was “stepping back from my responsibilities working the [Hillary] campaign” over fears that his continued assistance would be a distraction for the campaign.
But voter fraud isn’t Creamer’s only criminal specialty. A quick look at Wikipedia reveals that Creamer spent 5 months in federal prison back in 2006 for a “$2.3 million bank fraud in relation to his operation of public interest groups in the 1990s.” So, with that kind of history, you can imagine our surprise when we discovered that a Mr. Robert Creamer showed up on the White House visitor logs 340 times beginning in 2009 when Obama took office and culminating with his latest visit in June 2016. Moreover, in 45 of those instances, Creamer was scheduled to meet with POTUS himself. Perhaps this is just two old Chicago “community organizers” hanging out?
We live in a time of great uncertainty and confusion. Events keep happening that seem inexplicable and out of control. Donald Trump, Brexit, the War in Syria, the endless migrant crisis, random bomb attacks. And those who are supposed to be in power are paralysed – they have no idea what to do. This film is the epic story of how we got to this strange place. It explains not only why these chaotic events are happening – but also why we, and our politicians, cannot understand them.
It shows that what has happened is that all of us in the West – not just the politicians and the journalists and the experts, but we ourselves – have retreated into a simplified, and often completely fake version of the world. But because it is all around us we accept it as normal. But there is another world outside. Forces that politicians tried to forget and bury forty years ago – that then festered and mutated – but which are now turning on us with a vengeful fury. Piercing though the wall of our fake world.
Abdul Shakoor thought nothing could shock him anymore. He has, after all, survived an assassination attempt by Pakistani security agents, he claims, in addition to torture in a Lahore prison. “But I was wrong.” Thirty-three-year-old Shakoor is standing in the Moria refugee camp on the Greek island of Lesbos and pointing at the overcrowded plastic tents inside of which women, children and the ill are lying pushed up against one another, at the cement wall that surrounds the camp, and at the barbed wire. “I would have expected these kinds of conditions in Pakistan or Afghanistan,” he says. “But not in Greece.” As a result of the refugee influx, the infrastructure on Lesbos and other Greek islands is in danger of collapsing. Europe’s model is no longer working.
Although the number of migrants dropped after the EU-Turkey deal came into effect in March, the number of refugees heading for Greece has once again gone up, partially in response to the failed military coup in Turkey on June 15. In August and September, 6,527 refugees crossed the Aegean, twice as many as in May and June. The crisis in Turkey, it seems, isn’t just scaring many Turks, it is also driving refugees out of the country. Currently, there are at least 15,000 migrants on the Greek islands, with the camps available only able to handle half that many. And new boats arrive every day. Skirmishes between camp residents – and between refugees and locals – have become a frequent occurrence.
The Greek government is facing a dilemma, says political advisor Gerald Knaus, whose think tank, the European Stability Initiative, helped conceive the EU-Turkey deal. The Greeks, he says, can no longer ignore the chaos on the islands. If Prime Minister Alexis Tsipras carries through on his recent pledge to move large numbers of refugees onto the mainland, it would be a signal to the smugglers in Turkey that the Aegean Route has reopened. “If the EU doesn’t do anything quickly,” Knaus warns, “the refugee deal will be dead in a few months.” Knaus, whom many people describe as the creator of the refugee deal, warns that if the deal fails, chaos could result. Hundreds of thousands of refugees, he says, would arrive in Greece and try to break through the fences to the north. The Balkans would turn into a battleground for migrants, smugglers, border guards and soldiers, Knaus says. “That would be the end of European asylum policy.”
Hundreds of mammal species – from chimpanzees to hippos to bats – are being eaten into extinction by people, according to the first global assessment of the impact of human hunting. Bushmeat has long been a traditional source of food for many rural people, but as roads have been driven into remote areas, large-scale commercial hunting is leaving forests and other habitats devoid of wildlife. The scientists behind the new analysis warned that, without action, the wiping out of these species could lead to the collapse of the food security of hundreds of millions of people reliant on bushmeat for survival.
The work comes against the backdrop of the natural world undergoing the greatest mass extinction since a giant meteorite strike wiped out the dinosaurs 65m years ago, with species vanishing far more rapidly than the long term rate, driven by the destruction and invasion of wild areas by humans and their livestock and hunting. The researchers, whose study is published in the journal Royal Society Open Science, used the International Union for Conservation of Nature’s (IUCN) red list to identify the endangered land mammals that are primarily at risk from hunting for food. They found 301 such species, representing 7% of all the land mammals assessed by IUCN and about a quarter of all endangered mammals.
Other mammals are threatened by habitat loss or hunting for other reasons, such as elephants which are poached for their ivory. The 301 species include 168 primates, such as the lowland gorilla and mandrill, 73 hoofed animals, such as the wild yak and bactrian camel, 27 bats, such as the golden-capped fruit bat and the black-bearded flying fox, and 12 carnivores, such as the clouded leopard and several bear species. There are also 26 marsupials threatened by meat hunting, including the grizzled tree kangaroo, and 21 rodent species, such as the Sulawesi giant squirrel and the alpine woolly rat.
America’s wealth grew by 60% in the past six years, by over $30 trillion. In approximately the same time, the number of homeless children has also grown by 60%. Financier and CEO Peter Schiff said, “People don’t go hungry in a capitalist economy.” The 16 million kids on food stamps know what it’s like to go hungry. Perhaps, some in Congress would say, those children should be working. “There is no such thing as a free lunch,” insisted Georgia Representative Jack Kingston, even for schoolkids, who should be required to “sweep the floor of the cafeteria” (as they actually do at a charter school in Texas). The callousness of U.S. political and business leaders is disturbing, shocking. Hunger is just one of the problems of our children. Teacher Sonya Romero-Smith told about the two little homeless girls she adopted: “Getting rid of bedbugs, that took us a while. Night terrors, that took a little while. Hoarding food..”
America is a ‘Leader’ in Child Poverty The U.S. has one of the highest relative child poverty rates in the developed world. As UNICEF reports, “[Children’s] material well-being is highest in the Netherlands and in the four Nordic countries and lowest in Latvia, Lithuania, Romania and the United States.” Over half of public school students are poor enough to qualify for lunch subsidies, and almost half of black children under the age of six are living in poverty.
$5 a Day for Food, But Congress Thought it was Too Much. Nearly half of all food stamp recipients are children, and they averaged about $5 a day for their meals before the 2014 farm bill cut $8.6 billion (over the next ten years) from the food stamp program. In 2007 about 12 of every 100 kids were on food stamps. Today it’s 20 of every 100.
For Every 2 Homeless Children in 2006, There Are Now 3 On a typical frigid night in January, 138,000 children, according to the U.S. Department of Housing, were without a place to call home. That’s about the same number of households that have each increased their wealth by $10 million per year since the recession.
The US: Near the Bottom in Education, and Sinking The U.S. ranks near the bottom of the developed world in the percentage of 4-year-olds in early childhood education. Early education should be a primary goal for the future, as numerous studies have shown that pre-school helps all children to achieve more and earn more through adulthood, with the most disadvantaged benefiting the most. But we’re going in the opposite direction. Head Start was recently hit with the worst cutbacks in its history.
Children’s Rights? Not in the U.S. It’s hard to comprehend the thinking of people who cut funding for homeless and hungry children. It may be delusion about trickle-down, it may be indifference to poverty, it may be resentment toward people unable to “make it on their own.” The indifference and resentment and disdain for society reach around the globe. Only two nations still refuse to ratify the UN Convention on the Rights of the Child: South Sudan and the United States. When President Obama said, “I believe America is exceptional,” he was close to the truth, in a way he and his wealthy friends would never admit.
Global debt has expanded by $35 trillion since the credit crisis and as Lacy Hunt exclaims, “that’s a net negative, debt is an increase in current consumption in exchange for a decline in future spending and we are not going to solve this problem by taking on more and more debt.” Santelli notes that debt will actually keep growth “squashed down” and points out the low rates in Europe questioning the ability of The ECB’s actions to save the economy which Hunt confirms as “longer-term rates are excellent economic indicators” and that is not a good sign for Europe. “This process is far from over,” Hunt concludes, “rates will move irregularly lower and will remain depressed for several years.” Santelli sums up perfectly, “we’re all frogs in boiling water,” as we await the consequences of central planning.
The laws of the global economy should be written by the United States and not by the likes of China according to President Obama, as concern over China’s influence is growing. Washington hopes a Pacific free trade pact will curb Beijing’s investment bank. “When 95% of our potential customers live abroad, we must be sure that we are writing the rules for the global economy, not a country like China,” Obama said in his special message to Congress on Thursday, RIA reports. The statement comes after an agreement by US lawmakers to fast-track international trade bills earlier on Thursday. The White House is now looking forward to completing the Trans-Pacific Partnership agreement this year to remove trade barriers between the participating nations which account for 40% of the global economy and more than a third of global trade.
“Our exports support more than eleven million jobs, and we know that exporting companies pay higher wages than others. Today we have the opportunity to open even more new markets to goods and services backed by three proud words: Made in America,” Obama added. Meanwhile, the US and Japan are the largest economies in the 12 Pacific nations bloc and view it as a strategic economic partnership. The two countries have been voicing concerns over China’s increasing influence in Asia and did not join the Chinese Investment bank (AIIB). The AIIB is expected to challenge the Washington-based World Bank and rival Japan’s Asian Development Bank. It currently has 57 countries from 5 continents as founding members including the biggest European nations. International trade and investment institutions are the latest contest issues between Beijing and the Washington-Tokyo alliance for influence in Asia.
Greece’s major creditors are not ready to let the country drop out of the euro as long as Prime Minister Alexis Tsipras shows willingness to meet at least some key demands, according to two people familiar with the discussions. Chancellor Angela Merkel will go a long way to prevent a Greek exit from the single currency, though only so far, one of the people said. Every possibility is being considered in Berlin to pull Greece back from the brink and keep it in the 19-nation euro, the person said. For all the foot-dragging in Athens, some creditors are willing to show Greece more flexibility in negotiations over its finances to prevent a euro exit, the second person said. The red line is that the Syriza-led government shows readiness to commit to at least some economic reform measures, said both people, who asked not to be named discussing strategy.
“Our view is that Greece is not going to exit the euro,” Stephen Macklow-Smith at JPMorgan Asset Management in London, said in a Bloomberg Television interview on Friday. While both sides have “very entrenched positions” in the negotiations, “if you look at the way the euro-zone crisis has developed, in every case what you’ve seen is in return for firm action you get concessions.” The brinkmanship has sent Greek government bonds heading toward their worst week since Tsipras’s election in January at the head of an anti-austerity coalition. While the public rhetoric has escalated amid a standoff over releasing the last tranche of aid, creditors are willing to cut Greece some slack, the second person said.
Euro-area finance ministers are next due to discuss progress on Greece at their meeting on April 24 in the Latvian capital, Riga. Greece’s government remains confident an interim agreement with its creditors allowing disbursement of bailout funds can be reached by the end of April, a Greek official told reporters in Athens on Friday. “We’re of the view that Greece will hold to the commitments it made to the institutions,” Georg Streiter, Merkel’s deputy spokesman, said when asked about the chancellor’s stance. A deal won’t be ready by April 24 and could come together in the following weeks, Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem told reporters in Washington. “I don’t believe in this game-of-chicken rubbish,” Dijsselbloem said. “We don’t know what the risks are.”
Greece is bankrupt and should default, well-known investor Marc Faber told CNBC Friday, arguing that a “geopolitical game of chess” was being played out in the region. The comments by Faber, the editor of the “Gloom, Boom & Doom Report,” came at a time of heightened tensions between Greece and its international creditors. The organizations overseeing the country’s two international bailouts – worth a combined €240 billion – have said the country will not receive a last tranche of aid, worth 7.2 billion euros, until it makes far-reaching reforms. But Faber, a bearish investor known as “Dr. Doom,” said the country’s fiscal situation was unsalvageable. “Even if Greece grows at 10%per annum for the next ten years, it will not be able to pay its debts back,” he told CNBC.
“It’s bankrupt. We better face the reality and not kick the can the can down the road. Greece should default.” Faber said that while Greece could leave the euro zone and adopt a parallel currency, there that geopolitics were coming in to play and there was no appetite in Europe to let the country exit from the single currency bloc. “I personally think it’s not so much of an economic issue as a political issue,” he told CNBC Europe’s “Squawk Box.” “Europe, and in particular NATO and the U.S. do not want Greece to leave (the euro zone) because if they do, other people are going to knock on Greece’s door – like the Russians or the Chinese maybe. It’s very much a geopolitical game of chess that’s being played.” Greece and its creditors disagree on which reforms should be implemented, however, and as such the much-needed aid remains under lock and key.
T his has prompted speculation that the country could soon run out of money and default on its forthcoming debt repayments to the IMF and ECB, which could, in turn, result in the country leaving the euro zone. Greece denies this is the case and ECB President Mario Draghi said earlier this week that he has not even considered a default. On Friday, Greek Finance Minister Yanis Varoufakis will meet Draghi and IMF officials in Washington. The ECB stands to lose a lot if Greece does default, Faber argued, and thus Greece was in strong position to negotiate better terms for its bailout program and debt repayments. “I think that the ECB and European banks will have to take huge losses on their loans to Greece and bond purchases they have made (if it defaults),” he said. “I think Greece is in a very strong negotiating position. If they don’t want to pay what are you going to do, invade and hang them all up?”
“We’re not actually in a rules based world here, we’re in a politically determined one. If the other eurozone members think that keeping Greece solvent , in the euro and functioning is sufficiently important then they will do that.”
It’s long been true that welshing on debts to the IMF is just something that a civilised country just doesn t do. Thus there’s little surprise when Christine Lagarde, the head of the IMF, points out to Greece that there’s really no mileage in that country thinking about not paying the IMF back the money it s owed. Because, you know, that s just not something that civilised countries do. There is however a sting in the tail here. For there’s no formal method of dunning a country that does fail to repay the IMF on time. It takes at least a month after the payment doesn t appear for the IMF to go through its own internal reporting processes and then another couple of weeks for it to declare actual default.
And there’s politics in there as well: they can, quite happily, say that, well, they re trying to pay, they ve paid a bit perhaps, so we ll not actually say that they are in default. The point being that the rules aren’t hard and fast. What really matters is what other people think of a skipped IMF payment and here it’s the ECB that is most important. Here’s Lagarde:
IMF Managing Director Christine Lagarde warned that she wouldn’t let Greece skip a debt payment to the lender, shutting down a potential avenue to buy the Greek government some financial leeway. We never had an advanced economy actually asking for that kind of thing, delayed payment, Lagarde said in an interview Thursday in Washington with Bloomberg Television. And I very much hope that this is not the case with Greece. I would certainly, for myself, not support it.
It’s almost ritualistic, her saying that of course. But that it has been said does bind in a way future actions. Having gone public with said statement then the IMF can’t really turn around and say Well, it doesn’t matter if Greece is late with a payment.
Christine Lagarde, the head of the International Monetary Fund, said the IMF is worried about the liquidity situation in Greece but made it clear that the institution would not give the country any leeway on ¨ 1bn of debt repayments coming due in early May.
This is almost like the Kremlinology of old of course, looking for the runes in such remarks, but by the standards of these things it’s a fairly firm statement. But it’s really the ECB that matters here. Assume that Greece did delay the IMF payment (as one minister has said they would, if faced with a choice of paying the bank or paying the country s pensions). Not a great deal would happen immediately as a direct result. What would actually matter is what the ECB did:
With Greek sovereign yields blowing wider on Thursday (and pretty much staying there), it s worth revisiting what exactly might happen if, say, May 1 arrives and Greece fails to pay the €200m due to the IMF that day. Received wisdom has it that the ECB will withdraw the ELA emergency liquidity assistance currently propping up the Greek banking system, which will promptly collapse; Tsipras and Co would then be forced to bring back the Drachma (or similar) and Greece would exit the eurozone. But what do the rules here say?
Well, actually, the rules are written in such a flaccid manner that the ECB could do anything it liked. They could conclude that it’s temporary, no biggie, and keep supporting the Greek banks. Or they could conclude that it’s not, it is a biggie, and close them down and thus force default and Grexit. But the point is that a putative default to the IMF doesn’t really change that situation. Because the rules are sufficiently flaccid that pretty much anything can be interpreted as being a reason to withdraw EULA support: or nothing. We’re not actually in a rules based world here, we re in a politically determined one. If the other eurozone members think that keeping Greece solvent , in the euro and functioning is sufficiently important then they will do that. If they don’t they won’t: there’s really no rules here that can insist that they go either way.
Neighboring countries have effectively quarantined Greece in a bid to minimize the consequences on their credit systems in case of a Greek “accident.” Kathimerini understands that the central banks of Albania, Bulgaria, Cyprus, Romania, Serbia, Turkey and the Former Yugoslav Republic of Macedonia have all forced the subsidiaries of Greek banks operating in those countries to bring their exposure to Greek risk (bonds, treasury bills, deposits to Greek banks, loans etc.) down to zero in order to shield themselves and minimize the danger of contagion in case the negotiations between the Greek government and the eurozone do not bear fruit. This quarantine was deemed necessary after the aggressive rhetoric of the new Greek government – particularly in the first few weeks after the election – regarding a debt restructuring, the non-completion of the creditors’ assessment and so on.
Special care was taken for the subsidiaries of Greek lenders, which have a major presence in neighboring states, to make sure that they would not proceed to new positions in Greek bonds, T-bills, deposits in Greek banks or interbank funding. The Greek government recently put press pressure on banks to think how they could get around the ECB’s ban on the acquisition of more T-bills. Another concern for local bank groups is the threat of a reduction in the Greek element of their subsidiaries in neighboring countries in case of turmoil in Greece. Don’t forget that the Cypriot-owned bank branches in Greece changed hands virtually overnight in March 2013 during the Cyprus bank bail-in process.
US President Barack Obama spoke with Greek Finance Minister Yanis Varoufakis on the sidelines of an event at the White House honoring Greece’s Independence Day with the former stressing the need for flexibility from all sides in ongoing reform negotiations between Greece and its creditors, according to sources. The conversation between Obama and Varoufakis lasted for around 12 minutes, according to sources who said Varoufakis asked Obama to keep pressing European leaders so that a solution is found to Greece’s problem. Varoufakis agreed with Obama that all sides need to show flexibility and also highlighted the need to remain focused on the goal and on the process that Greece is involved in with its creditors. The event at the White House was also attended by US Vice President Joe Biden and Greek Archbishop Demetrios.
Varoufakis is to meet on Friday with US Treasury Secretary Jack Lew at 10.30 p.m. Greek time following a scheduled meeting at 6 p.m. with European Central Bank President Mario Draghi. On Thursday, in a speech at the Brookings Institution, Varoufakis underlined the difficulties in Greek negotiations with its creditors but said Greece was more keen than anyone for a deal to be reached. Nevertheless, Greece will not approve more austerity, he said. “We will not sign up to targets we know our economy cannot meet by means of policies that our partners should not wish to impose,” he said. “We will compromise, we will compromise and we will compromise in order to come to a speedy agreement. But we are not going to end up ‘being’ compromised. This not what we were elected for.”
The IMF has urged EU negotiators to slim down their list of demands in debt talks with Greece amid fears that time is running out to reach a deal. The intervention by one of the country’s three main lenders came as the UK chancellor, George Osborne, said the impasse posed the biggest immediate threat to the global economy. Poul Thomsen, head of the IMF’s European department, said the reforms being demanded from Athens in exchange for a vital €7.2bn (£5.2bn) in rescue funds should be simplified and slimmed down. European finance ministers and senior officials have warned that Greece is running out of time to secure the payment and avert a disorderly exit from the eurozone. Osborne said the situation in Greece was “the most worrying for the global economy”.
Speaking at the IMF’s spring meeting in Washington,he said discussions about Greece had “pervaded every meeting” and that “the mood is notably more gloomy than at the last international gathering”. He added: “It’s clear now to me that a misstep or a miscalculation on either side could easily return European economies to the kind of perilous situation we saw three to four years ago.” Osborne’s German counterpart, Wolfgang Schäuble, repeated his criticism of the radical left Syriza government’s negotiating tactics and warned that it was harming the economy. He said Greece was in a “very difficult situation” after Syriza demanded a new deal with its creditors – the IMF, the EU and the ECB – which had delayed reforms and hit the country’s already struggling economy.
Schäuble said it was unlikely that next week’s deadline for Athens to submit reform proposals would be met. The reforms are scheduled to be discussed at a meeting of eurozone finance ministers in Riga, Latvia next Friday, followed by a further gathering in Brussels on 11 May that is being seen as the crunch point for Athens. Greece is scheduled to make a €747m repayment to the IMF on 12 May and there are fears that Athens will be unable to meet the deadline as cash runs out of state and domestic bank coffers.
The ECB has analysed a scenario in which Greece runs out of money and starts paying civil servants with IOUs, creating a virtual second currency within the euro bloc, people with knowledge of the exercise told Reuters. Greece is close to having to repay the IMF about €1 billion in May and officials at the ECB are growing concerned. Although the Greek government has repeatedly said that it wants to honour its debts, officials at the ECB are considering the possibility that it may not, in work undertaken by the so-called adverse scenarios group. Any default by Greece would force the ECB to act and possibly restrict Greek banks’ crucial access to emergency liquidity funding.
Officials fear however that such action could push cash-strapped Athens into paying civil servants in IOUs in order to avoid using up scarce euros. “The fact is we are not seeing any progress… So we have to look at these scenarios,” said one person with knowledge of the matter. A spokesman for the ECB said it “does not engage in speculation about how specific scenarios regarding Greece could unfold.” One Greek government official, who declined to be named, said there was no need to examine such a scenario because Athens was optimistic it would reach a deal with its international lenders by the end of the month. Greece has dismissed a recent report suggesting it would need to tap all its remaining cash reserves across the public sector, a total of €2 billion, to pay civil service wages and pensions at the end of the month.
The conundrum that Greece presents for most investors is simple, but troubling. It is either mostly irrelevant, or one of the biggest threats to markets this year. The war of words over Greece and its attempts to strike a deal with its partners in recent days has deepened. German Finance Minister Wolfgang Schäuble warned that time was “running out” for Greece to strike an accord over its bailout program. European Commission Vice President Valdis Dombrovskis said talks were nowhere near the point where money could be disbursed. And IMF Managing Director Christine Lagarde on Thursday advised Greece to “get on” with fixing the economy. Greece has so far kept up with debt service, and retained access to very short-term market funding. But some very chunky payments come due in the summer months.
Standard & Poor’s this week cut Greece’s rating to triple-C-plus, warning that without deep reforms or further relief, Greece’s obligations would become unsustainable. Fears of a eurozone exit are building again. Financial markets are beginning to feel the jitters. Thursday, Greek bonds fell sharply, with two-year yields rising above 26%. Yields on Italian, Spanish and Portuguese bonds rose, widening the gap with Northern Europe. German bond yields fell to record lows, partly due to the European Central Bank’s bond-buying program, but partly due to nerves about Greece. As long as Greece stays in the eurozone, most investors can afford to pay it little attention. It accounts for just 1.8% of the currency bloc’s economic output.
The lowly rating on Greece’s bonds means they are off-limits for most funds; the volatility of Greek stocks will have deterred others from dipping into the market. The bigger factors affecting markets have been the ECB’s actions, the pickup in eurozone economic data, and the moves in currency markets. But if Greece leaves, all bets are off. The initial impact is probably containable, again due to Greece’s relatively small size economically. The ECB’s bond-purchase program should help stem financial-market contagion. But the second-round effects and political fallout are unknowable. UBS’s economists, for instance, warn that the apparent lack of bond-market concern over Greece is an unreliable indicator of calm; they argue that the real risk would come from bank runs in other highly-indebted countries. Undoubtedly, the remaining members of the eurozone would seek to circle the wagons and declare Greece unique once more, but the credibility of that effort might fall short.
A three-bedroom North Shore “do-up” has earned its owner nearly $1000 a day – just shy of the salary of a High Court judge – in Auckland’s red-hot property market. A Weekend Herald investigation into soaring house prices comes amid warnings from the Reserve Bank about the housing market and calls for immediate action by the country’s chief human rights watchdog. Stuart Duncan sold his 1982 fibre-cement home at 116 Oaktree Ave in Browns Bay in November 2013 for $751,000. Now the new owners have on-sold for $1,205,000 – despite doing little work on the property – giving them a 16-month profit of $454,000 – about $940 a day. “I’m still in shock,” Mr Duncan said after learning how much his old property fetched. “It’s just disbelief. “It was an 80s house, three-bedroom do-up. Where is the market going? God help New Zealand.”
The Weekend Herald has analysed annual house sale figures and compared them to wages earned in the country’s 12 regional council areas to calculate whether people’s homes are earning them more than they get from working. In Auckland, the average house earned nearly $230 a day in the past year – about twice the average worker’s pay. That’s about the same as an entry-level doctor or high school head of department with responsibility for 10 teaching staff. The one-bathroom Browns Bay property has a CV of just $800,000 and comes with a garage and carport. It sits on 1043sq m freehold and is zoned for Rangitoto College. Barfoot & Thompson agent Eve Huang said though the vendors had done little work on the property, they had obtained resource consent for the large section to be subdivided into two lots, which increased its value.
Mr Duncan said he couldn’t believe how the market had taken off, and blamed foreign buyers with deep pockets for what was fast becoming a housing crisis. “Every auction you go to, if they want it they just don’t give up. It’s a bottomless pit. It just doesn’t seem right. We’re going to end up with a generation that don’t own property.”
A much-anticipated return to surplus somehow metamorphoses into yet another unwelcome deficit; dairy prices slump ever lower; the New Zealand dollar keeps rising ever higher; the overheated Auckland property market makes the South Sea Bubble of the 1700s look like an exercise in financial probity. Is this the so-called rock-star economy? Or the rocky road to recession? It is not raining on John Key and his colleagues. It is pouring. Still smarting at the mass defection of erstwhile supporters which the party took for granted in the Northland byelection, National is currently exhibiting the self-absorbed demeanour of someone who cannot quite work out what is happening to himself or herself and is not sure what to do about it.
Not that National can do much anyway to halt the rise in the currency or stimulate the international milk market. In the past week the Prime Minister and his Finance Minister have also appeared to accept they will fail to meet their long-established target date this year for a resumption of Budget surpluses. As for Auckland house prices, well, the warning from the Reserve Bank on Wednesday of a potential downward, disruptive correction in prices could not have been blunter. The Reserve Bank’s worry is that the trading banks, which have 60% of their lending in residential mortgages, could find themselves in dire straits such that credit dries up with the result that the economy goes into a severe downturn.
Key’s response was literally “crisis, what crisis?” But that hellish scenario ought to chill Key and Bill English to the bone. But the Reserve Bank has not stopped there. It is strongly urging the Government to give “fresh consideration” to ways and means of shutting property speculators attracted by untaxed capital gains out of the Auckland market. Key’s difficulty is that he has long ruled out a capital gains tax. His one consolation is that Labour leader Andrew Little has effectively done likewise. But Little is not in Government. Key is.
There was a sharp increase the intensity of the training of NATO troops near the borders of Russia last year, Russian General Staff said. “In 2014, the intensity of NATO’s operational and combat training activities has grown by 80%,” Lieutenant General Andrey Kartapolov, head of the Main Operation Directorate of General Staff. The leadership of NATO made no effort to hide the clear anti-Russian orientation of these activities, he added. “During this period, NATO created a grouping of its member states’ forces in the Baltic States, consisting of over 10,000 troops, about 1,500 armored vehicles, 80 planes and helicopters and 50 warships,” Kartapolov said during the IV Moscow Conference on International Security.
According to the Lieutenant General, strategic bombers from the US Air Force were used to perform strategic tasks during those exercises. He also said that the US plans to supply its Eastern European allies with JASSM-ER long-range aviation cruise missiles, which will enable NATO warplanes to hit targets 1,300 kilometers inside the Russian territory. “In the case of a military conflict, critical facilities on the territory of almost the entire European part of Russia will be vulnerable to NATO’s air attack, with the flight time of the missiles reduced by half,” Kartapolov warned.
The General Staff official also spoke about increased intelligence activity by NATO in the Black Sea. He said that US Global Hawk drones were spotted in Ukrainian air space in March, with the UAVs increasing “the depth of reconnaissance on the territory of Russia by 250-300 kilometers.” Since Russia’s reunion with Crimea and the start of the military conflict in eastern Ukraine last spring, NATO forces have stepped up military exercises along the Russian border – in the Baltic States and Eastern Europe.
Hillary Clinton ran onto the playing field this week, Rock and Roll Part 2 blaring in the background, and started lying within minutes of announcing her entry into the presidential election campaign. “There’s something wrong,” she told a crowd of Iowans, “when hedge fund managers pay lower taxes than nurses or the truckers I saw on I-80 when I was driving here over the last two days.” Oh, right, that. The infamous carried interest tax break, the one that allows private equity vampires like Mitt Romney and Stephen Schwartzman to pay a top tax rate of 15% while all of the rest of us (including the truckers Hillary “saw” – note she didn’t say “hung out with Bill and me over chilled shrimp at the Water Club”) pay income taxes.
The carried interest loophole is an absurd, completely unjustifiable handout to the not merely well-off but filthy rich, and it’s been law in this country for about three decades. Raise your hand if you really think that Hillary Clinton is going to repeal the carried interest tax break. We’ll come back to that in a minute. In the meantime, the reaction to Hillary’s campaign announcement went exactly according to script. Newspapers and news sites ever-so-slightly raised figurative eyebrows at the tone of Hillary’s announcement, remarking upon its “populist” flair. This is no plutocrat who plans to ride to the White House upon a historically massive assload of corporate money, the papers declared, this is a candidate of the people!
“Hillary’s Return: Her Folksy, Populist Re-Entry,” proclaimed Politico. “Populist Theme, Convivial In Tone!” headlined the Los Angeles Times. “Hillary Lifts Populist Spirits,” commented The Hill, hook visibly protruding from its reportorial fish-mouth. Having watched this campaign-reporting process from both the inside and the outside for a long time now, I knew what was coming after the initial wave of “Hillary the Populist!” stories. In presidential politics, every time a candidate on either the left or the right veers in a populist direction – usually with immediate success, since the American populace is ready to run through a wall for anyone who makes the obvious observation that they’re being screwed by someone up above – it takes about two or three days before the “Let’s let cooler heads prevail!” editorials start trickling in.
So Ben Bernanke wants to make a buck. Who can blame him? The guy is one of the most esteemed economists of his generation. He served his country admirably; his term as chairman of the Federal Reserve was probably the single most stressful term in that role in history. He resigned from his tenured professorship at Princeton when he joined the Fed board. What else is the guy going to do? This is, of course, how systemic problems work—few individual cases are obviously unacceptable, but the whole is horrifying. In this case, it’s the “revolving door” of movement between government positions and the financial sector—that is to say, from modestly paying positions in the public sector, overseeing financial firms, to higher-paying jobs in the private sector.
Bernanke is going to work for Citadel, a $25 billion hedge fund that is one of the country’s largest. While Bernanke is a talented economist, he has also never worked in the industry, so it’s fairly clear that what Citadel wants is inside information—either things he knows because he remains close with people in positions of authority, or his insight into ongoing negotiations. That’s why he’s been in high demand by financial-industry powers ever since stepping down last February. For example, The New York Times noted that he analyzed the Fed’s true feelings about inflation at a dinner with hedge funders in Las Vegas—allowing several to make profitable moves. Another lamented that he didn’t pay closer attention: “He gave this stuff out, but I didn’t realize what he was saying at the time, so I didn’t do a great trade.”
Quantifying the revolving door is difficult—it involves a series of subjective choices about what constitutes the revolving door, what level of employees should be counted, and so on. (One study from Notre Dame found a double-digit increase between 2001 and 2013.) But there’s ample anecdotal evidence. In fact, Bernanke isn’t even the first Federal Reserve alum to jump to a hedge fund in the last month. Jeremy Stein, a former governor, was hired by BlueMountain Capital Management in late March. And as Rob Copeland notes, this is just the latest in a stream of prominent government officials: Former Federal Reserve chairman Alan Greenspan and ex-Reagan economic adviser Martin Feldstein accepted paid roles on a now-disbanded economic advisory board at John Paulson’s hedge-fund firm that started in 2008.
More recently, former Obama administration chief of staff William Daley joined Swiss hedge fund Argentiere Capital, while former Treasury Secretary Timothy Geithner and former CIA chief David Petraeus took posts at private-equity firms Warburg Pincus and KKR, respectively. And just this week, former Massachusetts governor Deval Patrick was introduced as a new managing director at Bain Capital. That doesn’t even include non-hedge-fund and private-equity moves. Peter Orszag, who led President Obama’s Office of Management and Budget, took a job with Citigroup when he left. The Obama administration had been closely involved with Citi in the aftermath of the financial collapse, and the bank received nearly $500 billion in bailouts.
Seventeen new genetically modified food products will be authorised for import to Europe before the end of May in a significant acceleration of biotech trade, the Guardian has learned. An announcement could be made as early as next week, sources said, when a meeting of EU commissioners has been pencilled in to review adoption of new rules for approving GM imports. Europe currently imports around 58 GM products from abroad, mostly US maize, cotton, soy bean and sugar beet. But Greenpeace said that the US has raised the issue of a large logjam in biotech authorisations in talks over a free trade deal known as TTIP. “With transatlantic trade talks ongoing, pressure has been mounting from the biotech industry and the US government to break open the EU market to GM imports and to speed up authorisation procedures,” Marco Contiero, Greenpeace EU’s agriculture director, told the Guardian.
“The possible authorisation of 17 GM crops by the commission in the next few days is a likely result of this pressure.” “The timing is still being discussed but it is just a question of internal procedure now,” a source familiar with the discussions told the Guardian. “It is clear that the 17 strains will be authorised at the same time as the review meeting or just after. I would say it will happen before the end of May for sure.” Under proposed new GM import rules seen by the Guardian, future authorisations would automatically follow approval of new strains by the European Food and Safety Agency (Efsa). Individual countries would be given a similar opt-out to the one agreed for GM cultivation in a law passed earlier this year.
“It will be up to each member state wanting to make use of this ‘opt-out’ to develop this justification on a case-by-case basis, taking into account the GMO [genetically-modified organism] in question, the type of measure envisaged and the specific circumstances at national or regional level that can justify such an opt-out,” the draft said. Opposition from some EU states to draft GM authorisations is “usually not based on science but on other considerations reflecting the societal debate existing in the country,” the commission argues. So opt-outs will not be granted to EU states who seek it on health or environmental grounds, after Efsa has deemed a product safe. “The scope for the exceptions [opt-outs] will probably be less than in the cultivation proposal because we are talking about the internal market here,” an informed source said. “You will have to have a really solid reason. Otherwise it would be attacked as a disruption to the market.”
Near California’s Success Lake, more than 1,000 water wells have failed. Farmers are spending $750,000 to drill 1,800 feet down to keep fields from going fallow. Makeshift showers have sprouted near the church parking lot. “The conditions are like a third-world country,” said Andrew Lockman, a manager at the Office of Emergency Services in Tulare County, in the heart of the state’s agricultural Central Valley about 175 miles north of Los Angeles. As California enters the fourth year of a record drought, its residents and $43 billion agriculture industry have drawn groundwater so low that it’s beyond the reach of existing wells. That’s left thousands with dry taps and pushed farmers to dig deeper as Governor Jerry Brown vorders the first mandatory water rationing in state history.
“The demand we’re placing on the aquifer and the deep bedrock drilling, which is going on at an alarmingly fast pace, is really scary,” said Tricia Blattler, executive director of the Tulare County Farm Bureau. “Folks are really concerned we’re not going to be able to find water in the groundwater system much longer. We are tapping it way too quickly.” Nowhere has lack of rain been felt more than in Tulare County, in a valley dotted with dairy farms and walnut orchards at the foot of the Sierra Nevada mountains. With 458,000 residents, it’s home to 1,013 dry wells, accounting for more than half of those that have failed in the state since January 2014.
Outside Porterville, in a dusty, unincorporated hamlet populated by many Latino citrus-farm workers, some residents use donated bottled water to drink and cook. About 40 people a day wash in the 26 showers set up in trailers next to the parking lot of Iglesia Emmanuel church. They lug nonpotable water home from county tanks for their toilets. Annette Clonts began bathing at friends’ homes or sneaking middle-of-the-night showers at Lake Success’s recreation area after the well near her trailer ran low two years ago. When the lake showers started sputtering in November, she turned to those at the church. “When you’re 400 yards from the lake and you have no water, you’re in trouble,” said Clonts, a 57-year-old retired cook.
[..] “We’ve got to find a way to survive, to hold on,” said Gallegos, who lives with her husband and two daughters. “Right now, we don’t have the money to drill a deeper well. You’re talking about $15,000.” That’s the starting price for residential wells, which range from 30 to 150 feet (9 to 46 meters) and can cost as much as $45,000, said Blattler, the official with the county’s farm bureau. Agricultural wells, which are about 1,000 to 1,800 feet, run $250,000 to $750,000, she said. There are so many customers, they’ll have to wait as long as two years.
It just keeps getting hotter. March was the hottest month on record, and the past three months were the warmest start to a year on record, according to new data released by the National Oceanic and Atmospheric Administration. It’s a continuation of trends that made 2014 the most blistering year for the surface of the planet, in to records going back to 1880. Thirteen of the 14 hottest years are in the 21st century, and 2015 is on track to break the heat record again. Results from the world’s top monitoring agencies vary slightly. NOAA and the Japan Meteorological Agency both had March as the hottest month on record. NASA had it as the third-hottest. All three agencies agree that the past three months have been the hottest start to a year.
The heat was experienced differently across the world. People in the U.S. and Canadian Northeast had an unusually cool March. But vast swaths of unusually warm weather covered much of the globe, and records were broken from California to Australia. The sweltering start to 2015 may be just the beginning. The National Weather Services predicts that a pattern of unusually warm waters in the Pacific Ocean, known as El Nino, will most likely persist well into the second half of the year. And this El Nino could be a big one. El Nino conditions transfer heat that’s been building in the ocean into the atmosphere, affecting weather around the world. A strong El Nino could possibly bring relief to California’s unprecedented drought in the form of heavy rains, but would likely add yet another year to a pile of broken temperature records.
Yanis gets creative. 2 days ago it was a payment to the IMF, which he said the ECB could make with money they themselves say belongs to Athens anyway. This one is even smarter: “I see it as a mistake – but the ECB did this with the aim of keeping us in the markets in 2010. They failed.”
Greece called into question on Saturday a major debt repayment it must make to the European Central Bank this summer, after acknowledging it faces problems in meeting its obligations to international creditors. Finance Minister Yanis Varoufakis said Athens should negotiate with the ECB on €6.7 billion in Greek government bonds held by the Frankfurt-based bank that mature in July and August. Varoufakis did not say what he hoped to achieve in any talks, but he accused the ECB of making a mistake in buying the bonds around the time Greece had to take an EU/IMF bailout in 2010. “Shouldn’t we negotiate this? We will fight it,” he said in an interview with Skai television. “If we had the money we would pay … They know we don’t have it.”
The government of leftist Prime Minister Alexis Tsipras promised to honor all its debt obligations when it struck a deal with the euro zone last week that extended Greece’s bailout program for four months. But Athens will get no more money until the EC, ECB and IMF have approved in detail its economic plans during the four-month period. With tax revenue falling far short of target last month and an economic recovery faltering, the state must repay an IMF loan of around €1.6 billion in March and find €800 million in interest payments in April. It then needs about €7.5 billion in July and August to repay the bonds held by the ECB and make other interest payments.
The ECB bought the bonds on the secondary market under its Securities Markets Programme (SMP) which aimed to reduce borrowing costs for troubled southern European governments during the euro zone debt crisis. However, Greece was frozen out of international debt markets, and more than four years later is still unable to fund itself commercially apart from limited issues of short-term treasury bills. Varoufakis, who has staged a media blitz in recent days to sell the euro zone deal to the Greek people, singled out former ECB President Jean-Claude Trichet for criticism. “One part of the negotiations will be on what will happen to these bonds which unfortunately and wrongly Mr Trichet bought,” he said.
“I see it as a mistake – but the ECB did this with the aim of keeping us in the markets in 2010. They failed.” Varoufakis argued that if the bonds had remained in investors’ hands, their value would have been cut by 90% under a restructuring of Greece’s privately held debt in 2012, reducing the burden on the state. The ECB bought the bonds at a deep discount and made large profits because their value rose as the euro zone debt crisis eased. Under Greece’s second bailout deal, these profits were due to be returned to Athens to help it repay debt. Athens received a partial payment in 2013 but eurozone countries are withholding a further €1.9 billion pending the review of Greece’s economic plans. Varoufakis wants this money sent directly to the IMF to meet the March payment.
The era of the Federal Reserve giving forward guidance to financial markets about its next steps on monetary policy is coming to an end, a top U.S. central banker said Friday. Fed Vice Chair Stanley Fischer said the Fed would feel too constrained if it “pre-committed” to a steady path for interest rates and so the central bank would not “telegraph every action.” “I know of no plans of following a deterministic path to raise rates, I don’t believe it will happen,” Fischer said at a conference sponsored by the University of Chicago Booth School of Business. Instead, the Fed will take into account the behavior of the economy and “shocks we have to deal with.”
At the same time, he said the Fed “doesn’t want to take the markets by surprise on a regular basis” and would explain to investors a general sense of the Fed’s goals. In other comments, Fischer said the Federal Reserve’s bond buying programs, although completed, are is still currently depressing 10-year Treasury yields by about 110 basis points, a top U.S. central banker said Friday. Fischer said the estimate was based on a Fed staff study of the effect on the term premium on 10-year Treasury securities from the combination of all of the Fed’s asset purchase programs. With the Fed’s balance sheet near $4.5 trillion, the programs will continue to apply downward pressure on rates “for some time,” Fischer said. The effects will likely wane over the next few years as the balance sheet begins to normalize, Fischer said.
ET: Keynesian theory has pretty much dominated macroeconomic thinking over the last thirty years. Its “consume now, pay later” policies provide a short-term boost and fit well with politicians’ desire to prop up the economy on their watch. A large number of economists in government, private sector and academia, believe that adding more debt to a debt-inspired crisis is the only solution, and that at some point the economy will reach escape velocity and help pay down those debts. Do you subscribe to this view, especially at these very high debt levels in the economy?
LH: I think that monetary policy at this stage of the game is largely bankrupt. There is certainly nothing that they can do. Monetary policy works through price effects, quantity effects, the potential wealth effect and the currency depreciation effect. None of those mechanisms are operative. The price effects don’t work because the short-term interest rates are at the zero bounds, so that’s out of the picture. The US central bank, the ECB and the Bank of Japan have greatly expanded their balance sheets, but that’s not printing money. Money is an increase in deposits that are available to households and businesses. US monetary growth today is under 6% in the last 12 months, which is lower than when quantitative easing started. The Bank of Japan has doubled the monetary base in the last two years and yet M2 growth is 3% and a little bit more. The same is true in Europe.
Moreover, money alone does not determine economic activity. The velocity of money has fallen to a six-decade low in the US. It has been falling substantially in Europe, as in Japan. When you look at money growth and velocity it’s hard to see where nominal growth can be much better than 1% in Europe and Japan and no better than 2-2.5% in the US. Monetary policy does not benefit from quantitative effects when economies are extremely over indebted. The velocity of money falls and the banks are undercapitalized – banks don’t make loans based on excess reserves, but rather based on capital.
The currency depreciation option by excessive monetary liquidity does provide a transitory benefit. We saw this one when QE1 was started in the US, but that’s a transitory benefit: other countries eventually retaliate making everyone worse off. And the final option is the wealth effect but there is no empirical support for it. So there’s really nothing that monetary policy can do and the fact that inflation in the US is substantially lower than when all of these quantitative easing efforts started is an indication that such policies are a bankrupt effort.
Greece will not need a third international debt bailout when its current programme ends in four months, the country’s prime minister has said. Alexis Tsipras vowed his government would “start working hard” to change the country, which is saddled with a debt 175% of its GDP. Greece has already received two bailouts since 2010, totalling €240bn euros. Germany’s parliament ratified a four-month extension on Friday. While some MPs had expressed doubts about the deal and there was substantial public scepticism in the EU’s leading economic power, the vote passed easily. Parliaments in all 19 eurozone states must approve the extension for it to be granted, but Germany’s vote is seen as significant because of its key role as a creditor nation.
Reacting to the Bundestag vote, Mr Tsipras told the Euronews TV channel: “The German parliament gave Europe a vote of confidence today. “Europe has now recognised that Greece has turned a new page… We start working hard, in order to change Greece within a Europe that changes direction.” Greece remains frozen out of international debt markets, prompting speculation about a new bailout request. However, in a televised speech to his cabinet, Mr Tsipras said Greece’s bailout agreements were “over both in form and in essence”. “Some people are betting on a third bailout in July… but we will disappoint them,” he said.
There has been plenty of talk regarding cracking down on corruption and vested interests in this country. From Costas Karamanlis’s “pimps” we have arrived at Finance Minister Yanis Varoufakis’s e-mail. If you read it carefully, you realize that a large portion of the new program deals with this crucial issue. Besides, it’s common knowledge that the reason why the troika, and the IMF in particular, pulled the rug from underneath the government in the fall was because they felt that Antonis Samaras’s administration would not have dared to stand up to vested interests. SYRIZA’s rhetoric on this particular issue coincided to a large extent with the lenders’ conclusions.
Let’s assume that New Democracy and PASOK indeed failed to go up against “pimps” preying on certain crucial sectors of the economy, especially those tied to the state. But will the current administration succeed? Varoufakis appears rather obsessed with this matter and firmly believes that the country’s growth has been curbed because of these vested interests and corruption. This battle will be hard to win, however, even if the necessary political will is in place. To begin with, as strange as it may sound, a prime minister is particularly powerless in this case. In order to fight corruption you need institutions which are operating properly, as in other European countries, whether it’s the justice system or the ministries themselves.
And let’s not forget that it’s a lonely battle. Any PM wishing to fight vested interests – in other words to go after those bleeding the rest of society dry – will face a very tough front. Essentially, Alexis Tsipras is set to confront two very different groups. One the one hand are the romantics who had hoped for a rift with the eurozone as they believe that it’s legitimate for Greece to follow a non-European, Latin American growth model. They will fight Tsipras because he betrayed them.
Then there are also the cynics who hid behind the holy anti-bailout struggle out of fear they would be deprived of the kind of privileges and protection that allowed them to get unjustifiably rich without contributing anything to production. These people wanted the country to remain in the eurozone while they operated in a drachma-style environment – in other words without having to undergo any kind of checks – or to return to the drachma so that they could act as kings in a super-cheap banana republic. If Tsipras and Varoufakis mean what was written in the latter’s e-mail to the eurozone, the battle is bound to be ferocious. There is a lot of money involved and the profit margins are huge..
Varoufakis is the newest finance minister in the Euro Group; Schäuble has served the longest. Varoufakis is a professor of economics, a man always good for a clever turn of phrase and a beaming smile. Schäuble is better known for being caustic and irritable. He is a lawyer by training and prefers practice to theory; he is matter-of-fact and deeply skeptical of those who seek to grab the spotlight. And he doesn’t hold university professors in high regard. Since Schäuble has gotten to know his new colleague from Athens, his appreciation for economy professors has dropped even further. He is suspicious of those who believe in their own theories and who think that the world is predictable. For Wolfgang Schäuble, societal behavior cannot be easily explained, not even by social scientists. That is why, he believes, negotiated rules – and adherence to those rules – is the best policy.
For Yanis Varoufakis, the euro is a defective currency. For Schäuble, it is his legacy. The German minister is unconcerned with formalities. He doesn’t care if his Greek counterpart tucks in his shirt or not, nor would he be bothered if Varoufakis were to wrap it around his head like a turban. Former Swedish Finance Minister Anders Borg, after all, used to come to Euro Group meetings with his hair in a ponytail. But Borg possessed competence, authority and political gravitas, qualities that, from Schäuble’s perspective, the new Greek finance minister has not yet demonstrated. Schäuble was annoyed by Varoufakis’ insistence during his initial visit to Berlin that he could save not just his country, but the entire euro zone, from the clutches of austerity and install a new financial architecture. And he found the Greek finance minister’s presentation during his first Euro Group meeting, full of well-prepared and well-meaning proposals, to be confused and muddled.
Indeed, by the time Schäuble arrived in Brussels for last Friday’s meeting of euro-zone finance ministers, EU diplomats were finding it difficult to bring the two together in a single room. And tensions were high among others in the group as well. Jeroen Dijsselbloem, head of the Euro Group, had even planned to hold telephone conferences and individual meetings rather than bring everyone together. His concern was the consequence of vigorous disagreement during the previous meeting – a conflict which almost descended into blows. That, at least, is what the long-time Brussels correspondent Jean Quatremer reported, citing sources in the French delegation. Varoufakis, his report said, shouted “liar!” at Dijsselbloem over and over again until the meeting ended inconclusively. Varoufakis denies that version of events. He says the disagreement had to do with different versions of the compromise paper.
Varoufakis says he wasn’t aware that, according to Brussels custom, only the version on Dijsselbloem’s desk was official. The result was that last Friday’s Euro Group meeting was atomized, with small groups of two to four people meeting individually with Schäuble, with IMF head Christine Lagarde, with ECB head Mario Draghi and with Dijsselbloem. Varoufakis quickly realized that he was alone, that the other 18 finance ministers were against him. But he took it as validation for his approach. Late that night, he forwarded an article from Foreign Policy to his Twitter followers headlined “Greece Should Not Give In to Germany’s Bullying.” The piece speaks of the “dead hand of Merkelism” and argues that economic logic lies with the Greek finance minister.
John Boehner’s first attempt to keep the Department of Homeland Security from running out of money at midnight failed in the House of Representatives after more than 50 Republicans baulked at his plan to fund it for just three more weeks. The House speaker had been hoping to prevent a shutdown by buying time to negotiate with conservatives in his caucus over their demands that the bill include a measure to prevent Barack Obama from deferring deportation of undocumented immigrants. But even this three-week stop gap was rejected by 52 Republican congressman who defied their party leadership and joined with Democrats to voted against the bill by 224 to 203 just after 5pm. The department runs out of funds at midnight.
Majority leader Kevin McCarthy concluded by saying: “Members are advised that additional votes are possible later this evening and may be this weekend.” Democrats resisted Boehner’s proposal in the hope of forcing House Republicans to follow their colleagues in the Senate and agree a one-year funding bill. But the impasse now sets up a dangerous game of chicken between the parties as each tries to see who will blink first before current funding for the department expires at midnight. Without funding, the department will be unable to pay tens of thousands of border guards, coast guards and other DHS staff, who will nevertheless have to turn up to work as they are deemed “essential workers”.
Congress averted a partial shutdown of the U.S. Department of Homeland Security with only two hours to spare by passing a stopgap funding bill that punts a fight over immigration into next week. The House of Representatives, with support from Democrats, voted 357-60 to send the measure to President Barack Obama for his signature. The Senate passed the measure by a voice vote. Hours earlier, the House failed to pass a three-week spending measure because 52 of Speaker John Boehner’s majority Republicans refused to support it. “It’s no way to govern the nation and the American people deserve better,” House Appropriations Chairman Hal Rogers said to boos from some lawmakers before the late-night vote. Nevertheless, the Kentucky Republican said, “It’s the 11th hour and we must act.”
Funding for Homeland Security operations was set to expire at midnight. Without new spending, thousands of employees would have been furloughed or required to work without pay. The House wants to use the Homeland Security funding bill to block Obama’s November orders that shielded about 5 million undocumented immigrants from deportation. The one-week extension ensures that the immigration issue will continue to dominate a congressional calendar that Republican leaders wanted to fill with debate over policy priorities including job creation, health care policy and curbing business regulations. Instead, Republicans are mired in an immigration debate that risks alienating Latino voters ahead of the 2016 presidential and congressional elections.
It’s a policy confrontation the party can’t win while Obama is in the White House. He has threatened to veto any reversal of his orders. The one-week bill, H.R. 33, carries the shutdown fight into next week when Israeli Prime Minister Benjamin Netanyahu will address Congress on security issues. The measure, which extends funding only through March 6, was backed by 183 Republicans and 174 Democrats. Voting no were 55 Republicans and five Democrats. Among the Republicans opposing the bill was Representative Mick Mulvaney of South Carolina, who accused Boehner of “unwillingness to challenge” Senate Minority Leader Harry Reid, a Nevada Democrat.
“The 5X gain in the Fed’s balance sheet since 2009 has not been harmless——even though it has not stimulated the main street economy. What is has done, obviously, is reflate a massive financial bubble.”
[..]..the case for the Fed’s massive money printing campaign has now been flat-out obliterated. As I documented in the Great Deformation, the short but deep recession of 2008-2009 represented a sharp liquidation of excess inventories and labor that had built up in the main street economy during the Greenspan-Bernanke housing and subprime credit bubble. But that one-time liquidation was over by June 2009; the economy was not sinking into a black hole. Moreover, by the time the US economy began to rebound in mid 2009, the real cause was the natural regenerative power of the capitalist market—not the massive money printing campaign that Bernanke had launched at the time of the Lehman failure in September 2008.
All of the massive liquidity – which took the Fed’s balance sheet from $900 billion to $2.5 trillion in less than a year – worked its magic in the canyons of Wall Street, not in the household and business sectors of the main street economy. The fact is, the only channel through which the Fed can impact the main street economy is through credit expansion. Yet business and household credit outstanding was still shrinking long after the recession ended. The 2% slog that began thereafter had nothing to do with the machinations of the Fed; its represented the return of a steady, modest increment of labor hours and productivity growth to the market economy. But here’s the thing. The 5X gain in the Fed’s balance sheet since 2009 has not been harmless——even though it has not stimulated the main street economy.
What is has done, obviously, is reflate a massive financial bubble. The latter will splatter eventually, sending the main street economy into a new tailspin of short-term labor and inventory liquidation and another financial crisis for no reason whatsoever. Indeed, the monetary politburo is stuck in a dangerous time warp. Not recognizing that the credit channel of monetary transmission is broken and done, they keep money market rates pinned to the zero bound because they claim to detect no acceleration of consumer price inflation on the immediate horizon. So what! Do not these clueless Keynesian apparatchiks recognize that the money market rate and the yield curve are the most important prices in all of capitalism, and that their policy of massive and continuous financial repression generates blatantly false prices in the financial markets and therefore rampant speculation and asset price inflation?
How America sees educating its children: “The federal aid program .. lends money to students at below-market interest rates, regardless of credit history, with no money down, to purchase an asset that can’t be repossessed in the event of default.”
A group of Senate Democrats, led by Elizabeth Warren of Massachusetts, urged the government to offer relief to distressed borrowers this week, even if that dampens the profit it makes from collecting on people with outstanding loans. In a letter to Education Secretary Arne Duncan dated Wednesday, the six senators wrote, “It is not the job of the Department of Education to maximize profits for the government at the cost of squeezing students.” The letter noted that a recent Congressional Budget Office estimate indicates the federal government will bring in $110 billion from these loans in the next decade. Denise Horn, a spokeswoman for the Education Department, said in an e-mail that the department is reviewing the letter. “[We] look forward to responding,” she wrote.
The department should make it easier for people to use the few tools available for demanding a refund on their student debt, the senators wrote. Borrowers who believe that their college committed fraud or lied to them—about job prospects or graduation rates, for example—can file what’s known as a “defense to repayment” claim against the school, according to federal law. But Warren and other senators have railed against the department for not making it clear enough to students how they could make such a claim. More broadly, the senators noted in the letter, the government has not used its power to cancel federal debts outright when the money went to a school that has been accused of abusing students.
“Instead, the Department continues to gouge borrowers who struggle to meet their payments, subjecting them to debt collection, wage and benefit withholding,” the senators wrote. Some point out, however, that there are risks inherent in handing money to people who might just get a degree in basket weaving, without checking their credit score. Lenders typically expect to be compensated for such risks. The federal aid program, education expert Kevin Carey wrote in the New York Times this month, “lends money to students at below-market interest rates, regardless of credit history, with no money down, to purchase an asset that can’t be repossessed in the event of default.”
Western powers should take into consideration Russia’s legitimate security concerns over Ukraine, a top Chinese diplomat has said in an unusually frank and open display of support for Moscow’s position in the crisis. Qu Xing, China’s ambassador to Belgium, was quoted by state news agency Xinhua late on Thursday as blaming competition between Russia and the West for the Ukraine crisis, urging Western powers to “abandon the zero-sum mentality” with Russia. He said the “nature and root cause” of the crisis was the “game” between Russia and Western powers, including the US and the EU. He said external intervention by different powers accelerated the crisis and warned that Moscow would feel it was being treated unfairly if the West did not change its approach.
“The West should abandon the zero-sum mentality, and take the real security concerns of Russia into consideration,” Qu was quoted as saying. His comments were an unusually public show of understanding from China for the Russian position. China and Russia see eye-to-eye on many international diplomatic issues but Beijing has generally not been so willing to back Russia over Ukraine. China has also been cautious not to be drawn into the struggle between Russia and the West over Ukraine’s future, not wanting to alienate a key ally. It has said it would like to continue to develop “friendly cooperation” with Ukraine, and respects the ex-Soviet state’s independence, sovereignty and territorial integrity.
Qu’s comments coincide with talks between the United States and its European allies over harsher sanctions against Moscow. On Monday, Russian Foreign Minister Sergei Lavrov accused Western powers of trying to dominate and impose their ideology on the rest of world. The United States and European delegations slammed Moscow for supporting rebels in eastern Ukraine. Qu said Washington’s involvement in Ukraine could “become a distraction in its foreign policy”. “The United States is unwilling to see its presence in any part of the world being weakened, but the fact is its resources are limited, and it will be to some extent hard work to sustain its influence in external affairs, ” Qu was quoted as saying.
The United Arab Emirates is not selling military equipment to Ukraine, despite earlier statements by Kiev officials, the UAE Foreign Ministry said. “An agreement on cooperation in defense technologies the UAE and Ukraine signed recently does not stipulate any contracts for deliveries of weaponry to the Ukrainian side,” said Faraj Faris al-Mazrouei, adviser to UAE Foreign Minister Abdullah bin Zayed Al Nahyan. The deal was only one element in a future system of cooperation between the two countries in the field of defense technologies, RIA Novosti reported al-Mazrouei as saying, citing the Emarat Al-Yawm news portal.
The UAE and Ukraine signed a memorandum of understanding on military-technical cooperation during the IDEX-2015 defense exhibition in Abu Dhabi earlier this week. After the signing, an advisor to Ukrainian Interior Minister Arsen Avakov, Anton Gerashchenko, wrote on social networks that this cooperation would include “the supply of certain types of arms and military equipment to Ukraine” by the UAE. “The types and volumes of supplies, as you can imagine, are not for disclosure on Facebook,” Gerashchenko said. The advisor stressed that “unlike Europeans and Americans, the Arabs aren’t afraid of Putin’s threats of a third world war starting in case of arms and ammunition supplies to Ukraine.”
Police have arrested eight Spanish men who returned from fighting alongside pro-Russia forces in eastern Ukraine, in what they said was the first operation of its kind in Europe. Officers detained the suspects in six regions across Spain after they returned from predominantly Russian-speaking eastern Ukraine, the interior ministry said in a statement. They had gone to Ukraine last year where they joined pro-Russia groups fighting for independence in the Luhansk and Donetsk regions, the statement added. The Spaniards belonged to the far left and were inspired by the International Brigades, the multinational volunteer forces that fought against Francisco Franco’s uprising during the Spanish civil war in the 1930s.
They are suspected of being accomplices in killings allegedly carried out by pro-Russia groups, and of possessing arms. “Their activities can be considered offences that compromise Spain’s peace or independence, as Spaniards who, while taking part in an armed conflict, violate the neutrality Spain must keep in relation to the international community,” the statement said. The interior ministry said it was the first operation in Europe directed against foreign fighters in Ukraine. Pro-Russia forces in eastern Ukraine are battling those of the Ukrainian government, which is backed by the west.
Over 30,000 foreign fighters are taking part in the conflict, according to the Ukrainian armed forces. A large number come from Russia and former Soviet states, but many have come from Israel, Serbia, Spain, Italy and Brazil. “These arrests sadden me,” a leader of Ukraine’s pro-Russian separatist rebels, in Donetsk, Denis Pouchiline, told AFP. “I think we are going to demand explanations from Spain over this incident. There are many volunteers in our ranks, the greatest number come from Russia, but there are representatives from Spain, Italy, France … it is the first time that they have these types of problems.”
Boris Nemtsov did not pose a threat to the Russian government, according to presidential press secretary Dmitry Peskov. The murder of the Russian opposition figure has been called a “provocation” by a number of politicians and public figures. Boris Nemtsov was killed Friday evening in the center of Moscow. A veteran of Russian politics, he was an influential figure in the 1990s and held the post of deputy prime minister under former President Boris Yeltsin. Though he had been more involved in business than politics since 2003, he was a critic of the Russian government.
“With all due respect to the memory of Boris Nemtsov, in political terms he did not pose any threat to the current Russian leadership or Vladimir Putin. If we compare popularity levels, Putin’s and the government’s ratings and so on, in general Boris Nemtsov was just a little bit more than an average citizen,” Peskov said on Saturday. Russian President Vladimir Putin has condemned the assassination and expressed his condolences to the family, Peskov added. “Putin has stressed that this brutal murder has all [the] signs of a contract murder and is extremely provocative.”
Irina Khakamada, an opposition figure who was Nemtsov’s ally in the SPS party (Union of Right Forces), called the murder a “provocation” aimed at destabilizing Russia. “It is definitely not beneficial to Putin and it is aimed at destabilizing everything to tatters,” she said.