Mar 262018
 


Dorothea Lange Gravestone St. George, Utah 1953

 

There are numerous ways to define the Precautionary Principle. It’s something we can all intuitively understand, but which many parties seek ways to confuse since it has the potential to stand in the way of profits. Still, in the end it should all be about proof, not profits. That is exactly what the Principle addresses. Because if you first need to deliver scientific proof that some action or product can be harmful to mankind and/or the natural world, you run the risk of inflicting irreversible damage before that proof can be delivered.

In one of many definitions, the 1998 Wingspread Statement on the Precautionary Principle says: “When an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically.”

Needless to say, that doesn’t easily fly in our age of science and money. Cigarette makers, car manufacturers and oil companies, just to name a few among a huge number of industries, are all literally making a killing while the Precautionary Principle is being ignored. Even as it is being cited in many international treaties. Lip service “R” us. Are these industries to blame when they sell us our products, or are we for buying them? That’s where governments must come in to educate us about risks. Which they obviously do not.

Nassim Nicholas Taleb -of Black Swan and Antifragile fame- has made the case, in his usual strong fashion, for applying the Precautionary Principle when it comes to GMOs. His argument is that allowing genetically modified organisms in our eco- and foodsystems carries unknown risks that we have no way of overseeing, and that these risks may cause irreversible damage to the very systems mankind relies on for survival.

Taleb is not popular among GMO producers. Who all insist there is no evidence that their products cause harm. But that is not the point. The Precautionary Principle, if it is to be applied, must turn the burden of proof on its head. The absence of evidence is not evidence of absence. Monsanto et al must prove that their products do no harm. They can not. Which is why they have, and need, huge lobbying, PR and legal departments.

 

But I didn’t want to talk about GMOs today, and not about Precautionary Principle alone. I wanted to talk about this: Paragraph 2 of article 191 of the European Union’s Lisbon Treaty (2009) states that:

“Union policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Union. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay.”

In other words, the EU has committed itself to the Precautionary Principle. Well, on paper, that is. However, then we get to a whole series of reports on wildlife in Europe, and they indicate all sorts of things, but not that Brussels cares even one bit about adhering to the Precautionary Principle, either for its people or its living environment. One voice below calls it a “state of denial”, but I would use some other choice words. Let’s start with the Guardian this morning, because they have an interesting perspective:

Most Britons remain blithely unaware that since the Beatles broke up, we have wiped out half our wildlife…

since the fall of the Berlin Wall in 1989, the number of flying insects on nature reserves in Germany had dropped by at least 76% – more than three-quarters…

Things like ‘since you were born’, ‘since man landed on the moon’, ‘since the wall came down’ or ‘since 9/11’ may be a bit clearer than 100 years, or 25 years. Moreover, I read somewhere that since Columbus landed in 1492, America has lost on third of all its biodiversity, but that doesn’t yet explain the rate of acceleration that is taking place.

In October last year, the Guardian had this:

 

Three-Quarters Of Flying Insects In Germany Have Vanished In 25 Years

The abundance of flying insects has plunged by three-quarters over the past 25 years , according to a new study that has shocked scientists. Insects are an integral part of life on Earth as both pollinators and prey for other wildlife and it was known that some species such as butterflies were declining. But the newly revealed scale of the losses to all insects has prompted warnings that the world is “on course for ecological Armageddon”, with profound impacts on human society.

The new data was gathered in nature reserves across Germany but has implications for all landscapes dominated by agriculture, the researchers said. The cause of the huge decline is as yet unclear, although the destruction of wild areas and widespread use of pesticides are the most likely factors and climate change may play a role. The scientists were able to rule out weather and changes to landscape in the reserves as causes, but data on pesticide levels has not been collected.

“The fact that the number of flying insects is decreasing at such a high rate in such a large area is an alarming discovery,” said Hans de Kroon, at Radboud University in the Netherlands and who led the new research. “Insects make up about two-thirds of all life on Earth [but] there has been some kind of horrific decline,” said Prof Dave Goulson of Sussex University, UK, and part of the team behind the new study. “We appear to be making vast tracts of land inhospitable to most forms of life , and are currently on course for ecological Armageddon. If we lose the insects then everything is going to collapse.”

[..] When the total weight of the insects in each sample was measured a startling decline was revealed. The annual average fell by 76% over the 27 year period, but the fall was even higher – 82% – in summer, when insect numbers reach their peak. Previous reports of insect declines have been limited to particular insects, such European grassland butterflies, which have fallen by 50% in recent decades. But the new research captured all flying insects, including wasps and flies which are rarely studied, making it a much stronger indicator of decline.

Then last week from AFP:

 

France’s Bird Population Collapses As Pesticides Kill Off Insects

Bird populations across the French countryside have fallen by a third over the last decade and a half, researchers have said. Dozens of species have seen their numbers decline, in some cases by two-thirds, the scientists said in a pair of studies – one national in scope and the other covering a large agricultural region in central France. “The situation is catastrophic,” said Benoit Fontaine, a conservation biologist at France’s National Museum of Natural History and co-author of one of the studies. “Our countryside is in the process of becoming a veritable desert,” he said in a communique released by the National Centre for Scientific Research (CNRS), which also contributed to the findings.

The common white throat, the ortolan bunting, the Eurasian skylark and other once-ubiquitous species have all fallen off by at least a third, according a detailed, annual census initiated at the start of the century. A migratory song bird, the meadow pipit, has declined by nearly 70%. The museum described the pace and extent of the wipe-out as “a level approaching an ecological catastrophe”. The primary culprit, researchers speculate, is the intensive use of pesticides on vast tracts of monoculture crops, especially wheat and corn. The problem is not that birds are being poisoned, but that the insects on which they depend for food have disappeared.

“There are hardly any insects left, that’s the number one problem,” said Vincent Bretagnolle, a CNRS ecologist at the Centre for Biological Studies in Chize. Recent research, he noted, has uncovered similar trends across Europe, estimating that flying insects have declined by 80%, and bird populations has dropped by more than 400m in 30 years. Despite a government plan to cut pesticide use in half by 2020, sales in France have climbed steadily, reaching more than 75,000 tonnes of active ingredient in 2014, according to EU figures. “What is really alarming, is that all the birds in an agricultural setting are declining at the same speed, even ’generalist’ birds,” which also thrive in other settings such as wooded areas, said Bretagnolle.

Not that it’s just Europe, mind you. Still ‘ove’ this one from Gretchen Vogel in ScienceMag, about a year ago, on a phenomenon most of you stateside will have noticed too:

 

Where Have All The Insects Gone?

Entomologists call it the windshield phenomenon. “If you talk to people, they have a gut feeling. They remember how insects used to smash on your windscreen,” says Wolfgang Wägele, director of the Leibniz Institute for Animal Biodiversity in Bonn, Germany. Today, drivers spend less time scraping and scrubbing. “I’m a very data-driven person,” says Scott Black, executive director of the Xerces Society for Invertebrate Conservation in Portland, Oregon. “But it is a visceral reaction when you realize you don’t see that mess anymore.”

Some people argue that cars today are more aerodynamic and therefore less deadly to insects. But Black says his pride and joy as a teenager in Nebraska was his 1969 Ford Mustang Mach 1—with some pretty sleek lines. “I used to have to wash my car all the time. It was always covered with insects.” Lately, Martin Sorg, an entomologist here, has seen the opposite: “I drive a Land Rover, with the aerodynamics of a refrigerator, and these days it stays clean.”

Though observations about splattered bugs aren’t scientific, few reliable data exist on the fate of important insect species. Scientists have tracked alarming declines in domesticated honey bees, monarch butterflies, and lightning bugs. But few have paid attention to the moths, hover flies, beetles, and countless other insects that buzz and flitter through the warm months. “We have a pretty good track record of ignoring most noncharismatic species,” which most insects are, says Joe Nocera, an ecologist at the University of New Brunswick in Canada.

After all those numbers, and before they get worse -which they will, it’s already baked in the cake-, you would expect the EU to remember the Precautionary Principle all its member nations signed on to for the Lisbon Treaty. You would expect wrong. Instead Brussels vows to continue with the exact same policies that have led to its mind-boggling biodiversity losses.

 

EU In ‘State Of Denial’ Over Destructive Impact Of Farming On Wildlife

Europe’s crisis of collapsing bird and insect numbers will worsen further over the next decade because the EU is in a “state of denial” over destructive farming practices, environmental groups are warning. European agriculture ministers are pushing for a new common agriculture policy (CAP) from 2021 to 2028 which maintains generous subsidies for big farmers and ineffectual or even “fake” environmental or “greening” measures, they say. In a week when two new studies revealed drastic declines in French farmland birds – a pattern repeated across Europe – the EU presidency claimed that the CAP continued to provide safe food while defending farmers and “protecting the environment”.

“The whole system is in a state of denial,” said Ariel Brunner, head of policy at Birdlife Europe. “Most agriculture ministers across Europe are just pushing for business as usual. The message is, keep the subsidies flowing.” Farm subsidies devour 38% of the EU budget and 80% of the subsidies go to just 20% of farmers , via “basic payments” which hand European landowners £39bn each year.

Because these payments are simply related to land area, big farmers receive more, can invest in more efficient food production – removing hedgerows to enlarge fields for instance – and put smaller, less intensive farmers out of business. France lost a quarter of its farm labourers in the first decade of the 21st century, while its average farm size continues to rise.

A smaller portion – £14.22bn annually – of EU farm subsidies support “greening” measures but basic payment rules work against wildlife-friendly farming: in Britain, farmers can’t receive basic payments for land featuring ponds, wide hedges, salt marsh or regenerating woodland. Signals from within the EU suggest that the next decade’s CAP [..] will continue to pay farmers a no-strings subsidy, while cash for “greening”, or wildlife-friendly farming, may even be cut. Birdlife Europe said the “greening” was mostly “fake environmental spending” and wildlife-friendly measures had been “shredded” by “loophole upon loophole” introduced by member states.

[..] This week studies revealed that the abundance of farmland birds in France had fallen by a third in 15 years – with population falls intensifying in the last two years. It’s a pattern repeated across Europe: farmland bird abundance in 28 European countries has fallen by 55% over three decades, according to the European Bird Census Council. Conservationists say it’s indicative of a wider crisis – particularly the decimation of insect life linked to neonicotinoid pesticides.

20% of farmers work 80% of the land in Europe. That is used as an argument to single them out to pay them billions in subsidies. But it simply means these 20% use the most detrimental farming methods, most pesticides, most chemicals. The subsidies policy guarantees further deterioration of an already disastrous situation. The polluter doesn’t pay, as the Lisbon Treaty demands, but the polluter gets paid.

And even that is apparently still not enough for the fast growing bureaucracy. In a move perhaps more characteristic of the EU than anything else, it approved something last week that a million people had vehemently protested: the Bayer-Monsanto merger. The European parliament may have thrown out all Monsanto lobbyists recently, and voted to ban Roundup, but the die has been cast.

A million citizens can protest in writing, many millions in France and Germany and elsewhere may do the same on the street, none of it matters. The people who brought you WWII nerve gases and Agent Orange can now come together to take over your food supply.

 

EU Approves Buyout Of Monsanto By German Chemical Firm Bayer

German conglomerate Bayer won EU antitrust approval on Wednesday for its $62.5bn (£44.5bn) buy of US peer Monsanto, the latest in a trio of mega mergers that will reshape the agrochemicals industry. The tie-up is set to create a company with control of more than a quarter of the world’s seed and pesticides market. Driven by shifting weather patterns, competition in grain exports and a faltering global farm economy, Dow and Dupont, and ChemChina and Syngenta had earlier led a wave of consolidation in the sector. Both deals secured EU approval only after the companies offered substantial asset sales to boost rivals.

Environmental and farming groups have opposed all three deals, worried about their power and their advantage in digital farming data, which can tell farmers how and when to till, sow, spray, fertilise and pick crops based on algorithms. The European Commission said Bayer addressed its concerns with its offer to sell a swathe of assets to boost rival BASF [..] “Our decision ensures that there will be effective competition and innovation in seeds, pesticides and digital agriculture markets also after this merger,” European Competition Commissioner Margrethe Vestager said in a statement. “In particular, we have made sure that the number of global players actively competing in these markets stays the same.”

[..] Vestager said the Commission, which received more than a million petitions concerning the deal, had been thorough by examining more than 2,000 different product markets and 2.7 million internal documents to produce a 1,285-page ruling. [..] Online campaigns group Avaaz criticised the EU approval. “This is a marriage made in hell. The Commission ignored a million people who called on them to block this deal, and caved in to lobbying to create a mega-corporation which will dominate our food supply,” Avaaz legal director Nick Flynn said.

Dow-Dupont, ChemChina and Bayer Monsanto have a lot more political influence than a million Europeans, or ten million Americans. They have even convinced numerous, if not most, people that without their products the world would starve. That their chemicals are needed to feed a growing human population. Farming based on algorythms.

They are not ‘seed companies’. They are ‘seeds-that-need-our-chemicals-to-grow’ companies. And they are out to conquer the entire world. A 100-times worse version of Facebook. And our governments subsidize the use of their products. As we not-so-slowly see our living world be massacred by those products.

We don’t know how bad GMOs will turn out to be. Which is in itself a very good reason to ban them. Since once they spread, they can’t be stopped anymore. Then the chemical boys will own all of our food. But we do know how bad the pesticides and other chemicals they produce are. And we’re not even banning those. We just eat all that sh*t and shut up.

It’s a failure to understand what science is: that you must proof harm first before banning stuff. The only real science is the one that has adopted the Precautionary Principle. Because science is supposed to be smart, and there’s nothing smart about destroying your own world. Because science should never be used to hurt people or nature. Science can only be good if it benefits us. Not our wallets, but our heads and hearts and forests, and our children. Do no harm.

Yeah, I know, who am I fooling, right?

 

 

Mar 222018
 


Edward Hopper The Circle Theater, New York 1936

 

US Democrats Plan Crackdown On Booming Stock Buybacks (CNN)
‘Mother Of All Yield Shocks’ Is About To Crush Stocks – Stockman (MW)
Forget The Fed, Libor Is The Story Of The Year (ZH)
Fed’s Powell: Some Asset Prices Elevated, Overall Vulnerabilities ‘Moderate’ (MW)
Federal Reserve Raises Interest Rates Again Amid ‘Strong’ Jobs Market (G.)
Mark Zuckerberg Says He’s ‘Really Sorry’ (CNBC)
Facebook Shareholders Sue As Share Price Tumbles (Ind.)
App Developer Kogan Calls Facebook’s Side Of The Story A “Fabrication” (BBG)
Austrian Lawyer Took on Facebook in Europe. He’s Ready to Do It Again (BBG)
Dutch Referendum On Spy Agency Tapping Powers Result Too Close To Call (R.)
‘Scary’ That Boris Johnson Represents A Nuclear Power – Russia (RT)
Scale Of UK Problem Debt At ‘Epidemic Levels’ – Archbishop Of Canterbury (Ind.)
EU Approves Buyout Of Monsanto By German Chemical Firm Bayer (R.)

 

 

There goes the S&P 500.

US Democrats Plan Crackdown On Booming Stock Buybacks (CNN)

Democrats in Congress want to rain on Wall Street’s buyback parade. Senator Tammy Baldwin plans to introduce a bill on Thursday that would prohibit companies from repurchasing their shares on the open market, Baldwin told CNNMoney. While the legislation faces an uphill battle getting through Republican-controlled Congress, it demonstrates a growing backlash against companies using extra cash to reward shareholders instead of sharing it with workers. Buybacks, which boost stock prices by making shares scarcer, have exploded in 2018 thanks to the huge windfall created by President Trump’s new tax law. American companies like Pepsi and Cisco have announced a total of $229 billion of buybacks so far this year, according to research firm TrimTabs.

Companies are on track to buy back the largest number of shares in at least a decade. Critics say this trend is deepening the chasm between America’s rich and poor because affluent families own the vast majority of the stocks. They argue the money would be better spent by investing in the future, paying workers more or offering better benefits and retraining programs. “I fear that if we don’t act, the impact on our economy and growth is going to be horrendous,” Baldwin told CNNMoney Wednesday. “This very partisan corporate tax bill has fueled a surge in stock buybacks that is hurting economic growth and shared prosperity for workers.” The bill, which is co-sponsored by Democrats Elizabeth Warren and Brian Schatz, would explicitly “prohibit public companies from repurchasing their shares on the open market.”

It would also repeal a 1982 SEC rule that gave companies the green light to buy back vast amounts of their own stock. Since 2008, US companies have spent $5.1 trillion to buy back their own stock, according to Birinyi Associates. Between 2007 and 2016, companies in the S&P 500 devoted 54% of their profits to stock buybacks, according to research by University of Massachusetts Lowell professor William Lazonick, who advised Baldwin’s office on the legislation. “This was not good for the US economy,” said Lazonick. He called Baldwin’s proposed crackdown “hugely positive,” even for long-term shareholders who will benefit from companies investing in something “instead of simply propping up the stock price.”

Read more …

And Libor.

‘Mother Of All Yield Shocks’ Is About To Crush Stocks – Stockman (MW)

David Stockman, the so-called “Father of Reaganomics,” hasn’t been shy — or close to right — about his frantically bearish calls in recent years Just last summer, he warned of a “horrendous storm” that could take the S&P 500 index all the way down to 1,600. From there, he took it up a notch in September, saying stocks are headed for a retreat of up to 70%. Well, it’s still up at 2,700. But the market’s volatile behavior of late has emboldened some bears to refresh and even ramp up their doomsday scenarios. Stockman is one of them. “There is not a snowball’s chance in the hot place that the mother of all yield shocks can be avoided,” Stockman wrote on his blog this week.

He explains that we’re in a uniquely dangerous position, one that really couldn’t have even happened under previous administrations. “Had Lyndon Johnson, Tricky Dick, Jimmy Carter or even Ronald Reagan suggested that the Federal Reserve buy government debt at rates which exceeded annual issuance by the U.S. Treasury, as was the case during the peak years of QE, they would have been severely attacked — if not subjected to impeachment — for advocating rank financial fraud,” Stockman claimed. He said ever since former Federal Reserve Chairman Alan Greenspan “commenced the age of monetary central planning,” Wall Street has used deficits as a tool in Washington’s kit of “whatever it takes,” instead of something to be feared.

“Anything that could fuel even the appearance of short-term economic growth was embraced unthinkingly,” he said, “because ‘growth’ of any shape, form or quality became the predicate for endless increases in the stock market averages.” That’s a recipe for disaster, says Stockman.

Read more …

Whack-a-mole central bank style.

Forget The Fed, Libor Is The Story Of The Year (ZH)

We’ve been saying it for over a month: the most important, if widely underappreciated, factor for risk assets has been the surge in Libor and the blow out in the Libor-OIS spread, or short-term funding costs, which impacts everything from bank lending costs to the marginal cost of trillions in floating rate debt. Yesterday, Citi’s Matt King confirmed as much in a lengthy note explaining why the blowing out Libor, and Libor-OIS spread, are sending increasingly ominous signals: LIBOR is still the reference point for the majority of leveraged loans, interest-rate swaps and some mortgages. In addition to that direct effect, higher money market rates and weakness in risk assets are the two conditions most likely to contribute towards mutual fund outflows.

If those in turn created a further sell-off in markets, the negative impact on the economy through wealth effects could be greater even than the direct effect from interest rates. Now, another bank has joined the growing chorus of warnings over the soaring Libor and Libor-OIS. Jonathan Garner, Morgan Stanley’s Chief Strategist for Asia and Emerging Markets, told Bloomberg that the rising Libor rates is a bigger concern right now than a more hawkish Federal Reserve, and in fact, is “the story of the year.” As we have documented nearly daily, most recently yesterday, Libor has been rising since Feb. 7 for 31 consecutive sessions, reaching 2.2711% this morning, the highest since 2008. Meanwhile, its gap over risk-free rates, known as the Libor-OIS spread, has more than doubled since the end of January to 55.6 basis points, a level unseen since 2009.

“That’s a key reason why markets have struggled. The acceleration in the private borrowing market is the story of the year, not the Fed,” Garner told BloombergQuint. “What I think is really interesting is that in the private, LIBOR markets, the USD Libor has already moved far more aggressively than Fed Funds, so if you look at 6M USD Libor, it’s actually reached 2.375% whereas the Fed is likely to raise Fed Funds by a quarter of a point to 1.75%, so we’ve actually already for the interest rate that really determines corporate costs are experiencing a very significant increase in interest rates. So unless the Fed is in some ways super dovish, I think we’re already looking at a significant tightening of monetary policy in the US and in addition China is tightening monetary policy at the same time and this joint tightening is a key reason why we are so cautious on markets.”

Read more …

Jay Powell was hired to bore everyone to tears.

Fed’s Powell: Some Asset Prices Elevated, Overall Vulnerabilities ‘Moderate’ (MW)

Federal Reserve Chairman Jerome Powell on Wednesday said some asset prices are elevated but said there weren’t many risks from it to the financial system. While some asset prices are elevated, particularly “some” equity prices and pockets of commercial real estate, financial vulnerabilities are still not at extreme levels, Powell said. He didn’t identify where specifically in the stock market he saw elevated prices. “The current view of the [FOMC] is that financial stability vulnerabilities are moderate,” Powell said during his first press conference, in answer to a question from MarketWatch. It was “key,” Powell said, that the housing sector is not in bubble territory.

Powell said he was not worried about excess leverage in the financial sector. The banking sector and household balance sheets are in good shape, he said. While there are “relatively elevated levels of borrowing” in nonfinancial corporations, “nothing… suggests serious risks.” “Overall, if you put all that into a pie, what you have is moderate vulnerabilities in our view,” he added. Powell said the Fed had “some tools” to combat financial instability “and I think we certainly use them.”

Read more …

Time to quit Fed watching.

Federal Reserve Raises Interest Rates Again Amid ‘Strong’ Jobs Market (G.)

The Federal Reserve raised interest rates again on Wednesday, arguing that the US jobs market was “strong” and signalled it may accelerate the pace of increases next year. The quarter percentage point rise to a range of 1.5% to 1.75% was the sixth such increase since 2015 and comes as the Fed appears to be moving, slightly, more quickly to end an era of historically low interest rates that began during the last recession. The announcement came as the Fed chair, Jerome “Jay” Powell, gave his first press conference in the role he took over from his predecessor Janet Yellen in February. His surprise-free performance left US financial markets barely changed.

“The economic outlook has strengthened in recent months,” the Fed said in a statement. “Information received since the Federal Open Market Committee met in January indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate,” the Fed said in a statement. The rise, which was unanimously approved, comes after Congress passed two major bills that may spur the economy. In January Donald Trump signed off on a $1.5tn tax cut that reduces corporate and income tax rates. In February Congress agreed to a $300bn two-year increase in federal funding.

The Trump administration has claimed the tax cuts will fuel US economic growth above 3% next year, significantly above the 2.5% growth it achieved last year, but Powell said the Fed did not expect growth above 3% in the near future. “We have been through many years of growth rate around 2%,” said Powell. While there are elements in the tax cuts that could boost growth “we don’t know how big those effects will be”.

Read more …

Must have been some long sessions with the legal team. And people were asking “where’s Mark?”.

Mark Zuckerberg Says He’s ‘Really Sorry’ (CNBC)

Facebook CEO Mark Zuckerberg has explicitly apologized forthe Cambridge Analytica data scandal that’s been making headlines over the last several days. “This was a major breach of trust, and I’m really sorry that this happened,” Zuckerberg said on CNN Wednesday evening, elaborating on the statement he posted to his Facebook page earlier in the day. People had criticized Zuckerberg on social media for not explicitly apologizing in his earlier post. Zuckerberg was addressing bombshell reports by The Observer and The New York Times published over the weekend alleged that London-based firm Cambridge Analytica improperly gained access to the personal data of more than 50 million users.

Since the news broke, Facebook’s stock price has plummeted, U.K. officials have opened a probe, and U.S. lawmakers have called for Zuckerberg to appear before a panel to address its handling of user data. Zuckerberg told CNN that he would be willing to testify before Congress, though he avoided committing himself to an appearance. “What we try to do is send the person at Facebook who will have the most knowledge,” Zuckerberg said. “If that’s me, then I am happy to go.” One of the issues at the heart of the incident is whether or not Facebook has done enough to safeguard users’ personal information.

In 2013, Cambridge University researcher Aleksandr Kogan created an app called “thisisyourdigitallife” that harvested Facebook information from the roughly 300,000 people who used it as well as from their friends. Facebook changed its policies in 2014 to limit the data third-party apps could receive, but there were still tens of millions of people who would have had no idea that Kogan’s app had collected their data in the first place, or that it had ultimately been passed to Cambridge Analytica.

Read more …

If this ever comes before a real court, you get Pandora’s box. Expect Facebook to pay before a court date. And that will lower the shareholders’ shares even more.

Facebook Shareholders Sue As Share Price Tumbles (Ind.)

Facebook is being sued by US investors over the company’s tumbling share price after allegations that millions of users’ profile data had been harvested. A class-action lawsuit was filed in federal court in San Francisco on Tuesday after Facebook shares fell as much as 5.2% on Monday. By Wednesday the shares had crashed by 11%, wiping more than $57bn (£41bn) off the company’s value as it deals with the erupting privacy scandal. The undisclosed number of Facebook shareholders, led by Fan Yuan, say that they suffered losses after a whistleblower told The Observer that UK-based data company Cambridge Analytica had harvested and improperly used profile data of 50 million Facebook users.

“As a result of [Facebook’s] wrongful acts and omissions, and the precipitous decline in the market value of the company’s common shares, plaintiff and other class members have suffered significant losses and damages,” the lawsuit said. The legal action represents investors who bought Facebook shares between 3 February 2017 and 19 March 2018 – two days after news of the Cambridge Analytica scandal broke. It alleges that throughout the period, Facebook made “materially false and misleading statements regarding the company’s business, operational and compliance policies”.

Read more …

Not even that part of the narrative is true.

App Developer Kogan Calls Facebook’s Side Of The Story A “Fabrication” (BBG)

The app developer who surreptitiously gathered and shared 50 million Facebook user profiles says the company was officially notified of his actions but failed to stop it. Aleksandr Kogan, a research associate in the department of psychology at the University of Cambridge, turned over his Facebook-generated personality research to the political consulting firm Cambridge Analytica. In an email to university colleagues he called Facebook’s side of the story a “fabrication.” He said that in 2014 he used an official Facebook Inc. platform for developers to change the terms and conditions of his app from “research” to “commercial use,” and that at no point then did the social media company object.

Kogan’s position contradicts Facebook’s stance that Kogan violated the company’s terms and services and then lied about it. “We clearly stated that the users were granting us the right to use the data in broad scope, including selling and licensing the data,” Kogan wrote in a March 18 email obtained by Bloomberg. “These changes were all made on the Facebook app platform and thus they had full ability to review the nature of the app and raise issues.” [..] Kogan’s interpretation of events is potentially critical in better understanding what Facebook knew and when. [..] In the email, Kogan says that he hadn’t been interviewed by the FBI or any other law enforcement agencies, but would have no problem doing so.

He wrote that his app originally started as an academic project but turned to a commercial venture after being approached by the U.K. affiliate of Cambridge Analytica, SCL Group, around 2013. He then formed a company called Global Science Research Ltd, and changed the name of his app to GSRApp, while also modifying the privacy terms from academic to commercial.

Read more …

Sue the intelligence community. Much more effective.

Austrian Lawyer Took on Facebook in Europe. He’s Ready to Do It Again (BBG)

Seven years ago, Max Schrems took on Facebook, ultimately winning a court order that led to stricter rules on international data transfers for the social network and other American tech giants. If your company has any contact with residents of Europe, he has this message: You could be next. Regulatory changes coming this spring “open unprecedented doors,” says Schrems, a 30-year-old lawyer from Austria. “Companies looking to make extra money with people’s data are on my target list.” The EU measure, called the General Data Protection Regulation, permits mass lawsuits similar to class actions in the U.S., he says, allowing him to increase pressure on companies to protect consumer data.

Schrems founded a group called noyb—for none of your business—that he aims to use as a vehicle for lawsuits he’ll start filing as soon as the rules kick in on May 25. He set up a crowdfunding campaign for noyb that has raised more than €300,000 ($370,000) from 2,500 contributors as well as the city of Vienna, labor unions, and small tech companies—and he already has a stack of potential complaints sitting on his desk in the small office he’s rented around the corner from Vienna’s opera house. “We will look for the bigger cases, where we’ll have the greatest impact,” he says.

[..] Schrems examined how Facebook treats customer data and says he discovered that the company didn’t fully purge information users had deleted. Although he never submitted the assignment, his research became the core of 22 complaints to data protection authorities in Ireland, Facebook’s European base. Schrems created a website called europe-v-facebook.org—but insists he bears no grudge against the social network. The company is “more of a test case,” he says. “I thought I’d write up a few complaints. I never thought it would create such a media storm.”

Read more …

Almost half of them voted to be spied on.

Dutch Referendum On Spy Agency Tapping Powers Result Too Close To Call (R.)

Dutch voters were on track to narrowly reject a nonbinding referendum granting spy agencies the power to install bulk taps on Internet traffic. With 83% of the vote counted in the early hours of Thursday, the “no” vote was 48.9%, against 47.2% “yes.” An exit poll by national broadcaster NOS had showed the yes camp narrowly winning. Though the referendum is nonbinding, Prime Minister Mark Rutte had vowed to take the result seriously, without committing to abide by the result. The tapping law has already been approved by both houses of parliament.

Dubbed the “trawling law” by opponents, the legislation will let spy agencies install taps targeting an entire geographic region or avenue of communication, store information for up to three years, and share it with allied spy agencies. Digital rights group Bits of Freedom, which had advised a “No” vote, said the law is not all bad, given that taps must be approved beforehand by an independent panel. But the group said it still fears privacy violations and urged that the law be reconsidered. Before the vote, Rutte said the law was needed to prevent terrorist attacks. “It’s not that our country is unsafe, it’s that this law will make it safer,” he said.

Read more …

You don’t compare the country that suffered most in WWII, to those who caused that suffering.

‘Scary’ That Boris Johnson Represents A Nuclear Power – Russia (RT)

British foreign minister Boris Johnson is poisoned with hatred and anger so it is scary that he represents a nuclear power, Russia’s foreign ministry spokeswoman said on Wednesday. Maria Zakharova was commenting on Johnson’s earlier statement that compared Russia’s hosting of this year’s World Cup to the 1936 Olympics in Nazi Germany. “Any such parallels and comparisons between our country, that lost millions of lives in the fight against Nazism, fought with an enemy on its own territory, and then liberated Europe [and Nazi Germany] are absolutely unacceptable,” she said, in a statement published on Facebook.

The Russian ministry spokeswoman then added that such statements are “unworthy of a head of a European state’s diplomatic service … It is clear that [Boris Johnson] is poisoned with hatred and anger,” she said, also denouncing his words as “unprofessional” and “rude.” It is “scary” that “this man is a representative of a nuclear power that bears a special responsibility for its actions in the international arena as well as for the preservation of international peace,” Zakharova said. Now “it is beyond the shadow of a doubt that all London’s actions … were aimed at setting up a spectre of an enemy out of Russia, using any, even the most absurd reasons,” Zakharova said. She then added that British politicians are now apparently seeking to fully boycott the 2018 World Cup in Russia.

Earlier on Wednesday, Johnson once again blatantly accused Russia of being behind the poisoning of the former double agent Sergei Skripal and his daughter, as he was being quizzed by the Commons foreign affairs committee. He also said he believes the comparison between the World Cup and the 1936 Olympics “is certainly right” just because the sporting event would somehow “glorify” Putin, from his point of view.

Read more …

How will Britain not be like Greece in a few years time?

Scale Of UK Problem Debt At ‘Epidemic Levels’ – Archbishop Of Canterbury (Ind.)

The scale of problem debt is at “epidemic levels”, the Archbishop of Canterbury has said. The Most Rev Justin Welby made the comments in the foreword of a report compiled by debt help charity Christians Against Poverty (CAP). The report said, on average, CAP clients’ outstanding debt equates to 96% of annual household income when they seek help. Mr Welby, the charity’s patron, says in the report: “In 2017 we have seen warnings from many of our financial institutions about the scale of consumer borrowing. “Achieving economic stability together with economic justice for all is too easily overlooked.” He continues: “The scale of problem debt in our country is at epidemic levels.

“Jesus calls us to be hope-bringers and peace-givers. Where there are still lives filled with an oppressive hopelessness, where darkness has a grip, our mission is not done.” In 2013, the archbishop voiced concerns about energy price hikes and he also said in that year that the Church of England wanted to drive payday lenders out of business through the creation of credit unions. [..] The CAP report said that for people in severe financial hardship, a home may not be a place of refuge but rather a place without food in the cupboard, without heating, hot water or working household essentials. More than 1,000 CAP clients were asked about life before they got help from the charity. The research found nearly four in 10 (37%) clients were afraid to leave the home, 60% were afraid to answer the door and 73% were too scared to answer the phone.

Read more …

One day after the report about disappearing insects and birds in France, Brussels votes for more pesticides and GMOs. Nobody wants them.

EU Approves Buyout Of Monsanto By German Chemical Firm Bayer (R.)

German conglomerate Bayer won EU antitrust approval on Wednesday for its $62.5bn (£44.5bn) buy of US peer Monsanto, the latest in a trio of mega mergers that will reshape the agrochemicals industry. The tie-up is set to create a company with control of more than a quarter of the world’s seed and pesticides market. Driven by shifting weather patterns, competition in grain exports and a faltering global farm economy, Dow and Dupont, and ChemChina and Syngenta had earlier led a wave of consolidation in the sector. Both deals secured EU approval only after the companies offered substantial asset sales to boost rivals.

Environmental and farming groups have opposed all three deals, worried about their power and their advantage in digital farming data, which can tell farmers how and when to till, sow, spray, fertilise and pick crops based on algorithms. The European Commission said Bayer addressed its concerns with its offer to sell a swathe of assets to boost rival BASF [..] “Our decision ensures that there will be effective competition and innovation in seeds, pesticides and digital agriculture markets also after this merger,” European Competition Commissioner Margrethe Vestager said in a statement. “In particular, we have made sure that the number of global players actively competing in these markets stays the same.”

[..] Vestager said the Commission, which received more than a million petitions concerning the deal, had been thorough by examining more than 2,000 different product markets and 2.7 million internal documents to produce a 1,285-page ruling. [..] Online campaigns group Avaaz criticised the EU approval. “This is a marriage made in hell. The Commission ignored a million people who called on them to block this deal, and caved in to lobbying to create a mega-corporation which will dominate our food supply,” Avaaz legal director Nick Flynn said.

Read more …

Jul 172016
 
 July 17, 2016  Posted by at 4:08 pm Finance Tagged with: , , , , , , , , , ,  7 Responses »


Ben Shahn Daughter of Virgil Thaxton, farmer, near Mechanicsburg, Ohio 1938

Recently, I posted a two-tear old article on facebook.com/TheAutomaticEarth that was shared so many times it seems to make sense to use it for an Automatic Earth article as well. The article asks how toxic the wheat we eat is – or Americans, more specifically-, and why that is.

But first I would like to touch on a closely connected issue, which is Nassim Nicholas Taleb’s ‘war’ on GMOs. Taleb, of Black Swans fame, has been at it for a while, but he’s stepped up his efforts off late.

In 2014, with co-authors Rupert Read, Raphael Douady, Joseph Norman and Yaneer Bar-Yam, he published The Precautionary Principle (with Application to the Genetic Modification of Organisms), an attempt to look at GMOs through a ‘solidly scientific’ prism of probability and complex systems. From the abstract:

The precautionary principle (PP) states that if an action or policy has a suspected risk of causing severe harm to the public domain (affecting general health or the environment globally), the action should not be taken in the absence of scientific near-certainty about its safety. Under these conditions, the burden of proof about absence of harm falls on those proposing an action, not those opposing it. PP is intended to deal with uncertainty and risk in cases where the absence of evidence and the incompleteness of scientific knowledge carries profound implications and in the presence of risks of “black swans”, unforeseen and unforeseable events of extreme consequence.

[..] We believe that the PP should be evoked only in extreme situations: when the potential harm is systemic (rather than localized) and the consequences can involve total irreversible ruin, such as the extinction of human beings or all life on the planet. The aim of this paper is to place the concept of precaution within a formal statistical and risk-analysis structure, grounding it in probability theory and the properties of complex systems. Our aim is to allow decision makers to discern which circumstances require the use of the PP and in which cases evoking the PP is inappropriate.

This puts into perspective the claims made by Monsanto et al that since no harm has ever been proven to arise from the use of GMOs, they should therefore be considered safe. Which is the approach largely taken over by American politics, and increasingly also in Europe and other parts of the world. In their paper, Taleb et al say the approach does not meet proper scientific standards.

This is very close to my personal opinion, expressed in many articles in the past, that GMOs pose such risks on such a wide scale to the food supply of every human being on earth -as well as a much wider selection of organisms- that they should not be legalized before perhaps 100 years of tests have been done by large and independent teams of specialists.

Note that if you, as an individual farmer, as a community or even as a nation, want to ban GMOs but your neighbors do not, you will in the case of many crops not stand a chance of keeping your plants GMO free. For which you can subsequently be sued by the ‘owner’ of the genetically altered plants and seeds.

Also, I think it is irresponsibly dangerous to give a handful of companies (Monsanto, Bayer, DuPont, Syngenta), who all happen to be chemical giants dating back to the 20th century interbellum, and all with questionable pasts, a quasi-monopoly over the -future of- world’s food. Because that is where things will go unless proper principles are applied, both scientific and legal.

One of the main arguments proponents of GMOs use is that through thousand of years mankind has altered crops through selection ‘anyway’, so talking about anything ‘pure’ or ‘natural’ in this regard is not relevant. Taleb put the difference between altering a staple through this ‘generational’ selection on the one hand and the modifying of genes in a lab into a sketch:

The sketch was later annotated by Rahul Goswami, approved and shared by Taleb:

I think it is obvious that ‘generational’ selection through breeding is localized, can be rejected by nature. Genetic modification is something completely different, it takes a much bigger step (a giant leap) and forces itself -as a more or less alien body- onto a much larger eco-system.

It’s not about trying to figure out what works, but about forcing itself upon the world and its inhabitants regardless of the consequences. The precautionary principle is missing where it is most needed.

A few examples of Taleb’s tweets on the topic in the past few days make his stance abundantly clear.

“GMO issue is ignorance of the properties of complex systems/fattails (Monsanto’s 107 Nobels, 80 y.o. are 50 y behind)”

“Anyone pro-GMOs on “scientific” grounds is 50 years behind, ignorant of complexity, or just stupid”

“Monsanto pulled no stop trying to discredit me: 1000 mails to Univ (!),>1000 shill posts. Nada. F***you money works.”

Then, on to the article I started talking about above. As I said, it was written some two years ago by Sarah at the Healthy Home Economist. From the reactions to my posting it on Facebook -a huge number of shares- I surmise that many people A) had no idea that what Sarah describes is common practice, and B) have a profound interest in the topic.

Note: while a fair number of people said they had never heard of this, and/or doubted it was true at all, quite a few confirmed it as common where they live, and not just stateside, but in Scotland, Argentina etc.

Let’s see how we get through this. I don’t want to just post the whole thing, but I’ll need large portions of it.

The Real Reason Wheat is Toxic

The stories became far too frequent to ignore. Emails from folks with allergic or digestive issues to wheat in the United States experienced no symptoms whatsoever when they tried eating pasta on vacation in Italy. Confused parents wondering why wheat consumption sometimes triggered autoimmune reactions in their children but not at other times.

In my own home, I’ve long pondered why my husband can eat the wheat I prepare at home, but he experiences negative digestive effects eating even a single roll in a restaurant. There is clearly something going on with wheat that is not well known by the general public. It goes far and beyond organic versus nonorganic, gluten or hybridization because even conventional wheat triggers no symptoms for some who eat wheat in other parts of the world.

What indeed is going on with wheat? For quite some time, I secretly harbored the notion that wheat in the United States must, in fact, be genetically modified. GMO wheat secretly invading the North American food supply seemed the only thing that made sense and could account for the varied experiences I was hearing about. I reasoned that it couldn’t be the gluten or wheat hybridization. Gluten and wheat hybrids have been consumed for thousands of years.

It just didn’t make sense that this could be the reason for so many people suddenly having problems with wheat and gluten in general in the past 5-10 years.

Finally, the answer came over dinner a couple of months ago with a friend who was well versed in the wheat production process. I started researching the issue for myself, and was, quite frankly, horrified at what I discovered. The good news is that the reason wheat has become so toxic in the United States is not because it is secretly GMO as I had feared (thank goodness!).

The bad news is that the problem lies with the manner in which wheat is grown and harvested by conventional wheat farmers. You’re going to want to sit down for this one. I’ve had some folks burst into tears in horror when I passed along this information before.

Common wheat harvest protocol in the United States is to drench the wheat fields with Roundup several days before the combine harvesters work through the fields as the practice allows for an earlier, easier and bigger harvest

Pre-harvest application of the herbicide Roundup or other herbicides containing the deadly active ingredient glyphosate to wheat and barley as a desiccant was suggested as early as 1980. It has since become routine over the past 15 years and is used as a drying agent 7-10 days before harvest within the conventional farming community.USDA pesticides applied to wheat.

According to Dr. Stephanie Seneff of MIT who has studied the issue in depth and who I recently saw present on the subject at a nutritional Conference in Indianapolis, desiccating non-organic wheat crops with glyphosate just before harvest came into vogue late in the 1990’s with the result that most of the non-organic wheat in the United States is now contaminated with it.

Seneff explains that when you expose wheat to a toxic chemical like glyphosate, it actually releases more seeds resulting in a slightly greater yield: “It ‘goes to seed’ as it dies. At its last gasp, it releases the seed” says Dr. Seneff. According to the US Department of Agriculture, as of 2012, 99% of durum wheat, 97% of spring wheat, and 61% of winter wheat has been treated with herbicides. This is an increase from 88% for durum wheat, 91% for spring wheat and 47% for winter wheat since 1998.

Wheat farmer Keith Lewis: “I have been a wheat farmer for 50 yrs and one wheat production practice that is very common is applying the herbicide Roundup (glyphosate) just prior to harvest. Roundup is licensed for preharvest weed control. Monsanto, the manufacturer of Roundup claims that application to plants at over 30% kernel moisture result in roundup uptake by the plant into the kernels. Farmers like this practice because Roundup kills the wheat plant allowing an earlier harvest.

A wheat field often ripens unevenly, thus applying Roundup preharvest evens up the greener parts of the field with the more mature. The result is on the less mature areas Roundup is translocated into the kernels and eventually harvested as such. This practice is not licensed. Farmers mistakenly call it “dessication.”

Consumers eating products made from wheat flour are undoubtedly consuming minute amounts of Roundup. An interesting aside, malt barley which is made into beer is not acceptable in the marketplace if it has been sprayed with preharvest Roundup. Lentils and peas are not accepted in the market place if it was sprayed with preharvest roundup….. but wheat is ok.. This farming practice greatly concerns me and it should further concern consumers of wheat products.”

This practice is not just widespread in the United States either. The Food Standards Agency in the United Kingdom reports that use of Roundup as a wheat desiccant results in glyphosate residues regularly showing up in bread samples. Other European countries are waking up to to the danger, however. In the Netherlands, use of Roundup is completely banned with France likely soon to follow.

Using Roundup on wheat crops throughout the entire growing season and even as a desiccant just prior to harvest may save the farmer money and increase profits, but it is devastating to the health of the consumer who ultimately consumes the glyphosate residue laden wheat kernels.

The chart below of skyrocketing applications of glyphosate to US wheat crops since 1990 and the incidence of celiac disease is from a December 2013 study published in the Journal Interdisciplinary Toxicology examining glyphosate pathways to autoimmune disease. Remember that wheat is not currently GMO or “Roundup Ready” meaning it is not resistant to its withering effects like GMO corn or GMO soy, so application of glyphosate to wheat would actually kill it.

While the herbicide industry maintains that glyphosate is minimally toxic to humans, research published in the Journal Entropy strongly argues otherwise by shedding light on exactly how glyphosate disrupts mammalian physiology. Authored by Anthony Samsel and Stephanie Seneff of MIT, the paper investigates glyphosate’s inhibition of cytochrome P450 (CYP) enzymes, an overlooked component of lethal toxicity to mammals.

The currently accepted view is that glyphosate is not harmful to humans or any mammals. This flawed view is so pervasive in the conventional farming community that Roundup salesmen have been known to foolishly drink it during presentations! However, just because Roundup doesn’t kill you immediately doesn’t make it nontoxic. In fact, the active ingredient in Roundup lethally disrupts the all important shikimate pathway found in beneficial gut microbes which is responsible for synthesis of critical amino acids.

Friendly gut bacteria, also called probiotics, play a critical role in human health. Gut bacteria aid digestion, prevent permeability of the gastrointestinal tract (which discourages the development of autoimmune disease), synthesize vitamins and provide the foundation for robust immunity. In essence:

Roundup significantly disrupts the functioning of beneficial bacteria in the gut and contributes to permeability of the intestinal wall and consequent expression of autoimmune disease symptoms

In synergy with disruption of the biosynthesis of important amino acids via the shikimate pathway, glyphosate inhibits the cytochrome P450 (CYP) enzymes produced by the gut microbiome. CYP enzymes are critical to human biology because they detoxify the multitude of foreign chemical compounds, xenobiotics, that we are exposed to in our modern environment today.

As a result, humans exposed to glyphosate through use of Roundup in their community or through ingestion of its residues on industrialized food products become even more vulnerable to the damaging effects of other chemicals and environmental toxins they encounter! What’s worse is that the negative impact of glyphosate exposure is slow and insidious over months and years as inflammation gradually gains a foothold in the cellular systems of the body.

The consequences of this systemic inflammation are most of the diseases and conditions associated with the Western lifestyle: Gastrointestinal disorders, Obesity ,Diabetes, Heart Disease, Depression, Autism, Infertility, Cancer, Multiple Sclerosis, Alzheimer’s, etc.

In a nutshell, Dr. Seneff’s study of Roundup’s ghastly glyphosate which the wheat crop in the United States is doused with uncovers the manner in which this lethal toxin harms the human body by decimating beneficial gut microbes with the tragic end result of disease, degeneration, and widespread suffering

[..] The bottom line is that avoidance of conventional wheat in the United States is absolutely imperative even if you don’t currently have a gluten allergy or wheat sensitivity. The increase in the amount of glyphosate applied to wheat closely correlates with the rise of celiac disease and gluten intolerance.

Dr. Seneff points out that the increases in these diseases are not just genetic in nature, but also have an environmental cause as not all patient symptoms are alleviated by eliminating gluten from the diet. The effects of deadly glyphosate on your biology are so insidious that lack of symptoms today means literally nothing. If you don’t have problems with wheat now, you will in the future if you keep eating conventionally produced, toxic wheat!

I guess we can leave it at that for now. Do go to the original article for more. Whether you look at it from a scientific viewpoint, as Taleb et al do, or from a common sense one, as Sarah does, the common thread seems obvious: Monsanto and other rich chemical giants seek to be the sole providers -even owners- of the world’s food, handed to us for free by nature and generations of our ancestors.

And to achieve that magnitude of power -and riches- they are more than willing to literally drive over sick and dead bodies. Once again, Taleb:

The precautionary principle (PP) states that if an action or policy has a suspected risk of causing severe harm to the public domain (affecting general health or the environment globally), the action should not be taken in the absence of scientific near-certainty about its safety. Under these conditions, the burden of proof about absence of harm falls on those proposing an action, not those opposing it.

That is not what’s happening, and there’s not much time left to start applying it before it’s too late. Because GMOs, once they’ve been introduced in a large enough environment, are near impossible to get rid of.

To end on a somewhat happier note, Taleb thinks that Monsanto is doing quite poorly these days, financially. Then again, that’s why Bayer wants to buy them, and that would only mean a continuation or even increase of the present practices.

What we need is decision makers who understand the science of complex systems, probability and the precautionary principle. And I don’t know about you, but when I look at who’s vying to be the leaders of the US, UK and many other nations, I think we’re a long way away from that.

Only Putin seems to get it. His stated goal is to make Russia the largest producer of organic food in the world. So maybe there is still hope.

May 202016
 
 May 20, 2016  Posted by at 8:59 am Finance Tagged with: , , , , , , , , , ,  2 Responses »


John Vachon Window in home of unemployed steelworker. Ambridge, PA 1941

Lacking New Ideas, G7 To Agree On ‘Go-Your-Own-Way’ Approach (R.)
Japan And US Are Headed For A Showdown Over Currency Manipulation (MW)
Kuroda Stresses Readiness to Act if Yen Rise Threatens Inflation Goal (WSJ)
US Business Loan Delinquencies Spike to Lehman Moment Level (WS)
China Steelmakers Attack US 522% Tariff Move; Say Need More Time (R.)
The Iron Mountain on China’s Doorstep Tops 100 Million Tons (BBG)
Big Chinese Banks Issue New Yuan-Denominated Debt In US (WSJ)
Mass Layoffs Are Looming in South Korea (BBG)
‘Central Banks Can Do Nothing’: Steen Jakobsen (Saxo)
Making Things Matters. This Is What Britain Forgot (Chang)
Germany Strives to Avoid Housing Bubble (BBG)
Bayer Eyes $42 Billion Monsanto in Quest for Seeds Dominance (BBG)
Bayer’s Mega Monsanto Deal Faces Mega Backlash in Germany (BBG)
EU Declines To Renew Glyphosate Licence (EUO)
Ai Weiwei Says EU’s Refugee Deal With Turkey Is Immoral (G.)

In a strong sign of how fast the crisis is deepening, and in between the usual blah blah, the G7 is falling apart.

Lacking New Ideas, G7 To Agree On ‘Go-Your-Own-Way’ Approach (R.)

A rift on fiscal policy and currencies is likely to set the stage for G7 advanced economies to agree on a “go-your-own-way” response to address risks hindering global economic growth at their finance leaders’ gathering on Friday. As years of aggressive money printing stretch the limits of monetary policy, the G7 policy response to anemic inflation and subdued growth has become increasingly splintered. Finance leaders gathering in Sendai, northeast Japan, sought advice from prominent academics, including Nobel Prize-winning economist Robert Shiller, on ways to boost growth in an informal symposium ahead of an official G7 meeting on Friday.

Participants of the symposium agreed that instead of relying on short-term fiscal stimulus or monetary policy, structural reforms combined with appropriate investment are solutions to achieving sustainable growth, a G7 source said. If so, that would dash Japan’s hopes to garner an agreement on the need for coordinated fiscal action to spur global demand. Germany showed no signs of responding to calls from Japan and the United States to boost fiscal stimulus, instead warning of the dangers of excessive monetary loosening. “There is high nervousness in financial markets” fostered by huge government debt and excess liquidity around the globe, German Finance Minister Wolfgang Schaeuble said on Thursday.

But G7 officials have signaled that they would not object if Japan were to call for stronger action using monetary, fiscal tools and structural reforms – catered to each country’s individual needs. That means the G7 finance leaders, while fretting about risks to outlook, may be unable to agree on concrete steps to bolster stagnant global growth. “I expect there to be a frank exchange of views on how to achieve price stability and growth using monetary, fiscal and structural policies reflecting each country’s needs,” Bank of Japan Governor Haruhiko Kuroda told reporters on Thursday.

Read more …

The interests are too different to reconcile, and it’s by no means just Japan and the US that are involved in the showdown.

Japan And US Are Headed For A Showdown Over Currency Manipulation (MW)

Investors will be watching for signs of tension between Japanese and U.S. powers this weekend, when central bankers and finance chiefs face off in Sendai, a city northeast of Tokyo, for the latest Group of 7 summit. The two countries have sparred over the dollar-yen exchange rate in the months since the Japanese currency began a prolonged rise against the dollar. The yen has lost nearly 9% of its value relative to the dollar since the beginning of the year. Last week, Japanese Finance Minister Taro Aso spoke publicly about the continuing disagreement between U.S. and Japanese policy makers over whether the rise in the yen seen since the beginning of the year has been severe enough to warrant an intervention.

Japan might favor a weaker currency primarily because it makes the country’s exports more attractive. “We’ve have often been arguing over the phone,” Aso said, according to The Wall Street Journal. He also reiterated that Japanese officials wouldn’t hesitate to intervene in the market if the currency continued its sharp moves. Plus, he said, the Treasury Department’s decision to put Japan on a currency manipulation monitoring list “won’t constrain” the country’s currency policy. The Treasury published the list for the first time this year, including it as part of a semiannual report on currency practices released late last month. Japan was joined on the list by China, Germany, Taiwan and Korea.

To be included on the Treasury’s watch list, a country must meet at least two of three criteria: A trade surplus with the U.S. larger than $20 billion, a current-account surplus larger than 3% of its GDP—or it must engage in persistent one-sided intervention in the currency market, which the Treasury qualifies as repeated purchases of foreign currency amounting to more than 2% of a country’s GDP over the course of a year.

Read more …

And so are all other central bankers.

Kuroda Stresses Readiness to Act if Yen Rise Threatens Inflation Goal (WSJ)

Bank of Japan Gov. Haruhiko Kuroda said he would act quickly if the yen’s rise threatens his inflation goal, highlighting his caution over exchange rates ahead of a major international convention. “Be it exchange rates or anything, if it has negative effects on our efforts to achieve our price-stability target, and from that perspective if we figure that action is necessary, we will undertake additional easing measures,” Mr. Kuroda told reporters Thursday. The remarks by Mr. Kuroda come at a time of tension between the U.S. and Japan over whether the yen’s appreciation seen earlier this year is sharp enough to warrant intervention by authorities. Investors are closely watching whether Tokyo and Washington will continue to clash over yen policy during a meeting in northern Japan Friday and Saturday of finance chiefs from the Group of Seven leading industrialized nations.

Mr. Kuroda defended his policy stance, saying it is no different from that of central banks abroad. He also reiterated that the BOJ has kept in place massive stimulus to achieve its target of 2% inflation, not to guide the yen lower. Mr. Kuroda said that while he is watching how the bank’s negative-rates policy affects the economy, “this doesn’t mean that we will sit idly by until trickle-down effects become clear.” The BOJ will review the need for fresh steps “at every policy meeting,” he added. Speaking of risks facing Japan’s economy, Mr. Kuroda acknowledged that he is “paying close attention” to the coming British referendum to decide whether to leave the European Union.

Read more …

“Business loan delinquencies are a leading indicator of big economic trouble.”

US Business Loan Delinquencies Spike to Lehman Moment Level (WS)

This could not have come at a more perfect time, with the Fed once again flip-flopping about raising rates. After appearing to wipe rate hikes off the table earlier this year, the Fed put them back on the table, perhaps as soon as June, according to the Fed minutes. A coterie of Fed heads was paraded in front of the media today and yesterday to make sure everyone got that point, pending further flip-flopping. Drowned out by this hullabaloo, the Board of Governors of the Federal Reserve released its delinquency and charge-off data for all commercial banks in the first quarter – very sobering data. So here a few nuggets. Consumer loans and credit card loans have been hanging in there so far.

Credit card delinquencies rose in the second half of 2015, but in Q1 2016, they ticked down a little. And mortgage delinquencies are low and falling. When home prices are soaring, no one defaults for long; you can sell the home and pay off your mortgage. Mortgage delinquencies rise after home prices have been falling for a while. They’re a lagging indicator. But on the business side, delinquencies are spiking! Delinquencies of commercial and industrial loans at all banks, after hitting a low point in Q4 2014 of $11.7 billion, have begun to balloon (they’re delinquent when they’re 30 days or more past due). Initially, this was due to the oil & gas fiasco, but increasingly it’s due to trouble in many other sectors, including retail.

Between Q4 2014 and Q1 2016, delinquencies spiked 137% to $27.8 billion. They’re halfway toward to the all-time peak during the Financial Crisis in Q3 2009 of $53.7 billion. And they’re higher than they’d been in Q3 2008, just as Lehman Brothers had its moment. Note how, in this chart by the Board of Governors of the Fed, delinquencies of C&I loans start rising before recessions (shaded areas). I added the red marks to point out where we stand in relationship to the Lehman moment:

Business loan delinquencies are a leading indicator of big economic trouble. They begin to rise at the end of the credit cycle, on loans that were made in good times by over-eager loan officers with the encouragement of the Fed. But suddenly, the weight of this debt poses a major problem for borrowers whose sales, instead of soaring as projected during good times, may be shrinking, and whose expenses may be rising, and there’s no money left to service the loan.

Read more …

Hadn’t seen this claim before: “..local steelmakers are more efficient (and enjoy far lower costs) than their international counterparts.”

China Steelmakers Attack US 522% Tariff Move; Say Need More Time (R.)

Chinese steelmakers attacked new U.S. import duties on the country’s steel products as “trade protectionism” on Thursday, saying the world’s biggest producer needs time to address its excess capacity. “There’s too much trade friction and it’s not good for the market,” Liu Zhenjiang, secretary general of the China Iron and Steel Association told Reuters when asked if China will appeal U.S. anti-dumping duties at the WTO. China said it will continue its tax rebates to steel exporters to support the sector’s painful restructuring after the United States said on Tuesday it would impose duties of 522% on Chinese cold-rolled flat steel. China, which accounts for half the world’s steel output, is under fire after its exports hit a record 112 million tonnes last year, with rivals claiming that Chinese steelmakers have been undercutting them in their home markets.

In the four months to April, China’s steel exports have risen nearly 7.6% to 36.9 million tonnes. “It’s not just China’s problem to tackle overcapacity. Everyone should play a part. China needs time,” Liu told an industry conference. “Trade protectionism hurts consumers, (it’s) against free trade and competition,” he added. China’s Commerce Ministry said on Wednesday the United States had employed “unfair methods” during an anti-dumping investigation into Chinese cold-rolled steel products. While a flood of cheap Chinese steel has been blamed for putting some overseas producers out of business, China denies its mills have been dumping their products on foreign markets, stressing that local steelmakers are more efficient and enjoy far lower costs than their international counterparts.

Read more …

All we got to do is wait till they run out of space to store it.

The Iron Mountain on China’s Doorstep Tops 100 Million Tons (BBG)

There’s a mountain of iron ore sat right on China’s doorstep. Stockpiles at ports have climbed above 100 million metric tons, offering fresh evidence of increased supplies in the world’s top user that may hurt prices. The inventories swelled 1.6% to 100.45 million tons this week, the highest level since March 2015, according to data from Shanghai Steelhome Information Technology. The holdings, which feed the world’s largest steel industry, have expanded 7.9% this year, and are now large enough to cover more than five weeks’ of imports. Iron ore has traced a boom-bust path over the past two months after investors in China piled into raw-material futures, then changed course after regulators clamped down.

While mills in China churned out record daily output in April to take advantage of a steel price surge, production in the first four months was 2.3% lower than a year earlier. Port inventories in China may continue to increase, BHP Billiton forecast this week. “There’s a lot of optimism actually that steel demand in China will increase,” Ralph Leszczynski at shipbroker Banchero Costa , said by phone. “It’s a bit of an ‘if’ as the economy is still quite fragile,” he said, calling the rise in port stocks “probably excessive.” The raw material with 62% content sank 5.8% to $53.47 a dry ton on Thursday, according to Metal Bulletin Ltd. Prices have tumbled 24% since peaking at more than $70 a ton in April, paring the gain so far in 2016 to 23%.

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A stronger dollar makes this a huge gamble.

Big Chinese Banks Issue New Yuan-Denominated Debt In US (WSJ)

Two of China’s largest banks are issuing new local currency debt in the U.S., offering attractive yields for investors willing to take some currency risk. Industrial and Commercial Bank of China, the world’s largest bank by assets, said it plans on Friday to raise 500 million yuan ($76 million) through 31-day certificates of deposit in the U.S. that will yield 2.6%. Agricultural Bank of China, the third-largest bank in the world, this week sold a 117 million yuan one-year bill that yields 3.35%. Both issues came at a significant premium to the 0.621% yield on the one-year U.S. Treasury bill. But the yuan-denominated debt could pay out less if the currency falls in value. Fed officials last month discussed the possibility of raising interest rates at their June policy meeting, according to minutes from the April meeting released on Wednesday.

A rate increase could cause the yuan to weaken against the dollar. China’s 3% devaluation in August sparked a selloff in yuan-denominated bonds, driving up interest rates in the offshore market, also known as the dim sum market. The new offerings will test demand for Chinese debt in local currency, the first issued by any Chinese bank in the U.S. since last year. China’s one-month interbank rate is currently 2.84%, which means some Chinese banks can borrow at better rates in the U.S. and other foreign markets than at home. The debt also promotes the use of the yuan abroad, one of the conditions set by the IMF when it said last year it would add the Chinese currency to its basket of reserve currencies. The IMF’s inclusion of the yuan is a step toward making the currency fully convertible.

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Take that, G7.

Mass Layoffs Are Looming in South Korea (BBG)

The South Korean government’s push to restructure debt-laden companies is set to cost tens of thousands of workers their jobs in an economy where social security is limited and a rigid labor market reduces the likelihood of getting rehired in a full-time position. Many of the layoffs will be in industrial hubs along the southeast coastline, where shipyards and ports dominate the landscape. These heavy industries, which helped propel South Korea’s growth in previous decades, have seen losses amid a slowdown in global growth, overcapacity and rising competition from China. As a condition of financial support, creditor banks and the government are pushing companies to cut back on staff and sell unprofitable assets. In Korea, losing a permanent, full-time job often means sliding toward poverty, one reason why labor unions stage strikes that at times lead to violent confrontations with employers and police.

A preference for hiring and training young employees, rather than recruiting experienced hands, means that many workers who get laid off drift into day labor or low-wage, temporary contracts that lack insurance and pension benefits, according to Lee Jun Hyup, a research fellow for Hyundai Research Institute. “The possibility of me getting a new job that offers similar income and benefits is about 1%,” said one of about 2,600 employees to be laid off following a previous restructure, of Ssangyong Motor in 2009. The 45-year-old worker, who asked only to be identified by the surname Kim as he tries to get rehired, initially delivered newspapers and worked construction after losing his permanent job. He’s now on a temporary contract at a retailer and taking night shifts as a driver to get by. Despite having these two jobs, his income has been halved. Being fired was “like being pushed into a desert with no water,” Kim said.

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Jakobsen’s always interesting. This is quite a long piece.

‘Central Banks Can Do Nothing’: Steen Jakobsen (Saxo)

TradingFloor.com: The “new nothingness” thesis was based on zero rates, zero growth, zero reforms. But you hinted that all of this nothingness has spilled over into culture and politics as well… do these macro facts hinder peoples’ imagination, or their ability to deal with the problem?

Steen Jakobsen: Yes, I think so. This year, we see a growing gap between the central banks’ narrative – which is that you have a trickle-down impact from lower rates – and [the situation on the ground]. People understand that zero interest rates are a reflection of zero growth, zero inflation, zero hope for changes, and zero reforms. In my opinion as an economist and a market observer, people are smarter than central banks. And because they are smarter, they can live with policy mistakes for a while because the narrative is very strong and because people like (ECB head Mario) Draghi and (Fed chief Janet) Yellen have these platforms from which they not only talk but occasionally shout, and they are deemed to be “credible”, scare quotes mine…

We see [this gap] in the Brexit debate as well, where the elite and the academics talk down to the average voter. By doing that, of course, they alienate the voters from their representatives. That’s what we see globally, that’s why Brazil is going to change presidents, why Ireland could not get its government re-elected with 6% growth. It’s not about the top line, but about the average person seeing that we need real, fundamental change.

TF: Earlier this year, you said that the social contract – the agreement between rulers and the ruled – is broken. It made me think of this year’s Davos meeting, which showed a leadership class terrified of slowing jobs growth and enamoured with the idea that population movements might be used to address this. Given the current unpopularity of globalisation and its effects, would you say that there are some things it is impossible for 21st century leaders and the led to agree upon? Is a social contract impossible?

SJ: No, it could be re-established, but it needs to be established on terra firma. Right now, we have a panacea in the form of low rates and the idea that things will somehow improve in six months. This has led to buyback programmes, a lack of motivation [and all the rest]. We as a society have to recognise that productivity comes from raising the average education level. People forget that all the revolutionary trends, the changes we’ve seen in history, have come from basic research. I don’t mean research driven by profit, but by an individual’s particular interest in one very minute area of a specific topic. This is what creates new inventions.

The second thing we often forget is that the military has been behind a lot of the industrial revolution. Mobile telephony, for example, had nothing to do with private citizens or companies – instead, it had a lot to do with the US military. The key thing here is that we need to be more productive. If everyone has a job, there is no need to renegotiate the social contract. The world has become elitist in every way. Before, you could start a company and build a small franchise; now, you have to be global, you have to have a billion users (if you’re an IT company), and [the pursuit of this] does not necessarily provide the best technologies, but only the biggest ones, the ones backed by [the firms with] the deepest pockets and largest web of connections.

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It’s what many countries ‘forgot’.

Making Things Matters. This Is What Britain Forgot (Chang)

It’s being blamed on the Brexit jitters. But the weakness in the UK economy that the latest figures reveal is actually a symptom of a much deeper malaise. Britain has never properly recovered from the 2008 financial crisis. At the end of 2015, inflation-adjusted income per capita in the UK was only 0.2% higher than its 2007 peak. This translates into an annual growth rate of 0.025% per year. How pathetic this performance is can be put into perspective by recalling that Japan’s per capita income during its so-called “lost two decades” between 1990 and 2010 grew at 1% a year. At the root of this inability to stage a real recovery is the serious imbalance that has developed in the past few decades – namely, the over-development of the UK financial sector and the atrophy of manufacturing.

Right after the 2008 financial crisis there was a widespread recognition that the ballooning financial sector needed to be reined in. Even George Osborne talked excitedly for a while about the “march of the makers”. That march never materialised, however, and manufacturing’s share of GDP has stagnated at around 10%. This is remarkable, given that the value of sterling has fallen by around 30% since the crisis. In any other country a currency devaluation of this magnitude would have generated an export boom in manufactured goods, leading to an expansion of the sector. Unfortunately manufacturing had been so weakened since the 1980s that it didn’t have a hope of staging any such revival. Even with a massive devaluation, the UK’s trade balance in manufacturing goods (that is, manufacturing exports minus imports) as a proportion of GDP has hardly budged.

The weakness of manufacturing is the main reason for the UK’s ever-growing deficit, which stood at 5.2% of GDP in 2015. Some play down the concerns: the UK, we hear, is still the seventh or eighth largest manufacturing nation in the world – after the US, China, Japan, Germany, South Korea, France and Italy. But it only gets this ranking because it has a large population. In terms of per capita output, it ranks somewhere between 20th and 25th. In other words, saying that we need not worry about the UK’s manufacturing sector because it is still one of the largest is like saying that a poor family with lots of its members working at low wages need not worry about money because their total income is bigger than that of another family with fewer, high-earning members.

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Just keep rates low enough for long enough and you’ll screw up any economy.

Germany Strives to Avoid Housing Bubble (BBG)

The German government, after years of warnings, is about to clamp down on rising home prices and mortgage lending. The government is preparing to implement measures to prevent real estate bubbles, the Finance Ministry said in an e-mail late on Wednesday. These policies may include capping borrowers’ loan-to-income ratio in order to reduce the probability of default, Handelsblatt reported on Thursday. The government continues to study the consequences of low interest rates on financial stability, a finance ministry spokesman said in the e-mail. However, there are currently no signs that German residential real estate lending is causing acute risks, he said.

With mortgage rates at record lows and savings accounts earnings almost nothing – thanks to a string of ECB rate cuts – Germans are buying homes at the fastest rate in decades. That’s pushed prices in cities including Berlin, Hamburg and Munich up by more than 30% in five years. New mortgages jumped by 22% in 2015 after five years of rising at 3% or less, according to the Bundesbank. In March, Bundesbank board member Andreas Dombret said he sees “clouds gathering on the horizon” and that the central bank is keeping a close eye on mortgages. Finance Minister Wolfgang Schaeuble, who has been critical of the ECB’s policy of pushing growth with cheap cash, in December said the hunt for yield could lead to the “formation of bubbles and excessive asset values.”

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Don’t think I can say in public what I think should happen to companies like Monsanto, Bayer, Syngenta et al. The people who brought you Agent Orange, Zyklon B and chemical warfare are coming for your food, all of it. A start might be to figure out who holds shares in these things. Your money fund, your pension fund? This is the industry of death, as much as arms manufactureers are.

Bayer Eyes $42 Billion Monsanto in Quest for Seeds Dominance (BBG)

Bayer made an unsolicited takeover offer for Monsanto Co. in a bold attempt by the German company to snatch the last independent global seeds producer and become the world’s biggest supplier of farm chemicals. The St. Louis-based company, with a market value of $42 billion, said it’s reviewing the offer in a statement Thursday. It didn’t disclose the terms of the proposal. Bayer, confirming the bid, said the combination would bolster its position as a life sciences company. Shares of Bayer plunged amid concern that a large purchase would weigh on its credit rating and force the company to sell more stock. The proposal by Werner Baumann, who’s been at Bayer’s helm for less than a month, follows Monsanto’s failed attempt to buy Syngenta and the proposed merger of Dow Chemical and DuPont.

To help finance its quest to buy the world’s largest seed maker, Bayer is considering asset disposals and a share sale, according to people familiar with the matter, who asked not to be identified because discussions are private. The German company is exploring the potential disposal of its animal-health business and the remaining 69% stake in plastics business Covestro, the people said. Animal health could fetch $5 billion to $6 billion, according to one of the people, and the Covestro holding is worth about €4.9 billion. If Bayer buys Monsanto, it could be the biggest acquisition globally this year and the largest German deal ever, according to data compiled by Bloomberg. A takeover of Monsanto would require an enterprise value of as much as €65 billionß, according to analysts at Citigroup.

[..]Merging Monsanto with the company that invented aspirin would bring together brands such as Roundup, Monsanto’s blockbuster herbicide, and Sivanto, a new Bayer insecticide. Monsanto is particularly vulnerable to a takeover after piling up a mountain of problems this year. The company has cut its earnings forecast, clashed with some of the world’s largest commodity-trading companies and become locked in disputes with the governments of Argentina and India. Shares are down 19% in the past 12 months. “It’s a relentless string of bad news,” Jonas Oxgaard, an analyst with Sanford C. Bernstein in New York, said. “It’s almost like they forgot to sacrifice a goat to the gods.”

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Bayer won’t be able to sell its new ‘products’ at home.

Bayer’s Mega Monsanto Deal Faces Mega Backlash in Germany (BBG)

Bayer’s proposed mega deal to buy Monsanto is likely to create a mega public relations challenge for the German company at home. Bayer faces a backlash against Germany’s biggest planned acquisition because of two products from the St. Louis-based company that are widely detested in the country: genetically modified seeds and the weedkiller Roundup, which uses a compound called glyphosate that some believe can cause cancer. “Germans view Monsanto as the main example of American corporate evil,” said Heike Moldenhauer, a biotechnology expert at German environmental group BUND. “It may not be such a good idea to take over Monsanto as that means incorporating its bad reputation, which would also make Bayer more vulnerable.”

A German Environment Ministry study released last month found 75% of citizens are against genetic engineering of plants and animals. Aware of voter suspicions, members of Chancellor Angela Merkel’s junior coalition partner, the Social Democrats, have already come out against the deal, which would turn Bayer into the biggest supplier of farm chemicals. Monsanto, which has a market value of $42 billion, said Thursday it’s studying the offer. Neither party has disclosed the terms. A merger would “strengthen the economic power of genetic engineering in Germany, which we see as very problematic as the majority of the population in Germany is opposed to the technology,” said Elvira Drobinski-Weiss, the lawmaker responsible for formulating policy positions on genetic engineering for the Social Democrats.

BASF four years ago abandoned research into genetically modified crops in Germany, citing a lack of acceptance of the technology in many parts of Europe from consumers, farmers and politicians. The German company moved the unit to the U.S. and halted development of products targeted for Europe to focus on crops for the Americas and Asia. “There’s virtually no market for genetically modified seeds in Europe because they’re so unpopular,” said Dirk Zimmermann, a GMO expert at Greenpeace in Hamburg. A deal combining Bayer and Monsanto would “hurt the future of sustainable agriculture.”

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The EU is good for something after all. The pro-Roundup arguments get an eery left field feel to them though: “We use it for some farming practices such as no-till and minimum-tillage, helping to ensure less greenhouse gas emissions and soil erosion.”

EU Declines To Renew Glyphosate Licence (EUO)

European experts failed again to take a decision on whether to renew a licence for glyphosate, the world’s widest-used weedkiller, during a meeting on Wednesday and Thursday (18-19 May). The EU standing committee on plants, animals, food and feed (Paff), which brings together experts of all EU member states, failed to organise a vote. There was no qualified majority for such a decision. The current licence expires on 30 June. The Paff committee was expected to settle on the matter already in March, but postponed the vote after France, Italy, the Netherlands and Sweden raised objections, mainly over the impact of glyphosate on human health. The European Commission has since tabled two new proposals, both of which failed to convince the member states.

The health commissioner Vytenis Andriukaitis insists that member states decide with a qualified majority because of the controversies involved. A spokesperson said the commission will reflect on the discussions. ”If no decision is taken before 30 June, glyphosate will be no longer authorised in the EU and member states will have to withdraw authorisations for all glyphosate based products”, the spokesperson said. Pekka Pesonen, the secretary general of agriculture umbrella organisation Copa-Cogeca, told EUobserver he regretted the outcome. ”This adds to uncertainty in an already pressured business”, he said. Glyphosate is widely used by European farmers because it is cost-efficient and widely available on the market.

”Without it, production will be jeopardised. This raises questions about food safety, competitiveness of European farmers, as well as our commitments to climate change,” Pesonen said. “We use it for some farming practices such as no-till and minimum-tillage, helping to ensure less greenhouse gas emissions and soil erosion.” ”Glyphosate is also recognised as safe by the EU food safety authority [Efsa]”, he added.

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“It is not legal or moral, it is shameful and it is not a solution. It will cause problems later.”

Ai Weiwei Says EU’s Refugee Deal With Turkey Is Immoral (G.)

The Chinese artist Ai Weiwei described the EU’s refugee deal with Turkey as shameful and immoral as he unveiled the artistic results of his stay on the Greek island of Lesbos. Speaking in Athens, where the works are going on public display for the first time from Friday, Ai said that although he had seen and experienced extreme and violent conditions in China, he “could never have imagined conditions like this”. Lesbos last year became the main European entry point for tens of thousands of Syrian and Iraqi refugees, but arrivals have fallen dramatically since the implementation of an agreement between Brussels and Ankara to return migrants from the Greek islands to Turkey. Of the agreement, Ai said: “It is not legal or moral, it is shameful and it is not a solution. It will cause problems later.”

The artist told the Guardian: “These people have nothing to do with Europe; they are like people from outer space, but they have to come. They have been pushed out and they are being totally neglected by Europe. They are sleeping in the mud and rain and it is only volunteers giving them food or clothes.” Ai arrived on Lesbos in December, having been invited to stage an exhibition at the Museum of Cycladic Art in Athens. The island seemed like a good starting point for thinking about ancient Greece and its mythologies, philosophies and values. Instead Ai became caught up in what he said was the biggest, most shameful humanitarian crisis since the second world war. He had told his girlfriend and young son it was a holiday, but five months later he and his studio are still there. He said he has been changed by what he has seen.

“It is such a beautiful island – blue water, sunshine, tourists – and to see the boats come in with desperate children, pregnant women and elderly people, some 90 years old, and they all have fear and they all have it in their eyes … You think: how could this happen? I got completely emotionally involved.” Ai said Europe needed to understand that the refugees were fleeing their countries because they had to. It was leave or die, he said. The exhibition at the MCA, Ai’s first in Greece, includes an enormous collage of 12,030 small pictures taken on his camera phone, documenting his time on the island. He is also exhibiting photographs taken by six Greek amateur photographers, in partnership with the Photographic Society of Mytilene.

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