Aug 182018
 
 August 18, 2018  Posted by at 9:28 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh Portrait of Doctor Félix Rey, Arles. Rey disliked his portrait and gave it away 1889

 

Furor Over Revoked Security Clearance Grows As Trump Said To Threaten More (G.)
What Was Bruce Ohr Doing? (Strassel)
US Special Counsel Recommends Six Months In Prison For Papadopoulos (R.)
CNN Sues Government To Get Names, Addresses Of Manafort Jurors (TF)
The Three-headed Monster (Kunstler)
Trump Pushes For SEC To End Quarterly Earnings Reports (G.)
You Should Fear the Emerging Market Debt Bubble (Nomi Prins)
Denmark Says Time Is Running Out To Avoid No-Deal Brexit (G.)
In The Country Of The Colosseum, Why Are 40-Year Old Structures Crumbling? (G.)
Censoring Alex Jones (Dmitry Orlov)
New Pesticides May Harm Bees As Much As Existing Ones (G.)
Glyphosate Found In Over 80% of Breast Milk Samples in Brazil (TeleSur)

 

 

Yeah, they’re not liking this one bit. But as I wrote yesterday, these people will be subjects in a 2nd special counsel. That doesn’t rhyme with security clearance.

Furor Over Revoked Security Clearance Grows As Trump Said To Threaten More (G.)

Amid mounting criticism after he revoked the former CIA director John Brennan’s security clearance, Donald Trump threatened to similarly punish a current official and is reportedly preparing to do the same to others who have criticized him. The president’s remarks and the report from the Washington Post escalated worsening tensions between the White House and the intelligence community. Trump discussed his intention to revoke security clearances while speaking to reporters Friday before he left the White House for a fundraiser on Long Island. The president suggested that his first target would be Bruce Ohr, a largely unknown justice department official who has become a frequent target of criticism by Trump and the rightwing media.

“I think Bruce Ohr is a disgrace,” Trump said. “I suspect I’ll be taking it away very quickly.” Ohr’s wife, Nellie, was employed during the 2016 campaign by Fusion GPS, the firm that commissioned an infamous dossier on Trump’s alleged ties to Russia that was authored by Christopher Steele, a former British spy. Also on Friday, the Washington Post, citing anonymous sources, reported that the the White House had already drafted documents to strip a number of other prominent intelligence community figures of their clearances.

The Post’s list of targets includes the former director of national intelligence James Clapper, the former FBI directors Michael Hayden and James Comey, the former national security adviser Susan Rice, the former acting attorney general Sally Yates, the former FBI deputy director Andrew McCabe, and the former FBI agents Lisa Page and Peter Strzok. [..] Senator Mark Warner, a Democrat from Virginia, announced Friday on Twitter that he planned to introduce an amendment “to block the president from punishing and intimidating his critics by arbitrarily revoking security clearances”.

Read more …

The Guardian, above, calls Ohr “a largely unknown justice department official who has become a frequent target of criticism by Trump and the rightwing media.”. Well, this is the Wall Street Journal. And Ohr and his wife have some explaining to do.

What Was Bruce Ohr Doing? (Strassel)

The Federal Bureau of Investigation and Justice Department have continued to insist they did nothing wrong in their Trump-Russia investigation. This week should finally bring an end to that claim, given the clear evidence of malfeasance via the use of Bruce Ohr. Mr. Ohr was until last year associate deputy attorney general. He began feeding information to the FBI from dossier author Christopher Steele in late 2016 – after the FBI had terminated Mr. Steele as a confidential informant for violating the bureau’s rules. He also collected dirt from Glenn Simpson, cofounder of Fusion GPS, the opposition-research firm that worked for Hillary Clinton’s campaign and employed Mr. Steele.

Altogether, the FBI pumped Mr. Ohr for information at least a dozen times, debriefs that remain in classified 302 forms. All the while, Mr. Ohr failed to disclose on financial forms that his wife, Nellie, worked alongside Mr. Steele in 2016, getting paid by Mr. Simpson for anti-Trump research. The Justice Department has now turned over Ohr documents to Congress that show how deeply tied up he was with the Clinton crew – with dozens of emails, calls, meetings and notes that describe his interactions and what he collected. Mr. Ohr’s conduct is itself deeply troubling. He was acting as a witness (via FBI interviews) in a case being overseen by a Justice Department in which he held a very senior position.

He appears to have concealed this role from at least some superiors, since Deputy Attorney General Rod Rosenstein testified that he’d been unaware of Mr. Ohr’s intermediary status. Lawyers meanwhile note that it is a crime for a federal official to participate in any government matter in which he has a financial interest. Fusion’s bank records presumably show Nellie Ohr, and by extension her husband, benefiting from the Trump opposition research that Mr. Ohr continued to pass to the FBI. The Justice Department declined to comment. But for all Mr. Ohr’s misdeeds, the worse misconduct is by the FBI and Justice Department.

Read more …

Unlike Ohr, Papadopoulos is an absolute nobody. But he once when he was drunk mentioned Russians. So Mueller wants his ass. He has to keep the collusion meme alive.

US Special Counsel Recommends Six Months In Prison For Papadopoulos (R.)

Special Counsel Robert Mueller recommended in a court filing on Friday that a judge sentence former Trump campaign aide George Papadopoulos to up to six months in prison for lying to federal agents investigating whether Russia interfered in the 2016 U.S. presidential election. Papadopoulos pleaded guilty in October to lying to FBI agents and is scheduled to be sentenced on Sept. 7. According to Mueller’s sentencing memorandum to the judge, Papadopoulos lied about his contacts with people who claimed to have ties to top Russian officials, including his meeting with a professor who said Russia had “dirt” on Democratic presidential candidate Hillary Clinton.

“The defendant’s crime was serious and caused damage to the government’s investigation into Russian interference in the 2016 presidential election,” Mueller’s memo said. “The defendant lied in order to conceal his contacts with Russians and Russian intermediaries during the campaign and made his false statements to investigators on January 27, 2017, early in the investigation, when key investigative decisions, including who to interview and when, were being made,” Mueller said. Mueller said the government believed a sentence of up to six months in prison was “appropriate and warranted” along with a fine of $9,500.

Papadopoulos unwittingly played a key role in triggering the FBI investigation into possible collusion between Trump’s campaign in Russia, which the president repeatedly has denounced as a “witch hunt.” While drinking at a London bar in May 2016, he told the Australian ambassador to Great Britain that the Russians had hacked thousands of emails that could damage Clinton’s presidential campaign. When the emails began appearing publicly two months later, the envoy, Alexander Downer, told U.S. diplomats about what Papadopoulos had said, according to U.S. officials familiar with the events.

Read more …

Mueller has Papadopoulos and Manafort. That’s all he has. By the way, the judge in this case says he’s been threatened and is under police protection. He doesn’t want that for the jurors. Neither should CNN, Washington Post, BuzzFeed, POLITICO, New York Times, NBC Universal, and the Associated Press.

CNN Sues Government To Get Names, Addresses Of Manafort Jurors (TF)

In a motion filed in federal court on Thursday, CNN and several other media outlets requested that the court release the names and home addresses of all jurors in the Paul Manafort fraud case. Jurors haven not yet rendered a verdict on any of the 18 charges against Manafort, who briefly served as President Donald Trump’s campaign manager in 2016. The motion — filed on behalf of CNN, Washington Post, BuzzFeed, POLITICO, New York Times, NBC Universal, and the Associated Press — asks the court to provide to the media organizations the full names and home addresses of the men and women who were summoned and selected by the federal government to serve as jurors in Manafort’s fraud case.

The media request for the names and home addresses of jurors comes a day after the jury began deliberating about the verdicts on 18 fraud and conspiracy counts against Manafort. [..] Early Thursday evening, members of the jury asked the judge a series of questions about the case and the legal threshold for proving guilt, including a definition of what “reasonable doubt” meant. Many outside legal experts interpreted the question as being good news for Manafort’s defense team and bad news for the prosecution.

Read more …

“Robert Mueller, is left looking ridiculous — and perhaps subject to malpractice charges — for trying to remove an appendix-like organ called the Manifort from the body politic instead of attending to the cancerous mess all around him. ”

The Three-headed Monster (Kunstler)

The faction that used to be the Democratic party can be described with some precision these days as a three-headed monster driving the nation toward danger, darkness, and incoherence. Anyone interested in defending what remains of the sane center of American politics take heed: The first head is the one infected with the toxic shock of losing the 2016 election. The illness took hold during the campaign that year when the bureaucracy under President Obama sent its lymphocytes and microphages in the “intel community” — especially the leadership of the FBI — to attack the perceived disease that the election of Donald Trump represented. The “doctors” of this Deep State diagnosed the condition as “Russian collusion.”

An overdue second opinion by doctors outside the Deep State adduced later that the malady was actually an auto-immune disease. The agents actually threatening the health of the state came from the intel community itself: Mr. Brennan, Mr. Clapper, Mr. Comey, Mr. Strzok, Mr. McCabe, Mr. Ohr, Ms. Yates. Ms. Page, et. al. who colluded with pathogens in the DNC, the Hillary campaign, and the British intel service to chew up and spit out Mr. Trump as expeditiously as possible. With the disease now revealed by hard evidence, the chief surgeon called into the case, Robert Mueller, is left looking ridiculous — and perhaps subject to malpractice charges — for trying to remove an appendix-like organ called the Manifort from the body politic instead of attending to the cancerous mess all around him.

Meanwhile, the Deep State can’t stop running its mouth — The New York Times, CNN, WashPo, et al — in an evermore hysterical reaction to the truth of the matter: the Deep State itself colluded with Russia (and perhaps hates itself for it, a sure recipe for mental illness).

Read more …

Let the SEC study it.

Trump Pushes For SEC To End Quarterly Earnings Reports (G.)

Donald Trump has told the US securities regulator to consider abandoning quarterly reporting – a practice criticised as too short-term by some businesses on both sides of the Atlantic. Trump said a leading company boss told him switching to twice-yearly disclosure of accounts would reduce costs and be good for business. If enacted by the Securities and Exchange Commission, the change could allow more UK companies to join a trend away from quarterly reports. The US president tweeted: “In speaking with some of the world’s top business leaders I asked what it is that would make business (jobs) even better in the U.S. “Stop quarterly reporting & go to a six month system,” said one. That would allow greater flexibility & save money. I have asked the SEC to study!”

Elon Musk, the founder of Tesla, has criticised the short-term thinking of analysts and investors. Explaining earlier this month why he was considering taking the electric carmaker private, he told employees: “Being public … subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter but not necessarily right for the long-term.” JP Morgan’s boss, Jamie Dimon, and Warren Buffett, the world’s richest investor, argued earlier this year that companies should stop publishing quarterly earnings guidance that puts too much weight on hitting short-term targets. However, they said quarterly reporting should stay because it made companies accountable to the public.

Read more …

Oh, we do.

You Should Fear the Emerging Market Debt Bubble (Nomi Prins)

[..] what’s happening in Turkey right now shouldn’t be terribly surprising, given Fed chairman Jerome Powell’s attitudes towards emerging markets. Going back to last October, his words offer a glimpse of what was coming. Powell was then just the number two guy at the Fed when he publicly articulated his outlook on tightening interest rates, the rising dollar and the impact of both on emerging markets. He conceded that higher U.S. interest rates and weakening EM currencies “could cause capital to return to advanced economies.” But, unlike those that actually pay attention, Powell was not worried. He believed that the “most likely outcome” of that policy shift for emerging markets “will be manageable.”

Powell’s statement matters. He now commands the central bank with the largest influence on assets in the world. Powell seemed to deny that the Fed is, as Zero Hedge sums it up, the “major determinant of flows of capital into developing economies.” Later on as Fed chairman, Powell reemphasized that position at an IMF and Swiss National Bank gathering in Zurich. According to Powell: “There is good reason to think that the normalization of monetary policy in advanced economies should continue to prove manageable for EMEs. Markets should not be surprised by our actions if the economy evolves in line with expectations.” But Powell’s argument misses a central point. What he left out was that it was the Fed’s low interest rate policy to begin with that enabled countries to borrow as much as they did.

Read more …

Time is running out fast.

Denmark Says Time Is Running Out To Avoid No-Deal Brexit (G.)

Time is running out to strike a Brexit deal, according to the Danish finance minister, who has echoed warnings that there is a 50-50 chance of Britain crashing out of the European Union without an agreement in place. Kristian Jensen said the window of opportunity for striking a deal that was positive for both Britain and the EU was closing. Earlier, Latvia’s foreign minister, Edgars Rinkevics, claimed the chance of a no-deal Brexit was “50-50”. He said it was a “very considerable risk” but stressed he remained optimistic an agreement with Britain could be reached. Speaking on BBC Radio 4’s Today programme, Jensen was asked about Rinkevics’s remarks.

He said: “I also believe that 50-50 is a very good assessment because time is running out and we need to move really fast if we’ve got to strike a deal that is positive both for the UK and EU.” He said that everyone who wanted there to be a good deal “needs to put in some effort in the months to come, otherwise I’m afraid that time will run out”. He went on to describe Theresa May’s Chequers plan – which includes a pledge that the UK would apply domestic tariffs on goods intended for the UK, but charge EU tariffs on goods heading into the EU – as a “realistic proposal for good negotiations”. “We need to go into a lot of details but I think it’s a very positive step forward and a necessary step,” he said.

Read more …

Mafia.

In The Country Of The Colosseum, Why Are 40-Year Old Structures Crumbling? (G.)

The collapse of a bridge in Genoa on Tuesday, which killed 39 people, is the latest symptom of Italy’s infrastructure woes. More than 2m homes across the country are unstable, according to figures from the national statistics agency, Istat, and more than 156 school ceilings have fallen in over the last five years. The Morandi Bridge, considered an engineering jewel when it was inaugurated in 1967, was the 12th bridge to have collapsed in Italy since 2004. Five of those were in the last five years. Many of the problems can be traced back to the construction boom of the 1960s, when bridges, roads, buildings and schools were being built, often with weak or cheap material to increase profits, and ending up in the hands of the mafia.

“There’s no doubt that the building boom of the 1960s contributed to exacerbating the situation because so much was built then – everywhere and not always with adequate standards,” said Maurizio Carta, a professor of city planning at the University of Palermo. “We built in fragile areas, along riverbeds, in areas prone to landslides, along cliffs, and in high-risk hydrogeological and seismic areas, not to mention near heavy infrastructure, which increases the risk for people living there – in essence, where they shouldn’t be living in the first place.” [..] In the country of the Colosseum, Roman aqueducts and 1,000-year-old churches, it seems paradoxical that 40-year-old structures are crumbling.

“We have used materials which are destined to deteriorate quickly, like those of the bridge in Genoa,” said Prof Antonio Bercich, of the University of Genoa, who warned of the risks associated with the Morandi Bridge two years ago. “Engineering experts in previous decades believed that reinforced concrete would have permitted the construction of miniature colosseums that would have lasted forever. But that’s not the way it turned out. There are structures from those years that should now be demolished.” The Temple of Concordia, built in around 440BC, is considered one of the world’s best-preserved Greek temples. Located in Agrigento, western Sicily, it is just a few kilometres from a 4km bridge which was closed last year because it was at risk of collapse. The bridge was completed in 1970 by the engineer Riccardo Morandi.

Read more …

“Trump is a bull in a China shop while Clinton would have been a deer in the headlights.”

Censoring Alex Jones (Dmitry Orlov)

Something happened recently that made me feel like a bit of an endangered species. A set of transnational internet companies, including Google, Facebook, Apple and several others, all synchronously removed content belonging to infowars.com, which is run by Alex Jones. Such synchronicity is a sure sign of conspiracy—something that Alex Jones harps on a lot. I once appeared on a radio show run by Alex Jones, and he did manage to boil down what I had to say to “the USA is going to collapse like the USSR did,” which is pretty good, considering how poorly we managed to connect, having so little in common. He is a conservative and a libertarian whereas I think that conservatives don’t exist in the US.What have they “conserved” lately—other than the right to bear small arms?

As far as libertarianism, I consider proper historical libertarianism as a strain of socialism while its American cooptation is just plain funny: these ones remain libertarian only until they need the services of an ambulance or a fire engine, at which point they turn socialist. To boot, American libertarians like Ayn Rand, who to me was a relentlessly bad writer full of faulty thinking. However, I find her useful as a litmus test for mediocre minds. Moreover, Jones is political while I remain convinced that national politics in the US is a waste of time. It has been statistically proven that the US is not a democracy: popular will has precisely zero effect on public policy. It doesn’t matter who is president; the difference is a matter of style.

Trump is a bull in a China shop while Clinton would have been a deer in the headlights. The result is the same: the US is bankrupt and its empire is over. There is also the mismatch of genre between Jones and me. I am first of all an experimenter and an essayist, and to me personal experience and literary form are vitally important, while Jones is light on research and happy to work with hearsay, and is rather hackneyed and repetitive, but has the right instincts for a rabble-rouser.

Read more …

Just stop poisoning everything.

New Pesticides May Harm Bees As Much As Existing Ones (G.)

A new class of pesticides positioned to replace neonicotinoids may be just as harmful to crop-pollinating bees, researchers have warned. In experiments, the ability of bumblebees to reproduce, and the rate at which their colonies grow, were both compromised by the new sulfoximine-based insecticides, they reported in the journal Nature. Colonies exposed to low doses of the pesticide in the lab yielded significantly less workers and half as many reproductive males after the bees were transferred to a field setting. “Our results show that sulfoxaflor” – one of the new class of insecticide – “can have a negative impact on the reproductive output of bumblebee colonies,” said lead author Harry Siviter, a researcher at Royal Holloway University of London.

As with neonicotinoids, sulfoxaflor does not directly kill bees, but appears to affect the immune system or the ability to reproduce. Foraging behaviour, and the amount of pollen collected by individual bees remained unchanged in the experiment. The study has been published amid legal challenges and shifting national policies on neonicotinoids, among the most commonly used insecticides in the world. In April, European Union countries voted to ban three neonicotinoid-based products in open fields, restricting use to covered greenhouses. Earlier this month Canada followed suit, announcing the phase-out of two of the pesticides widely applied to canola, corn and soybean crops.

Neonicotinoids are based on the chemical structure of nicotine and attack insect nervous systems. Sulfoximine insecticides, while in a different class, act in a similar way. Unlike contact pesticides – which remain on the surface of foliage – neonicotinoids are absorbed by the plant from the seed phase and transported to leaves, flowers, roots and stems.

Read more …

“Brazil has become the primary consumer of pesticides on the planet..”

Glyphosate Found In Over 80% of Breast Milk Samples in Brazil (TeleSur)

Over 80 percent of breast milk samples examined in a recent study in Urucui, Brazil were found to contain agro-toxins. According to the study undertaken by Inacio Pereira Lima, a master’s student in Women’s Health at the Federal University of Piaui’s (UFPI) Center of Health and Sciences, 83.4 percent of the breast milk samples were found to contain glyphosate or aminomethylphosphonic acid (AMPA) or both substances. “The presence of glyphosate in breast milk indicates direct contamination by this agro-toxin or that the quantities utilized in agricultural activity in the region must be so high that the plant metabolism or microbiology did not degrade the excess,” Pereira Lima explained. “Nearby regions where agricultural activity is not present, we suspect that agro-toxins have contaminated the water.”

The samples were obtained from the maternity ward at the Dirceu Arcoverde Regional Hospital (HRDA) in the municipality of Urucui, located 450 kilometers from the capital city Teresina. It is the largest producer of soya in the state, and its crops are sprayed with large quantities of agro-toxins, according to Pragmatismo Politico In 2016, a total of 10.1 million kilos were consumed in the state. It is the equivalent of 3.18 kilos per person, a percentage that is comparable to the national average. Surprisingly, the same contamination level was detected in the municipality of Oeiras, roughly 750 kilometers from the Urucui, where agricultural activity is the least in the state. With a 20 percent stake in world’s total consumption since 2008, Brazil has become the primary consumer of pesticides on the planet, a new study has revealed.

Read more …

To make a prairie it takes a clover and one bee,
One clover, and a bee.
And revery.
The revery alone will do,
If bees are few.

– “To make a prairie”, Emily Dickinson

Apr 302018
 
 April 30, 2018  Posted by at 12:40 pm Finance Tagged with: , , , , , , , , , , ,  


Gustav Klimt The Park 1909

 

 

Dr. D feels his own golden age coming on. It’s just a bit dark gold. Nothing a good polish can’t help, I’m sure. In the end, the spirit is familiar:

A man only begins to grasp the true meaning of life when he plants a tree under whose shade he knows he will never sit.

That is literally how he finishes this:

It’s going where it’s going, as I grow plants and make the bees happy, let the trees rest in the forests, as best I’m able when devoid of any help. They will survive. We are as perennial as grass, and will diminish someday. When we do, I will have left the trees, the seeds, the order, the patterns that will feed the generations that follow, as true men, not infants, should.

It’s spring.

 

 

Dr. D:

Ilargi —
 
Would rather work on a more positive article, something about life, nature, spring, gardens; however I find that they are so complicated as to be inexpressible.  So many, from Thoreau to Sand County Almanac spend entire books and barely scratch an overview of the complexity of nature.  It’s at once so obvious and, lacking personal experience, so inexplicable.  So I haven’t done that, but it’s been chilly and till the asparagus, start the plants (too early) and wait for the leaves.
 
Maybe it’s the case that once we understand how much there is, no thoughts can be put into a 1,000 word article.  Certainly that’s to the detriment of modern thinking and persuasion.  Maybe I just always use too many words to say things and draw in sidelines that are better neglected, however interesting and connected; for all things are really equally connected in mind just as in nature, and because of our linear minds we can’t look at them at once, but only one by one.
 
John Day is correct of the gestalt, however seldom that happens to humankind.  And what is it?  Does that not mean we partake of Jung’s mass consciousness, that we are in fact telepathic, like schools of fish and flocks of birds gyring in the sky?  The nation has gone insane, truly mad, I could not describe it to you.  80% of people believe whatever they think that minute is reality.  When CNN tells them the opposite of yesterday, or the beginning of the sentence is the opposite of the ending, it causes no distress. 

It’s truly Robespierre, cultural revolution, and it doesn’t end well, for the expression of all of it is Crowley’s “Do what thou will” with Ayn Rand’s “What’s best for me is best for all” so you have a system of plundering by power, whether by force or victimhood, where the reality – actually, earnestly, incontrovertibly believed – is whatever will get me the most in this moment.  Is it easier to fake medical paperwork, not check patients, and let them die rather than get out of a chair once an hour?  We do it. 

Call them on it and they’ll deny it, believing even to themselves.  Steal from your own work, your family, banish them on Facebook if they call you on it, then expect a minute later there should be no ill will, no consequences?  Certainly.  Look around and call on public opinion for the callous, selfish, murdering behavior, and 80% of them support you, they think it’s normal and fine, punishing the 20% who still have order, consequences, cause and effect, logos. 
 

 

I have no explanation for it, nor is there an end, but I greatly fear the only cure for it is for the good people to withdraw and leave the bad people starving in a ditch, their children and dogs included, for as adults, it is nearly impossible for them to change, and impossible for any good people to trust that change.  And how are you supposed to run a justice system, a society, in a world of truly pathological, lying, self-serving sociopaths?  How even will their children not end up the same, with only 20% left to throw a lifeline?  A lifeboat cannot save the ship, you know.  It can hardly save itself.
 
I was surprised at the comments today, for this open, transparent, appalling, illogical lies are still completely internalized, completely believed at the meta level.  Trump has an open war on the CIA and Deep State – I don’t know how it could possibly be more obvious or advertised – and any common level would tell you we have been antagonizing North Korea to justify keeping country-sized bases in Japan and SoKo because the men needed to contain China wouldn’t fit in Pearl Harbor and are too far away. And yet when Trump’s team openly undercuts the CIA and peace breaks out everywhere, it’s suddenly not him. 

It’s Kim Jong actually, I read yesterday, he beat the U.S., Trump lost (when Trump also wasn’t trying anything) and…I don’t know, NoKo is going to invade us and SoKo, after they nuke Miami and the moon with the CNN missiles that can hit anywhere on earth?  After Pompeo (and allegedly Trump) met with Kim Jong in the Forbidden City? Earlier, however, he WAS completely responsible for war and the 12M dead Wolf Blitzer and Rachel Maddow longed for.  So let me translate: all bad things forever in time and space are Trump, all good things forever in time and space, not Trump.  And that’s logic now.
 
Maybe it’s inappropriate to give the Nobel to a man when it’s often a team, maybe we shouldn’t give prizes for doing a normal, decent thing and simply not killing each other, but that’s not the tradition.  Personally, I wouldn’t give it to him because in my estimation all he did was STOP the CIA from holding Kim and NoKo hostage to his own Deep State Generals.  Kim is a Swiss-raised trust fund playboy: he doesn’t want war unless forced to it.  I can’t give a medal for simply stopping a war that never should have existed, and one they even now lie about and won’t admit. 

 

But that’s not the point.  The point is, our own readers, who are very smart and should be more than up to speed, seem to completely fall for CNN, Brian Williams, and an endless list of exposed, transparent liars for 20+ years, instead of you, for example, who’s been calling it out and they read every day. My God, what will it take?  It’s disheartening.  I believe that is part of the same Jungean mass-mind they have somehow hacked and it’s a struggle for even smart people to break through.
 
So apparently Kanye, following Professor Griff and a wide number of other immediately ignored and sidelined black artists, has woken up before our own readers.  Not that Trump is great or anything, because he’s a jerk, but that they’ve arranged the same system from 100 years ago where darkie has to think and vote the way master says, or else.  That’s the worst system of slavery ever devised.  You think your color, vote your color, dress your color, watch your color, apply for jobs according to your color, and not your free thinking, your talents, your politics, your soul. 

Yet again, that’s normal: that’s not racism to tell groups how they better vote, yet it IS racism to tell them to think for themselves.  All overwhelmingly racist countries easily elect and accept Black Presidents with Muslim names, have black leaders in both parties, black billionaires, black megastars.  That’s how we know they’re racist, right?  Reality doesn’t matter, evidence doesn’t matter, logic doesn’t matter, it hasn’t mattered my whole life, it will never matter ever again.
 
It strikes me that although pretty poor, whose mascot should be the rhino, Republicans are the party AGAINST slavery, AGAINST the southern Democrats, born AGAINST the KKK, who have black cabinet members, black presidential candidates going back decades as still today. 

Doesn’t matter.  Doesn’t have the slightest effect.  Then they are so racist, so bigoted, that when any member of a subgroup, be they Kanye, Milo, Janda, Diamond and Silk should cross the aisle, they are easily welcomed as party members and people, as thinkers, and not as races, skin colors, or issues – no backlash, no contention in the party. Doesn’t matter.  Hasn’t mattered in 100 years, doesn’t matter now.  It’s truly astonishing.
 

 

Like I said, I once thought, “if only people knew”, if only there were events that would remove the mask of lies, corruption, and abuse, but there are dozens daily, and as Churchill said, they pick themselves up and brush it off, continuing with the lie, no matter how continually debunked, for example, daily for two hysterical years.
 
So what are we supposed to do when that lie — which everyone knows is a lie, but they lie and claim it’s not a lie — can get us into a war ending life on earth?  I do not know.  I say stop lying, as Trump plays along, for all the good that does us.  People tell the truth constantly: big, high-profile journalists, stars, senators…doesn’t have the slightest effect.  They’re still crazy, and the Assad-gassed-his-people-because-he-likes-to-lose-although-we-sniffed-the-backpack-and-door-handle-and-found-nothing are still credible and rational. 

Nor do I trust the gestalt.  They have a bad habit of going where they’re going, and when driven by what are essentially insane people have a bad habit of going astray, meeting their karma, with all the bad consequences therein.  I can’t stop that, but I am an American, and it’s my duty to survive this madness and this civil conflict as did my ancestors before me.  And I’m sure I will, or well enough.  Where would I go to escape this karma anyway?  Britain?  Belgium?  China?  I don’t think so. 
 
It’s going where it’s going, as I grow plants and make the bees happy, let the trees rest in the forests, as best I’m able when devoid of any help.  They will survive.  We are as perennial as grass, and will diminish someday.  When we do, I will have left the trees, the seeds, the order, the patterns that will feed the generations that follow, as true men, not infants, should.

 

 

Apr 132018
 
 April 13, 2018  Posted by at 8:38 am Finance Tagged with: , , , , , , , , , , ,  


Ezra Stoller Parking garage, New Haven, Connecticut 1963

 

Zombies In Our Midst (Felder)
After 10 Fat Years For Stock Investors A Lean Decade Is Looming (MW)
China Records Rare Trade Deficit In March As Exports Fall 2.7% (R.)
London House Prices Falling At Fastest Rate In Nine Years (G.)
Google Saves Manhattan Office Market. Chinese Buyers Vanish (WS)
The Deep State Closes In On The Donald: Mueller’s War, Part 2 (Stockman)
Bitcoin Surges 15%, Pushing Crypto Market Cap Above $300 Billion (MW)
The US Fading into Irrelevance – A Good Thing for the World (Pieraccini)
Interest Rate Hikes Are On The Way, But When And How Fast? (AFR)
Why Trade Wars Will Unleash Central Banks (Nomi Prins)
Global Warming Is a Central Bank Issue (BBG)
Decline In Bees Puts Supply Of Raw Materials For Global Business At Risk (Ind.)
No Plan To Protect Queensland’s Green-Haired Turtle From Extinction (G.)
Gulf Stream Slowdown ‘About A Century Ahead Of Schedule’ (TP)

 

 

Ponzi’s and zombies. Not Jesse Felder’s original title, but this one by DiMartino Booth is better.

Zombies In Our Midst (Felder)

To begin to understand the current situation in Minsky terms we must first understand the hypothesis: “The first theorem of the financial instability hypothesis is that the economy has financing regimes under which it is stable, and financing regimes in which it is unstable. The second theorem of the financial instability hypothesis is that over periods of prolonged prosperity, the economy transits from financial relations that make for a stable system to financial relations that make for an unstable system. In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance.”

Next we need to understand what these financing units are: “Hedge financing units are those which can fulfill all oftheir contractual payment obligations by their cash flows… Speculative finance units are units that can meet their payment commitments on “income account” on their liabilities, even as they cannot repay the principle out of income cash flows… For Ponzi units, the cash flows from operations are not sufficient to fulfill either the repayment of principle or the interest due on outstanding debts by their cash flows from operations.”

And this is what reminded me of Minsky when I read the recent article in Grant’s with the accompanying chart below. It shows the percent of companies in the S&P 500 that would fall into Minsky’s “Ponzi unit” category. Specifically, Bianco Research defines these “zombies” as companies whose interest expense is greater than their 3-year average EBIT (earnings before interest and taxes). Currently, we face the greatest percentage of “Ponzi units” in at least 20 years.

This should be worrisome to investors and even more so to those managing monetary policy because it suggests that financial instability within the economy may be greater than any other time over the past couple of decades. Minsky again: “It can be shown that if hedge financing dominates, then the economy may well be an equilibrium seeking and containing system. In contrast, the greater the weight of speculative and Ponzi finance, the greater the likelihood that the economy is a deviation amplifying system.” Those last three words are critical. “A deviation amplifying system,” simply means an economy built on a virtuous cycle that risks evolving into a vicious one.

So long as interest rates remain low and investor risk appetites remain strong zombies will thrive and the economy will, as well, relatively speaking of course. However, should interest rates rise and risk appetites reverse course the risk of a self-reinforcing downturn grows. Minsky explains: “In particular… if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values.”

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It won’t be like any of those previous decades.

After 10 Fat Years For Stock Investors A Lean Decade Is Looming (MW)

It’s a phrase that comes standard on Wall Street, but which may be taking on ominous undertones in the current market: Past performance is no guarantee of future returns. It should come as no surprise that U.S. equity-market investors have been handsomely rewarded thus far this decade, a period of time that roughly corresponds with the recovery from the financial crisis (the bottom came in March 2009, roughly 10 months before the start of the 2010s). The S&P 500 is up nearly 140% since the start of the decade, and more than 180% on a total-return basis. The Dow Jones Industrial Average is up more than 130% over the same period. Those are obviously strong gains, but even the biggest bulls on Wall Street may not appreciate just how strong this period has been relative to other decades.

“The 2010s have so far been one of the highest-returning and lowest-risk decades for U.S. stocks in the last 100 years,” wrote Howard Wang, co-founder of Convoy Investments. According to Convoy’s data, stocks averaged a total annualized return of 13.2% thus far this decade, comfortably above the long-term average of 9.6%. While this was below four other decades — the best decade was the 1950s, when the average was 18.8%, followed by the 18.6% gain in the 1990s — equities fared better in terms of their excess return above interest rates. By the excess-return measure, the 2010s have seen an average annual return of 12.7%, significantly above the 5.8% long-term average (going back to the 1920s).

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“Separately, China’s dollar-denominated trade surplus with the United States rose 19.4% in the first quarter…”

China Records Rare Trade Deficit In March As Exports Fall 2.7% (R.)

China’s March exports unexpected fell 2.7% from a year earlier, the first drop since February last year, while imports grew 14.4%, more than expected, customs data showed on Friday. That left the country with a rare trade deficit of $4.98 billion for the month, also the first since last February. Analysts polled by Reuters had expected March shipments from the world’s largest exporter to have risen 10.0%, slowing sharply from a 44.5% spike in the previous month which was believed to be heavily distorted by seasonal factors. Import growth had been expected to pick up to 10.0%, after slowing sharply to 6.3% in February.

Analysts expected China would record a trade surplus of $27.21 billion for last month, from February’s surplus of $33.75 billion. For the first quarter, exports rose 14.1%, and imports rose 18.9% on-year. China’s trade performance has got off to a strong start this year, following through on a solid rebound in 2017, thanks to sustained demand at home and abroad. But the export outlook is being clouded by an escalating trade dispute with the United States, which could disrupt China’s shipments and its supply chains, while a cooling property market may curb China’s demand for imported raw materials such as iron ore. Separately, China’s dollar-denominated trade surplus with the United States rose 19.4% in the first quarter.

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Ain’t seen nothing yet.

London House Prices Falling At Fastest Rate In Nine Years (G.)

House prices in London are falling at the fastest rate in nine years, according to Halifax, Britain’s biggest mortgage lender. Prices in the capital were down 3.2% between January and March compared with the previous quarter, the sharpest decline since the depths of the financial crisis, according to regional data collated by IHS Markit and published by Halifax, part of Lloyds Banking Group. London also recorded the sharpest fall in annual house prices since the start of 2011. Property values fell 3.8% in the first quarter from a year ago, following a 0.7% annual drop in the fourth quarter. London prices have been falling on a quarterly and annual basis since the third quarter of 2017.

There was a small annual increase of 0.3% in prices in the south-east of England at the start of the year, and a rise of 1.9% in the south-west. Prices grew strongly elsewhere in the country. The east Midlands and East Anglia recorded the fastest rates of annual price inflation, at 7.3% and 7.2% respectively, followed by Scotland at 6.7% and Yorkshire and the Humber at 6.1%. The standardised price of a home in London was £430,749 in the first quarter, the lowest since the end of 2015. Figures are standardised in order to track the price of a “typical house” by giving values to certain attributes of the properties and using them to calculate the price.

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The only game in town.

Google Saves Manhattan Office Market. Chinese Buyers Vanish (WS)

Chinese entities – such as the conglomerates – were once the dominant buyer in US trophy office markets, such as Manhattan. It ended with a big bang in the second quarter of 2017 when Chinese entities accounted for half of the commercial real estate volume in Manhattan, including its sixth largest transaction ever, the $2.2 billion purchase of 245 Park Avenue by the conglomerate HNA Group. It paid $1,282 per square foot, as it was called, “among the highest price per pound for this type of asset.” It was the last big Chinese property purchase in Manhattan.

But Google blew that deal out of the water, with its $2.4 billion acquisition of the iconic eight-story Chelsea Market at 75 Ninth Ave in Q1 this year. This was the second largest deal ever to close in Manhattan. And Google paid a breath-taking $2,181 per square foot. We will never again laugh about the inflated prices Chinese buyers were paying. [..] And here is what that Google deal did to the Manhattan office market: It more than doubled the total volume of sales! Without the Google deal, total transaction volume would have been $2.12 billion. With the Google deal, it jumped to $4.52 billion! [..] the dizzying price of $2,181 per square foot that Google forked over pushed the average price per square foot to a record $1,266, up 70% from Q1 last year:

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David is a great ranter.

The Deep State Closes In On The Donald: Mueller’s War, Part 2 (Stockman)

What is going on in the eastern Mediterranean and over the skies and on the ground in Syria is absolutely nuts; it’s also scary dangerous and utterly unnecessary, too. After all, the imminent Russian/American military clash is over the skeleton of an artificial backwater nation confected in 1916 by two swells in the British and French foreign offices. At length, what was never a nation anyway has finally been reduced to rubble, misery and sectarian fragments. So there is nothing to contest now, and, in fact, there never was. The sovereign government of Syria long ago invited the Russians in and Washington out. Period. Why, then, are commercial aircraft being warned to stay out of Syrian airspace, while the Russian fleet at Tartus scrambles into defensive redeployments?

Likewise, why is the Syrian air force being forced to hide its planes and helicopters in its own country, while Washington steams an armada of warships toward the Mediterranean that is larger and more lethal than the entire Navy of almost every other country in the world? The answer is simple and terrible: Washington has become the War Capital of the planet and now teems with a whole generation of war-obsessed bureaucrats, think-tankers, consultants, lobbyists, militarists, imperialists, neocon belligerents and the legions of military/industrial/spy complex racketeers who feed off a hideously bloated national security budget.

Of course, you also have thousands of politicians—both those now in office and those who hang-around afterwards and get prosperous by hanging-out a shingle to ply the business of operating Washington’s global empire. Among them are the brainwashed, the stupid, the larcenous, the sanctimonious, the venal, the flag-wavers, the sunshine patriots and the ideologues of American exceptionalism, responsibility-to-protect (R2P), democracy propagation and plain old imperial hegemony.

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Casino. Not for the faint of heart.

Bitcoin Surges 15%, Pushing Crypto Market Cap Above $300 Billion (MW)

After a period of low volatility, cryptocurrencies have broken out of their recent ranges, surging to multiweek highs on Thursday. The No. 1 digital currency, bitcoin rose to a two-week peak, trading above $8,000 to an intraday high of $8,055.20, adding as much as 16%. A single coin last changed hands at $7,705.21, up 11%. The intraday move is the largest since Feb. 6 when bitcoin traded down to $5,947.40 before closing at $7,700.39, a 29.4% move. The move comes after bitcoin spent the best part of two weeks in the $6,500 to $7,500 range. The tight sideways action created a so-called wedge formation, which can often presage significant swings in either direction once breached, according to market technicians “We have seen consolidation in a very small range,” said Naeem Aslam, chief market analyst with ThinkMarkets. “When the consolidation is in such a tight range the probability is that a move to the upside can be two to three times the size of the consolidation range.”

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Multipolar is the future.

The US Fading into Irrelevance – A Good Thing for the World (Pieraccini)

As demonstrated by the recent meeting between the defense ministers of Russia and China, the multipolar strategy is now wide-ranging, relegating Washington, Tel Aviv and Riyadh to further digging themselves into the hole they have already dug themselves into (see recent events in Syria with Israel launching 8 missiles and Trump beating the drums of war). As General Wei Fenghe stated, “We came to Moscow to let the Americans know about the close military ties between the armed forces of China and Russia.” When these two military and economic powers unite their efforts, involving regional powers and mediating over various conflicts, it becomes clear that the challenge to Washington’s hegemony is progressively leading away from an international reality consisting of one superpower to one consisting of three to four powers that maintain an international balance via diplomatic, economic and military means.

The phase in which we currently live is turbulent and is essentially caused by a single factor that has two very strong thrusts. The acceleration of the dwindling of the unipolar phase is directly connected with the strategic and tactical errors of the American deep state and its main sponsors, like Israel and Saudi Arabia. At the same time, the opposing push comes from the multipolar environment, which tends to consolidate its sphere of influence via diplomatic and military means. The goal for Moscow and Beijing is to present to the American and European elites a viable alternative that is shared among several actors. For the time being, the Euro-Atlantic establishment continues to consider itself capable of changing the course of events and preventing the drift towards multipolarity.

Whether the Western oligarchy is a victim to its own propaganda or whether it simply wishes to avoid facing reality and is using every means available to postpone an epochal change, is difficult to determine; and this makes the future uncertain, and is therefore highly dangerous.

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“The economy may only be operating on a single cylinder, but each time it’s an impressive one.”

Interest Rate Hikes Are On The Way, But When And How Fast? (AFR)

The Australian economy may not be booming, but it looks to have performed “the miracle pivot”. This is what Ardea Investment Management portfolio manager Tamar Hamlyn calls the economy’s remarkably smooth transition away from a once-in-a-generation mining investment boom without falling into recession. A massive uplift in residential construction activity has carried us through. The “next dance” is infrastructure investment, Hamlyn says. Now we await what feels like another miracle: an RBA rate hike. The economy may only be operating on a single cylinder, but each time it’s an impressive one. We don’t have a solid pick-up in consumption and “we are never going to have that really solid GDP growth until we get that,” Hamlyn says.

But what we are is far from the recessionary fears that were the original rationale for rates at such low levels. It makes sense, then, to think that in the absence of a nasty shock, it seems perfectly reasonable to bet, as RBA governor Philip Lowe flagged again this week, that the next move in rates will be up and not down. But when will that first hike be? And how far will they eventually go? And how quickly will they get there? Accepting that borrowing costs are more likely to get more rather than less expensive is one thing. But anybody trying to assess the potential risks and rewards of taking on a large and long-dated loan obligation, whether it be a mortgage or a business loan, needs to think beyond the next hike. Let’s start with when the RBA will act. Unfortunately, the experts and the market are telling a different story.

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Central banks are still supposed to save us. Sure.

Why Trade Wars Will Unleash Central Banks (Nomi Prins)

You can bet that deep within the halls of the Fed they are developing a game plan to keep the markets from crashing if trade wars escalate. This is another reason to believe that trade wars will be met with cheap money policy. You can look at this as a financial see-saw of sorts. Trade wars, or even media soundbites about them, will spark negative markets reactions. That is why the Fed and other central banks will combat this with cheap words and even cheaper money policies. If the U.S. does jump into a hot trade war it could find itself needing to make up for the costs. The logical place to turn is to the beacon of more money creation from the Fed or to issue more debt.

The Fed would be directly involved in order to keep the cost of debt from rising, again — which is why my analysis forecasts a return to Fed policies that keep rates low. Similarly, other major economies would also unleash their central bank money when needed. This type of tit-for-tat response is already playing out. Beijing has used its new wealth to attract friends, deter enemies, modernize its military, and aggressively assert its central bank into nearly any sector it believes requires assistance. This type of brinksmanship shows that it is only a matter of time before a trade war with China morphs into massive military build-up and competition.

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Oh yeah, sure, central bankers will save the planet.

Global Warming Is a Central Bank Issue (BBG)

Central bankers have been dubbed “masters of the universe” for the tools and powers they have acquired since the financial crisis. Some of them now want to play a more active role in the fight against climate change. Monetary authorities are right to be mindful of the way in which climate risk affects their mandate to ensure price stability and guard financial stability. But that is different from seeking to promote the shift to a “greener” economy, which is the role of government. Last week, central bank governors from the U.K., France and the Netherlands met in Amsterdam to discuss how to adapt regulation to the risks posed by climate change.

Together with five other institutions (from China, Germany, Mexico, Singapore and Sweden), these central banks have formed the “Network for Greening the Financial System” (NGFS). This group has two objectives: sharing and identifying best practices in the supervision of climate-related risks, and enhancing the role of the financial sector in mobilizing “green” financing. The first is entirely reasonable and consistent with the central banks’ traditional role. As Francois Villeroy de Galhau, governor of the Bank of France, said in a speech at the conference, “Climate stability is one of the determinants of financial stability.” It is only right that financial supervisors take an interest in what is going on.

The clearest example concerns the regulation of insurers: Climate change has made extreme weather events such as hurricanes more frequent. Regulators must ensure that the industry updates its models and sets aside enough capital to deal with these growing climate-related risks. To do so, central bankers may need to extend the supervisory horizon beyond their usual time span. Climate change may only pose a threat for the balance sheet some years down the road, but these risks should be assessed now. Villeroy de Galhau argued in his speech that the financial sector should move towards “a compulsory transparency requirement,” so that companies are forced to provide a snapshot of their climate-related risks. It’s an idea supervisors around the world should embrace.

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As long as we keep putting species extinction in terms of trade and profit, we are doomed.

Decline In Bees Puts Supply Of Raw Materials For Global Business At Risk (Ind.)

Businesses face a shortage of raw materials and a drop in the quality of crop as the number of bees decline worldwide, a new report warns. Approximately three quarters of crops around the world depend on pollination, all of which could soon be threatened as more than a third of wild bee and butterfly species face extinction, according to a joint study by the UN, the University of East Anglia and Cambridge University. Major businesses, including Asda, the Body Shop, Mars and Pepsico, say they are unable to take action largely because of uncertainty around which crops and regions are vulnerable to the decline in pollinators such as bees.

“The role pollinators play – be it tiny midges for cocoa or squirrels for coconut – is not well understood and can be taken for granted,” says Jos van Oostrum, director of sustainable solutions at chocolate and confectionary maker Mars. Cocoa, a vital ingredient in the production of chocolate, is at particular risk from a declining number of bees and other species that help spread pollen. The risks of a shortfall in raw materials not only prove a challenge for food production, but also the sourcing of ingredients for beauty products. “The importance of pollination for natural raw materials is increasingly a priority for us,” said the Body Shop’s sustainable sourcing manager Francesca Brkic.

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Everytime I make a new friend I find out they’re about to die. It’s making me terribly sad.

No Plan To Protect Queensland’s Green-Haired Turtle From Extinction (G.)

The Australian government does not have a plan to save an endangered Australian turtle species that received global attention on Thursday for its green mohawk and its ability to breathe through its genitals. The Mary river turtle, found only in that one river in Queensland, attracted worldwide headlines as one of the standout species on a new list of the most vulnerable reptile species compiled by the Zoological Society of London (ZSL). But despite this listing it does not have a national recovery plan to protect it from extinction and it is unclear whether any federal government funds have been specifically allocated for its protection. The turtle is 29th on ZSL’s Evolutionary Distinct and Globally Endangered (Edge) list for reptiles, which highlights the conservation needs of some of the world’s unique reptiles.

The turtle is not the only reptile species found in Australia to appear on the list, with eight species making the top 100, and seven of those appearing in the top 40. Among them are the critically endangered western swamp tortoise, which is number seven on the Edge list, the pig-nosed turtle, number 19 on the list, and the Gulbaru Gecko, a critically endangered Queensland species that was only discovered in 2001 and appears at 40 on the list. Conservationists say the list highlights the lack of conservation attention many Australian reptiles receive compared to more charismatic and iconic mammal and bird species. The federal government’s threatened species strategy specifically targets 20 mammals, 20 birds and 30 plants, but no reptiles.

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The climate on both sides of the Atlantic would change too much to imagine.

Gulf Stream Slowdown ‘About A Century Ahead Of Schedule’ (TP)

New research provides strong evidence that one of the long-predicted worst-case impacts of climate change — a severe slow-down of the Gulf Stream system — has already started. The system, also known as the Atlantic Meridional Overturning Circulation (AMOC), brings warmer water northward while pumping cooler water southward. “I think we’re close to a tipping point,” climatologist Michael Mann told ThinkProgress in an email. The AMOC slow down “is without precedent” in more than a millennium he said, adding, “It’s happening about a century ahead of schedule relative to what the models predict.”

The impacts of such a slowdown include much faster sea level rise — and much warmer sea surface temperatures — for much of the U.S. East Coast. Both of those effects are already being observed and together they make devastating storm surges of the kind we saw with Superstorm Sandy far more likely. The findings come in two new studies published this week. One study published in the journal Nature, titled “Observed fingerprint of a weakening Atlantic Ocean overturning circulation,” was led by the Potsdam Institute for Climate Impact Research. It finds that the AMOC has weakened “around 15 per cent” since the mid-twentieth century, bringing it to “a new record low.”

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Mar 022018
 
 March 2, 2018  Posted by at 9:43 am Finance Tagged with: , , , , , , , , , , , , , ,  


Harold Steggels Essex landscape 1932

 

Trump’s Steel And Aluminum Tariffs Trigger Market Sell-Off In US, Asia (G.)
Trump’s Tariffs Throw a Wrench in the Global Trading System (BBG)
S&P 500 Breaks Below 100-Day Average Technical Inflection Point (BBG)
JFK-Trump S&P500 Analog Chart (MW)
NRA Members On Trump Gun Control Plans: ‘Every Word Of It Was A Betrayal’ (G.)
Putin On New US Nuclear Stance: If Attacked, Russia Will Use Nukes (RT)
China Bans Orwell’s Animal Farm And Letter ‘N’ Amid Anger At Xi (Ind.)
‘Cleanest In History’ Diesel Cars Still Pollute Far Above Legal Limits (Ind.)
US Breaks 47-Year-Old Monthly Oil Production Record (Robert Rapier)
Bitcoin’s Plunge in Volume Stirs Questions About Its Popularity (BBG)
Making the Business Case for Gender Equality (PS)
UK Risks Running Out Of Gas, Prices Soar (G.)
UK Food Crisis Looms Without Brexit Deal (BBG)
Pesticides Put Bees At Risk, European Watchdog Confirms (CNBC)
‘Doomsday’ Seed Vault Gets Makeover As Arctic Heats Up (AFP)

 

 

What he was elected on. Why should the US be dependent on imports for all of its steel?

Trump’s Steel And Aluminum Tariffs Trigger Market Sell-Off In US, Asia (G.)

World stock markets have tumbled after Donald Trump said the United States would impose tariffs of 25% on steel imports and 10% on imported aluminum next week. The threat of a trade war with China and higher goods prices led to a sharp sell-off in Wall Street on Thursday, causing Asian markets to take fright on Friday. The Nikkei index in Japan fell 2.4%, Hong Kong and South Korea were down 1.6%, and the ASX200 in Sydney was off 1% in early afternoon trading. Asian steelmakers bore the brunt. South Korea’s Posco fell 3% and Japan’s Nippon Steel 4%. Michael McCarthy of CMC Markets in Sydney said it was a “sharp reminder of the initial negative reaction to the election of Mr Trump ..

… An explanation may come, but the initial market interpretation of the move is rank populism. The lack of structure makes anticipating further measures and possible responses to retaliatory moves difficult to predict.” The Dow Jones Industrial Average had initially fallen more than 570 points, with heavy losses for manufacturers like Caterpillar and Boeing. The index closed down 420 points and the S&P 500 and Nasdaq both dropped on the day. Trump campaigned on the promise of protecting the US steel industry but until now has done little to make good on those promises. At a meeting with US industry officials at the White House, he vowed to rebuild American steel and aluminum industries, saying they had been treated unfairly by other countries for decades.

The move is likely to increase tensions with China, whose top trade official, Lui He, is in Washington for trade talks. “People have no idea how badly our country has been treated by other countries, by people representing us that didn’t have a clue,” Trump said at a White House press conference attended by executives from the steel and aluminum industries. “Or if they did, then they should be ashamed of themselves because they’ve destroyed the steel industry, they’ve destroyed the aluminum industry, and other industries, frankly, when you look at all the plants, the car plants, automobile plants that moved down to Mexico for no reason whatsoever, except we didn’t know what we were doing. So we’re bringing it all back.”

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Bloomberg claims that “..it looked like the global economy was running on all cylinders ..” No it didn’t.

Trump’s Tariffs Throw a Wrench in the Global Trading System (BBG)

Just when it looked like the global economy was running on all cylinders, President Donald Trump injected a degree of risk to the otherwise favorable outlook. The U.S. president announced on Thursday plans to impose 25% tariffs on imported steel and 10% tariffs on foreign aluminum, with more details to be unveiled next week. American equities cratered for a third day as fears of a trade war spread and expectations for U.S. economic growth weakened a bit. The move to protect American metals producers threatens to raise prices for consumers and businesses that buy goods made with the raw materials. That will have implications for a U.S. central bank that’s debating how fast to raise interest rates this year.

“If tariffs go up, it will, at the margin, tend to put more upward pressure on prices, and those upward pressure on prices will have to be considered by the monetary authority,” New York Fed President William Dudley said in a speech in Brazil on Thursday. The extent of any economic damage will depend on the fine-print of Trump’s new policies and the severity of countries’ retaliation. Some economists worried the move might presage a shift toward an era of more economy-inhibiting protectionism just when it looked like the growth headwinds were fading. “It is possible that a more aggressive shift in policy is under way that could undermine the pro-growth tilt of fiscal policy, harming the U.S. and global economic expansions,” JPMorgan analysts wrote in a research note after Trump’s announcement.

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Jay Powell gets a warm welcome.

S&P 500 Breaks Below 100-Day Average Technical Inflection Point (BBG)

The stock market is flirting with a technical inflection point again. The S&P 500 Index briefly broke below its 100-day moving average Thursday, sinking as much as 2% after President Donald Trump said the U.S. will impose harsh tariffs on steel and aluminum imports. The announcement added fuel to a fire that’s been smoldering since last month’s selloff, as investors continue to worry about rising inflation and interest rates. That anxiety has brought the market close to collapsing through the line of defense the moving average represents.

“You’ve broken down below the halfway point, now you’re toying below the initial high after the collapse, and you’ve gotten into all sorts of technical problems,” Jim Paulsen, chief investment strategist at Leuthold Weeden, said by phone. “Breaking some technical averages here is starting to scare people.” The S&P 500 fell 1.1% to 2,684.02 as of 3:27 p.m. in New York, after going as low as 2,659.65. The index is down about 2.5% on the week. Before February’s correction, the gauge hadn’t touched the 100-day barrier since last August. And while the market is recovering some of Thursday’s losses late in the session, it still risks closing below the line for the third time in a month.

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Causation and correlation.

JFK-Trump S&P500 Analog Chart (MW)

Last month, MarketWatch used a chart overlay to illustrate how the stock market under John F. Kennedy has closely followed its performance over the same time frame with Donald Trump in the White House. Fast forward three weeks and, as of Wednesday’s close, the S&P 500, in relative terms, sat almost exactly where it did at this point during Kennedy’s administration. If the trend persists—a HUGE if, of course—prepare for some rather steep losses in the coming weeks. Perhaps it’s already started, with the Dow Jones Industrial Average down nearly 600 points at its Thursday low.

“After 328 trading days since election day, the Trump S&P 500 sits right on top of the JFK S&P 500,” the blogger behind the Global Macro Monitor wrote. ”The index, 328 trading days after the election day of each president, is less than five basis points within one another. Rather stunning, don’t you think?”

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Trump needs Democrat support on this. Where are they?

NRA Members On Trump Gun Control Plans: ‘Every Word Of It Was A Betrayal’ (G.)

NRA members have branded Donald Trump’s plans for stricter gun control legislation “stupid” and a “betrayal” after the president suggested reforms on Wednesday. In an open meeting with congressional Democrats and Republicans, Trump embraced raising the age limit on purchasing certain weapons and suggested that law enforcement should be allowed to confiscate people’s guns before going through due process in a court. Joe Biggs, an Austin, Texas-based NRA member and chief executive of Rogue Right, a conservative news website, was among those unimpressed by the proposal. “That’s the stupidest fucking thing I’ve ever heard in my life. Hopefully he was just having a momentary brain fart, a lapse of judgment,” Biggs said.

He added: “Hopefully someone pulled him into the back and said: ‘You’ve just lost half your base by saying something that stupid.’” During the meeting Trump called for a “beautiful” bill which would expand background checks on gun purchases and restrict young people from purchasing certain weapons. But it was his suggestion that in some cases law enforcement should be allowed to “take the guns first, go through due process second” – that most alarmed gun owners on the right. “You spend your whole life on the right and you always think that Democrats are going to be the ones who take your guns,” Biggs said. “And then you hear President Trump say: ‘Oh we’re gonna take your guns and go through due process later.’” Biggs said he would vote for another candidate in the 2020 presidential election if Trump pushed through his reforms.

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Putin in his state of the union announced to his people that Russia can defend itself from any attacks, including nuclear. Western media twist his words; the Guardian claims that “Russia threatens arms race” and even Zero Hedge says :“..the era of the Western world attempting to prevent Russia’s expansion is over.”

That’s all straight from NATO’s playbook.

Putin On New US Nuclear Stance: If Attacked, Russia Will Use Nukes (RT)

The new US nuclear posture allows a nuclear strike in response to a conventional attack. President Vladimir Putin said Russia, if attacked with nuclear weapons, would not hesitate to respond in kind. The warning came during a state of the nation address delivered by the Russian president on Thursday, in which he presented a number of new advanced strategic weapon systems which, he said, would render all anti-missile capabilities that the US currently has powerless. Putin also mentioned the new American nuclear posture, which has relaxed some rules on when the US is prepared to use its nuclear weapons. “We are greatly concerned by some parts of the new nuclear posture, which reduces the benchmark for the use of nuclear weapons…

..Whatever soothing words one may try to use behind closed doors, we can read what was written. And it says that these weapons can be used in response to a conventional attack or even a cyber-threat,” he said. “Our nuclear doctrine says Russia reserves the right to use nuclear weapons only in response to a nuclear attack or an attack with other weapons of mass destruction against her or her allies, or a conventional attack against us that threatens the very existence of the state.” “It is my duty to state this: Any use of nuclear weapons against Russia or its allies, be it small-scale, medium-scale or any other scale, will be treated as a nuclear attack on our country. The response will be instant and with all the relevant consequences,” Putin warned.

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Xi as a stand up comedian.

China Bans Orwell’s Animal Farm And Letter ‘N’ Amid Anger At Xi (Ind.)

The Chinese government has banned George Orwell’s dystopian satirical novella Animal Farm and the letter ‘N’ in a wide-ranging online censorship crackdown. Experts believe the increased levels of suppression – which come just days after the Chinese Communist Party announced presidential term limits would be abolished – are a sign Xi Jinping hopes to become a dictator for life. The China Digital Times, a California-based site covering China, reports a list of terms excised from Chinese websites by government censors includes the letter ‘N’, Orwell’s novels Animal Farm and 1984, and the phrase ‘Xi Zedong’. The latter is a combination of President Xi and former chairman Mao Zedong’s names.

Search terms blocked on Sino Weibo, a microblogging site which is China’s equivalent of Twitter, include “disagree”, “personality cult”, “lifelong”, “immortality”, “emigrate”, and “shameless”. It was not immediately obvious why the ostensibly harmless letter ‘N’ had been banned, but some speculated it may either be being used or interpreted as a sign of dissent. [..] Facebook, Twitter and YouTube have long been blocked in the country and even Winnie the Pooh recently found himself subject to China’s latest internet crackdown. In July, references to the cartoon bear on Sina Weibo were removed after his image was compared to President Xi.

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Our car addiction is deeply rooted. We built our communities around them. Not around ourselves. That is a much bigger problem than what fuel a car uses to power a vehicle 10-20 times heavier than its driver, with a 10% fuel efficiency.

‘Cleanest In History’ Diesel Cars Still Pollute Far Above Legal Limits (Ind.)

Over half of diesel cars recently approved for sale in Europe are emitting pollutants far above current legal air pollution limits, despite being marketed as the “cleanest in history”. Analysis of emissions data from nearly 100 car models revealed many vehicles from the new “Euro 6” generation would not be allowed on the market if they were tested today. An investigation by Greenpeace found dozens of these high-polluting vehicles were approved for sale during a “monitoring period” in which there was no limit set on the amount of nitrogen oxide (NOx) they could emit on roads. Many of these vehicles have only gone on sale across Europe in the recent months. The news comes after a German court ruled cities can impose driving bans on certain diesel cars in an effort to deal with the country’s air pollution.

Such restrictions on diesel cars – including the clean air zones found in London and other UK cities – tend to focus on older, dirtier car models. However, Greenpeace campaigners emphasised that while newer Euro 6 models are described as “light years away from their older counterparts” many of them still have the capacity to emit high levels of pollutants. Following the so-called “dieselgate” scandal in 2015, which found VW had installed “cheat software” in its vehicles to fool lab emissions tests, there was a widespread push for tough new regulations. In the aftermath of the scandal, testing revealed diesel cars that met the latest “Euro 6” limits for NOx emissions in lab tests were massively exceeding those limits when driving on the road.

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Our old Oil Drum pal Robert. I’d be interested to see how fast and how sharp the shale numbers are expected to start falling.

US Breaks 47-Year-Old Monthly Oil Production Record (Robert Rapier)

In a recent post, I wrote that the U.S. would almost certainly set a new oil production record this year. I noted that the most recent data from the Energy Information Administration (EIA) showed that last November U.S. oil production exceeded 10 million barrels per day (BPD) for the first time since 1970. This week the EIA revised November’s oil production upward, which pushed it into the #1 spot for monthly production. The revision increased U.S. oil production in November to 10.057 million BPD, just edging out the previous record of 10.044 million BPD from November 1970. However, many new records should be set this year, as the EIA projects that oil production will reach 11 million BPD by year-end.

This would push the U.S. into first place among the world’s oil producers. But depending on how it is measured, the U.S. is already #1. The 2017 BP Statistical Review of World Energy ranks the U.S. #1 in oil production, but that’s because they include natural gas liquids (NGLs), which have surged in the U.S. along with natural gas production. The gains in U.S. oil production are being driven by production gains across tight oil plays in the Bakken and Eagle Ford, and especially the Permian Basin – where oil production is approaching a staggering 3 million BPD.

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Are they buying their own?

Bitcoin’s Plunge in Volume Stirs Questions About Its Popularity (BBG)

Earlier this year, when Bitcoin’s price fell by more than 60% from its record close, a less-noticed Bitcoin figure also plunged: the number of daily transactions. There are many explanations for the fall-off in trading, from software- to news-related. What’s less understood is why the level hasn’t recovered as Bitcoin’s price made a 50% comeback since Feb. 5. That’s left some investors wondering whether the cryptocurrency is waning in popularity. The average number of trades recorded daily has roughly dropped in half from the December highs and touched its lowest in two years last month, even as Bitcoin became a household name and roared back above $10,000.

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1) Why does it take a guy to make that case?

2) “$28 trillion would be added to the global economy by 2025” sounds like a male argument. If the only advantage of more women is that the same arguments are made by different voices, why bother?

Making the Business Case for Gender Equality (PS)

Around the world, gender bias is attracting renewed attention. Through protest marches and viral social-media campaigns, women everywhere are demanding an end to sexual harassment, abuse, femicide, and inequality. But, as successful as the #MeToo and #TimesUp movements have been in raising public awareness, the struggle for parity is far from over. Empowering women and girls is key to achieving all 17 of the United Nations Sustainable Development Goals by 2030. At the moment, however, gender bias remains a significant obstacle to global progress, and it is particularly acute in the workplace. Today, only 5% of S&P 500 companies are led by women, according to Catalyst, a non-profit CEO watchdog.

That dismal figure is all the more remarkable when one considers that 73% of global firms allegedly have equal-opportunity policies in place, according to a survey by the International Labour Organization (ILO). Moreover, while research shows a clear link between a company’s gender balance and its financial health, women occupy fewer than 20% of governing board seats in the world’s largest companies. Addressing such deficiencies is both an economic and a moral imperative. A 2015 report by the McKinsey Global Institute found that if women and men played an “identical role in labor markets,” $28 trillion would be added to the global economy by 2025. These global gains would be in addition to the benefits for individual companies.

Firms with greater gender equality are more innovative, generous, and profitable. But, at the current rate of female empowerment, it would take nearly 220 years to close the gender gap. The world cannot afford to wait that long; we need a new approach.

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The thrills of the just in time economy.

UK Risks Running Out Of Gas, Prices Soar (G.)

National Grid has warned that the UK would not have enough gas to meet public demand on Thursday, as temperatures plummeted and imports were affected by outages. But the government said households would not notice disruptions to their supply or any increase in energy bills because suppliers, including British Gas, bought energy further ahead. The energy minister Claire Perry said people should cook and use their heating as they would normally. But experts said there was a strong chance that industrial users could experience interruptions to their gas supply. Within-day wholesale gas prices soared 74% to 200p per therm after the formal deficit warning, which acts as a call to suppliers to bring forward more gas.

It is the first time such an alert has been issued since 2010. By lunchtime on Thursday the price had spiked even higher, hitting a high of 275p per therm at one point. National Grid’s forecast for the day initially showed a shortfall across the day of 49.5m cubic metres (mcm) below the country’s projected need of 395.7mcm, which would normally be around 300mcm at this time of year. The gas deficit warning aims to fill the gap, which has since narrowed to 16.5mcm. “We are in communication with industry partners and are closely monitoring the situation,” the company said.

Gas demand is now at a five-year high, according to the market watchers S&P Global Platts. Simon Wood, a gas analyst at the group, said: “There’s a strong chance you’ll see some interruptions for industrial users to balance the system.” Big energy users such as car manufacturers have supply contracts which can be interrupted in return for lower prices. The situation has been compounded by several supply outages, which can relate to very cold weather. There have been problems with a pipeline to the Netherlands, reductions in gas flows from Norway, and technical issues at facilities in the UK, including at the North Morecambe Barrow terminal.

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Gas shortage, food shortage. Self-sufficiency, anyone?

UK Food Crisis Looms Without Brexit Deal (BBG)

Brexit would lead to an unprecedented food shortage if the U.K. leaves the European Union without a deal, the CEO of the country’s second-biggest grocer said. “The impact of closing the borders for a few days to the free movement of food would result in a food crisis the likes of which we haven’t seen,” J Sainsbury CEO Mike Coupe said in an interview. “It’s inconceivable to me that there won’t be a solution found.” Tensions are simmering between London and Brussels, with U.K. Prime Minister Theresa May saying Wednesday that no one in her position could ever agree to the draft Brexit treaty published by the EU.

May is seeking to get the EU to sign on to a transition phase at a summit of leaders later this month, but Michel Barnier, the EU’s chief Brexit negotiator, warned Thursday that any such agreement could still unravel before Britain’s scheduled exit in March 2019. Almost half of the food eaten in the U.K. is imported. Trade barriers would be especially damaging to Britain’s fresh-food retailers, who rely heavily on the unencumbered movement of perishable goods throughout the EU. In 2016, the U.K. imported 22.4 billion pounds ($30.8 billion) worth of meat, fish, dairy products, fruit and vegetables, according to the Department for Environment, Food and Rural Affairs.

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Hey, don’t keep us from poisoning ourselves. It’s our god-given right.

Pesticides Put Bees At Risk, European Watchdog Confirms (CNBC)

Wild bees and honeybees are put at risk by three pesticides from a group known as neonicotinoids, Europe’s food safety watchdog said on Wednesday, confirming previous concerns that prompted an EU-wide ban on use of the chemicals. The European Food Safety Authority (EFSA) report, which covered wild bees and honeybees and included a systematic review of scientific evidence published since EFSA’s 2013 evaluation, is seen as crucial to whether the European moratorium on neonicotinoid use remains in place. The updated risk assessment found variations due to factors such as species of bee, exposure and specific pesticide, “but overall the risk to the three types of bees we have assessed is confirmed,” said Jose Tarazona, head of EFSA’s pesticides unit.

The European Union has since 2014 had a moratorium on use of neonicotinoids — made and sold by various companies including Bayer and Syngenta — after lab research pointed to potential risks for bees, which are crucial for pollinating crops. EU nations will discuss a European Commission proposal to ban three neonicotinoids next month in the Plant Animal Food and Feed Standing Committee. “This is strengthening the scientific basis for the Commission’s proposal to ban outdoor use of the three neonicotinoids,” a spokeswoman for the EU executive said.

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The whole concept is based on permafrost. Or was.

‘Doomsday’ Seed Vault Gets Makeover As Arctic Heats Up (AFP)

Designed to withstand a nuclear missile hit, the world’s biggest seed vault, nestled deep inside an Arctic mountain, is undergoing a makeover as rising temperatures melt the permafrost meant to protect it. Dubbed the “Noah’s Ark” of food crops, the Global Seed Vault is buried inside a former coal mine on Svalbard, a remote Arctic island in a Norwegian archipelago around 1,000 kilometres (650 miles) from the North Pole. Opened in 2008, the seed bank plays a key role in preserving the world’s genetic diversity: it is home to more than a million varieties of seeds, offering a safety net in case of natural catastrophe, war, climate change, disease or manmade disasters.

But warmer temperatures have disrupted the environment around the vault. In an unexpected development, the permafrost, which was meant to help keep the temperature inside the vault at a constant -18 Celsius (-0.4 Fahrenheit), melted in 2016. “The summer season was (warmer) than expected. We had water intrusions in the (access) tunnel that could be related to climate change,” Asmund Asdal, one of the seed bank’s coordinators, told AFP. The Arctic is warming twice as fast as the rest of the planet, scientific studies show. And while Europe is at the moment experiencing a subzero cold spell, the North Pole recently registered above-zero temperatures, 30 degrees higher than normal.

Scientists say warm spells like this are occurring with increasing frequency in the Arctic. Norway recently announced it would contribute 100 million kroner (10 million euros, $12.5 million) to improve the repository in a bid to protect the precious seeds. “We want to be sure that the seed vault will be cold throughout the whole year, even if the temperature continues to increase in Svalbard,” Norway’s Agriculture Minister Jon Georg Dale told AFP.

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Nov 092017
 
 November 9, 2017  Posted by at 9:28 am Finance Tagged with: , , , , , , , ,  


Henri Cartier Bresson Madrid 1933

 

How I Sold Out To The Putin-Soros-Murdoch Conspiracy (Steve Keen)
Bill Gates, Jeff Bezos and Warren Buffett Richer Than Poorest Half Of US (G.)
The Middle East Is On The Verge Of New War (SF)
With Saudi Princes Dead, Arrested, King Fahd’s Grandson Flees To… Iran (IT)
Prince Alwaleed Sold His Shares In 21st Century Fox (Abc.au)
It Begins: Pension Bailout Bill To Be Introduced This Week (ZH)
How The Netherlands Became A Tax Haven (SüdD)
FEMA Offers To Airlift Puerto Ricans To Mainland US (CBS)
Catalan Parliament Speaker, 5 MPs Appear In Court On Sedition Charge (G.)
EU Gives Greece Foreclosure Ultimatum (K.)
The Plot Against Greece (K)
UK Will Back Total Ban On Bee-Harming Pesticides (G.)

 

 

“How I sold out to the Putin-Soros-Murdoch conspiracy to destroy Western civilization”

Steve has a sense of humor alright. But the serious note here is that RT is the only place where he can get a chance to discuss the issues he sees as real. The BBC, for one, is not interested.

How I Sold Out To The Putin-Soros-Murdoch Conspiracy (Steve Keen)

I was delighted to find myself in the Top Ten (alright; top 15) of the European Values list of 2,326 “Useful Idiots” appearing regularly on RT shows, and thus legitimizing Vladimir Putin’s attempt to destroy Western civilization as we know it. Why delighted? Because it completes the set of conspiracies to which I can now be accused of belonging. They include: • The Putin Conspiracy, since I am regularly interviewed on Russia Today (and even worse, I now get paid to write for RT!); • The Soros Conspiracy, since my research, has been funded by the Institute for New Economic Thinking (INET) which he established; • The Murdoch Conspiracy, since I appear every week on Sky News Australia with Carson Scott, and I used to get paid by News Ltd to write a weekly column; and • The Alt-Right Conspiracy, since I’ve signed a book contract with Vox Day’s publishing firm Castalia House.

So not only am I a “useful idiot,” I’m a useful idiot for four contradictory conspiracies. Does that make me a double-double agent? No, it makes me someone who’s quadruple pissed off with people who attempt to understand the world from the perspective of conspiracy theories in the first place. I don’t deny the existence of conspiracies: in fact, far from it, because they’re everywhere. What I do deny is the implicit assumption that the conspirators understand the system they’re attempting to manipulate. For example, I’ve heard plenty of conspiracy theorists assert that the 2008 financial crisis was caused by the Federal Reserve/George Soros (Hi George!)/Hedge Funds/Academic-Economists-Who-Peddle-The-Efficient-Markets-Hypothesis, and “they” profited from it.

This implies “they” knew what “they” were doing. Pardon me, but I’ve met many of these protagonists—and in the case of academic economists, I’ve worked with them for 30 years. “They” don’t have a clue (except George). Even those that were actively conspiring—like many hedge funds during the subprime bubble were doing so on the basis of utterly deluded theories about how the system they were trying to game actually worked. Where apparent conspiracies did work, like Soros’s punt against the British Pound decades ago, they did so because a CSP (Clever Sinister Person) bet against the conventional wisdom of others who thought they understood the system (and did not), rather than because the CSP set up the whole thing in the first place.

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“..the “billionaire class” continues to “pull apart from the rest of us” at the fastest rate ever recorded..”

Bill Gates, Jeff Bezos and Warren Buffett Richer Than Poorest Half Of US (G.)

The three richest people in the US – Bill Gates, Jeff Bezos and Warren Buffett – own as much wealth as the bottom half of the US population, or 160 million people. Analysis of the wealth of America’s richest people found that Gates, Bezos and Buffett were sitting on a combined $248.5bn (£190bn) fortune. The Institute for Policy Studies said the growing gap between rich and poor had created a “moral crisis”. In a report, the Billionaire Bonanza, the thinktank said Donald Trump’s tax change proposals would “exacerbate existing wealth disparities” as 80% of tax benefits would end up going to the wealthiest 1% of households. “Wealth inequality is on the rise,” said Chuck Collins, an economist and co-author of the report. “Now is the time for actions that reduce inequality, not tax cuts for the very wealthy.”

The study found that the billionaires included in Forbes magazine’s list of the 400 richest people in the US were worth a combined $2.68tn – more than the GDP of the UK. “Our wealthiest 400 now have more wealth combined than the bottom 64% of the US population, an estimated 80m households or 204 million people,” the report says. “That’s more people than the population of Canada and Mexico combined.” The report says the “billionaire class” continues to “pull apart from the rest of us” at the fastest rate ever recorded. “We have not witnessed such extreme levels of concentrated wealth and power since the first gilded age a century ago.” Forbes celebrated 2017 as “another record year for the wealthiest people in America”, as “the price of admission to the country’s most exclusive club jumped nearly 18% to $2bn”.

That was a tenfold increase on the amount of money needed to enter the list when it first started in 1982. Josh Hoxie, another co-author of the thinktank report, said: “So much money concentrating in so few hands while so many people struggle is not just bad economics, it’s a moral crisis.” The report says many Americans are joining an “emerging anti-inequality movement”. “A century ago, a similar anti-inequality upsurge took on America’s vastly unequal distribution of income and wealth and, over the course of little more than a generation, fashioned a much more equal America,” it says.

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“.. the kingdom’s leadership is desperately in need of an enemy..”

The Middle East Is On The Verge Of New War (SF)

A missile gets fired on the Saudi capital. A missile, which was allegedly built in Iran and smuggled to Yemen, just to be fired at Saudi Arabia. According to initial reports, two Saudi princes died back to back in 24 hours: one in an “accidental” helicopter crash, the other during a firefight that broke out while security forces were trying to arrest him. On November 7, Saudi Arabia’s information ministry spokesman said that “Prince Abdulaziz is alive and well”. However, the prince could not be independently reached for comment by the media. Other high-ranking members of the establishment and the royal family – the two tend to be one and the same in Saudi Arabia – get arrested on charges of corruption, with their bank accounts frozen. Lebanese Prime Minister Saad Hariri unexpectedly resigns after he was summoned to Riyadh by his Saudi-backers.

Meanwhile, Saudi Arabia accused Iran of conducting acts of “direct military aggression” and accused Lebanon of “declaring war” on Riyadh by allowing Hezbollah “aggression” against the kingdom. All this happened in a span of just a few days. With ever-growing security challenges and problems at the regional level, the crisis that took hold of Saudi Arabia does not seem to be slowing down. One contributing factor to the ongoing crisis is a major split in the Saudi royal family: the power struggle that resulted in the former crown prince being deposed and replaced with a new one, a move that shook things up quite a bit inside the country. The echo of this can be seen in the current “anti-corruption” persecution, enforced by the current Crown Prince Mohammad bin Salman.

Outside the country, several key foreign policy projects failed: the effectiveness of the Yemen intervention can be judged by the fact that it resulted in a missile being fired at Riyadh. Bashar al-Assad is still in power in Syria. The attempts to scare Qatar into submission backfired, as Qatar has been getting more and more friendly with Russia, Turkey and Iran. Iran is gaining more and more influence in the region, while the Saudis seem to be losing it, hence they are trying to compensate for their losses by participating in proxy wars elsewhere. The Saudis also tried to flex their diplomatic muscle. King Salman even visited Moscow, where the two sides exchanged promises with no guarantees that these will ever be fulfilled. This also backfired, as some considered it a demonstration of weakness or an attempt to make peace by making concessions.

Add economic struggles to this series of failures, and one can see why the King’s and his Crown Prince’s position seem less and less stable by the minute. The situation apparently seemed so dire, that in order to keep everything afloat active persecution seemed the only possible way to keep the King and his successor in power. The “anti-corruption” campaign is just an excuse: the corruption has always been high in Saudi Arabia, and no one batted an eye before now. These are temporary measures. Persecution can hardly solve foreign and internal matters, and it will not lead to a solution of the problems. Right now, the kingdom’s leadership is desperately in need of an enemy to unite the population and draw their attention away from the chaotic events that unfolding in the country.

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The one that got away.

With Saudi Princes Dead, Arrested, King Fahd’s Grandson Flees To… Iran (IT)

The Saudi royal family – the House of Saud – is throwing up one intrigue after another. Hours after the reported death of Prince Abdul Aziz bin Fahd, his nephew and son of late King Fahd’s eldest surviving son, Prince Turki bin Mohamed bin Fahd has fled the country. His destination, according to speculation among those who are watching the situation closely, is, wait for it, Iran.If this is true, this may put new strain on Tehran and Riyadh, already at loggerheads for dominance in the restive Middle East region, where Saudi Arabia and Iran are fighting, what analysts term, a proxy war in Yemen. What makes Prince Turki bin Mohamed bin Fahd’s reported flight to Iran, where he is said to have sought asylum, interesting, apart from his destination, is that it comes at a time when Saudi aviation authorities are said to have been told not to let any of the oil-rich kingdom’s many royals fly out of the country.

Of course,with the outflow of information from Saudi Arabia particularly restricted right now, all reports of developments on the region must be taken with a pinch of salt. Turki bin Mohamed, is the son of Muhammad bin Fahd Al Saud, the second-oldest son of late Saudi King Fahd bin Abdulaziz Al Saud, and is also the grandnephew of the current King Salman bin Abdulaziz Al Saud This is the same King Salman whose son Crown Prince Mohammad Bin Salman (known informally as MBS) is believed to be have orchestrated what many are seeing as a coup by sideling prominent Saudi royals and taking decisions that could win over the country’s liberal quarters.

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Murdoch’s powers challenged.

Prince Alwaleed Sold His Shares In 21st Century Fox (Abc.au)

One of Rupert Murdoch’s key business allies, who was arrested in last week’s corruption crackdown in Saudi Arabia, has quietly sold off his $1.5 billion stake in 21st Century Fox. The business relationship between Mr Murdoch and Prince Alwaleed bin Talal is now under new scrutiny, with Mr Murdoch’s control over his family-controlled business empire looking more uncertain. “This is very big news,” Murdoch watcher and shareholder activist Stephen Mayne said after the company confirmed Prince Alwaleed had offloaded his shareholdings in Fox and News Corporation. “He’s been the number one backer of Murdoch family control of the public companies for the last 20 years.”

One of the world’s richest men, the Prince is one of dozens of royal family members, officials and business leaders arrested in Saudi Arabia in recent days. With his bank accounts and other assets likely to have been frozen by Saudi authorities, his detention had raised questions about who had control over his almost 40 million Fox shares. It now appears he sold those shares with little fanfare. It is unclear when the shares were sold. But a Bloomberg report on the company’s shareholders shows Prince Alwaleed’s stake fell to zero during the current financial quarter.

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Impossible to overestimate what a disaster this is going to be. We need a whole new economics to confront it.

It Begins: Pension Bailout Bill To Be Introduced This Week (ZH)

Over the past year we have provided extensive coverage of what will likely be the biggest, most politically charged, and most significant financial crisis facing the aging U.S. population: a multi-trillion pension storm, which was recently dubbed “one of the most heated battles of a lifetime” by John Mauldin. The reason, in a nutshell, why the US public pension problem has stumped so many professionals is simple: for lack of a better word, it is an unsustainable Ponzi scheme, in which satisfying accrued pension and retirement obligations requires not only a constant inflow of new money, but also fixed income returns, typically in the 6%+ range, which are virtually unfeasible in a world where global debt/GDP is in the 300%+ range. Which is why we, and many others, have long speculated that it is only a matter of time before the matter receives political attention, and ultimately, a taxpayer bailout.

That moment may be imminent. According to Pensions and Investments magazine, Democratic Senator Sherrod Brown from Ohio plans to introduce legislation that would allow struggling multiemployer pension funds to borrow from the U.S. Treasury to remain solvent. The bill, which is co-sponsored by another Democrat, Rep. Tim Ryan, also of Ohio, could be introduced as soon as this week or shortly after. It would create a new office within the Treasury Department called the Pension Rehabilitation Administration. The funds would come from the sale of Treasury-issued bonds to financial institutions. The pension funds could borrow for 30 years at low interest rates. The one, and painfully amusing, restriction for borrowers is “they could not make risky investments”, which of course will be promptly circumvented in hopes of generating outsized returns and repaying the Treasury’s “bailout” loan, ultimately leading to massive losses on what is effectively a taxpayer-funded pension bailout.

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Amoral.

How The Netherlands Became A Tax Haven (SüdD)

Barack Obama had only been in office for a few weeks when he first tried to take on tax havens. The freshly inaugurated U.S. president wanted greater transparency, harsher penalties and more justice. Obama, who had helped draft anti-tax haven legislation – to date, still not passed – as an Illinois senator, called out many tax havens by name. There were the usual suspects: Bermuda, the Cayman Islands and Switzerland. But there was also, to the surprise of many, the Netherlands. A founding member of the European Union, quaint little Holland has for years been the most important tax haven for American corporations. This includes large multinationals such as the coffee chain Starbucks, the delivery company FedEx, the pharmaceuticals giant Pfizer and – as the Paradise Papers have revealed – the sporting apparel manufacturer Nike and the electric carmaker Tesla.

Every year, other countries lose out on billions of euros in taxes for the apparent reason that the Netherlands has bent to the will of influential lobbyists while neighboring EU member states have stood idly by and done nothing. Experts accuse the country of providing illegal state subsidies, and the European Commission is alarmed, but the Dutch tax loophole will nevertheless remain open for years to come. One of the most important days for the Netherlands as a tax haven was July 6, 2005. That was the day that Paragraph 4 of Article 24 – the so-called anti-abuse clause – was struck from the U.S. tax convention with the Netherlands, effectively legalizing the abuse of Dutch corporate law. The Netherlands’ tax loophole revolves around a business structure known in Dutch as a commanditaire vennootschap, or CV, the Dutch version of a limited partnership. In a CV, just like in a limited partnership, two or more people can join together for business purposes.

One of the partners, namely the limited partner, is only liable for a fixed amount, while the other, the general partner, is fully liable. In contrast to Germany, CVs are not regarded as taxable entities in the Netherlands, but solely as partnerships. In the eyes of the Dutch tax authorities, it’s not the CV itself that’s responsible for paying taxes, but the individual partners. This is where things get interesting, especially for American companies. By founding a CV in the Netherlands plus one or two Dutch subsidiaries, U.S. firms reach “the Holy Grail of tax avoidance.” That’s how Senator Carl Levin once put it while still in office, describing the complex networks of companies that allow their owners to completely avoid taxes.

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Time for a plan?!

FEMA Offers To Airlift Puerto Ricans To Mainland US (CBS)

The Federal Emergency Management Agency (FEMA) is offering to airlift victims of Hurricane Maria in Puerto Rico to the U.S. mainland to reach temporary housing – a complex operation that would be the first of its kind for the agency. Under FEMA’s Transitional Shelter Assistance (TSA) program, displaced residents and families who are still living in shelters on the island can opt to relocate to housing in Florida and New York. The agency is working with the governors in both states to work through logistical issues for families interested in participating. Mike Byrne, a federal coordinating officer for FEMA, said the program is the first time the agency has attempted what it calls an “air bridge,” or a relief operation requiring the transportation of individuals from a disaster area.

In most disasters, FEMA pays for displaced residents to stay in hotels under the TSA program. In Puerto Rico, the hotels are filled to capacity, so FEMA is turning to the mainland and working with states to find accommodations. “A thousand miles adds a whole level of complexity to this,” Byrne said. Byrne says agency teams are traveling to shelters on the island to ask longtime occupants about their housing options going forward, telling them about FEMA’s offer. He said the level of interest in the program has so far been low, with only about 30 out of 300 families interviewed on Tuesday expressing interest in participating. “People really don’t want to leave their homes,” Byrne said. “We want to give them every opportunity we can to be able to stay here, whether it’s providing financial assistance or repairing their homes. So we are going to work hard on those things so people don’t have to leave.”

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And still no-one has come forward with an answer. A third party will have to, the two sides can’t do it be themselves.

Catalan Parliament Speaker, 5 MPs Appear In Court On Sedition Charge (G.)

The speaker of the Catalan parliament and five of its members appeared before Spain’s supreme court in Madrid on Thursday to answer charges of rebellion and sedition over their roles in staging a banned referendum on Catalonia’s independence last month. The court will decide whether to remand Carme Forcadell and the five MPs in custody while the investigation continues or release them under certain conditions. Eight former members of the Catalan government and the leaders of the two main grassroots pro-independence groups are already in custody awaiting trial on sedition charges for their parts in the 1 October referendum, which Spanish courts ruled illegal.

The region’s deposed president, Carles Puigdemont, and four of his former cabinet ministers went into self-imposed exile in Belgium last week after Madrid responded to Catalonia’s declaration of independence by firing his administration, dissolving the parliament and calling regional elections for December. Spain’s high court issued an arrest warrant for for all five last week on sedition and rebellion charges. Forcadell and the five MPs were summoned last week to the supreme court, which handles cases of people who enjoy parliamentary immunity, but it gave them more time to prepare their defences. They are suspected of having followed a “concerted strategy to declare independence” before the official declaration of the Catalan parliament on 27 October, which Spain’s constitutional court annulled on Wednesday.

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The narrative is that rich parties organize protests. But there are certainly people simply wanting to prevent people being thrown out into the streets.

EU Gives Greece Foreclosure Ultimatum (K.)

European officials have given the government an ultimatum to proceed with electronic foreclosures on homes later in the month or else the country’s third bailout review will not be concluded. The warning came despite the recent positive messages emanating from Brussels and Washington that Greece is making progress in the review and is on course to reach an agreement with creditors on a technical level by the end of the year. But lenders appear adamant that the review’s conclusion will be jeopardized if foreclosures do not take place as scheduled and if notaries, who have borne the brunt of attacks by anti-establishment groups and protesters, are not protected. “If the Greek government has the will to protect notaries it will find the way to achieve this,” a source told Kathimerini, adding that “if they want to stop the violence they can do it.”

The sources told Kathimerini they expect to see foreclosures beginning on November 27 “at all banks and throughout the country and not just isolated cases.” Auditors have repeatedly made it clear that the resumption of foreclosures, which have dragged during the crisis years due to strikes by lawyers and notaries and more recently due to anti-austerity protesters, is a prerequisite for the successful conclusion of Greece’s current bailout review. The ultimatum, however, appears to have motivated the government to take action so that foreclosures resume and notaries are protected as sources said that all necessary measures will be taken to “ensure strategic debt defaulters do not hide behind the attacks against notaries.”

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The plot is Greeks themselves?!

The Plot Against Greece (K.)

If some power wanted to undermine all that is good in a country, to waste its natural beauty and people, to damage its past, present and future, it need look no further than Greece. Here it would see the result of a long-term conspiracy against the coue beginning of the modern Greek state, the Greeks were under foreign tutelage. In the past few decades, though, as a member of the European Union, we had begun to believe that we could function as an independent country, without patrons. And suddentry. Fortunately, the Greeks are fighters, they resist as much as they can. That is why the country is still beautiful, with talented, generous people, with bright children capable of competing with the best in the world. The “enemy,” though, holds the people hostage, keeping them from reaching their full potential, from making the country what it could be.

From thnly, bankrupt, we found ourselves under strict supervision again. It is understandable, then, that we blame foreigners for all our ills – those powers that want to suck us dry of our wealth, to keep us weak and under control. Because it is certain that we are not the ones who benefit from continued political and economic insecurity, from unpredictable and excessive taxation, disdain for investments, dysfunctional justice, a weakened education system. The only beneficiaries are the tricksters who know how to exploit the situation – and other countries. When we have almost no investments and the country’s strongest selling point as a tourist destination is its stability in an unstable region, it is clear that we are not creating added value, we are not establishing foundations for the future. Investments go elsewhere and Greece keeps falling behind the competition.

In the World Bank’s latest Doing Business survey of 190 countries, Greece was ranked 67th, from 61st last year (and 60th and 58th before that). It is incredible that after seven years of crisis and three bailout agreements it should still be so difficult to set up a business in Greece. And yet, there is stiff resistance to improving the situation: Taxes and social security contributions are way above the European Union average; there are long delays in the justice system, conflicting and confusing laws and regulations, along with a public administration determined to obstruct whatever it can, encourage corruption and send businesses elsewhere.

Other countries gain even more when thousands of Greek doctors and others with special skills move away in search of a better life, taking with them the money invested in their education. So why should we not believe that it is in our foreign partners’ interests to keep Greece at this level? In the past, they lent us money, now they loot our human resources (and later perhaps our still-to-be-discovered fossil fuels, according to a long-running conspiracy theory). Our partners did not stop lending us money, but now it comes not from their banks but from their taxpayers, and with strict conditions.

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Well well. Something good comes out of that mess of a government.

UK Will Back Total Ban On Bee-Harming Pesticides (G.)

A total ban on insect-harming pesticides in fields across Europe will be backed by the UK, environment secretary Michael Gove has revealed. The decision reverses the government’s previous position and is justified by recent new evidence showing neonicotinoids have contaminated the whole landscape and cause damage to colonies of bees. It also follows the revelation that 75% of all flying insects have disappeared in Germany and probably much further afield, a discovery Gove said had shocked him. Neonicotinoids are the world’s most widely used insecticide but in 2013 the European Union banned their use on flowering crops, although the UK was among the nations opposing the ban. The European Commission now wants a total ban on their use outside of greenhouses, with a vote expected in December, and the UK’s new position makes it very likely to pass.

“The weight of evidence now shows the risks neonicotinoids pose to our environment, particularly to the bees and other pollinators which play such a key part in our £100bn food industry, is greater than previously understood,” said Gove. “I believe this justifies further restrictions on their use. We cannot afford to put our pollinator populations at risk.” In an article for the Guardian, Gove said: “As is always the case, a deteriorating environment is ultimately bad economic news as well.” He said pollinators boost the yield and quality of UK crops by £400m-£680m every year and said, for example, gala apple growers are now having to spend £5.7m a year to do replace the work of lost natural pollinators.

Gove said the evidence of neonicotinoids’ harm to pollinators has grown stronger since 2013, including a landmark field trial published in July that showed neonicotinoids damage bee populations, not just individual insects, and a global analysis of honey revealing worldwide contamination by the insecticides. [..] Gove’s decision has delighted campaigners and scientists who have long argued that heavy pesticide use, along with the destruction of habitat and disease, are having a devastating impact on insects. “Michael Gove is to be congratulated for listening to the experts on this issue and backing tougher restrictions,” said Friends of the Earth’s chief executive Craig Bennett. “But lessons also need to be learned – we now need to move away from chemical-intensive farming and instead boost support for less damaging ways of tackling persistent weeds and pests.

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Aug 022017
 
 August 2, 2017  Posted by at 9:04 am Finance Tagged with: , , , , , , , , ,  


Stanley Kubrick Men’s fashion show, New York 1948

 

New Rule Makes It Easier To Get A Mortgage With Student Loan Debt (F.)
US Auto Market Slump Persists (BBG)
US Plans Trade Measures Against China (WSJ)
US Begins Russia Drawdown After Kremlin Retaliates For Sanctions (R.)
Former Obama Aide Rhodes A Person Of Interest In Unmasking Investigation (C.)
For Sale: Two Half-Finished Nuclear Reactors -Never Used- (BBG)
Nissan Runs One Of ‘Nastiest Anti-Union Campaigns’ In Modern US History (G.)
Monsanto’s Sway Over Research Is Seen in Disclosed Emails (NYT)
Pesticide ‘Drifting’ Wreaks Havoc Across US Crops (BBG)
Bees Are Bouncing Back From Colony Collapse Disorder – A Little (BBG)
8 Migrants Dead Off Libya, 500 Rescued As Italy Prepares Naval Mission (AFP)
EasyJet Passengers Left High And Dry In Greece Due to Mating Turtles (G.)

 

 

Desperately mining for a new generation of greater fools. Courtesy of government-owned Fannie Mae. What a world.

New Rule Makes It Easier To Get A Mortgage With Student Loan Debt (F.)

For millions of Americans drowning in student loan debt, the prospect of getting a mortgage might seem out of reach. Last week, Fannie Mae changed underwriting rules that could make it much easier for people with student loan debt to qualify for a mortgage. The new rule impacts people with federal student loan debt who are currently on an income-driven repayment program. An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based upon your income and family size. Depending upon the plan, your monthly payment could be capped as low as 10% of your discretionary income. And if your discretionary income is low enough, your monthly payment could be as low as $0.

In order to qualify for a mortgage, a borrower needs to meet certain debt-to-income (DTI) requirements. That seems simple enough. However, there was confusion regarding federal student loan debt on an income-driven repayment program. When calculating a debt burden, should the underwriter include the standard student loan payment, the reduced payment, or something in between? The new statement from Fannie Mae makes it clear: the reduced payment can be used, even when the payment is $0. According to Fannie Mae, “if the lender obtains documentation to evidence the actual monthly payment is $0, the lender may qualify the borrower with the $0 payment as long as the $0 payment is associated with an income-driven repayment plan.”

This is important, because the payment calculation for a student loan (10% of the discretionary income) is different from the DTI requirement of a mortgage. Many Americans could find it easier to qualify for a mortgage while in student loan debt. Michigan-based mortgage broker Cassandra Evers told MagnifyMoney that the changes “allow a lot more borrowers to qualify for a home.” Previously, there was a lot of confusion among borrowers, lenders, and brokers, Evers said. “[The rules have] changed at least five or six times in the last five years.”

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“You can’t jawbone the economy..”

US Auto Market Slump Persists (BBG)

Here’s a bad sign for the U.S. economy: Auto sales just fell the most since August 2010, a year after the federal government’s “Cash for Clunkers” program to stimulate demand came to an end. Sales at General Motors plunged 15% in its home market in July, the biggest drop in more than a year. Its Detroit rivals didn’t fare much better: Ford reported its biggest sales decline since October and Fiat Chrysler had its second worst tumble this year. The disappointing showing underscores how Detroit has been struggling to live up to President Donald Trump’s prediction that it would become “the car capital of the world again.” The hometown automakers are instead laying off U.S. workers, particularly those who build passenger cars that have fallen out of favor with American consumers.

A demand slump has rendered spending on vehicles and parts a drag on U.S. economic growth, after years of contributing to expansion. “You can’t jawbone the economy,” said Diane Swonk, CEO and founder of DS Economics. “The auto industry was stronger than the rest of the economy for a while because they were giving credit to people who couldn’t pay loans. Sales crested sooner and now they are paying the price.” The traditional U.S. automakers each missed projections for declines that analysts gave in a Bloomberg News survey. While Nissan and Honda both beat projections, only Toyota posted a gain. Industrywide deliveries fell 7%, the steepest drop since the anniversary of “Cash for Clunkers,” a program that inflated U.S. sales in August 2009 as buyers traded in for more fuel-efficient wheels. The annualized pace of light-vehicle sales, adjusted for seasonal trends, slowed to 16.7 million in July, according to Autodata Corp., from 17.8 million a year earlier.

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China is not liking this.

US Plans Trade Measures Against China (WSJ)

The Trump administration is planning trade measures to force Beijing to crack down on intellectual-property theft and ease requirements that American companies share advanced technologies to gain entry to the Chinese market. The administration is considering invoking a little-used provision of U.S. trade law to investigate whether China’s intellectual-property policies constitute “unfair trade practices,” according to people familiar with the matter. That would pave the way for the U.S. to impose sanctions on Chinese exporters or to further restrict the transfer of advanced technology to Chinese firms or to U.S.-China joint ventures. American business frustration with Chinese trade and market-access practices has mounted in recent years, with U.S. business groups urging the government to take a tougher trade line with China.

Many organizations have complained that the Trump administration hasn’t pushed hard enough in areas like intellectual property, as it has focused more on Chinese manufacturing and China’s $347 billion trade surplus with the U.S. last year. That discontent has intensified as China’s economy continued to expand and its computer and software sectors became bigger competitors internationally. Western firms fear China will use the regulations to bar foreign investments in areas that Beijing targets for investment, including semiconductors, advanced-machine tools and artificial intelligence. One big question hanging over the White House review is whether the administration pursues any complaint through the World Trade Organization, or whether it chooses to impose penalties on its own without first seeking permission from the international body, which some Trump advisers have argued is incapable of dealing with China’s trade practices.

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Has Trump even signed the new sanctions yet?

US Begins Russia Drawdown After Kremlin Retaliates For Sanctions (R.)

The United States began removing furniture and equipment from a diplomatic property in Moscow on Tuesday in the first sign of compliance with a Kremlin order to slash its presence in Russia as retaliation for new U.S. sanctions. President Vladimir Putin has ordered the United States to cut around 60% of its diplomatic staff in Russia by Sept. 1, and said Moscow will seize two U.S. diplomatic properties in response to sanctions approved by Congress last week. The White House has said U.S. President Donald Trump will sign the sanctions bill, meant as a response to alleged Russian meddling in the 2016 U.S. presidential election and to further punish Moscow for its 2014 annexation of Crimea from Ukraine.

On Tuesday, removal men began dismantling play equipment and barbecues at a U.S.-owned dacha (country villa) on the outskirts of Moscow, after being refused access the day before, according to a Reuters journalist at the scene. The dacha, which is being confiscated along with a U.S. warehouse in the south of the Russian capital, was used by U.S. diplomatic staff at the weekends and to host parties for students, journalists and other diplomats. [..] The ultimatum issued by the Russian leader is a display to voters at home that he is prepared to stand up to Washington – but is also carefully calibrated to avoid directly affecting the U.S. investment he needs, or burning his bridges with Trump. One person at the embassy, who spoke on condition of anonymity because they are not authorized to talk to the media, said staff there were feeling depressed and despondent as they came to terms with the Kremlin’s order. “The mood in the office is very pessimistic,” the person said. “Everyone is just loitering, or sitting on job websites looking for a new job.”

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Strange things were taking place.

Former Obama Aide Rhodes A Person Of Interest In Unmasking Investigation (C.)

Former Obama White House National Security Adviser Ben Rhodes is now an emerging as a person of interest in the House Intelligence Committee’s unmasking investigation, according to a letter sent Tuesday by the committee to the National Security Agency (NSA). This adds Rhodes to the growing list of top Obama government officials who may have improperly unmasked Americans in communications intercepted overseas by the NSA, Circa has confirmed. The House Intelligence Committee Chairman Devin Nunes, R-CA, sent the letter to the National Security Agency requesting the number of unmaskings made by Rhodes from Jan. 1, 2016 to Jan. 20, 2017, according to congressional sources who spoke with Circa.

Rhodes, who worked closely with former National Security Adviser Susan Rice and was a former deputy national security adviser for strategic communications for President Obama, became a focus of the committee during its review of classified information to assess whether laws were broken regarding NSA intercepted communications of President Trump, members of his administration and other Americans before and after the election, according to congressional officials. The committee is requesting that the NSA deliver the information on Rhodes by August, 21. Former U.S. Ambassador to the United Nations Samantha Power, Rice and former CIA Director John Brennan have all been named in the House Intelligence Committee’s investigation into the unmasking of Americans.

A letter sent last week from Nunes to Dan Coats, the director of National Intelligence, suggested that top Obama aides made hundreds of unmasking requests during the 2016 presidential elections. The story, which was first reported by The Hill last week, stated that the requests were made without specific justifications as to why the unmasking was necessary. Rice and Brennan have confirmed they sought the unredacted names of Americans in NSA-sourced intelligence reports but insisted their requests were routine parts of their work and had no nefarious intentions. Power also has legal authority to unmask officials, though the practice has not reportedly been common for someone in her position. Rhodes also had legal authority to unmask Americans in NSA-source intelligence reports. But intelligence and congressional sources question the extent of the unmasking.

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Testament to insanity and waste.

For Sale: Two Half-Finished Nuclear Reactors -Never Used- (BBG)

Looking to buy two half-finished nuclear reactors? It may be your lucky day. U.S. utility owner Scana Corp. dropped a plan to build two reactors at the V.C. Summer power plant in South Carolina on Monday after the projected total costs exceeded $20 billion. The cancelation of the project is another blow to the much-hyped (and thus far non-existent) nuclear renaissance in the U.S. As cheap natural gas squeezes the margins of nuclear generators, there’s only one company currently building reactors in the country — Southern Co., at its Vogtle plant in Georgia. So what’s a utility to do with two unfinished nukes laying around in South Carolina? Scana CEO Kevin Marsh said in a call with analysts that he wants to keep the equipment in operating condition in case someone in China, India or the U.K. wants to buy it.

A sale like that is easier said than done. “The Chinese are developing a competitive product, the Brits are in trouble with their nuclear projects and the Indians want to develop their own supply chain,” said Chris Gadomski, a nuclear industry analyst for Bloomberg New Energy Finance. It’s more likely the South Carolina project is “mothballed,” he said. Reactors have found new buyers and new life in the past. In 2016, the Tennessee Valley Authority turned on its Watts Bar 2 reactor after work had been suspended in 1985. Franklin L. Haney bought an unfinished, decades-old nuclear plant in northern Alabama at an auction last November for $111 million. The Bellefonte plant came with two partially built nuclear reactors, one that’s about 55% complete and another about 35% finished.

Haney still has to get the mothballed station into working order, find customers for its power and qualify for a federal nuclear production tax credit. Perhaps a similar fate awaits the V.C. Summer plant. “It makes more sense to let them sit in place, maintain them, and see if they can be revisited,” Gadomski said.

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What, there are still unions?

Nissan Runs One Of ‘Nastiest Anti-Union Campaigns’ In Modern US History (G.)

Days before a potentially historic union vote at the Nissan plant in Canton, Mississippi, the car company has been accused of running one of the “nastiest anti-union campaigns in the modern history of the American labour movement”. The vote, a fiercely contested effort by the United Auto Workers (UAW) union to represent a foreign automaker’s US plant, is planned for Thursday and Friday this week. It comes as US unions are hopeful they can overturn a series of defeats as they seek to build membership in southern states, where manufacturers have moved to take advantage of lower wages and non-union workforces. In the closing days of the campaign, which has attracted support from the former presidential hopeful Bernie Sanders, UAW officials and their allies have become increasingly confident of victory even as managers have pressured workers to vote no.

“People are rallying,” says Frank Figgers, co-chair of the Mississippi Alliance for Fairness at Nissan. The UAW is undertaking an extensive door-to-door campaign to visit workers in their homes to discuss the union. The UAW has shipped in staff from all over the country to help in the effort. Other unions from around the south have shipped in organizers from across the country to assist in the outreach to the plant’s nearly 4,000 workers. Nissan has responded with fierce opposition. The company has blitzed local TV with anti-union ads and stands accused of both threatening and bribing workers to vote no. It requires workers to regularly attend anti-union roundtable group meetings as well as one-on-one meetings with their direct supervisors, some of whom have worn “vote no” T-shirts to work. The Republican governor, Phil Bryant, has also come out hard for Nissan. “If you want to take away your job, if you want to end manufacturing as we know it in Mississippi, just start expanding unions,” Bryant said last week.

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Evil incorporated.

Monsanto’s Sway Over Research Is Seen in Disclosed Emails (NYT)

Documents released Tuesday in a lawsuit against Monsanto raised new questions about the company’s efforts to influence the news media and scientific research and revealed internal debate over the safety of its highest-profile product, the weed killer Roundup. The active ingredient in Roundup, glyphosate, is the most common weed killer in the world and is used by farmers on row crops and by home gardeners. While Roundup’s relative safety has been upheld by most regulators, a case in federal court in San Francisco continues to raise questions about the company’s practices and the product itself. The documents underscore the lengths to which the agrochemical company goes to protect its image. Documents show that Henry I. Miller, an academic and a vocal proponent of genetically modified crops, asked Monsanto to draft an article for him that largely mirrored one that appeared under his name on Forbes’s website in 2015.

A similar issue appeared in academic research. An academic involved in writing research funded by Monsanto, John Acquavella, a former Monsanto employee, appeared to express discomfort with the process, writing in a 2015 email to a Monsanto executive, “I can’t be part of deceptive authorship on a presentation or publication.” He also said of the way the company was trying to present the authorship: “We call that ghost writing and it is unethical.” A Monsanto official said the comments were the result of “a complete misunderstanding” that had been “worked out,” while Mr. Acquavella said in an email on Tuesday that “there was no ghostwriting” and that his comments had been related to an early draft and a question over authorship that was resolved. The documents also show internal talk about Roundup’s safety.

“If somebody came to me and said they wanted to test Roundup I know how I would react — with serious concern,” one Monsanto scientist wrote in an internal email in 2001. Monsanto said it was outraged by the documents’ release by a law firm involved in the litigation. “There is a standing confidentiality order that they violated,” said Scott Partridge, vice president of global strategy for Monsanto. He said that while “you can’t unring a bell,” Monsanto would seek penalties on the firm. “What you’re seeing are some cherry-picked things that can be made to look bad,” Mr. Partridge said. “But the substance and the science are not affected by this.”

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How does a farmer protect himself from Monsanto, DuPont and BASF?

Pesticide ‘Drifting’ Wreaks Havoc Across US Crops (BBG)

Larry Martin in Illinois says he’s never seen anything like it in his 35 years of farming. Arkansas soybean grower Joe McLemore says he faces the loss of his life savings. They’re among farmers across the U.S. suffering from a pesticide “drifting” across from neighboring fields onto their crops, leaving behind a trail of damage. Although not a new problem, it’s re-emerged with a vengeance this year. At least 2.5 million acres (1 million hectares) have been damaged in this growing season through mid-July, according to estimates from Kevin Bradley, a professor of plant sciences at the University of Missouri. Dicamba, the offending herbicide, is produced by seed and crop-chemical giants Monsanto, DuPont and BASF.

It’s been around for decades, but in recent years it gained a new lease of life after the companies developed new dicamba-resistant soybean and cotton seeds, allowing farmers to spray crops later in the growing process. Dicamba is fine if you’re growing those genetically modified varieties, but not if you’re cultivating others and the chemical wafts over from another farm. The situation is so bad that states including Missouri, Arkansas, and Tennessee have placed restrictions on dicamba use at various times during the summer. Martin, a third-generation farmer, says an 80-acre soybean field of his has been damaged by dicamba. McLemore, who started out on his own eight years ago, after two decades working on someone else’s farm, says 800 of his 1,026 acres of soybeans have suffered damage.

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3%? That’s hardly ‘bouncing back’.

Bees Are Bouncing Back From Colony Collapse Disorder – A Little (BBG)

The number of U.S. honeybees, a critical component in the agriculture industry, rose in 2017 from a year earlier, and deaths of the insects attributed to a mysterious malady that’s affected hives in North America and Europe declined, according a U.S. Department of Agriculture honeybee health survey released Tuesday. The number of commercial U.S. honeybee colonies rose 3% to 2.89 million as of April 1, 2017 compared with a year earlier, the Agriculture Department reported. The number of hives lost to Colony Collapse Disorder, a phenomenon of disappearing bees that has raised concerns among farmers and scientists for a decade, was 84,430 in this year’s first quarter, down 27% from a year earlier. Year-over-year losses declined by the same%age in April through June, the most recent data in the survey.

Still, more than two-fifths of beekeepers said mites were harming their hives, and with pesticides and other factors still stressing bees, the overall increase is largely the result of constant replenishment of losses, the study showed. “You create new hives by breaking up your stronger hives, which just makes them weaker,” said Tim May, a beekeeper in Harvard, Illinois and the vice-president of the American Beekeeping Federation based in Atlanta. “We check for mites, we keep our bees well-fed, we communicate with farmers so they don’t spray pesticides when our hives are vulnerable. I don’t know what else we can do.” Environmental groups have expressed alarm over the 90% decline during the past two decades in the population of pollinators, from wild bees to Monarch butterflies. Some point to a class of pesticides called neonicotinoids as a possible cause, a link rejected by Bayer AG and other manufacturers.

In the USDA study, beekeepers who owned at least five colonies, or hives, reported the most losses from the varroa mite, a parasite that lives only in beehives and survives by sucking insect blood. The scourge, present in the U.S. since 1987, was reported in 42% of commercial hives between April and June this year, according to the USDA. That’s down from 53% in the same period one year earlier. Among other factors, beekeepers said 13% of colonies in the second quarter of this year were stressed by pesticides, 12% by mites and pests other than varroa and 4.3 by diseases. Bad weather, starvation, insufficient forage and other reasons were listed as problems with 6.6% of hives.

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What does it mean to be human?

8 Migrants Dead Off Libya, 500 Rescued As Italy Prepares Naval Mission (AFP)

The bodies of eight migrants have been found at sea off the coast of Libya by rescuers coming to the aid of four rubber dinghies, the Italian coast guard said Tuesday. Some 500 survivors were pulled to safety, the coast guard told AFP, illustrating the huge challenge that continues to bedevil authorities as people try to reach Europe. The latest deaths came as the Italian government presented plans for a naval mission in Libyan territorial waters that aims to reduce the flow of migrants from the coast. Spanish NGO Proactiva Open Arms, which was taking part in the rescues, said the corpses were recovered by the Santa Lucia merchant ship.

“We are here to stop more people drowning, today eight dead and four drifting boats” in distress, Proactiva’s founder, Oscar Champs, said on Twitter. The charity said there were 79 women and 39 minors — including four young children — among those rescued. Nearly 95,000 people have been brought to safety in Italy this year, a rise of 1% on the same period last year, according to the interior ministry. The government intends to send a logistics ship that could support Libyan units and will also offer a patrol boat, Italian Defense Minister Roberta Pinotti told lawmakers on Tuesday. However, Italy has no intention to create a naval blockade, which would be a “hostile act,” she said, insisting that support for the Libyan mission was the aim and cooperation was necessary.

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If you read between the whining, what a lovely story. Night curfew because turtles are important. Perhaps that’s what it means to be human.

EasyJet Passengers Left High And Dry In Greece Due to Mating Turtles (G.)

Scores of easyJet passengers were stranded on the Greek island of Zakynthos (also known as Zante) after their plane developed technical difficulties and a replacement aircraft was prevented from flying in because of mating turtles. [..] The airline said the night curfew – apparently in place because of vulnerable loggerhead turtles breeding nearby – had prevented an alternative aircraft being sent out. The sea turtle breeding season is well under way in Zakynthos. According to Archelon, a group dedicated in protecting sea turtles in Greece, late June to early July see the highest levels of spawning. The group has recorded 500 nests on the island so far, but that is fewer than in previous years.

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Oct 012016
 
 October 1, 2016  Posted by at 9:26 am Finance Tagged with: , , , , , , , , , , ,  Comments Off on Debt Rattle October 1 2016


Lewis Wickes Hine Drift Mouth, Sand Lick Mine, near Grafton, West Virginia 1908

Why You Should Be Skeptical Of That $5.4 Billion Deutsche Settlement (CNBC)
A Deutsche Bank Settlement Rumor Overshadows US Equities (R.)
Deutsche Bank Takes a Lashing From the German Public (WSJ)
Trump Will Win, Unless the S&P Rallies in October (BBG)
Global Trade Crashes Back To “Very Old Normal” (ZH)
Global Corporate Default Tally By Far Highest Since 2009 (Barron’s)
US, Canadian IPOs Raise Lowest Annual Total Since 1990 (BBG)
US Consumer Spending Drops, Clouds Fed Rate Hike Outlook (R.)
China’s Yuan Joins Elite Club Of IMF Reserve Currencies (R.)
State Spending Keeps China’s Industrial Sector Humming in September (WSJ)
Has Vancouver Found The Solution To A Super-Heated Housing Market? (G.)
Bundesbank President Rejects Calls for German Stimulus (WSJ)
The “Pardon Snowden” Case Just Got Stronger (Cato)
Brexit Is A ‘Once-in-a-Generation’ Chance To Save UK’s WIldlife (Ind.)
Bees Added To US Endangered Species List For The First Time (G.)
Elephants Have Learned To Avoid Poachers By Hanging Out With Rangers (Konbini)

 

 

A planted rumor. “..if the number was correct, under German capital market rules Deutsche Bank would be required to confirm the amount by now..”

Why You Should Be Skeptical Of That $5.4 Billion Deutsche Settlement (CNBC)

Shares of Deutsche Bank were leaping in New York trade Friday on a report that it was near a settlement with the U.S. Department of Justice, but there’s reason to be skeptical about the number being cited. Shares of Deutsche Bank have extended their gains, up about 14% in afternoon trading, after an AFP report that Germany’s biggest bank is close to a $5.4-billion dollar settlement with the Justice Department over mortgage bonds. […] But if the number was correct, under German capital market rules Deutsche Bank would be required to confirm the amount by now. Its failure to do so indicates the number is not correct.

Any eventual settlement, however, would almost certainly be well below the reported $14-billion opening bid by the Department of Justice in its talks with Deutsche. Deutsche Bank is not publicly commenting on the supposed $5.4-billion figure. The capital market rules say the bank would have to react almost immediately to a report on such a settlement. That’s why two weeks ago, after The Wall Street Journal reported on the initial $14-billion figure, Deutsche Bank quickly put out a release confirming the news. “The negotiations are only just beginning,” Deutsche Bank said at the time. “The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”

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Far from over: “Once they come to some resolution on the difference between what they are charged, $14 billion, and what they are going to pay, call it $5 or $6 billion, the market is going to be afraid there is a problem..”

A Deutsche Bank Settlement Rumor Overshadows US Equities (R.)

Deutsche Bank will likely cast a pall over equity markets next week as the largest German lender navigates a possible multi-billion dollar settlement with the U.S. Department of Justice over the sale of mortgage-backed bonds. Deutsche shares traded in the United States hit a record low on Thursday, falling as much as 24% since the DOJ asked the bank to pay $14 billion to settle charges related to its sale of toxic mortgage bonds before the financial crisis. But the stock had its best day in five years Friday, on record volume, after news agency AFP reported that Deutsche was nearing a much-lower $5.4 billion settlement with the DOJ. Analysts at Morgan Stanley estimated Deutsche could pay about $6 billion to settle with the DOJ. Stocks on Wall Street broadly tracked Deutsche over the past few days and will likely continue to do so, analysts say.

“While it is in the headlines, it is an overhang,” said Art Hogan at Wunderlich Securities in New York. “Once they come to some resolution on the difference between what they are charged, $14 billion, and what they are going to pay, call it $5 or $6 billion, the market is going to be afraid there is a problem,” Hogan said. Deutsche’s market capitalization of near $18 billion makes it much smaller than its U.S. peers like Bank of America, at $155 billion, or Citi, at $133 billion. However its trading relationships with the world’s largest financial institutions make a potential breakdown at Deutsche a bigger risk to the wider financial system than any other global bank, the International Monetary Fund said in June. “Its world print and eurocentric role are unrivaled, so it is going to drive the narrative next week,” said Peter Kenny at Global Markets Advisory Group in New York.

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Merkel’s room to move is shrinking.

Deutsche Bank Takes a Lashing From the German Public (WSJ)

Deutsche Bank is getting rough treatment in the market. It is also having a hard time with its own public. The lender, founded in 1870, has turned from an object of patriotic pride into what critics on both sides of the political spectrum openly deride as a national embarrassment. Multibillion-dollar losses last year, investigations into misconduct around the world, concerns about its capital cushion and rich pay have made Deutsche Bank a handy target for left-leaning critics that accuse it of short-term thinking and greed. Many on the far right, meanwhile, regard Deutsche Bank as German in name only. Three out of its past four chief executives have been foreigners, including current CEO John Cryan, helping detractors tar it as the embodiment of out-of-control stateless capitalism.

The sentiment isn’t confined to political circles. A TNS Emnid poll for news magazine Focus conducted on Wednesday and released on Friday showed that 69% of respondents opposed any kind of state aid for Deutsche Bank, with only 24% in favor. “People feel it’s simply unacceptable that banks should be exempted from business risks,” said Frank Decker, politics professor at Rheinische Friedrich-Wilhelms-University in Bonn. [..] the lack of support at home, along with strict bailout rules Germany has backed for banks in the European Union, could limit the government’s room for maneuver should Deutsche Bank end up in a position that it does need help.

Despite the trauma of the financial crisis, large institutions such as Deutsche Bank haven’t learned any lessons, said Manfred Güllner, head of the Forsa polling group, making any bailout a tougher sell than in 2008. “While the returns on savings keep falling in a bottomless pit—and now into negative territory—the banks, as always, keep conducting their risky speculative businesses,” the populist Alternative for Germany party said in a Facebook post Thursday. “Whenever they get in trouble, the politicians are always there to help with taxpayers’ money.”

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“When the stock market ends up for the three-month period, the Democrat wins. When it’s negative, the Republican wins.”

Trump Will Win, Unless the S&P Rallies in October (BBG)

October is the bad boy of the stock market. The Panic of 1907, the Crash of 1929, Black Monday in 1987. It’s notable for another reason, too. The performance of Standard & Poor’s 500-stock index from July 31 to Oct. 31 has a curious way of predicting the winner of the presidential election. As with every prediction, take it with a giant grain of salt. But the pattern is solid, as shown in this chart by Sam Stovall, equity strategist for S&P Global Market Intelligence1. When the stock market ends up for the three-month period, the Democrat wins.

When it’s negative, the Republican wins. Since this July 31, the S&P is in slightly negative territory. Two times the pattern didn’t hold were in 1968 and 1980, when influential third-party candidates were in race, including George Wallace, who took about 14% of the popular vote in ’68. The pattern also failed in 1956, which Stovall says could be attributed to geopolitical events putting the markets on edge. That was the year of the Suez Crisis and the Hungarian Uprising, he noted.

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“What if the last 30 years of exuberant world trade growth was the ‘outlier’..”

Global Trade Crashes Back To “Very Old Normal” (ZH)

“Get used to it” is the message from Goldman Sachs when it comes to the collapse in global trade… What if the last 30 years of exuberant world trade growth was the ‘outlier’ and we are now reverting to the pre-Greenspan normal? As Goldman’s Goohoon Kwon explains, a low trade beta may be normal:

“Finally, another explanation for the trade slowdown is that it simply represents a return to normal. Historical trade data show that the global trade beta was slightly higher than 1 in the early 1950s before rising gradually due to a series of extraordinary events. In the 1960s-1980s, it rose to around 1.5, boosted by multilateral efforts for trade reforms, which reduced average tariffs from 35% in 1947 to 6.4% at the start of the of the Uruguay Round (1986-94) of global trade negotiations. Thereafter, the breakup of the Soviet Union enabled global trade to expand rapidly in the 1990s, and the WTO entry of China in 2001 helped sustain the trade beta at around 2 in the 2000s. There is therefore an argument that a series of largely one-off factors drove the trade beta to unusually high levels.”

And as Goldman warns, there is limited upside to global trade from here…

“Given these structural forces, the outlook for global trade remains weak in our view, though it might rebound somewhat in the short term. Asian trade is likely to recover moderately in coming years, helped by the eventual dissipation of capacity overhangs in China and reductions in internal imbalances in the economy. And further trade liberalization, including in services, presents upside for global trade. However, the restructuring of overcapacity sectors seems to be proceeding slowly so far in Asia, as reflected in low and still-falling capacity utilization in China and Korea. Moreover, the current political backdrops in the major economies suggest that another major push for trade liberalization might be off the table, at least for now.”

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By far the worst year since 2009.

Global Corporate Default Tally By Far Highest Since 2009 (Barron’s)

Three corporate defaults in the past week, two metals companies and one telecom firm, brought the total number of defaults around the world to 130. That’s a lot more than last year. Diane Vazza, head of S&P Global Fixed Income Research says: “The default tally is 60% higher than the count at this time in 2015 and has surpassed the total number of defaults recorded in full-year 2015, 113 defaults. The last time the global tally was higher at this point in the year was in 2009, when it reached 223 during the financial crisis.” Energy and commodity-related firms make up over half of the defaults; 70% are U.S. companies. Vazza notes: “As of Aug. 31, 2016, the global speculative-grade default rate for the energy and natural resources sector was 17.9%–more than seven times higher than the default rate of all other sectors.”

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How to make a pretty awful number sound good.

US, Canadian IPOs Raise Lowest Annual Total Since 1990 (BBG)

It’s been a paltry year for initial public offerings. Fewer than 135 companies have made their debuts in U.S. and Canada, putting 2016 on pace to be the slowest for IPOs since 1990, according to data compiled by Bloomberg. With $14.4 billion raised so far, we’re also on track to witness the lowest annual total on that score since 1990. For the companies that have made it to market, the dearth of activity has helped underpin demand. That’s especially true in the case of tech IPOs, where (as my colleague Shira Ovide has written) the paucity of new issues has left investors scrambling for any new listing, driving valuations to potentially unsustainable levels.

Nutanix, a tech unicorn that priced Thursday evening, will likely continue the trend, with its shares poised for a surge when they begin trading Friday. But another crop of listings – backed by private equity – has also done well out of the chute this year, and may offer the potential for more lasting gains. On average, new issues of private-equity backed companies have rallied 34.5% this year through Thursday, topping the 28.2% average return for all U.S. and Canadian IPOs during the same period, according to data compiled by Bloomberg.

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David Stockman put it like this: “They shopped till they dropped.”

US Consumer Spending Drops, Clouds Fed Rate Hike Outlook (R.)

U.S. consumer spending fell in August for the first time in seven months while inflation showed signs of accelerating, mixed signals that could keep the Federal Reserve cautious about raising interest rates. The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 0.1% last month after accounting for inflation. Analysts polled by Reuters had expected a 0.1% gain. “Consumers took a breather in August,” said Chris Christopher of IHS Global Insight. Fed Chair Janet Yellen said last week she expected the U.S. central bank would raise rates once later this year to keep the economy from eventually overheating.

Prices for fed funds futures suggest investors see almost no chance of a hike at the Fed’s next policy meeting in early November and roughly even odds of an increase at its mid-December meeting, according to CME Group. The dollar was little changed against a basket of currencies while U.S. stock prices were trading higher. Consumer spending, which has been robust in recent months, partially offset the drag from weak business investment and falling inventories in the second quarter when the economy expanded at a lackluster 1.4% annual rate.

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A mixed blessing.

China’s Yuan Joins Elite Club Of IMF Reserve Currencies (R.)

China’s yuan joins the IMF’s basket of reserve currencies on Saturday in a milestone for the government’s campaign for recognition as a global economic power. The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF’s special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.The IMF is adding the yuan, also known as the renminbi, or “people’s money”, on the same day that the Communist Party celebrates the founding of the People’s Republic of China in 1949.

“The inclusion into the SDR is a milestone in the internationalization of the renminbi, and is an affirmation of the success of China’s economic development and results of the reform and opening up of the financial sector,” the People’s Bank of China said in a statement. China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added. The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing’s often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.

Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November’s election. China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth. Some China watchers also fear that Beijing’s commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.

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Now that China has entered the IMF basket, it’ll get much harder to keep this up: “It’s very clear that this sort of continued funding of industrial overcapacity sectors is unsustainable.”

State Spending Keeps China’s Industrial Sector Humming in September (WSJ)

Activity in China’s crucial industrial sector appeared to stabilize last month, with an official index on manufacturing holding steady, buoyed by state spending on infrastructure. China’s official manufacturing purchasing managers index was unchanged at 50.4 in September compared with August, the National Bureau of Statistics reported Saturday. The gauge has remained above 50, which separates expansion from contraction, for six out of the past seven months. The September reading matched a median forecast of 50.4 by 11 economists polled by The Wall Street Journal.

Subindexes gave mixed readings. One measured new orders weakening, while another for production showed improvement; both remained above 50. The official nonmanufacturing PMI edged up to 53.7 in September from 53.5 in August. Economists said stepped-up bank lending and spending on government projects is helping to steady an economy that got off to a wobbly start to the year and has been slowing overall in recent years. “You’re seeing a bit of a credit-fueled holding pattern,” said Angus Nicholson, an analyst with IG Markets. “The question is: when does that turn around and when are they going to cut credit? It’s very clear that this sort of continued funding of industrial overcapacity sectors is unsustainable.”

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Better question: do other cities have the guts to follow suit?

Has Vancouver Found The Solution To A Super-Heated Housing Market? (G.)

There is a city which is suffering a worse property bubble than Sydney, whose residents are more priced-out than Londoners, and where there is a greater divide between the housing haves and have-nots than even San Francisco. That city is Vancouver, and in response to these mounting challenges, the west-coast Canadian metropolis recently imposed an extraordinary new tax on foreign buyers – whose impact is now being watched closely by other cities grappling with bloated property markets. On 2 August, Vancouver introduced a tax on anyone from outside Canada wanting to buy a home in its super-heated market. In future, city authorities said, if you weren’t Canadian, you would have to pay an extra 15% on the purchase price.

The impact has, by some measures, been more startling than campaigners could have hoped for. The price of the average detached home reportedly slumped by an astonishing 16.7% in August alone to C$1.47m (£856,000), according to the Real Estate Board of Greater Vancouver. Some agents are reporting that the market has gone from red hot to stone cold in a matter of weeks. British Columbia’s premier, Christy Clark, who introduced the tax, told reporters there will be no going back on it. “The prices were going up way too fast and if we helped slow that down, that’s good,” she said. In the year before the tax, prices in the city were galloping ahead at a rate of 39% a year amid widespread concern that investors, from China in particular, were pricing out local residents.

It is a concern echoed in cities across the Pacific Rim. In June, Sydney introduced a 4% stamp duty surcharge on foreigners buying homes; the following month, Melbourne hiked stamp duty rates from 3% to 7% for foreign buyers – in both cases to deter rampant property speculation. Queensland, whose capital is Brisbane, has followed suit with an extra 3% duty surcharge that will be slapped on “foreign persons” buying residential property and land from 1 October. In Auckland, New Zealand – currently the world’s frothiest property market – property investors are, as of last month, required to put down at least 40% of the purchase price in cash.

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By ignoring Germany’s role in destroying the Greek and Italian economies, Weidmann ensures the downfall of the eurozone, and thereby of Germany itself.

Bundesbank President Rejects Calls for German Stimulus (WSJ)

It’s absurd to ask Germany’s government to spend more to bolster eurozone growth, German Central Bank President Jens Weidmann said on Thursday, rejecting growing pressure on Berlin to loosen its purse strings. Speaking in the German capital, Mr. Weidmann said a fiscal stimulus program in Germany was unnecessary given the nation’s robust economy, and would have few positive effects for other countries anyway. Earlier this month, ECB President Mario Draghi joined the chorus of voices that have criticized Germany for reining in its spending at a time of weak economic growth. “Countries that have fiscal space should use it,” Mr. Draghi said at a news conference. “Germany has fiscal space.”

But Mr. Weidmann argued that Germany’s national debt was already high, and the country’s aging population “calls for lower rather than higher debts.” Mr. Draghi tempered his remarks on Wednesday after a meeting in Berlin with German lawmakers, who grilled him over the ECB’s easy-money policies and their impact on German savers and banks. “Germany does have fiscal space [but] we need to be nuanced,” Mr. Draghi said. “I never argued for irresponsible fiscal expansion.”

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It couldn’t be more obvious.

The “Pardon Snowden” Case Just Got Stronger (Cato)

Yesterday, the Department of Justice Inspector General (DoJ IG) issued a long overdue Congressionally-mandated report on FBI compliance with the PATRIOT Act’s Section 215 “business records” provision between 2012 and 2014. It is the first such report issued that covers the initial period of Edward Snowden’s revelations about widespread domestic mass surveillance by the federal government. Since his indictment for leaking the information to the press, Snowden’s lawyers have argued that he should not be prosecuted under the WW I-era Espionage Act because his revelations served the public interest. The DoJ IG report provides the clearest evidence yet that Snowden’s lawyers are correct (p. 6):

“In June 2013, information about the NSA’s bulk telephony metadata program was publicly disclosed by Edward Snowden. These disclosures revealed, among other things, that the FISA Court had approved Section 215 orders authorizing the bulk collection of call detail records. The telephony metadata collected by the NSA included information from local and long-distance telephone calls, such as the originating and terminating telephone number and the date, time, and duration of each call. The disclosures prompted widespread public discussion about the bulk telephony metadata program and the proper scope of government surveillance, and ultimately led Congress to end bulk collection by the government in the USA Freedom Act.”

Public discussion of the controversy. Very public action by Congress to change the law, addressing at least one major abuse brought to light by Snowden. And there was more (p. 33):

“An [National Security Division] Deputy Unit Chief noted that the number of business records orders reached its peak in 2012 and has declined annually since then, and that the number of [Electronic Communication Transation] requests has declined more than other types of requests. The Deputy Unit Chief said that the Snowden revelations have played a role in this decline, both in terms of the stigma attached to use of Section 215 and increased resistance from providers. The Deputy Unit Chief stated, “I think that it’s possible that folks … have decided it’s not worth pursuing [business records orders], you know, obviously things haven’t been great with providers since Snowden either.” ”

Translation: Snowden’s actions forced companies like Verizon, Yahoo and others to grow a spine and start defending the Fourth Amendment rights of their customers. Earlier this month, a group of non-governmental organizations and individuals launched a campaign to get President Obama to pardon Snowden before he leaves office. We now have the department seeking Snowden’s prosecution offering unambigous evidence that his whistleblowing actions served the public interest. Obama should direct DoJ to drop the case or he should pardon Snowden. Either approach would be in the public interest, just as Snowden’s actions were.

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if there’s anyone left claiming to be surprised by Brexit, they must be blind.

Record Numbers Left Homeless After Eviction By Private Landlords In UK (G.)

Record numbers of families are becoming homeless after being evicted by private landlords and finding themselves unable to afford a suitable alternative place to live, government figures show. The end of an assured shorthold tenancy (AST) was cited by nearly a third of the 15,170 households in England who were classed as homeless in the three months to June – a number that was up 10% on the same period last year. The problem was particularly acute in London, accounting for 41% of all homelessness acceptances in the capital during the period, according to figures from the Department for Communities and Local Government (DCLG). The end of an AST has rapidly become the single biggest cause of homelessness in recent years, triggered by spiralling rent rises and cuts to housing benefit support.

In 2010 just 11% of homeless acceptances in England were caused by the end of an AST. The government’s statistical release states: “Affordability [of housing] is an increasingly significant issue, as more households facing the end of a private tenancy are unable to find an alternative without assistance.” Bob Blackman, a Tory backbencher who has drawn up a private member’s bill seeking to require councils to do more to help households at risk of losing their homes, said: “It is a national disgrace when we have the highest number of people in employment ever, we have a low rate of unemployment, that we still have people sleeping rough. Goodness knows what will happen if there is a recession.”

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Not if and when the present political climate perseveres.

Brexit Is A ‘Once-in-a-Generation’ Chance To Save UK’s WIldlife (Ind.)

Brexit will be a “once-in-a-generation chance” to reverse the huge decline in Britain’s wildlife, according to four of the UK’s leading environmental groups. The RSPB, WWF UK, National Trust and The Wildlife Trusts said the British countryside was “key to our identity as a nation” and farmers had the ability address the “urgent challenge of restoring nature”. They called on the Government to replace the much-criticised EU Common Agricultural Policy subsidy system with a British one that pays farmers to maintain “high environmental standards”. Earlier this month, the State of Nature 2016 report – produced by more than 50 organisations – concluded the UK was one of the “most nature-depleted countries in the world”. More than one in seven species face extinction and more than half are in decline.

However, in its response to the conservation groups’ call, the Government insisted the natural environment was “cleaner and healthier than at any time since the industrial revolution”. The National Farmers Union (NFU) said its members understood “the importance of protecting the environment” and complained that some organisations were making suggestions about agricultural policy “without speaking to those the policy most affects”. In a joint statement, called A new policy for our countryside, the four conservation groups said the UK’s departure from the EU “will be one of the most defining events for farming and our environment in living memory”. “[It] provides an unprecedented opportunity to revitalise our countryside in a way that balances the needs of everyone, for generations to come,” they said.

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We have created far too great a distance between ourselves and the world that gives us life.

Bees Added To US Endangered Species List For The First Time (G.)

Seven types of bees once found in abundance in Hawaii have become the first bees to be added to the US federal list of endangered and threatened species. The listing decision, published on Friday in the Federal Register, classifies seven varieties of yellow-faced or masked bees as endangered, due to such factors as habitat loss, wildfires and the invasion of non-native plants and insects. The bees, so named for yellow-to-white facial markings, once crowded Hawaii and Maui but recent surveys found their populations have plunged in the same fashion as other types of wild bees – and some commercial ones – elsewhere in the United States, federal wildlife managers said.

Placing yellow-faced bees under federal safeguards comes just over a week since the US Fish and Wildlife Service proposed adding the imperilled rusty patched bumble bee, a prized but vanishing pollinator once found in the upper midwest and north-eastern United States, to the endangered and threatened species list. One of several wild bee species seen declining over the past two decades, the rusty patched bumble bee is the first in the continental United States formally proposed for protections. The listing of the Hawaii species followed years of study by the conservation group Xerces Society, state government officials and independent researchers. The Xerces Society said its goal was to protect nature’s pollinators and invertebrates, which play a vital role in the health of the overall ecosystem.

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Nice, but that’s just a few of them. I think we’re going to end up sending our armies, our children and grandchildren, to Africa and far beyond, to the oceans, to try and keep alive enough of what preceded us on this planet in order to guarantee our own species can survive. But I can’t say I have high hopes.

Elephants Have Learned To Avoid Poachers By Hanging Out With Rangers (Konbini)

In an effort to protect diminishing elephant herds in the Democratic Republic of Congo’s Virunga National Park, a Kenyan conservation group fitted elephants with collars so they could monitor and track them in real time. Save the Elephants claim some of the herds they track have started changing their behavior to avoid dangerous areas, which the team believes is an adaptation to poaching. “Several elephant families [were seen] clustered around ranger posts, suggesting they had learned to distinguish the heavily armed rangers as harmless,” STE founder Iain Douglas-Hamilton said. In one rebel-afflicted area, elephants had even started hanging out at ranger checkpoints where huge trucks of charcoal and hardwood rumble through every few minutes.

“Yet somehow the elephants sensed that they were safe there and walked close to the voluble rangers.” Elephants that are able to distinguish rangers from poachers represent an incredible feat of animal ingenuity, but according to experts, it’s all quite understandable. According to My Green World, these mammals are similar to gorillas, in that they’re “smart, sensitive, loyal and aware.” But while this is great news for elephants (and bad news for outsmarted poachers), there’s still the matter of curbing the ongoing colossal hunting epidemic. Africa had 1.3 million elephants in the 1970s, but today there are only 500,000. So there is still quite a way to go before elephants can be taken off the endangered species list.

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Jul 272016
 
 July 27, 2016  Posted by at 9:12 am Finance Tagged with: , , , , , , , , , , , ,  


John Vachon Five o’clock crowds, Chicago 1941

Japan PM Unveils More Than $266 Billion Stimulus (AFP)
Deutsche Bank’s Q2 Net Income Plunges Nearly 100% Year-On-Year (CNBC)
China’s Debt Problem May Be Worse Than Expected, Moody’s Warns (CNBC)
China Stocks Tumble on Report of Wealth Management Product Curbs (BBG)
Hong Kong Imports/Exports Plunge in Line with Japan and China (R.)
A Refinery-Driven Correction Is Upon Us’ (BBG)
Cameron Was Right, Britain Is Broken (G.)
Kremlin Says Idea It Hacked Democratic Party Emails Absurd (R.)
Assange: “A Lot More Material” Will Be Released (ZH)
The Neocons Are Backing Hillary Clinton (Intercept)
The Odious Versus the Tedious (Kunstler)
Auckland House Prices Must Deliberately Be Reduced By 50% – NZ Greens (RNZ)
Catalonia Tells Spain It Will Push For Secession With Or Without Assent (G.)
We Love To Talk Of Terror (Robert Fisk)
The Power of “Nyet” (Dmitry Orlov)
Leading Insecticide Cuts Bee Sperm By 40%, Lifespan By A Third (G.)
LUCA: The Ancestor Of All Living Things On Earth (IBT)

 

 

Abenomics must end in full-blown madness.

Japan PM Unveils More Than $266 Billion Stimulus (AFP)

Japan on Wednesday announced a whopping economic stimulus package worth more than 28 trillion yen ($266 billion), media reported, to boost the stumbling economy. Prime Minister Shinzo Abe announced the package in a speech in southwestern Japan, giving few details except to say it would include about 13 trillion yen in government spending, according to Jiji Press news agency.

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“..scrapping dividend payments to shareholders, thousands of job cuts and asset sales…”

Deutsche Bank’s Q2 Net Income Plunges Nearly 100% Year-On-Year (CNBC)

Deutsche Bank, the German bank which is an important part of the global financial system, announced revenue and income falls Wednesday which could add further concerns for investors made jittery by a combination of Brexit and previous issues at the bank. Its second-quarter net income was down 98% from the same period in the previous year, to 20 million euros ($22 million), as it exited parts of its business while revenues were down 20% to 7.4 billion euro. Further cuts may be needed, John Cryan, chief executive of Deutsche Bank, warned. “If the current weak economic environment persists, we will need to be yet more ambitious in the timing and intensity of our restructuring,” he said in a statement.

Deutsche’s CET1 ratio – a key measure of financial strength – improved slightly to 10.8%. The bank, one of Germany’s largest lenders, has lost around 40% of its market value this year as concerns mount about its capital position and $14 billion in fines over past misconduct. John Cryan, the bank’s co-chief executive who was appointed in July last year, has embarked on a drastic plan to meet its capital targets, including scrapping dividend payments to shareholders, thousands of job cuts and asset sales. Raising new capital is likely to be difficult because of the bank’s holdings of debt for some of the worse off euro zone countries.

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As I’ve said 100 times: “China’s “shadow banking” system is masking the rise in indebtedness..

China’s Debt Problem May Be Worse Than Expected, Moody’s Warns (CNBC)

China’s “shadow banking” system is masking the rise in indebtedness in China, Moody’s Investors Service said in a report Wednesday. The rating agency said overall leverage in China’s economy continued to rise with credit growth outpacing the rise in nominal GDP. “The growth in overall leverage may be understated, because some of the fastest growing components of shadow banking are not included in TSF (total social financing),” said Michael Taylor, Moody’s chief credit officer for Asia Pacific. The credit growth was measured using TSF, an economic barometer of total fundraising by Chinese non-state entities, including individuals. It didn’t, however, include all shadow banking activities, which have grown in recent years.

“We estimate the potential understatement to be significant, amounting to at least RMB16 trillion ($2.4 trillion) or 23% of GDP at end-2015, equivalent to around one-third of shadow banking,” Taylor added. Moody’s said TSF flows were being sustained by formal bank credit flows supported by accommodative monetary policy. The increasing leverage was worrying. “The rise in overall leverage and further expansion of shadow banking activity are pushing up financial risks,” said Stephen Schwartz, a Moody’s senior vice president.

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Shadow banks and their ‘wealth’ products.

China Stocks Tumble on Report of Wealth Management Product Curbs (BBG)

Chinese stocks slumped the most in six weeks amid concern regulators are moving to limit equity investments by some wealth-management products. The Shanghai Composite Index fell 1.6% at the mid-day break, reversing a gain of as much as 0.2%. The Shenzhen Composite Index lost 3%, while the ChiNext Index of small-company shares sank 4%, the most since June 13. China’s banking regulator is considering tightening curbs on the nation’s $3.6 trillion market for WMPs, the 21st Century Business Herald reported, citing people it didn’t identify. Authorities may set a limit on how much WMPs can invest in equities and “non-standard assets” such as loans, the report said.

“There’s an obvious trend that the regulators want to strengthen market monitoring and lower the use of leverage in financial markets to control risks,” said Dai Ming at Hengsheng Asset Management. “Under such circumstances, Chinext is especially vulnerable, given its high valuations and the recent gains.” The China Banking Regulatory Commission met with some banks this month on the rule revision and a final version hasn’t been drafted, the 21st Century Business Herald report said. China’s watchdogs have signaled they’re paying closer attention to the fund managers and brokerages who funnel the nation’s household savings into investments from stocks to bonds and derivatives.

The China Securities Regulatory Commission this month issued guidelines curbing the use of leverage by structured asset management plans. Li Chao, vice chairman of the regulator, told a gathering of firms in the northeastern city of Harbin last week to do better due diligence on prospective clients when arranging initial public offerings, secondary share sales and bond issues, people familiar with the matter said.

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Hong Kong=Japan=China. Exact same pattern. World trade collapsing. If Hong Kong weren’t so dependent on imports, those would fall much more than 5.6%. “Domestic exports to the United Kingdom [..] plunged 48.2% in June.”

Hong Kong Imports/Exports Plunge in Line with Japan and China (R.)

Hong Kong’s total exports in June fell for the 14th straight month, dampened by a slowdown in China, with the city’s factories bracing for more pain in coming months from the impact of Brexit. Open and trade-dependent economies in Asia such as Hong Kong are expected to be among the most vulnerable to a slowdown in global trade from Britain’s shock vote to leave the European Union as the effects filter through factory supply chains, analysts say. Hong Kong’s total exports in June fell 1% from a year earlier to HK$296.5 billion ($38.2 billion), government data showed on Tuesday. Total imports fell 0.9%, in its 17th straight month of decline, to HK$342.1 billion. In May, annual exports slipped 0.1% while imports dropped 4.3%.

For the first half of 2016, total exports value dropped 3.9%, while imports fell 5.6%. The city recorded a visible trade deficit of HK$199.6 billion for the first half period, equivalent to 10.8% of the value of imports. “Looking ahead, the external trading environment remains challenging given the uncertainties associated with the outcome of the UK referendum in favor of leaving the EU, slow recovery in the advanced markets, monetary policy divergence among major central banks and heightened geopolitical tensions in various regions,” the government said, adding it will monitor the situation closely. Domestic exports to the United Kingdom, which accounted for 2.2% of the total, plunged 48.2% in June.

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Well, not really, it’s all just about demand.

A Refinery-Driven Correction Is Upon Us’ (BBG)

Gear up for a fall in oil prices. The global oil market is “severely oversupplied” with gasoline — with stocks at a five-year high — serving as a blow to crude prices from next month, reckon Morgan Stanley analysts led by Adam Longson. In a report published on Sunday, the analysts foresee “worrisome trends” for oil supply and demand, led by refineries generating too much gasoline in recent months. Faced with the need to cut back on capacity utilization to protect profit margins, these refineries are set to crimp crude oil purchases and drag prices lower, the analysts say. “Crude oil demand is trending below refined product demand for the first time in three years,” they write.

“Refineries are the true consumer of crude oil, and crude oil demand is ultimately more important than aggregate refined product demand for oil balances. Given the oversupply in the refined product markets, fading refinery margins, and economic run cuts, we expect crude oil demand to deteriorate further over the coming months.” A glut of gasoline could weigh significantly on oil prices, which have been lifted in recent weeks by supply disruptions and healthy petrol demand in emerging markets. Excess gasoline also means that refiners may close their doors sooner and for longer than usual during their traditional summer production shutdown, taking further demand out of the market.

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Reading through a piece like this, it becomes even more surprising that Brexit was a surprise to so many Brits.

Cameron Was Right, Britain Is Broken (G.)

In opposition, David Cameron battered Gordon Brown with two words: Broken Britain. It was his Murdoch-inspired catchphrase for hoodies scrapping in gangs, Neets necking alcopops, teenagers ending up pregnant. It set the framework for Iain Duncan Smith’s welfare reforms. Broken Britain summed up the dark side of the New Labour era: a busted social contract and a class wantonly sponging off the rest of society. It always struck me as the right phrase for the wrong target. The real Broken Britain is the one revealed over the past four days in two reports from MPs. It is workers urinating into bottles at the “Victorian workhouse” of Sports Direct, because their toilet breaks are restricted. It is women being offered permanent jobs in return for sexual favours.

It is BHS, a high-street chain nearly as old as the Queen, effectively killed by two “plundering” owners. It is 10,000 shop workers who will shortly be out on the streets, and 20,000 pension-scheme members who must now worry over how much they’ll have to live on in their old age. The riots of 2011 were taken by Cameron as proof he’d been right all along: “Irresponsibility. Selfishness. Behaving as if your choices have no consequences … Reward without effort. Crime without punishment. Rights without responsibilities.” This is Philip Green and Mike Ashley summed up – along with all the well-heeled consultants, directors and credulous politicians (including Cameron) who applauded and subsidised them on their way, bought off with fat fees and cheap photo-ops.

The rioting kids who stole bottles of water and robbed tellies from their local Argos were given prison sentences worth a total of 1,200 years. By contrast, Green and Ashley weren’t even going to bother facing MPs. Only after five months of back and forth did Sports Direct’s Ashley get in the chauffeured car down to Westminster. Green went one better, demanding that Frank Field resign from the BHS inquiry – then rocking up to parliament and telling MPs to stop looking at him. Such prickliness from a multibillionaire would have been funny had it not been for the thousands of families whose lives he’d just ruined.

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Wow. I found a few sentences at Reuters that sound somewhat sensible on the topic. “If the Russians hadn’t hacked us (for which we have no proof), Americans would have never found out about what we did.” Dumb f**ks!

Kremlin Says Idea It Hacked Democratic Party Emails Absurd (R.)

“We are again seeing these maniacal attempts to exploit the Russian theme in the U.S. election campaign,” Kremlin spokesman Dmitry Peskov told reporters when asked about the leaked emails. “This is not breaking new ground, this is an old trick which is being played again. This is not good for our bilateral relations, but we understand that we simply have to get through this unpleasant period.” U.S. Secretary of State John Kerry said earlier on Tuesday he had raised the hacking issue at a meeting in Laos with Russian Foreign Minister Sergei Lavrov. “I don’t want to use four-letter words,” was Lavrov’s only response to reporters when asked whether Russia was responsible for the email hack.

Earlier this month, Carter Page, a foreign policy adviser to Trump, visited Moscow, where he gave a lecture complaining that Western governments had often had a hypocritical focus on democratization in the post-Soviet world. Analysts say the Kremlin would welcome a Trump win because the billionaire U.S. businessman has repeatedly praised Putin, spoken of wanting to get along with Russia, and has said he would consider an alliance with Moscow against Islamic State. Trump’s suggestion he might abandon NATO’s pledge to automatically defend all alliance members is also likely to have gone down well in Moscow, where the military alliance is cast as an outdated Cold War relic.

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“Assange told CNN that Democratic Party officials were using the specter of Russian involvement to distract from the content of the emails..”

Assange: “A Lot More Material” Will Be Released (ZH)

One month ago, when Wikileaks’ Julian Assange told ITV’s Richard Peston that he would publish “enough evidence” to indict Hillary Clinton, few took him seriously. And while Hillary has not been indicted – yet – last Friday’s leak has already managed to wreak havoc and has led to revelations of cronyism and collusion within the Democratic party and the media, the resignation of the DNC Chair Debbie Wasserman Schultz, as well as chaos on the first day of the Democratic convention. Hence, why we believe Assange will be taken more seriously this time. Earlier today, Assange told CNN that Wikileaks might release “a lot more material” relevant to the US electoral campaign. Assange spoke to CNN following the release of nearly 20,000 hacked Democratic National Committee emails.

The topic then turned to the topic du jour: “did Putin do it”? Assange refused to confirm or deny a Russian origin for the mass email leak, saying Wikileaks tries to create ambiguity to protect all its sources. “Perhaps one day the source or sources will step forward and that might be an interesting moment some people may have egg on their faces. But to exclude certain actors is to make it easier to find out who our sources are,” Assange told CNN. The Kremlin has rejected allegations its behind the hacking, calling suggestions it ordered the release of the emails to influence US politics the “usual fun and games” of the US election campaigns, while the Russian foreign minister had an even simpler reaction to the same question: “I don’t want to use four-letter words.”

Dmitry Peskov, the Kremlin spokesman, added, “This is not really good for bilateral relations.” All of this now appears to be irrelevant, and as we speculated earlier, the “anti-Russia” narrative is now in motion and moments ago Obama said that it’s ‘possible’ Putin is trying to sway vote for Trump. Which brings us to the next point: speaking from the Ecuadorian embassy in London, where he faces extradition over sexual assault allegations, Assange told CNN that Democratic Party officials were using the specter of Russian involvement to distract from the content of the emails, which have had tumultuous affect on the party at the start of its national convention [..]

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And you think Trump is the danger? These are the people who shed blood around the globe. These are the people responsible for the terrorist attacks against the west.

The Neocons Are Backing Hillary Clinton (Intercept)

As Hillary Clinton puts together what she hopes will be a winning coalition in November, many progressives remain wary — but she has the war-hawks firmly behind her. “I would say all Republican foreign policy professionals are anti-Trump,” leading neoconservative Robert Kagan told a group gathered around him, groupie-style, at a “foreign policy professionals for Hillary” fundraiser I attended last week. “I would say that a majority of people in my circle will vote for Hillary.” As the co-founder of the neoconservative think tank Project for the New American Century, Kagan played a leading role in pushing for America’s unilateral invasion of Iraq, and insisted for years afterwards that it had turned out great.

Despite the catastrophic effects of that war, Kagan insisted at last week’s fundraiser that U.S. foreign policy over the last 25 years has been “an extraordinary success.” Republican presidential nominee Donald Trump’s know-nothing isolationism has led many neocons to flee the Republican ticket. And some, like Kagan, are actively helping Clinton, whose hawkishness in many ways resembles their own. The event raised $25,000 for Clinton. Two rising stars in the Democratic foreign policy establishment, Amanda Sloat and Julianne Smith, also spoke.

The way they described Clinton’s foreign policy vision suggested that if elected president in November, she will escalate tensions with Russia, double down on military belligerence in the Middle East and generally ignore the American public’s growing hostility to intervention. Sloat, the former deputy assistant secretary of state in the Bureau of European and Eurasian Affairs, boasted that Clinton will be “more interventionist and forward-leaning than Obama’s been” in Syria. She also applauded Clinton for doing intervention the right way, through coalitions instead of the unilateral aggression that defined the Bush years.

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“What higher service to democracy than to expose the anti-democratic workings of the party that affects to call itself Democratic? ”

The Odious Versus the Tedious (Kunstler)

You thought the Republican convention was a ghastly spectacle of royal Trumpery (and Iago-style backstabbing featuring the arch-asshole Ted Cruz)? Now comes the Democratic Annunciation of I’m-With-Her-It’s-My-Turn, the incarnation of crony corruption in our late-state Republic of Racketeering. Remember that old movie, The Exorcist, with its demonic spewage of projectile vomit. Expect something like that on the grand scale in Philadelphia this week as the Exalted-Breaker-of-Glass-Ceilings steps forth to accept her victory tiara.

The New York Times is blaming the Ruskies for releasing those thousands of new emails disclosing the perfidy of the Democratic National Committee staff in pimping for Hillary against Bernie and trafficking with the major network news operations to manage and spin things Her way — and especially to rig the electoral machinery against Sanders. How much will his supporters Feel the Bern this week in Philly as the party attempts to put on an appearance of unity (Ha!) behind HRC? How can it conceivably be possible now for Bernie to stand by her side for the crucial unity photo op? I suspect he’d rather chew his right arm off.

For my money, the Ruskies should get the Nobel Peace Prize if they were behind the email release. What higher service to democracy than to expose the anti-democratic workings of the party that affects to call itself Democratic? The sudden appearance of 20,000 smoking guns made party chairperson Debbie Wasserman-Schultz vamoose faster than you can say Debbie Wasserman Schultz, though her replacement, Donna Brazile is every inch just another blatant HRC foot-soldier. Perhaps she’ll have to orchestrate the proceedings with smoke signals or invisible ink instead of emails.

As the conventions rolled out, the aggregate miasma we call the news industry resorted to that tired trope of Optimism Versus Pessimism. Translation: you can’t handle the truth so somebody please bring out the rainbow-leaping unicorns. The American zeitgeist is a tattered garment worn by a three hundred pound tranny in a diabetic coma. It’s probably beyond salvation at this point. Somebody please put it out of its misery. Hence: Trump Versus Hillary, the odious versus the tedious, the election to end all elections.

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This makes too much sense.

Auckland House Prices Must Deliberately Be Reduced By 50% – NZ Greens (RNZ)

Auckland house prices should be deliberately reduced by up to 50% over a period of time to make the market affordable again, Greens co-leader Metiria Turei says. The average house price in Auckland has risen to nearly $1 million, or 10 times the median household income. Ms Turei said the only way to reverse that was to slowly bring prices back down to three or four times the median household income. She told Morning Report the Green Party was considering what timeframe would work without crashing the market and hurting people who already owned homes. “The only way to prevent a bust, and to protect families in the short and long term is to lay out a comprehensive plan, which means using every comprehensive tool that we’ve got so that we can slowly bring down house prices so that they’re reasonable.”

The Auckland Council’s chief economist had suggested bringing prices down to five times the median household income by 2030, she said. Labour leader Andrew Little said Ms Turei’s declaration that Auckland house prices should be deliberately reduced was irresponsible. There was no way a Labour-led government would consider the idea, he said. “We have a very clear plan. It’s not about crashing house prices. It’s about stabilising prices. “We don’t want to cause undue economic harm to those who – in good faith – have bought homes, entered into mortgages. That’s not a responsible approach.”

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“Last month, Spain’s interior minister, Jorge Fernández Díaz, and the head of Catalonia’s anti-fraud office, Daniel de Alfonso, were apparently recorded discussing possible investigations that could be launched against pro-independence politicians in the region.”

Catalonia Tells Spain It Will Push For Secession With Or Without Assent (G.)

The Catalan government has intensified its war of words with Spain by vowing to use its democratic mandate to forge a separate Catalan state with or without the approval of Madrid. Catalonia is preparing to defy Spain’s constitutional court this week by debating the conclusions of a working group on sovereignty, nine months after the Catalan parliament put forward a resolution calling for the “beginning of a process of the creation of an independent Catalan state”. Carme Forcadell, the president of the parliament, and Raül Romeva, the minister of foreign affairs, told the Guardian enduring hostility from Madrid had left Catalonia with no choice but to press ahead with the independence agenda.

“The [Spanish state] has left us feeling that we just don’t have an alternative,” Romeva said. “We have always said that we would have preferred a Scottish-type scenario, where we could negotiate with the state and hold a coordinated and democratic referendum. We keep talking to Madrid, but all we get back from them is an echo.” Forcadell pointed to a recent scandal as evidence of the Spanish government’s attitude towards Catalonia. Last month, Spain’s interior minister, Jorge Fernández Díaz, and the head of Catalonia’s anti-fraud office, Daniel de Alfonso, were apparently recorded discussing possible investigations that could be launched against pro-independence politicians in the region.

Forcadell said she was incredulous at the idea that the acting Spanish government, led by Mariano Rajoy, could simply brush aside the alleged incident and say nothing was going on. “How can they say that when the interior minister, who’s meant to defend the interests of all citizens, is caught conspiring to find evidence against citizens solely because they think differently? How can absolutely nothing come of that? We don’t understand it,” she said.

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The power of words.

We Love To Talk Of Terror (Robert Fisk)

The frightful and bloody hours of Friday night and Saturday morning in Munich and Kabul – despite the 3,000 miles that separate the two cities – provided a highly instructive lesson in the semantics of horror and hypocrisy. I despair of that generic old hate-word, “terror”. It long ago became the punctuation mark and signature tune of every facile politician, policeman, journalist and think tank crank in the world. Terror, terror, terror, terror, terror. Or terrorist, terrorist, terrorist, terrorist, terrorist. But from time to time, we trip up on this killer cliché, just as we did at the weekend. Here’s how it went. When first we heard that three armed men had gone on a “shooting spree” in Munich, the German cops and the lads and lassies of the BBC, CNN and Fox News fingered the “terror” lever.

The Munich constabulary, we were informed, feared this was a “terrorist act”. The local police, the BBC told us, were engaged in an “anti-terror manhunt”. And we knew what that meant: the three men were believed to be Muslims and therefore “terrorists”, and thus suspected of being members of (or at least inspired by) Isis. Then it turned out that the three men were in fact only one man – a man who was obsessed with mass killing. He was born in Germany (albeit partly Iranian in origin). And all of a sudden, in every British media and on CNN, the “anti-terror manhunt” became a hunt for a lone “shooter”. One UK newspaper used the word “shooter” 14 times in a few paragraphs.

Somehow, “shooter” doesn’t sound as dangerous as “terrorist”, though the effect of his actions was most assuredly the same. “Shooter” is a code word. It meant: this particular mass killer is not a Muslim. [..] It all comes down to the same thing in the end. If Muslims attack us, they are terrorists. If non-Muslims attack us, they are shooters. If Muslims attack other Muslims, they are attackers. Scissor out this paragraph and keep it beside you when the killers next let loose – and you’ll be able to work out who the bad guys are before the cops tell you.

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More power of words.

The Power of “Nyet” (Dmitry Orlov)

The way things are supposed to work on this planet is like this: in the United States, the power structures (public and private) decide what they want the rest of the world to do. They communicate their wishes through official and unofficial channels, expecting automatic cooperation. If cooperation is not immediately forthcoming, they apply political, financial and economic pressure. If that still doesn’t produce the intended effect, they attempt regime change through a color revolution or a military coup, or organize and finance an insurgency leading to terrorist attacks and civil war in the recalcitrant nation. If that still doesn’t work, they bomb the country back to the stone age. This is the way it worked in the 1990s and the 2000s, but as of late a new dynamic has emerged.

In the beginning it was centered on Russia, but the phenomenon has since spread around the world and is about to engulf the United States itself. It works like this: the United States decides what it wants Russia to do and communicates its wishes, expecting automatic cooperation. Russia says “Nyet.” The United States then runs through all of the above steps up to but not including the bombing campaign, from which it is deterred by Russia’s nuclear deterrent. The answer remains “Nyet.” One could perhaps imagine that some smart person within the US power structure would pipe up and say: “Based on the evidence before us, dictating our terms to Russia doesn’t work; let’s try negotiating with Russia in good faith as equals.”

And then everybody else would slap their heads and say, “Wow! That’s brilliant! Why didn’t we think of that?” But instead that person would be fired that very same day because, you see, American global hegemony is nonnegotiable. And so what happens instead is that the Americans act baffled, regroup and try again, making for quite an amusing spectacle.

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But it’s a billion-dollar industry!

Leading Insecticide Cuts Bee Sperm By 40%, Lifespan By A Third (G.)

The world’s most widely used insecticide is an inadvertent contraceptive for bees, cutting live sperm in males by almost 40%, according to research. The study also showed the neonicotinoid pesticides cut the lifespan of the drones by a third. The scientists say the discovery provides one possible explanation for the increasing deaths of honeybees in recent years, as well as for the general decline of wild insect pollinators throughout the northern hemisphere. Bees and other insects are vital for pollinating three-quarters of the world’s food crops but have been in significant decline, due to the loss of flower-rich habitats, disease and pests and the use of pesticides.

Neonicotinoids were banned from use on flowering crops in the EU in 2013. The UK opposed the ban and allowed a limited “emergency” lifting of the ban in 2015, but has refused further suspensions this year. There is clear scientific evidence that neonicotinoids harm bees, but there is only a little research showing the pesticides harm the overall performance of colonies. Previous work has shown that neonicotinoids reduce the number of bumblebee queens produced and severely cuts the survival and reproduction of honeybee queens. But the new research, led by Lars Straub at the University of Bern, Switzerland and published in the journal Proceedings of the Royal Society B, is the first to test how neonicotinoids affect male bee fertility.

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We’re really killing off our own family.

LUCA: The Ancestor Of All Living Things On Earth (IBT)

The planet we live on is home to an estimated 10 million species of living organisms. Hard as it may be to fathom, the immense diversity of life we see around us today – from the bacteria living in the garden soil to the majestic blue whale inhabiting the deep blue seas – all evolved from one single-celled ancestor that lived, and died, billions of years ago. In a paper published Monday in the journal Nature Microbiology, researchers have described, in unprecedented detail, this Last Universal Common Ancestor, or LUCA, which was only “half alive.” This ancestor – a single-cell, bacterium-like organism – is believed to have existed roughly four billion years ago, when Earth was just over 500 million years old. LUCA, the researchers say, was the common point of origin for three great domains of life — bacteria, archaea, which are bacteria-like single-cell prokaryotes, and the eukaryotes, a domain that includes all plants and animals.


Phylogeny for LUCA’s genes: In the two-domain tree of life, eukaryotes stem from prokaryotes, so the last universal common ancestor, LUCA, is the ancestor of archaea and bacteria.

“We are seeing something for which there was previously no evidence,” co-author William Martin from the Heinrich Heine University in Düsseldorf, Germany, told the Washington Post. “Just by asking the right questions of genome data, we were able to obtain some very interesting answers that also mesh well with what we know from geochemistry.” In order to get a clear picture of what LUCA was like, the researchers examined over six million protein-coding genes found in the present-day bacteria and archaea. After analyzing the DNA sequence of each gene and determining whether these genes were present in both bacteria and archaea, the researchers identified 355 gene “clusters” that were probably present in LUCA. “It was flabbergasting to us that we found as many as we did,” Martin told New Scientist.

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May 072015
 
 May 7, 2015  Posted by at 9:55 am Finance Tagged with: , , , , , , , , ,  


Unknown General Patrick’s headquarters, City Point, Virginia 1865

21 Countries Where a 40-Hour Work Week Still Keeps Families Poor (Bloomberg)
Central Bank Driven ‘Markets’ Have Nothing To Do With Economics (Stockman)
Yellen Says Stock Valuations Are ‘Quite High’ (MarketWatch)
El-Erian Warns Of Trouble As Bond Liquidity Dries Up (MarketWatch)
There Will Be No 25-Year Depression (Bill Bonner)
More Pain Ahead For China Steel (CNBC)
Brexit Threat Looms Over Britain’s Election And Europe’s Fate (AEP)
Extreme Secrecy Eroding Support For Obama’s TPP Trade Pact (Politico)
UN Calls For Suspension Of TTIP Talks Over Human Rights Abuses (Guardian)
Defiant Greece Overturns Civil Service Cuts Agreed In Previous Bailouts (FT)
A Blueprint for Greece’s Recovery (Yanis Varoufakis)
European Lenders Dash Greek Hopes For Quick Aid Deal (Reuters)
At Greek Port, ‘Migrants’ Dream And Despair In Abandoned Factories (Reuters)
Greek Banks Are Having Trouble Trading Foreign Currencies (Bloomberg)
ECB Decision on Greek Haircuts Said to Depend on Political Talks (Bloomberg)
Bernanke Inc.: The Lucrative Life of a Former Fed Chairman (Bloomberg)
Canada’s Political Landscape In Seismic Shift On Alberta Election (Guardian)
The Choice Before Europe (Paul Craig Roberts)
California Regulators Approve Unprecedented Water Cutbacks (AP)
Save The Bees To Save The Planet (Giorgio Torrazza)

Progress 21st century style.

21 Countries Where a 40-Hour Work Week Still Keeps Families Poor (Bloomberg)

How often have you felt that no matter how hard and long you work you just couldn’t make ends meet? Turns out life is just that hard for minimum-wage workers pretty much across the globe. A global ranking out Wednesday by the Paris-based Organization for Economic Cooperation and Development painted a grim picture of the situation in member countries straddling continents. The 34-member organization found that a legal minimum wage existed in 26 countries and crunched the numbers to see how they compared. Forget taking a siesta in Spain. There, you’d have to work more than 72 hours a week to escape the trappings of poverty. Turns out that is the norm, not the exception. In the 21 countries highlighted with blue bars in the chart below, a full 40-hour work week still won’t lift families out of relative poverty.

This list includes France, home to the 35-hour work week, which almost met the threshold. Minimum wage workers there who are supporting a spouse and two children need to work 40.2 hours to get their families out of poverty. (The poverty line is defined as 50% of the median wage in any nation.) To gauge the generosity of each country’s floor on hourly pay, you can also look at another measure: The minimum wage as a percentage of the local median wage. Those ratios vary widely across the world. In the U.S., the minimum wage was less than 40% of the median wage in 2013, which meant the country had one of the lowest percentages among the economies the OECD examined. Those ratios are much higher across the Atlantic, but Europe’s sovereign debt crisis has taken its toll. In Ireland, Greece and Spain – three of the hardest-hit countries in the euro area – minimum wage levels as a ratio to the median wage were higher in 2007 than in 2013.

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That’s what I said.

Central Bank Driven ‘Markets’ Have Nothing To Do With Economics (Stockman)

The German bund yield is soaring like a rocket today. After touching on the truly lunatic rate of 5 bps only a few weeks back, it has just crossed the 60 bps marker. Needless to say, when a blue chip 10-year bond widely held on @95% repo leverage moves that far that fast – there is some heavy duty furniture breakage happening in fast money land. But don’t cry for the bond market gamblers. They already made a killing front-running the ECB. During the 16 months between January 2014 and the April peak, speculators in German 10-year bunds would have made a 350% profit using essentially zero cost repo funding. So in the last few days they have given a tad of that back while making a bee line for the exit.

Yet during the uninterrupted march of the bund into the monetary Valhalla depicted above, how many times did you hear that the market was merely “pricing in” a flight to quality among investors and the dreaded specter of “deflation”. That is, what amounted to sheer lunacy – valuing any 10-year government bond at a deeply negative after-tax and after-inflation yield – was attributed to rational economic factors. No it wasn’t. The manic drive to 5 bps was pure speculative caprice, triggered by the ECB’s public pledge to corner the market in German government debt. What gambler in his right mind would not buy hand-over-fist any attempt to corner the market by a central bank with a printing press – especially one managed by a dim bulb apparatchik like Mario Draghi!

Never has an agency of a state anywhere on the planet pleasured speculators with such stupendous windfalls. Yet any day now we will hear from the talking heads on CNBC that, no, massive bond buying by central banks does not repress or distort interest rates because once Europe’s QE started, rates actually backed up. And, furthermore, this is entirely logical because QE will enable the economy to escape its deflationary trap, meaning that investors are discounting an imminent resurgence of growth!

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The spin narrative. “Yellen said that she thought risks to financial stability “are moderated, not elevated, at this point.”

Yellen Says Stock Valuations Are ‘Quite High’ (MarketWatch)

Federal Reserve Chairwoman Janet Yellen on Wednesday used her bully pulpit to warn of the risks from “quite high” stock prices. “I would highlight that equity market valuations at this point generally are quite high,” Yellen said in a conversation with Christine Lagarde, the managing director of the International Monetary Fund, sponsored by the Institute for New Economic Thinking. “They are not so high when you compare the returns on equities to the returns on safe assets like bonds, which are also very low, but there are potential dangers there,” Yellen said. The S&P 500 is up about 12% over the last year and has more than tripled from its March 2009 low. The Fed has kept interest rates near zero since the end of 2008.

The price to earnings ratio of S&P 500 stocks was 20.40 for April, according to data from Haver Analytics, which is near five-year highs. Yellen said her comments were part of the Fed’s new remit in the wake of the Great Recession to monitor and speak publicly about potential risks to financial stability. Yellen noted that long-term bond yields were low due to low term premiums, which can move rapidly. “We saw this in the case of the taper tantrum in 2013,” Yellen said. “We need to be attentive and are to the possibility that when the Fed decides it is time to begin raising rates, these term premiums could move up and we could see a sharp jump in long-term rates,” Yellen said. As a result, the Fed was working overtime not to take markets by surprise, she said.

Yellen also repeated a long-standing concern with the leveraged loan market, saying there was a deterioration in underwriting standards. She also noted that the compression in spreads on high yield debt which looks like “reach-for-yield type of behavior.” Despite these concerns, Yellen said that she thought over risks to financial stability “are moderated, not elevated, at this point.” “We’re not seeing any broad based pickup in leverage, we’re not seeing rapid credit growth, we’re not seeing an increase in maturity transformation,” which are the hallmarks of bubbles, she said.

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More QE!

El-Erian Warns Of Trouble As Bond Liquidity Dries Up (MarketWatch)

The leap in German bund yields over the last two weeks is another sign that liquidity issues could eventually present serious problems for financial markets, former Pimco Chief Executive Mohamed El-Erian on Wednesday warned at the annual SALT investment conference in Las Vegas. “There isn’t the countercyclical risk-taking we need,” said El-Erian, chief economic adviser at Pimco parent Allianz. That could spell trouble when there is a big shift market positioning, he warned at SALT, a gathering of around 1,800 hedge-fund and investment-industry professionals. That is because investors may not be able to reposition at a low cost. Bond liquidity is a “delusion, not an illusion,” he noted.

El-Erian’s remarks came during SALT’s opening panel, which included Peter Schiff, CEO of Euro Pacific Capital, and Gene Sperling, a former economic adviser to President Barack Obama and the Clinton White House. Sperling argued that a lackluster U.S. economic recovery is the aftermath of a financial crisis, which typically gives way to less robust recoveries as banks, businesses and consumers focus on eliminating debt. Meanwhile, the Federal Reserve was left to do much of the heavy lifting as the federal government’s stimulus efforts were offset by fiscal contraction at the state and local level.

Schiff, a persistent Fed critic, charged that the U.S. economy is witnessing a bubble rather than a recovery and that the Fed was crowding out small businesses who would otherwise be creating jobs. Fed Chairwoman may not entirely disagree with Schiff’s bubble assessment, On Wednesday, Yellen referred to stock valuations as “quite high,” and hinted that bond values may be even higher during a conversation with International Monetary Fund head Christine Lagarde sponsored by the Institute for New Economic Thinking.

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And how many times have I said this?: “..the developed economies have been zombified..”

There Will Be No 25-Year Depression (Bill Bonner)

Today, we have bad news and good news. The good news is that there will be no 25-year recession. Nor will there be a depression that will last the rest of our lifetimes. The bad news: It will be much worse than that. On Monday, the Dow rose another 43 points. Gold seems to be working its way back to the $1,200 level, where it feels most comfortable. “A long depression” has been much discussed in the financial press. Several economists are predicting many years of sluggish or negative growth. It is the obvious consequence of several overlapping trends and existing conditions. First, people are getting older. Especially in Europe and Japan, but also in China, Russia and the US. As we’ve described many times, as people get older, they change. They stop producing and begin consuming.

They are no longer the dynamic innovators and eager early adopters of their youth; they become the old dogs who won’t learn new tricks. Nor are they the green and growing timber of a healthy economy; instead, they become dead wood. There’s nothing wrong with growing old. There’s nothing wrong with dying either, at least from a philosophical point of view. But it’s not going to increase auto sales or boost incomes – except for the undertakers. Second, most large economies are deeply in debt. The increase in debt levels began after World War II and sped up after the money system changed in 1968-71. By 2007, US consumers reached what was probably “peak debt.” That is, they couldn’t continue to borrow and spend as they had for the previous half a century. Most of their debt was mortgage debt, and the price of housing was falling.

The feds reacted, as they always do… inappropriately. They tried to cure a debt problem with more debt. But consumers were both unwilling and unable to borrow. Their incomes and their collateral were going down. This left corporations and government to aim only for their own toes. Central banks created more money and credit – trillions of dollars of it. But since the household sector wasn’t borrowing, the money went into financial assets and zombie government spending. Neither provided any significant support for wages or output. So, the real economy went soft, even as the cost of credit fell to its lowest levels in history. Third, the developed economies have been zombified. The US, for example, is way down at No. 46 on the World Bank’s list of places where it is easiest to start a new business. And only one G8 country – Canada – even makes the top 10.

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And for China’s steel suppliers.

More Pain Ahead For China Steel (CNBC)

Sluggish demand at home is driving up the chronic supply surplus at China’s steel mills to critical levels and is set to drive down global prices, analysts warn. “Chinese authorities will be slow to react to the over-capacity,” E&Y’s Michael Elliott told CNBC. In the meantime, “steel prices will remain low for the next five years, until the global industry consolidation starts to take place,” he said. For a decade, China’s mostly state-owned steelmakers have been supplying the country’s building boom with more steel than it needed, while steel prices nearly halved during the same period. Now, with the economy growing at the slowest pace in six years and demand shrinking at home, the excess capacity is hitting critical levels, although China’s steel mills have shown few signs of slowing down production.

The level of excess capacity may be as high as 30% according to E&Y, and little relief is in sight on the domestic front: demand for steel in China contracted for the first time in a decade in 2014, falling by 3.3% on-year, and is set to drop by 0.5% on-year in both 2015 and 2016, according to World Steel Association forecasts. “The need for consolidation has been recognized for some time and the government has set targets for capacity closure in the past,” Capital Economics’ Caroline Bain said in a report on Tuesday. “However, production (and losses and debts) just kept on rising,” she said.

Beijing’s record on keeping to its reduction targets is not entirely stellar, in part because the state-owned steelmakers are major local employers. The government has just recently pushed back its target date for restructuring and consolidating the steel industry by ten years to 2025, according to E&Y’s Elliot. The solution, at least for the Chinese steel mills, has been to ramp up exports. In 2014, Chinese steel exports soared by 50% on-year and continued to grow by 40% on-year in the first-quarter of 2015, according to Capital Economics.

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Ambrose is all Tory. He may not be a happy man come nightfall.

Brexit Threat Looms Over Britain’s Election And Europe’s Fate (AEP)

The subject of Europe has barely crept into the current campaign, which is odd given that UKIP’s primary demand – and its original raison d’etre – is the restoration of British self-government and the end of split parliamentary sovereignty between Westminister and Strasbourg. Yet the inescapable controversy of Britain’s dispensation with Europe looms over everything as we vote.

Whoever is elected will almost certainly have to deal a perpetual running sore in the eurozone. It is clear by now that monetary union is fundamentally deformed and will never be stable until there is a fiscal union and an EMU-wide government to back it up, but there is no democratic support for such a Utopian leap forward in any country. It is sheer fantasy following the Front National’s victory in the European elections in France. The ECB’s Mario Draghi has averted a deflationary collapse – in the nick of time – but the gap in competitiveness between the North and South is wider than ever. The EU Fiscal Compact will force the weakest debtor states to pursue contractionary policies for two decades to come asymmetrically, starving the south of investment and further entrenching the divide.[..]

A recent study by Stephen Jen, at SLJ Macro Partners, found that EMU states have reacted in radically different ways to globalisation and the rise of China. They are now further apart than they were in 1982. Worse yet, the perverse effects of euro itself has set off a self-reinforcing vicious circle. “The combination of a common monetary policy, fixed exchange rates and limited scope for member countries to conduct their own fiscal policies may have led to weak economies weakening further and strong economies strengthening further. We find these results rather alarming,” he said.

The implication is that EMU will lurch from crisis to crisis until the victims of this cruel dynamic rebel through the ballot box, as the Greeks are already doing. Cheap oil, a weak euro and a blast of QE have together lifted the region off the reefs for now, but the deformed structure will be exposed again when the world economy spins into another downturn. The European elites may imagine that a defeat for David Cameron can extinguish the Brexit threat. In reality it is has become a permanent fixture of the British landscape. They over-reached and brought it on themselves.

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There are 1000 reasons support should erode.

Extreme Secrecy Eroding Support For Obama’s TPP Trade Pact (Politico)

If you want to hear the details of the Trans-Pacific Partnership trade deal the Obama administration is hoping to pass, you’ve got to be a member of Congress, and you’ve got to go to classified briefings and leave your staff and cellphone at the door. If you’re a member who wants to read the text, you’ve got to go to a room in the basement of the Capitol Visitor Center and be handed it one section at a time, watched over as you read, and forced to hand over any notes you make before leaving. And no matter what, you can’t discuss the details of what you’ve read. “It’s like being in kindergarten,” said Rep. Rosa DeLauro (D-Conn.), who’s become the leader of the opposition to President Barack Obama’s trade agenda. “You give back the toys at the end.”

For those out to sink Obama’s free trade push, highlighting the lack of public information is becoming central to their opposition strategy: The White House isn’t even telling Congress what it’s asking for, they say, or what it’s already promised foreign governments. The White House has been coordinating an administration-wide lobbying effort that’s included phone calls and briefings from Secretary of State John Kerry, Labor Secretary Tom Perez, Treasury Secretary Jack Lew, Agriculture Secretary Tom Vilsack, Commerce Secretary Penny Pritzker and others. Energy Secretary Ernest Moniz has been working members of the House Energy and Commerce Committee. Housing and Urban Development Secretary Julián Castro has been talking to members of his home state Texas delegation.

Officials from the White House and the United States trade representative’s office say they’ve gone farther than ever before to provide Congress the information it needs and that the transparency complaints are just the latest excuse for people who were never going to vote for a new trade deal anyway. “We’ve worked closely with congressional leaders on both sides of the aisle to balance unprecedented access to classified documents with the appropriate level of discretion that’s needed to ensure Americans get the best deal possible in an ongoing, high-stakes international negotiation,” said USTR spokesman Matt McAlvanah. Obama’s seeking a renewal of fast-track authority, which would empower him to negotiate trade deals that then go to Congress for up-or-down votes but not amendments.

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“We don’t want a dystopian future in which corporations and not democratically elected governments call the shots.”

UN Calls For Suspension Of TTIP Talks Over Human Rights Abuses (Guardian)

A senior UN official has called for controversial trade talks between the European Union and the US to be suspended over fears that a mooted system of secret courts used by major corporations would undermine human rights. Alfred de Zayas, a UN human rights campaigner, said there should be a moratorium on negotiations over the Transatlantic Trade and Investment Partnership (TTIP), which are on course to turn the EU and US blocs into the largest free-trade area in the world. Speaking to the Guardian, the Cuban-born US lawyer warned that the lesson from other trade agreements around the world was that major corporations had succeeded in blocking government policies with the support of secret arbitration tribunals that operated outside the jurisdiction of domestic courts.

He said he would becompiling a report on the tactics used by multinationals to illustrate the flaws in current plans for the TTIP. De Zayas said: “We don’t want a dystopian future in which corporations and not democratically elected governments call the shots. We don’t want an international order akin to post-democracy or post-law.” The intervention by de Zayas comes amid intense scrutiny in the US, Europe and Japan of groundbreaking trade deals promoted by Barack Obama. The European commission, which supports the talks, believes an agreement that would lower tariffs and establish basic health and safety standards would boost trade and add billions of euros to the EU’s income. UK ministers estimate Britain could benefit from a rise in GDP of between £4bn and £10bn a year.

Under the proposed agreement, companies will be allowed to appeal against regulations or legislation that depress profits, resulting in fears that multinationals could stop governments reversing privatisations of parts of the health service, for instance. The investor state dispute settlement (ISDS) scheme that includes the secret tribunals is already a cornerstone of a trade deal between the EU and Canada and is scheduled to be included in the TTIP deal, as well as a trans-pacific deal being negotiated between the US and Japan. EU officials said the ISDS would be part of the package when it is put to a vote in the EU parliament later this year. Cecilia Malmström, the European trade commissioner, has sought to dampen criticism by publishing discussion documents submitted to the TTIP talks.

Following growing calls from environmental groups, unions and MEPs for the deal to be scrapped, she has put forward a series of suggestions to “safeguard the rights of governments to regulate” and protect public service provision from demands for competition. More than 97% of respondents to an official EU survey voted against the deal. However De Zayas, the UN’s special rapporteur on promotion of a democratic and equitable international order, said that while these were helpful initiatives, the adoption of a separate legal system for the benefit of multinational corporations was a threat to basic human rights. “The bottom line is that these agreements must be revised, modified or terminated,” he said. “Most worrisome are the ISDS arbitrations, which constitute an attempt to escape the jurisdiction of national courts and bypass the obligation of all states to ensure that all legal cases are tried before independent tribunals that are public, transparent, accountable and appealable.

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Kudos.

Defiant Greece Overturns Civil Service Cuts Agreed In Previous Bailouts (FT)

Even as the Greek government scrambled to reach an agreement on new economic reforms with its creditors in Brussels, it began reversing similar measures agreed during previous bailout negotiations in a parliamentary session in Athens. A new law proposed by the leftwing Syriza-led government and passed Tuesday night opens the way to rehire thousands of workers cut loose from the country’s inefficient public sector in a reform enacted by the previous government. The move came on the same day the new government announced changes to a finance ministry system of electronic procurements and public payments that was supposed to improve transparency and had been blessed by international lenders.

And it followed legislation passed last week to reopen the state broadcaster, ERT, which was shut down by the previous government as a cost-cutting measure. The moves highlighted the conflicting impulses of Greece’s new left-wing government and creditors bent on securing economic reforms in exchange for their support. They could further complicate already-fraught negotiations aimed at closing the country’s current €172bn bailout and giving Athens access to €7.2bn in desperately needed cash; in February, the new government agreed any economic legislation would be introduced only after consultations with creditors.

Opposition lawmakers accused Syriza of violating that agreement with the new laws, which could expand the government payroll by as many as 15,000 employees. But government ministers remained defiant. “We aren’t going to consult [bailout monitors], we don’t have to, we’re a sovereign state,” Nikos Voutsis, the powerful interior minister, told parliament.

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He keeps on making a lot of sense. But that’s not the picture painted in the media.

A Blueprint for Greece’s Recovery (Yanis Varoufakis)

Imagine a development bank levering up collateral that comprises post-privatization equity retained by the state and other assets (for example, real estate) that could easily be made more valuable (and collateralized) by reforming their property rights. Imagine that it links the European Investment Bank and the European Commission President Jean-Claude Juncker’s €315 billion investment plan with Greece’s private sector. Instead of being viewed as a fire sale to fill fiscal holes, privatization would be part of a grand public-private partnership for development. Imagine further that the “bad bank” helps the financial sector, which was recapitalized generously by strained Greek taxpayers in the midst of the crisis, to shed their legacy of non-performing loans and unclog their financial plumbing.

In concert with the development bank’s virtuous impact, credit and investment flows would flood the Greek economy’s hitherto arid realms, eventually helping the bad bank turn a profit and become “good.” Finally, imagine the effect of all of this on Greece’s financial, fiscal, and social-security ecosystem: With bank shares skyrocketing, our state’s losses from their recapitalization would be extinguished as its equity in them appreciates. Meanwhile, the development bank’s dividends would be channeled into the long-suffering pension funds, which were abruptly de-capitalized in 2012 (owing to the “haircut” on their holdings of Greek government bonds).

In this scenario, the task of bolstering social security would be completed with the unification of pension funds; the surge of contributions following the pickup in employment; and the return to formal employment of workers banished into informality by the brutal deregulation of the labor market during the dark years of the recent past. One can easily imagine Greece recovering strongly as a result of this strategy. In a world of ultra-low returns, Greece would be seen as a splendid opportunity, sustaining a steady stream of inward foreign direct investment. But why would this be different from the pre-2008 capital inflows that fueled debt-financed growth? Could another macroeconomic Ponzi scheme really be avoided?

During the era of Ponzi-style growth, capital flows were channeled by commercial banks into a frenzy of consumption and by the state into an orgy of suspect procurement and outright profligacy. To ensure that this time is different, Greece will need to reform its social economy and political system. Creating new bubbles is not our government’s idea of development. This time, by contrast, the new development bank would take the lead in channeling scarce homegrown resources into selected productive investment. These include startups, IT companies that use local talent, organic-agro small and medium-size enterprises, export-oriented pharmaceutical companies, efforts to attract the international film industry to Greek locations, and educational programs that take advantage of Greek intellectual output and unrivaled historic sites.

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Greece must leave the euro or it will never be it own master.

European Lenders Dash Greek Hopes For Quick Aid Deal (Reuters)

European lenders on Wednesday dashed Greece’s hopes for a quick cash-for-reforms deal in the coming days, leaving Athens in an increasingly desperate financial position ahead of a major debt payment next week. Talks between the two sides have dragged on for months without a breakthrough and EU officials say Greece’s leftist government has failed to produce enough concessions for a deal at next Monday’s meeting of euro zone finance ministers. “Since the last Eurogroup quite a bit of progress has been made,” Eurogroup chief Jeroen Dijsselbloem said. “Still, lots of issues have to be solved, have to be deepened more, with more details, so there will be no agreements on Monday. We have to be realistic.”

Prime Minister Alexis Tsipras’s government remains hopeful the Eurogroup meeting will acknowledge progress in the talks, possibly enabling the ECB to let Greek banks buy more short-term government debt to ease a cash crunch. But there was no sign in Brussels or Frankfurt that any such easing of the squeeze is likely soon without concrete evidence of progress on reforms.The ECB’s governing council extended emergency liquidity assistance to Greek banks by €2 billion at its weekly review on Wednesday, the biggest increase in recent weeks. The governors also debated tightening collateral conditions but were expected to hold off for another week.

Athens managed to scrape together funds to make a €200 million interest payment to the IMF on Wednesday, but faces a more daunting €750 million repayment on May 12. With some municipalities, regional and public entities resisting an order to turn over cash reserves to the central bank, sources close to the government have expressed doubt about whether Athens can make both the IMF payment and pay wages and pensions later this month. A government source said the money raised so far by the decree has fallen short of a target of €2.5 billion and that Athens is expected to continue resorting to other one-off measures such as holding off some payments to suppliers. Monday’s Eurogroup meeting could serve as a “platform” for an eventual accord with lenders, Greek Finance Minister Yanis Varoufakis said after talks with his Italian counterpart.

Tsipras’ government has sought to shift blame onto the euro zone and IMF for a lack of agreement in the three-month-old negotiations, charging that each was setting different “red lines” on multiple issues from pension and labour reforms to the primary budget surplus, making a deal impossible. The three institutions issued a rare joint statement rejecting that accusation and insisting they share the same objective of helping Greece achieve financial stability and growth. German Finance Minister Wolfgang Schaeuble, one of Greece’s harshest critics among euro zone policymakers, also dismissed the accusation and said help for Greece had to “make sense”. “Neither the troika, nor Europe, nor Germany can be blamed for Greece’s problems,” Schaeuble said, referring to the trio of European Commission, ECB and IMF informally dubbed the troika. “Greece lived beyond its means for many years.”

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Let them walk cross the border.

At Greek Port, ‘Migrants’ Dream And Despair In Abandoned Factories (Reuters)

Rapper Mahdi Babika Mohamed’s journey to a better life in Europe started in his native Sudan and passed through Libya and Turkey before abruptly ending in a squalid abandoned factory at Greece’s western port of Patra. There, the 37-year-old is one of hundreds of migrants making desperate attempts to board ferries to Italy by hanging on to the underside of cargo trucks – usually unsuccesfully. “We come from a country in war to another war here in Patra,” said Mohamed. “Every day I try to get on the ferry and it’s dangerous hiding under the trucks, I could die any minute.” Patra is no longer on the frontline of Greece’s migrant crisis as it was six years ago when authorities shut down a makeshift camp in the port where hundreds of migrants had lived in squalid conditions.

Focus has since shifted to the thousands of Syrian and other migrants now breaking through Greece’s eastern sea border, but the refugee problem in Patra is far from over. Today, about 100 Afghan, Iranian and Sudanese migrants live in two deserted textile and wood factories opposite the main ferry terminal, living off food scraps and without electricity. Some arrived recently, others have lived there for as long as two years. Each day, some try to jump over a high fence into the terminal in the hope of sneaking onto a ferry set for Italy, where they dream of a better life than in crisis-hit Greece, where jobs are scarce and sympathy even harder to find.

Others hide by the roadside, dashing to scramble underneath trucks waiting at traffic lights before entering the ferry terminal. One of those is Azam, a 26-year-old from South Sudan who says he boarded a small fishing boat in Egypt with 175 other immigrants earlier this year. He says he paid around $3,000 to go to Italy but the boat took them to Crete instead. Despite several attempts, he has yet to make it on to a ferry to Italy. But he refuses to abandon his dream. “I want to go to northern Europe and find a decent job and live a good life I will try until I make it,” Azam said. “I’ll never give up.”

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“The market has increasingly become aggressive in preparing for a Greek default and in protecting itself from the potential financial impact.”

Greek Banks Are Having Trouble Trading Foreign Currencies (Bloomberg)

Greek banks are increasingly being hampered from trading currencies, one of most liquid markets, as international dealers cut back credit lines and costs soar, according to people with knowledge of the trades. International securities firms are curtailing trading with Greece’s major lenders that may expose them to the risk of a default by the nation and the possible use of capital controls to stem outflows from banks, the people said, asking not to be named because they are not authorized to speak publicly.
Those threats are adding to concern that the euro would decline in the event of a default or a Greek exit from the currency region, leaving counterparties exposed to multiple risks, said the people.

A months-long impasse on Greece’s bailout talks with creditors has prompted depositors to withdraw funds from the nation’s lenders, leaving banks no choice but to rely on emergency funds for liquidity. The ECB on Wednesday raised the limit on Emergency Liquidity Assistance, people familiar with the matter said, a sign the financial system remains under strain. “The latest sign the market is attempting to fortify itself against a Greek default is playing out in the FX market,” said Mark Williams, a former bank examiner for a Federal Reserve bank and now a lecturer at Boston University’s Questrom School of Business. “The market has increasingly become aggressive in preparing for a Greek default and in protecting itself from the potential financial impact.”

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ECB and politics should never appear in the same sentence.

ECB Decision on Greek Haircuts Said to Depend on Political Talks (Bloomberg)

The ECB will decide after next week’s meeting of euro region finance ministers whether to tighten Greek access to emergency liquidity, two people familiar with the matter said. The ECB is prepared to raise the discount demanded on Greek collateral to a level last seen in 2014 unless the country’s government shows a willingness to compromise in bailout talks, said one of the officials, who spoke on condition of anonymity. An ECB spokesman declined to comment. The Governing Council’s stance adds pressure on Prime Minister Alexis Tsipras to make progress with creditors at Monday’s meeting of finance ministers in Brussels, or risk watching his country’s banks being pushed deeper into crisis.

Such is the rate of deposit withdrawals that ECB officials meeting Wednesday in Frankfurt raised their cap on Emergency Liquidity Assistance by €2 billion to €78.9 billion, the people said. The ECB also wants to ensure Greece makes a €767 million payment to the International Monetary Fund due on May 12, one of the officials said. The central bank decided in October to reduce the risk premium charged on Greek securities, citing “overall improved market conditions” for the assets at the time. Since then, the government has changed and the incoming administration has stalled on the reforms needed to access its bailout funds. Early this year, the ECB suspended a waiver on collateral requirements for Greek debt, forcing banks to rely more on ELA from their own central bank.

Increasing the haircuts now would force lenders to post higher collateral in exchange for funding. Even so, more draconian ideas have been floated. An internal ECB proposal circulated in April contained an option that would see haircuts raised to as high as 90%, a level consistent with Greece being in default. Euro-area central bankers are concerned about Greece’s solvency as debt repayments loom, though they remain reluctant to act before politicians have had a chance to salvage the bailout program. Most Governing Council members, led by President Mario Draghi, argued that it would be unfair to restrict access to liquidity before the outcome of Monday’s meeting is clear, one of the people said.

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Morals have nothing to do with it.

Bernanke Inc.: The Lucrative Life of a Former Fed Chairman (Bloomberg)

Between Boyz II Men at The Mirage and Celine Dion at Caesars Palace, a hot new act is playing Vegas: Ben Bernanke. One day only, live from Sin City – the economist formerly known as chairman of the Federal Reserve. Fifteen months after leaving the Fed and its trappings of mystery and power, Bernanke, 61, is settling into the peripatetic and highly lucrative life of a Washington former. Beyond the dancing fountains of the Bellagio, in the gilded splendor of the Grand Ballroom, Bernanke will play to a full house at the SkyBridge Alternatives Conference on Wednesday: 1,800 hedge fund types who used to hang on his every word. Bernanke is, in a sense, one of them now – a well-paid investment consultant who can fete clients, open doors and add a gloss of Fed luster to conferences and meetings.

Call it Bernanke Inc., a post-Fed one-man-show that’s worth millions annually on the open market. While the former chairman hasn’t disclosed his fees and compensation – nor, as a private citizen, is he required to – he is almost certainly pulling down many times what he did while in government. First there are speaking fees, which bring in at least $200,000 per engagement, according to a person who hired Bernanke. Then there are new advisory roles at Pimco, the big bond house; and Citadel, one of the world’s largest hedge funds. Executive recruiters say each is probably worth more than $1 million a year. Finally, there’s a book deal, details of which haven’t been made public. Bernanke’s predecessor, Alan Greenspan, reportedly landed an $8.5 million contract for his memoir in 2006.

Bernanke – who has a day job as a distinguished fellow in residence at the Brookings Institution – used the same Washington lawyer, Robert Barnett, to negotiate his deal. Policy makers like Bernanke are often criticized for going to work for the financial industry, but they are following a well-worn path. Robert Rubin, Lawrence Summers, Timothy Geithner: countless economic policy makers, in the U.S. and elsewhere, have spun through the revolving door, sometimes more than once. Summers –who picked up work at the hedge fund D.E. Shaw – is scheduled to address the SALT conference this week as well. So are former Secretary of State Condoleezza Rice and former Defense Secretary Chuck Hagel. What does someone like Bernanke bring to a Pimco or a Citadel? Both say investment insight and some face time with clients. Many in the industry, however, tend to view such appointments as little more than high-paid marketing jobs.

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“The perception from the market based on their comments is they’re extremely dangerous.”

Canada’s Political Landscape In Seismic Shift On Alberta Election (Guardian)

Canada’s rockbound political landscape has undergone a seismic shift with the election of a leftwing government in oil-rich Alberta, the country’s wealthiest and – until now – most conservative province. The once-marginal New Democratic Party swept to victory in the western province on Tuesday night, humiliating the Progressive Conservative party that has ruled the province since the first term of US president Richard Nixon. “We made a little bit of history tonight,” the province’s New Democrat leader, Rachel Notley, told supporters. The result marks the latest and most surprising setback to prime minister Stephen Harper’s signature diplomatic effort to transport bitumen from Alberta’s tar sands to world markets through the controversial Keystone XL pipeline.

During the campaign, Notley promised to withdraw provincial support for the project, raise corporate taxes and also potentially to raise royalties on a regional oil industry already reeling from the collapse in world prices. Notley led her party from a four-seat toehold in the provincial legislature to a commanding majority of 54 with a buoyant campaign that contrasted sharply with the flatfooted effort of the Progressive Conservatives under leader Jim Prentice, a former Harper cabinet member often touted as a future Conservative prime minister. Despite being one of a handful of PC candidates returned to office, Prentice resigned both his new seat and his leadership after the rout.

Canadian oil stocks slid slightly in response to the NDP win, with tar-sands giant Suncor Energy Inc losing 4.3% of its value in the first few hours of trading in Toronto before recovering half the loss by noon. The election of the NDP is “completely devastating”, declared financier Rafi Tahmazian of Canoe Financial in Calgary, Canada’s oil capital. “The perception from the market based on their comments is they’re extremely dangerous.” [..] .. ordinary Canadians were reeling from the sheer magnitude of the shift in Alberta, which has placed the country’s most notoriously conservative province, taken for granted as an impregnable redneck kingdom, in the hands of its most progressive regional government. To explain the phenomenon, Toronto-based writer Doug Saunders asked his American Twitter followers to imagine socialist presidential candidate Bernie Saunders “becoming Texas governor by a big majority”.

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Do you really want war with Russia?

The Choice Before Europe (Paul Craig Roberts)

Washington continues to drive Europe toward one or the other of the two most likely outcomes of the orchestrated conflict with Russia. Either Europe or some European Union member government will break from Washington over the issue of Russian sanctions, thereby forcing the EU off of the path of conflict with Russia, or Europe will be pushed into military conflict with Russia. In June the Russian sanctions expire unless each member government of the EU votes to continue the sanctions. Several governments have spoken against a continuation. For example, the governments of the Czech Republic and Greece have expressed dissatisfaction with the sanctions. US Secretary of State John Kerry acknowledged growing opposition to the sanctions among some European governments.

Employing the three tools of US foreign policy–threats, bribery, and coercion, he warned Europe to renew the sanctions or there would be retribution. We will see in June if Washington’s threat has quelled the rebellion. Europe has to consider the strength of Washington’s threat of retribution against the cost of a continuing and worsening conflict with Russia. This conflict is not in Europe’s economic or political interest, and the conflict has the risk of breaking out into war that would destroy Europe. Since the end of World War II Europeans have been accustomed to following Washington’s lead. For awhile France went her own way, and there were some political parties in Germany and Italy that considered Washington to be as much of a threat to European independence as the Soviet Union.

Over time, using money and false flag operations, such as Operation Gladio, Washington marginalized politicians and political parties that did not follow Washington’s lead. The specter of a military conflict with Russia that Washington is creating could erode Washington’s hold over Europe. By hyping a “Russian threat,” Washington is hoping to keep Europe under Washington’s protective wing. However, the “threat” is being over-hyped to the point that some Europeans have understood that Europe is being driven down a path toward war.

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Problems that cannot be solved.

California Regulators Approve Unprecedented Water Cutbacks (AP)

California water regulators adopted sweeping, unprecedented restrictions Tuesday on how people, governments and businesses can use water amid the state’s ongoing drought, hoping to push reluctant residents to deeper conservation. The State Water Resources Control Board approved rules that force cities to limit watering on public property, encourage homeowners to let their lawns die and impose mandatory water-savings targets for the hundreds of local agencies and cities that supply water to California customers. Gov. Jerry Brown sought the more stringent regulations, arguing that voluntary conservation efforts have so far not yielded the water savings needed amid a four-year drought. He ordered water agencies to cut urban water use by 25% from levels in 2013, the year before he declared a drought emergency.

“It is better to prepare now than face much more painful cuts should it not rain in the fall,” board Chairwoman Felicia Marcus said Tuesday as the panel voted 5-0 to approve the new rules. Although the rules are called mandatory, it’s still unclear what punishment the state water board and local agencies will impose for those that don’t meet the targets. Board officials said they expect dramatic water savings as soon as June and are willing to add restrictions and penalties for agencies that lag. But the board lacks staff to oversee each of the hundreds of water agencies, which range dramatically in size and scope. Some local agencies that are tasked with achieving savings do not have the resources to issue tickets to those who waste water, and many others have chosen not to do so.

Despite the dire warnings, it’s also still not clear that Californians have grasped the seriousness of the drought or the need for conservation. Data released by the board Tuesday showed that Californians conserved little water in March, and local officials were not aggressive in cracking down on waste. A survey of local water departments showed water use fell less than 4% in March compared with the same month in 2013. Overall savings have been only about 9% since last summer. Under the new rules, each city is ordered to cut water use by as much as 36% compared with 2013. Some local water departments have called the proposal unrealistic and unfair, arguing that achieving steep cuts could cause higher water bills and declining property values, and dissuade projects to develop drought-proof water technology such as desalination and sewage recycling.

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“..[beekeepers and bee-product manufacturers] generate a turnover of somewhere between €57 and €62 million per year. The value of the pollination services provided to the agricultural sector is estimated to run to €2.6 billion.”

Save The Bees To Save The Planet (Giorgio Torrazza)

In 2004, local production of acacia, chestnut, citrus and meadow flower honey in Italy fell by half and the reason for this is very simple: the bees are dying. According to estimates released by the beekeepers associations, every year some 175-thousand tons of chemical substances are sprayed onto the fields, substances that pollute and compromise the ecosystem in which the bees live and reproduce. Here in Italy there are some 40-thousand beekeepers and 12-thousand bee-product manufacturers, and if you include all the associated secondary enterprises, together they generate a turnover of somewhere between €57 and €62 million per year. The value of the pollination services provided to the agricultural sector is estimated to run to €2.6 billion.

What is of inestimable value to mankind instead is that according to the FAO data, bees are responsible for pollinating 71 of the top 100 crops that constitute around 90% of all the foodstuff products worldwide. The multinationals encourage the indiscriminate use of insecticides and weed killers, many of which are currently banned in the European Union, but if the TTIP were to be approved, according to a study conducted by the Center for International and Environmental Law, no less than 82 pesticides currently banned in Europe but approved for use in the USA would flood onto the market, further aggravating an already dire situation. This is total folly. We interviewed a beekeeper by the name of Giorgio Torrazza who loves bees and explains in his own simple way precisely who is causing the problem and how to resolve it. #SavetheBees to save the planet!

The bee emergency is linked to parasites that come in from outside the country. There is the Varroa parasitic mite, which has been around for more than 30 years, then there is also the Asian predatory wasp and now there is also another parasite from Africa, the (Aethina tumida), which has already arrived in Calabria and will undoubtedly get here too. The parasite emergency is causing problems but it is still manageable at this stage. However, one of the things that is very difficult to manage at the moment are the chemical poisons that are being spread about like rose water on all the crops. If you spray a weed-killer, even if it is not classified as a pesticide, do you know what happens?

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Jan 202015
 
 January 20, 2015  Posted by at 10:44 am Finance Tagged with: , , , , , , , , , , ,  


DPC The steamer Cincinnati off Manhattan 1900

IMF Lowers Global Growth Forecast by Most in Three Years (Bloomberg)
Chinese Growth at 7.4% Is the Slowest Since 1990 (Bloomberg)
China’s $20 Trillion Headache Underscored by Stock Swings (Bloomberg)
Warning! Volatility May Await If ECB Launches QE (CNBC)
Draghi Weighs QE Compromise Showcasing Unity Shortfall (Bloomberg)
Endgame for Central Bankers (Steen Jakobsen)
Denmark Strikes Back at Speculators and Burnishes Peg Defenses (Bloomberg)
Denmark Should Cut Loose From Euro (Bloomberg)
Swiss Upending Polish Mortgages Unnerves Bank Bondholders (Bloomberg)
Iraq Back From The Brink With Largest Oil Output Since 1979 (CNBC)
Price Collapse Hits Scavengers Who Scrape the Bottom of Big Oil (Bloomberg)
The Keystone XL Pipeline (Energy Matters)
A Huge Credit Line Reset Looms Over Oil Drillers (Bloomberg)
Janjuah On 2015: Oil At $30; Bonds To Go Crazy (CNBC)
U.S. Won’t Intervene in Oil Market (Bloomberg)
Saudi Arabia Can Last Eight Years On Low Oil Prices (Guardian)
Europe ‘Faces Political Earthquakes’ (BBC)
If The Fed Has Nothing To Hide, It Has Nothing To Fear (Ron Paul)
A Solemn Pause (Jim Kunstler)
Whiplash! (Dmitry Orlov)
Why New Zealand Can Handle Europe, Oil Troubles (CNBC)
Bleak Future For Retirees As Savings Slashed (CNBC)
Disease Threat To Wild Bees from Commercial Bees (BBC)

All that’s wrong, put in just a few words: “We want to make sure that when there’s an announcement, that it’s as large as what the market’s expecting.” The ECB should do what’s good for people, not what markets expect. That’s insiduous.

IMF Lowers Global Growth Forecast by Most in Three Years (Bloomberg)

The IMF made the steepest cut to its global-growth outlook in three years, with diminished expectations almost everywhere except the U.S. more than offsetting the boost to expansion from lower oil prices. The world economy will grow 3.5% in 2015, down from the 3.8% pace projected in October, the IMF said in its quarterly global outlook released late Monday. The lender also cut its estimate for growth next year to 3.7%, compared with 4% in October. The weakness, along with prolonged below-target inflation, is challenging policy makers across Europe and Asia to come up with fresh ways to stimulate demand more than six years after the global financial crisis.

“The world economy is facing strong and complex cross currents,” Olivier Blanchard, the IMF’s chief economist, said in the text of remarks at a press briefing Tuesday in Beijing. “On the one hand, major economies are benefiting from the decline in the price of oil. On the other, in many parts of the world, lower long-run prospects adversely affect demand, resulting in a strong undertow.” The IMF cut its outlook for consumer-price gains in advanced economies almost in half to 1% for 2015. Developing economies will see inflation this year of 5.7%, a 0.1 percentage point markup from October’s projections, the fund said. The growth-forecast reduction was the biggest since January 2012, when the fund lowered its estimate for expansion that year to 3.3% from 4% amid forecasts of a recession in Europe.

The IMF marked down 2015 estimates for places including the euro area, Japan, China and Latin America. The deepest reductions were in places suffering from crises, such as Russia, or for oil exporters including Saudi Arabia. IMF Managing Director Christine Lagarde outlined the sobering outlook in her first speech of the year last week, saying that oil prices and U.S. growth “are not a cure for deep-seated weaknesses elsewhere.” The U.S. is the exception. The IMF upgraded its forecast for the world’s largest economy to 3.6% growth in 2015, up from 3.1% in October. Cheap oil, more moderate fiscal tightening and still-loose monetary policy will offset the effects of a gradual increase in interest rates and the curb on exports from a stronger dollar, the fund said.

In Europe, weaker investment will overshadow the benefits of low oil prices, a cheaper currency and the European Central Bank’s anticipated move to expand monetary stimulus by buying sovereign bonds, according to the IMF. The fund lowered its forecast for the 19-nation euro area to 1.2% this year, down from 1.3% in October. The ECB should go “all in” in its bond-buying program, Blanchard said on Bloomberg TV. “We want to make sure that when there’s an announcement, that it’s as large as what the market’s expecting.”

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Why anyone would believe numbers like these is beyond me.

Chinese Growth at 7.4% Is the Slowest Since 1990 (Bloomberg)

China’s stimulus efforts began kicking in late last year, boosting industrial production and retail sales, and helping full-year economic growth come close to the government’s target. Gross domestic product rose 7.3% in the three months through December from a year earlier, compared with the median estimate of 7.2% in a Bloomberg News survey. GDP expanded 7.4% in 2014, the slowest pace since 1990 and in line with the government’s target of about 7.5%. The yuan and local stocks advanced after the release. A soft landing for China would help a global economy contending with weakness that spurred the IMF’s steepest cut to its world growth outlook in three years.

China’s central bank cut interest rates for the first time in two years in November and has added liquidity in targeted steps to buoy demand. “The economy’s performance in 2014 stands out against the widespread hard-landing fears that prevailed early last year,” said Tim Condon at ING in Singapore. “That the authorities were able to sustain close-to-target growth and increase the tempo of economic reforms –- shadow banking, local government finances -– and sustain the property-cooling measures demonstrates the effectiveness of the targeted measures.” “Markets should breathe a sigh of relief as the economy enters 2015 in a better shape than had been expected,” said Dariusz Kowalczyk at Credit Agricole in Hong Kong.

“The data lowers the need for further stimulus, but there remains some room for easing as risks are skewed to the downside.” [..] Quarter-on-quarter, China’s performance was less robust, slowing to 1.5% growth in the three months through December from 1.9% in the third quarter. “Growth momentum eased in the fourth quarter from the previous three months due to property-related weakness,” said Wang Tao, chief China economist at UBS Group AG in Hong Kong. “Property starts deepened their decline, which also dragged down heavy industry and related investment. Property will continue to drag down growth this year.”

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China imitates the west: “Funds aren’t flowing into economic activities on the ground. Instead, people are adding leverage to speculate.”

China’s $20 Trillion Headache Underscored by Stock Swings (Bloomberg)

For China’s central bank, the 36% stock market rally through Jan. 16 spurred in part by a surprise November interest-rate cut is the latest reminder that it’s easier to unleash money than to guide it to the right places. Since Zhou Xiaochuan became People’s Bank of China governor in late 2002, the broad money supply base has expanded almost seven times to 122.8 trillion yuan ($20 trillion) while the economy has grown about five times. That translates to a M2/GDP ratio of about 200% versus about 70% in the U.S. That liquidity springs up like a jack-in-the-box, driving property prices, then shifting to stocks, before moving on to whatever may be next. Such sprees help explain the PBOC’s reluctance to cut banks’ required reserve ratios even as the economy slows. Instead, it’s trying targeted tools to guide money to preferred areas such as farming and small business.

“The central bank will continue to face structural challenges in 2015 and beyond,” said Shen Jianguang at Mizuho. “Funds aren’t flowing into economic activities on the ground. Instead, people are adding leverage to speculate.” China’s benchmark stock index plunged the most in six years on Monday in Shanghai, led by brokerages, after regulatory efforts to rein in record margin lending sparked concern that speculative traders will pull back from the world’s best-performing stock market in 2014. The move to control margin lending was to “pave the way for more monetary easing,” according to Zhu Haibin at JPMorgan in Hong Kong. The action was to stop future monetary easing from flowing into the stock market, Zhu said in an interview with Bloomberg Television today.

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“If we want to help governments that are in trouble let’s do it – but let the parliaments decide rather than this technocratic body, the ECB council.”

Warning! Volatility May Await If ECB Launches QE (CNBC)

One of Europe’s most influential economists has warned that the quantitative easing measures seen being unveiled by the ECB this week could create deep market volatility, akin to what was seen after the Swiss National Bank abandoned its currency peg. “There was so much capital flight in anticipation of the QE to Switzerland, that the Swiss central bank was unable to stem the tide, and there will be more effects of that sort,” the President of Germany’s Ifo Institute for Economic Research, Hans-Werner Sinn, told CNBC on Monday. This week, the ECB holds its two-day policy meeting and is widely seen unveiling a U.S. Federal Reserve-type government bond-purchasing program, known as quantitative easing or QE. Sinn, a fierce critic of QE, said the launch of such a program would bring more market volatility, of the kind seen on Thursday after the Swiss National Bank abandoned its euro/Swiss franc floor.

“He (ECB President Mario Draghi) will do it, and what will the markets do, they will happy to be able to sell the government bonds, which they consider as partly toxic and they will have a lot of cash. What will they do – they will buy real estate, there could be a revival of the real estate market but they will primarily try to take it abroad. And they have already begun doing that – what you see in Switzerland,” Sinn told CNBC. Sinn said that a ECB government bond-buying program would make markets “happy”, but that it was not the right way to go about bailing out the euro zone. “If we want to help governments that are in trouble let’s do it – but let the parliaments decide rather than this technocratic body, the ECB council. All these (QE) measures go way beyond monetary policy – these are bailout operations to help banks and states which are unable to cope with normal rates of interest,” Sinn told CNBC.

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What an incredible mess even before it’s been announced.

Draghi Weighs QE Compromise Showcasing Unity Shortfall (Bloomberg)

Mario Draghi is weighing how much a compromise on euro-area stimulus would reveal about the currency bloc’s fault lines. As the European Central Bank president and his Executive Board sit down today to formulate a bond-buying proposal to fend off deflation, one option is to ring-fence the risks by country. While that may win over some of Draghi’s opponents when the Governing Council meets on Jan. 22, it might also shine a spotlight on the lack of unity within the union. “An absence of risk-sharing could be taken as a bad signal by the market with respect to the singleness of monetary policy and could be self-defeating,” said Nick Matthews at Nomura. “However, it may prove to be a necessary compromise to make the design of QE more palatable for Governing Council members, and is preferable to having to limit the size of the program.”

Investors are banking on Draghi to announce quantitative easing at his press conference after the council meets, with economists in a Bloomberg survey estimating the package at €550 billion euros. What remains unclear is how far he’ll go to mollify critics who say unelected central-bank officials are transferring risk from weaker nations to stronger ones. The tension surfaced again yesterday at a conference in Dublin. Irish Finance Minister Michael Noonan said having national central banks buy government bonds would be “ineffective,” drawing a response from ECB Executive Board member Benoit Coeure.

“The discussion is how to design it in a way that works, in a way that makes sense,” Coeure said. “If this is a discussion about how best to pool sovereign risk in Europe, and how to make the pooling of sovereign risk take a step forward in an environment where the governments themselves have decided not to do it, then this is not the right discussion.” Klaas Knot, the Dutch central-bank governor, told Der Spiegel last week that “we have to avoid that decisions are taken through the back door of the ECB.”

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“Studies show that the business cycle was less volatile before the Federal Reserve was born. The presence of the Fed means that the implicit backing of the Fed allows excess leverage..”

Endgame for Central Bankers (Steen Jakobsen)

The SNB suddenly abandoning the CHF ceiling had wide consequences last week as we were all taken by surprise. The fact that it would and should happen eventually was not lost on the market, but the SNB was, as late as last weekend, talking tough and telling the market that the floor was an integral part of Swiss monetary policy. Then suddenly it was not. I fully understand the rationale for the move but, like most of the market, I remain extremely disappointed in the SNB’s communication and handling of the issue. But isn’t the bigger lesson or bigger question: Why is it that most people trust or bother to listen to central banks? Major centrals banks claim to be independent, but they are all ultimately under the control of politicians.

Many developed countries have tried to anchor an independent central bank to offset pressure from politicians and that’s well and good in principle until an economy or the effects of a monetary policy decision beginning spinning out of control. At zero bound for growth and for interest rates, politicians and central banks switch to survival mode, where rules are bent or even broken to fit an agenda of buying more time. Just look at the Eurozone crisis over the past eight years: every single criteria of the EU treaty has been violated, in spirit of not strictly according to the letter of the law, all for the overarching aim of “keeping the show on the road”. No, the conclusion has to be that are no independent central banks anywhere! There are some who pretend to be, but none operates in a political vacuum. That’s the reality of the moment.

I would not be surprised to find that the Swiss Government overruled the SNB last week and the interesting question for this week of course will be if the German government will overrule the Bundesbank on QE to save face for the Euro Zone? Likely…. The most intense focus for the last few years in central banking policy-making has been on “communication policy”, which boiled down to its essentials is merely an appeal to “believe us and act accordingly”, often without any real policy action. Look at the Federal Reserve’s forward guidance: They are constantly too optimistic on growth and inflation. Constantly. The joke being to get the proper GDP and inflation forecast you merely take the Fed’s own forecasts and deduct 100-150 bps from both growth and inflation targets and Voila! You have the best track record over time.

Studies show that the business cycle was less volatile before the Federal Reserve was born. The presence of the Fed means that the implicit backing of the Fed allows excess leverage (gearing), and this has resulted in bigger and bigger collapses in financial markets as each collapse triggers yet another central bank “put” that then enables the next bubble to inflate. And the trend of major crashes has been increasing in frequency: 1987 stock crash, 1992 ERM crisis, 1994 Mexico “Tequila crisis”, 1998 Asian crisis and Russian default, 2000 NASDAQ bubble, 2008 stock market crash, and now 2015 SNB, ECB QE, Russia and China, which will lead to what? I don’t know, but clearly the world of finance and the flow of money is increasing in velocity, meaning considerably more volatility.

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“Denmark’s three-decades-old peg is backed by the ECB, unlike the SNB’s former currency regime..” And that’s supposed to make us feel better?

Denmark Strikes Back at Speculators and Burnishes Peg Defenses (Bloomberg)

Denmark is trying to silence currency speculators as the government and central bank insist the Nordic country won’t follow Switzerland in severing its euro ties. “Circumstances significantly different from Denmark’s” were behind the Swiss National Bank’s decision, Danish Economy Minister Morten Oestergaard said in a phone interview. “Any comparison between Denmark and Switzerland is impossible.” The comments followed yesterday’s surprise decision by the Danish central bank to cut its deposit rate by 15 basis points to minus 0.2%, matching a record low last seen during the darkest hours of Europe’s debt crisis in 2012. Like the Swiss, the Danes lowered rates after interventions in the market proved insufficient.

Denmark will probably deliver another rate cut on Jan. 22 as krone “appreciation pressure prevails” with the European Central Bank set to present details of its bond-purchase program, Danske Bank reiterated today. Danske, Denmark’s biggest bank, says it’s been inundated by calls from offshore investors and several hedge funds seeking advice on how to profit from the latest developments in currency markets. SEB, Scandinavia’s largest currency trader, says it’s fielded similar calls. Their response has been to tell investors that Denmark’s three-decades-old peg is backed by the ECB, unlike the SNB’s former currency regime. Denmark has “a long-lasting and politically firmly anchored fixed-currency policy,” Oestergaard said. “This situation should not be overly dramatized.”

To underline the point, the central bank yesterday sought to reassure investors that its monetary policy arsenal is big enough should speculators try to test its resolve. “We have the necessary tools” to defend the peg,Karsten Biltoft, head of communications at the central bank, said by phone. Asked whether Denmark could ever consider abandoning its currency peg, he said, “Of course not.” Biltoft described as “somewhat off” any attempt to draw parallels between the Danish and Swiss currency pegs. “I don’t think you can make a comparison between the two cases,” he said. Yet the speculation is proving hard to put to rest. Defending Denmark’s euro peg “might be easier said than done in the current environment,” Ken Wattret at BNP Paribas, said. “The next test will of course be the upcoming ECB policy announcement on Thursday.” Given BNP’s estimate that the ECB will purchase €600 billion ($697 billion) in sovereign bonds, “further upward pressure on the DKK is likely,” he said.

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As if they have a choice.

Denmark Should Cut Loose From Euro (Bloomberg)

Europe’s currency war is picking up speed. On Monday, with the Danish krone appreciating against the euro, the Danish central bank sought to make the currency less attractive to safe-haven investors by cutting the deposit rate to -0.2% and the lending rate to 0.05%. After the Swiss National Bank abandoned its peg to the euro and cut interest rates, bankers and traders wondered which country would be the next to follow suit. No sooner had the franc zoomed upward than the Danish central bank prepared for an onslaught. Defending the krone’s peg to the euro could get a lot harder once the ECB begins its government bond-buying program, widely expected on Thursday. Yet maintaining the peg is an act of faith in Denmark.

The central bank should rethink its commitment. With a more flexible monetary policy, it could have done more to stimulate the economy since the global financial crisis, just as it could have prevented some of the overheating that took place in the years running up to the crisis. The krone has been pegged to the euro since 1999, and to the deutschemark before that. It’s allowed to fluctuate no more than 2.25% from 7.46038 to the euro. In practice, the central bank tries to keep the fluctuations within 0.5%. It also marches to the ECB’s monetary drum, including changing interest rates on the same day as ECB decisions, or in response to exceptional pressures on the euro-krone exchange rate. The peg was put in place to stabilize Danish monetary policy after a period of high inflation, which peaked at 12.3% in 1980.

It’s not clear that the peg is a good idea now. Unlike Sweden, which has a floating currency and until 2010 had a more sensible monetary policy, Denmark hasn’t fully recovered from the global economic crisis. Real gross domestic product per capita is still more than 7% below the pre-crisis peak. The desirability of the peg, however, is beyond debate in political and economic policy circles. When a prominent economist and former Danish government economic adviser was asked to compare the performance of the Danish economy with Sweden’s in December 2013, he was unable to name any area of economic policy where the Swedes did better. Monetary policy wasn’t mentioned at all; only structural reforms such as marginal tax rates and labor market policies were.

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Poland and especially Hungary have huge amounts of mortgages denominated in Swiss francs.

Swiss Upending Polish Mortgages Unnerves Bank Bondholders (Bloomberg)

Among the victims of last week’s shock surge in the Swiss franc are bond investors in Polish banks, which hold $35 billion in mortgages denominated in the currency. Yields on Eurobonds for lenders including Bank Polski and MBank jumped to five- and nine-month highs after the Swiss National Bank unexpectedly ditched its currency cap. The move sent the zloty tumbling against the franc on concern more Poles will fall behind on repaying franc-denominated home loans. JPMorgan said the nation’s banks may need to make additional provisions for non-performing mortgages in the currency, whose value is equivalent to 6.7% of gross domestic product.. While the zloty plunged 20% against the franc following the SNB action, Polish lenders have adequate capital to withstand a drop of more than twice that, the financial markets regulator said last week, citing results of October stress tests.

“This is clearly negative and increases the risks in the banking sector, which may or may not materialize,” Marta Jezewska-Wasilewska at Wood & Co., wrote in a research note Jan. 15. “Polish banks have managed to deal with the FX mortgage issue relatively well since 2008.” The yield on PKO’s 2019 euro-denominated bonds rose 40 basis points in the last three days to 1.56%, the highest since Aug. 22. The rate on similar-maturity MBank debt soared 83 basis points to 2.34% in the same period. The currency swing pushed banking stocks on the Warsaw Stock Exchange down by the most in more than three years, with Getin Noble Bank, owned by billionaire Leszek Czarnecki, leading declines after a 16% drop on Jan. 15. Getin’s Swiss-franc loans accounted for “slightly” above 20% of total loans at the end of last year, spokesman Wojciech Sury said in an e-mail last week. The bank sees no threat its liquidity levels will fall below the required minimum and is “ready for different scenarios,” he said.

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“They are not subject to an OPEC quota at the moment, and could flood the market”.

Iraq Back From The Brink With Largest Oil Output Since 1979 (CNBC)

In spite of still struggling to recover from the 2003 war and the continuing Islamic State (IS) insurgency, Iraq produced a record amount of oil last month, the country’s oil minister announced at the weekend. Unveiling production of 4 million barrels of crude per day in December, Adel Abdel Mehdi told reporters that the total was ” a historical figure, and the first time Iraq has achieved this.” Speaking at a joint press conference with his Turkish counterpart Taner Yildiz in Baghdad, the Iraqi minister added the production increase would “make up” for the recent slump in oil prices. Iraq, where lawmakers are now looking at a 2015 draft budget based on an average of $60 dollars a barrel, depends on crude exports to generate over 90% of government revenues. The barrel export count, if confirmed, also trumps estimates of 3.7 million b/d by the International Energy Agency (IEA) published last week.

The agency’s report also identified Iraq as the main driver behind a rise in OPEC supply in December by 80,000 b/d to 30.48 million b/d. Iraq has not pumped as much crude oil since 1979, when the previous record was set with 3.56 million b/d . The December total would make Iraq OPEC’s second largest producer, behind Saudi Arabia at around 7 million b/d and ahead of Iran, the United Arab Emirates and Kuwait which each produce 2.7 b/d. “It’s quite a significant increase, but in-line with all the investment that was done over the last 10 years,” Samir Kasmi at Dubai-based advisory firm CT&F, told CNBC. “They are not subject to an OPEC quota at the moment, and could flood the market”. Abdel Mehdi explained production in the region of Kirkuk, which was held by IS troops last year before being liberated in June, would reach 375,000 b/d for the first three months of 2015. Production would eventually rise to 600,000 b/d by April.

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10% of US production.

Price Collapse Hits Scavengers Who Scrape the Bottom of Big Oil (Bloomberg)

In the $1.6 trillion-a-year oil business, there are global titans like Exxon Mobil that wield more economic might than most of the nations on Earth, and scores of wildcatters scouring land and sea for the next treasure troves of crude. Then there are the strippers. For these canaries in the proverbial coal mine, the journey keeps going deeper and darker. Strippers are scavengers who make a living by resuscitating once-prolific oil fields to coax as little as a bathtub full of crude a day from each well. Collectively, the strippers operate almost half-a-million oil wells that produced more than 730,000 barrels a day in 2012, the most recent year for which figures were available.

That’s one of every 10 barrels produced in the U.S. – equivalent to the entire output of Qatar, or half the crude Shell, Europe’s largest energy company, pumps worldwide every day. With oil prices down 57% since June, these smallest of producers will be the first to succumb to the Great Oil Bust of 2015. “This is killing us,” said Todd Shulman, a University of Colorado-trained geologist who ran fracking crews in the Rocky Mountains before returning to Vandalia, Illinois, in 1984 to help run the family’s stripper well business. Stripper wells – an inglorious moniker for 2-inch-wide holes that produce trickles of crude with the aid of iconic pumping machines known as nodding donkeys – were a vital contributor to U.S. oil production long before the shale revolution.

Though a far cry from the booming shale gushers that have pushed American crude production to the highest in a generation, stripper wells are a defining image of the oil business, scattered throughout rural backwaters abandoned by the world’s oil titans decades ago. With the price of crude dipping so low, there’s no way Shulman will be able to drill a new well that regulators have already permitted. Nor is he even going to turn on a well finished last month that’s ready to start production. It would be foolhardy to harvest crude from wells that won’t pay for themselves, said Shulman, who scrapes remnants from old Texaco (CVX) and Shell fields 310 miles south of Chicago, in the heart of what had been a booming oil region in the 1930s. He’ll wait for prices to rebound.

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“The crude Keystone XL delivers will make no difference to US crude imports; it will simply displace crude imports from elsewhere.”

The Keystone XL Pipeline Makes No Difference (Energy Matters)

Lobbyists are mobilizing to advance it. Environmentalists are mobilizing to stop it. The newly-elected Republican House has already voted to approve it. So has the newly elected Republican Senate. Obama has threatened a veto. The media are having a field day. What’s so important about Keystone XL? Well nothing, really. Keystone XL is basically just another pipeline; a little longer and larger than most, but not unusually so, and it goes nowhere pipelines don’t already go. All it does is increase the capacity of the existing Keystone pipeline system, which has already transported over 550 million barrels of Canadian heavy crude from Alberta to the US. The crude Keystone XL delivers will make no difference to US crude imports; it will simply displace crude imports from elsewhere.

And if Keystone XL doesn’t get built the crude it would have carried will go somewhere else, meaning that no CO2 emissions would be saved by not building it. (Although building it probably would save CO2 emissions because much of the Canadian crude that now moves south on trucks and rail tankers would pass through Keystone instead.) So what’s all the fuss about? What’s happened, of course, is that Keystone XL has been blown totally out of proportion, to the point where it’s become a cause célèbre. But how it got to this point is something for the psychologists, sociologists and political scientists to argue about. Here we will confine ourselves to the facts.

First, the purpose of Keystone XL. Its purpose is simply to supply more Canadian heavy crude to US Gulf Coast refineries that are facing potential feedstock shortages because of declining heavy crude production from Mexico and Venezuela, their main historic suppliers. This is a perfectly reasonable business proposition. Canada is motivated to sell, the refineries are motivated to buy and both will profit from the transaction. (Scotland has the same motivation in wishing to sell its surplus wind power to England. The difference is that Canada can deliver a product the client wants when the client wants it.) Second, the Canada-US pipeline system. There’s a perception that Keystone XL will be the first pipeline to bring Canadian crude to the US, but as shown in Figure 1 a substantial network of oil pipelines linking the two countries already exists. (Keystone XL is the blue line running northwest of Steele City):

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“I call it a liquidity spiral. They’ll start burning right through cash.”

A Huge Credit Line Reset Looms Over Oil Drillers (Bloomberg)

Oil and gas companies have April circled on their calendars. That’s when their lenders will recalculate the value of properties that energy companies staked as loan collateral. With those assets in decline along with oil prices, banks are preparing to cut the amount they’re willing to lend, crimping the ability of U.S. drillers to keep production growing. “This could start a downward spiral for some of these companies because liquidity will dry up,” said Thomas Watters, managing director of oil and gas research for Standard & Poors in New York. “I call it a liquidity spiral. They’ll start burning right through cash.” More than 20 U.S. exploration and production companies have used at least 60% of their credit lines, according to Bloomberg analyst Spencer Cutter. The energy industry is facing a cash squeeze after U.S. oil prices fell 60% since June.

Drillers have already cut spending to conserve cash. If credit lines are cut, the most indebted producers will be left scrambling to raise money elsewhere. New loans will be expensive – if they’re available at all. The credit lines, which typically are reset each spring and fall based on the value of borrowers’ petroleum reserves, operate like credit cards. To pay them off, companies have in the past sold off assets or issued bonds. The value of oil properties has declined at the same time that the borrowing environment for energy companies has gotten worse. At least one junk-rated company, Breitburn, has gotten an early jump on discussions with its lender. Breitburn’s credit limit was raised to $2.5 billion from $1.6 billion on Nov. 19 as a result of the acquisition of another energy company.

About three months ago, Los Angeles-based Breitburn attempted to sell $400 million of bonds to pay down its $2.5 billion credit line, but canceled the offering as oil falling below $90 a barrel roiled credit markets. The credit line is 88% drawn, according to regulatory filings. With the high-yield energy market still “challenged,” Breitburn is considering tapping the loan market, Jim Jackson, the oil producers’ chief financial officer, said in a phone interview. If its credit line is reduced to below what’s already been borrowed, “we would have six months to close that gap,” he said. “We’re being very pro-active.” Last week, S&P said it might downgrade Breitburn’s credit rating over concerns the company would face cash shortfalls if it couldn’t replace money from a reduced credit line.

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“There is a point in time where disinflation turns into deflation and then you start worrying about that potential car crash..”

Janjuah On 2015: Oil At $30; Bonds To Go Crazy (CNBC)

If you thought 2014 was volatile, hold on to your hats this year as the price of oil could hit $30 a barrel and the bond markets will outperform, according to Bob Janjuah, a closely-watched strategist from Nomura Securities. He told CNBC on Monday that there was little chance of Saudi Arabia changing its decision not to cut oil production, despite the 60% fall in prices since June 2014, and the cost of a barrel could head even lower. “Oil can go up in the short-term but I think actually that there’s some political motivations at play here and Saudi Arabia is at risk of losing its position as the marginal price-setter and I don’t think they want to lose that position,” Janjuah, co-head of cross-asset allocation strategy at Nomura, told CNBC Monday.

“I think the Saudis will potentially carry on (with their policy of not cutting production) and production will remain high but my head target is $30 – $35 as where we could get to. Where prices are now, I think a twenty dollar move is more difficult but I think that’s the risk and out there,” he told CNBC Europe’s “Squawk Box.” Janjuah believed that Saudi Arabia – the leading member of OPEC – would be content to maintain that pressure on the U.S. along with other major oil producers such as Russia. While some economies could benefit from lower oil prices, such as major importer Europe, Janjuah warned about the U.S. whose energy industry has grown thanks to its “fracking” of shale oil.

“If you look at the U.S. economy, the bulk of capital expenditure and jobs growth has been in and around the shale and energy-related sectors so if crude is down around the $30-$35 mark for a significant period of time I think you’re going to see a default cycle in the U.S. energy sector.” “I think disinflation is the key theme (this year) so you have to like bonds,” Janjuah said. “There is a point in time where disinflation turns into deflation and then you start worrying about that potential car crash where we start to worry about growth and earnings and how that hits the equity trade.”

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Translation: frack on!

U.S. Won’t Intervene in Oil Market (Bloomberg)

The U.S. won’t intervene in the oil market amid falling crude prices, according to Amos Hochstein, the U.S. State Department’s energy envoy. The U.S. will let “the market” decide what happens, Hochstein said in an interview at a conference in Abu Dhabi yesterday. Hochstein is special envoy and coordinator for international affairs at the State Department’s Bureau of Energy Resources. “When people ask the question ‘what will the U.S. do?,’ it’s really the market that’s going to have to decide what happens,” Hochstein said. “This is about a global market that is addressing the supply-demand curve.” Asked what the U.S. could do about falling prices and instability in oil markets, he said: “We do have mechanisms to work with our partners around the world if something extreme happens, but that’s not where I think we are and I think the markets so far can adjust themselves.”

Oil prices have dropped 53% in the past year as growing production from the U.S., Russia and OPEC overwhelmed demand. The International Energy said last week that the effects on U.S. production are so far “marginal.” “One of the most remarkable aspects of this recent period has been the resilience of the American energy market,” Hochstein said. U.S. oil production growth has swelled to its fastest pace in more than three decades, driven by output from shale deposits. Cheaper oil prices won’t stop development of alternative energy sources, he said. “We have really switched paradigms here where renewable energy really can continue to grow, even when there are low oil prices,” he said. “That’s true globally.”

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Not politically, it can’t.

Saudi Arabia Can Last Eight Years On Low Oil Prices (Guardian)

A former adviser to Saudi Arabia has said the country can withstand eight years or more of low oil prices as tensions over the price slump simmered between the world’s biggest oil exporter and Iran. Mohammad al-Sabban told the BBC that Saudi Arabia was concerned about the falling oil price but its cash reserves and planned budget cuts meant it could cope with a long period of depressed prices. “Saudi Arabia can sustain these low oil prices for at least eight years. First, we have huge financial reserves of about 3tn Saudi riyals (£527bn). Second, Saudi Arabia is embarking now on rationalising its expenditure, trying to take all the fat out of the budget. I think [Saudi Arabia] is worried but we [have to] wait for the full medicine that we have prescribed for ourself to take its course.”

Without cuts in spending on infrastructure, sports stadiums and new cities, Saudi Arabia can withstand low oil prices for at least four years, said Sabban, a former adviser to the Saudi minister for petroleum. He also suggested that lower oil prices could have long-term benefits for Saudi Arabia. Saudi Arabia has refused to cut production despite a more than 50% fall in the price of oil since last summer. “To shorten the cycle, you need to allow prices to go as low as possible to see those marginal producers move out of the market on the one hand, and also if there is any increase in demand that will be welcomed.” His comments were a further signal that Saudi Arabia was prepared to use its financial strength to ride out depressed oil prices now piling pressure on other producers, including Iran, which also faces western sanctions over its nuclear programme.

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Thank you Brussels for bringing back extremism.

Europe ‘Faces Political Earthquakes’ (BBC)

Political earthquakes could be in store for Europe in 2015, according to research by the Economist Intelligence Unit for the BBC’s Democracy Day. It says the rising appeal of populist parties could see some winning elections and mainstream parties forced into previously unthinkable alliances. Europe’s “crisis of democracy” is a gap between elites and voters, EIU says. There is “a gaping hole at the heart of European politics where big ideas should be”, it adds. Low turnouts at the polls and sharp falls in the membership of traditional parties are key factors in the phenomenon. The United Kingdom – going to the polls in May – is “on the cusp of a potentially prolonged period of political instability”, according to the Economist researchers.

They say there is a much higher than usual chance that the election will produce an unstable government – predicting that the populist UK Independence Party (UKIP) will take votes from both the Conservatives and Labour. The fragmentation of voters’ preferences combined with Britain’s first-past-the-post electoral system will, the EIU says, make it increasingly difficult to form the kind of single-party governments with a parliamentary majority that have been the norm. But the most immediate political challenge – and test of how far the growing populism translates into success at the polls – is in Greece. A snap general election takes place there on 25 January, triggered by parliament’s failure to choose a new president in December. Opinion polls suggest that the far left, populist Syriza could emerge as the strongest party. If it did and was able to form a government, the EIU says this would send shock waves through the European Union and act as a catalyst for political upheaval elsewhere.

“The election of a Syriza government would be highly destabilising, both domestically and regionally. It would almost certainly trigger a crisis in the relationship between Greece and its international creditors, as debt write-offs form one of the core planks of its policy platform,” the EIU says. “With similar anti-establishment parties gaining ground rapidly in a number of other countries scheduled to hold elections in 2015, the spill-over effects from a further period of Greek turmoil could be significant.” Other examples of European elections with potential for unpredictable results cited by EIU include polls in Denmark, Finland, Spain, France, Sweden, Germany and Ireland. “There is a common denominator in these countries: the rise of populist parties,” the EIU says, “Anti-establishment sentiment has surged across the eurozone (and the larger EU) and the risk of political disruption and potential crises is high.”

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“The audit revealed that between 2007 and 2008 the Federal Reserve loaned over $16 trillion — more than four times the annual budget of the United States — to foreign central banks and politically-influential private companies.”

If The Fed Has Nothing To Hide, It Has Nothing To Fear (Ron Paul)

Since the creation of the Federal Reserve in 1913, the dollar has lost over 97% of its purchasing power, the US economy has been subjected to a series of painful Federal Reserve-created recessions and depressions, and government has grown to dangerous levels thanks to the Fed’s policy of monetizing the debt. Yet the Federal Reserve still operates under a congressionally-created shroud of secrecy. No wonder almost 75% of the American public supports legislation to audit the Federal Reserve. The new Senate leadership has pledged to finally hold a vote on the audit bill this year, but, despite overwhelming public support, passage of this legislation is by no means assured. The reason it may be difficult to pass this bill is that the 25% of Americans who oppose it represent some of the most powerful interests in American politics.

These interests are working behind the scenes to kill the bill or replace it with a meaningless “compromise.” This “compromise” may provide limited transparency, but it would still keep the American people from learning the full truth about the Fed’s conduct of monetary policy. Some opponents of the bill say an audit would somehow compromise the Fed’s independence. Those who make this claim cannot point to anything in the text of the bill giving Congress any new authority over the Fed’s conduct of monetary policy. More importantly, the idea that the Federal Reserve is somehow independent of political considerations is laughable. Economists often refer to the political business cycle, where the Fed adjusts its policies to help or hurt incumbent politicians.

Former Federal Reserve Chairman Arthur Burns exposed the truth behind the propaganda regarding Federal Reserve independence when he said, if the chairman didn’t do what the president wanted, the Federal Reserve “would lose its independence.” Perhaps the real reason the Fed opposes an audit can be found by looking at what has been revealed about the Fed’s operations in recent years. In 2010, as part of the Dodd-Frank bill, Congress authorized a one-time audit of the Federal Reserve’s activities during the financial crisis of 2008. The audit revealed that between 2007 and 2008 the Federal Reserve loaned over $16 trillion — more than four times the annual budget of the United States — to foreign central banks and politically-influential private companies.

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”Next time around, the federals are going to have to confiscate stuff, break promises, take away things, and rough some people up.”

A Solemn Pause (Jim Kunstler)

Events are moving faster than brains now. Isn’t it marvelous that gasoline at the pump is a buck cheaper than it was a year ago? A lot of short-sighted idiots are celebrating, unaware that the low oil price is destroying the capacity to deliver future oil at any price. The shale oil wells in North Dakota and Texas, the Tar Sand operations of Alberta, and the deep-water rigs here and abroad just don’t pencil-out economically at $45-a-barrel. So the shale oil wells that are up-and-running will produce for a year and there will be no new ones drilled when they peter out — which is at least 50% the first year and all gone after four years.

Anyway, the financial structure of the shale play was suicidal from the get-go. You finance the drilling and fracking with high-yield “junk bonds,” that is, money borrowed from “investors.” You drill like mad and you produce a lot of oil, but even at $105-a-barrel you can’t make profit, meaning you can’t really pay back the investors who loaned you all that money, a lot of it obtained via Too Big To Fail bank carry-trades, levered-up on ”margin,” which allowed said investors to pretend they were risking more money than they had. And then all those levered-up investments — i.e. bets — get hedged in a ghostly underworld of unregulated derivatives contracts that pretend to act as insurance against bad bets with funny money, but in reality can never pay out because the money is not there (and never was.) And then come the margin calls. Uh Oh….

In short, enjoy the $2.50-a-gallon fill-ups while you can, grasshoppers, because when the current crop of fast-depleting shale oil wells dries up, that will be all she wrote. When all those bonds held up on their skyhook derivative hedges go south, there will be no more financing available for the entire shale oil project. No more high-yield bonds will be issued because the previous issues defaulted. Very few new wells (if any) will be drilled. American oil production will not return to its secondary highs (after the 1970 all-time high) of 2014-15. The wish of American energy independence will be steaming over the horizon on the garbage barge of broken promises. And all, that, of course, is only one part of the story, because there is the social and political fallout to follow.

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“Production can only be maintained through relentless drilling, and that relentless drilling has now stopped.”

Whiplash! (Dmitry Orlov)

Over the course of 2014 the prices the world pays for crude oil have tumbled from over $125 per barrel to around $45 per barrel now, and could easily drop further before heading much higher before collapsing again before spiking again. You get the idea. In the end, the wild whipsawing of the oil market, and the even wilder whipsawing of financial markets, currencies and the rolling bankruptcies of energy companies, then the entities that financed them, then national defaults of the countries that backed these entities, will in due course cause industrial economies to collapse. And without a functioning industrial economy crude oil would be reclassified as toxic waste. But that is still two or three decades off in the future.

In the meantime, the much lower prices of oil have priced most of the producers of unconventional oil out of the market. Recall that conventional oil (the cheap-to-produce kind that comes gushing out of vertical wells drilled not too deep down into dry ground) peaked in 2005 and has been declining ever since. The production of unconventional oil, including offshore drilling, tar sands, hydrofracturing to produce shale oil and other expensive techniques, was lavishly financed in order to make up for the shortfall. But at the moment most unconventional oil costs more to produce than it can be sold for. This means that entire countries, including Venezuela’s heavy oil (which requires upgrading before it will flow), offshore production in the Gulf of Mexico (Mexico and US), Norway and Nigeria, Canadian tar sands and, of course, shale oil in the US.

All of these producers are now burning money as well as much of the oil they produce, and if the low oil prices persist, will be forced to shut down. An additional problem is the very high depletion rate of “fracked” shale oil wells in the US. Currently, the shale oil producers are pumping flat out and setting new production records, but the drilling rate is collapsing fast. Shale oil wells deplete very fast: flow rates go down by half in just a few months, and are negligible after a couple of years. Production can only be maintained through relentless drilling, and that relentless drilling has now stopped. Thus, we have just a few months of glut left. After that, the whole shale oil revolution, which some bobbleheads thought would refashion the US into a new Saudi Arabia, will be over.

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New Zealand PM does hollow propaganda.

Why New Zealand Can Handle Europe, Oil Troubles (CNBC)

New Zealand’s exports may face headwinds from the decline in oil price and strengthening of its currency against the euro, but the country’s prime minister told CNBC that the “Kiwi economy” is set to carry on booming. The New Zealand dollar has appreciated just over 8% against the euro since in the last three months as expectations have risen that the European Central Bank (ECB) will announce a full-blown quantitative easing program when it meets this Thursday. The kiwi dollar, as it is known, strengthened further to a record high against the euro on Friday after the Swiss National Bank made a surprise policy move to abandon its minimum exchange rate against the euro. New Zealand Prime Minister John Key told CNBC that a stronger currency would not hinder the economy, one that is currently outperforming many developed nations.

“Obviously it’s had an impact as it’s pushed up the kiwi-euro rate and that makes it a little bit more difficult for our exporters but overall our economy is still very strong. We think we’ll grow 3.25% every year for the next three years, so about ten% over the next three years so we’re still confident we can get there, even with a higher exchange rate.” In December, Statistics New Zealand said the economy was growing faster than expected and had accelerated in the third quarter. Gross domestic product increased 1% in the third quarter from the previous quarter, according to the statistics body. Key said that the New Zealand economy was being helped by economic activity in the U.S. and he brushed aside concerns over a slowdown in growth in Asia. Europe was another matter, however.

“The U.S. is much stronger than people think now, we see a lot of activity out of the U.S. both in terms of tourists coming and the buying activity. Asia is still quite strident and there is some concern that China is going to fall over but I don’t think that’s going to happen. It’s still Europe that’s got to deal with its fundamental issues.” New Zealand’s third-quarter growth was driven by its primary industries, including the dairy industry and oil and gas exploration and extraction, which grew by 5.8%. After dairy, meat and wood, oil is the fourth-largest export for New Zealand and, as such, the steep decline in global oil prices could hit the country’s economy. Indeed, exploration companies like New Zealand Oil and Gas, TEG Oil and Key Petroleum are all looking to defer projects in the region.

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Thank ZIRP.

Bleak Future For Retirees As Savings Slashed (CNBC)

Millions of workers around the world could enter retirement with savings diminished by a fifth or more after getting into debt or financial difficulty, HSBC warned in a new report. According to the bank, the impact of the global economic downturn could be felt for decades by the vast number of people who raided their retirement funds and accumulated debt during the financial crisis. In a study of 16,000 people into global retirement trends, HSBC found that two in five workers stopped or reduced their savings for retirement during the downturn that began in 2007. The situation is particularly bad in the U.K. and Canada, the bank warned, where retirement savings have been nearly halved as a result of debts or financial constraints.

“Despite the fact that close to 70% of people feel like they will run out of money or not have enough to live on day-to-day in retirement, 40% of people today are either not saving for retirement or significantly reduced their savings for retirement,” Michael Schweitzer, head of sales and distribution for group wealth management at HSBC, told CNBC on Monday. “And that is going to cause a shortfall for millions of people – as much as a fifth when they do get to retirement.” Even with a recovery in the global economy, which the International Monetary Fund expects to grow 3.8% this year from 3.3% in 2014, debt accumulated during the financial crisis will continue to weigh on workers’ ability to save, HSBC said. According to the study, this gloom is being felt across the globe, with almost a quarter of working-age people anticipating living standards in retirement to be worse than they are today.

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Did anyone realize this?: “Wild honey bees can no longer be found in England or Wales ..”

Disease Threat To Wild Bees from Commercial Bees (BBC)

The trade in bees used for honey or to pollinate crops could have a devastating impact on wild bees and other insects, say scientists. New measures are needed to stop diseases carried by commercial bees spilling over into the wild, says a University of Exeter team. Evidence suggests bees bred in captivity can carry diseases that could be a risk to native species. Bees are used commercially to pollinate crops such as peppers and oilseed rape. Species of bees used for this purpose, or in commercial hives, are known to suffer from parasite infections and more than 20 viruses. Many of these can also infect wild bumble bees, wasps, ants and hoverflies.

The study, published in the Journal of Applied Ecology, reviewed data from existing studies to look at the potential for diseases to jump from commercial bees to insects in the wild. “Our study highlights the importance of preventing the release of diseased commercial pollinators into the wild,” said lead researcher Dr Lena Wilfert. “The diseases carried by commercial species affect a wide range of wild pollinators but their spread can be avoided by improved monitoring and management practices. “Commercial honey beekeepers have a responsibility to protect ecologically and economically important wild pollinator communities from disease.”

Several diseases of honey bee colonies are known. They include a parasite called the Varroa mite and a virus that leads to deformed wings, which has also been found in wild bumble bees. Vanessa Amaral-Rogers of the charity, Buglife, said the results of the study showed an urgent need for changes in how the government regulates the importation of bees. “Wild honey bees can no longer be found in England or Wales, thought to have been wiped out by disease,” she told BBC News. “Now these studies show how diseases can be transmitted between managed honey bees and commercial bumble bees, and could have potentially drastic impacts on the rest of our wild pollinators. “

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