Dec 042017
 
 December 4, 2017  Posted by at 1:44 pm Finance Tagged with: , , , , , , , , , ,  8 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Saul Leiter Raining on two 1957

 

First of all, let me reiterate that I don’t think Brexit is a bad thing per se. Getting rid of Brussels is at least as much of a relief as it is a headache. Moreover, Britain needed a makeover, badly, as has ironically been shown especially after the referendum. But as an outsider it is still top class theater to see it playing out. And the real high value drama hasn’t even started.

But we can already hear the orchestra changing tone, and mood, and the fat lady’s warming up her voice. To see the whole negotiating process being led and conducted by a woman who voted against initiating it in the first place is a guaranteed added bonus. Not sure Shakespeare would have found it a credible plotline, but there you go.

It’s much less amusing to see that poverty in Britain is soaring and a fifth of the population is now poor, including an additional 400,000 children in the past 5 years. But that is a strong indicator of how much of a failed state the country has become, and it makes the Brexit vote outcome that much easier to explain. Still, whether the vote had been Leave or Remain, the real damage had been done long before.

The people doing the negotiations are to a large extent accountable for that damage, they’re all Tories from the Cameron era, and Tony Blair, who’s just as much to blame, is speaking up again as well. The Brexit mess thus functions to expose the abject failure of the entire British political system as much as Donald Trump’s ascent to the US presidency does in America.

It’s now just a matter of learning the right lessons from these events. And that is not that the US would be fine if Trump were not there, or that Brexit itself is the main problem in the UK. It’s that these are the consequences of systems failing across the board, with Blair turning UK’s Labour party into a right wing force, and the DNC doing the same with the Democrats.

Try to take away people’s voices along with their money, and they will speak up. It’s one easy step from there for the other side of the spectrum to claim they are the real voice of the people, and getting the benefit of the doubt. Not that it will end there, but until and unless the left has re-defined itself as actual left again, representing people instead of themselves, there will be no easy way out.

That said, both Trump and Brexit will become mired in cesspools, just not because of Russia but because both turn against their fast impoverishing populations. But even then, redefining is a crucial issue.

 

As Theresa May is in Brussels to hold talks aimed merely at just getting negotiations started, something she will have to make hefty concessions for, the majority her party had before she called a snap election keeps slip sliding away. Labour would now get that majority. If she were smart, she’d call another election today, lose it and let Corbyn deal with the mess, but she won’t, the Tories are addicted to the smell of power in the morning, and so is May herself.

May seems to have reached some shaky sounding deal with the EU about the Irish border issue (“regulatory alignment”), but that will only lead to more problems (as will all deals she manages to reach in the talks). In this case, her coalition with Northern Ireland DUP party, which keeps her in power to begin with, comes under strain. Every solution will lead to another problem, and she can’t keep everybody happy.

Brexit is Pandora’s gift to Britain. Suppose the DUP accepts open borders with EU member Ireland, why would not Scotland, for instance, demand a similar deal?

 

Labour Open Up 8-Point Lead Over Conservatives In Latest Opinion Poll

Jeremy Corbyn’s Labour party has extended its lead over the Conservatives to eight points, according to a new poll that will provide grim reading for the Prime Minister. The poll by Survation puts Labour on 45%, with Theresa May’s Conservatives trailing behind on 37%, and the Liberal Democrats under Vince Cable on six%. An eight point lead, the polling company added, would likely put Labour into overall majority territory if such vote share totals were reflected at the ballot box.

Meanwhile, ever more people want a say in what Brexit will look like, via another referendum. Before the negotiations are finished, someone will add up how much Brexit will really cost, and that’ll be the end of it, unless the Tories prevent that second referendum. There will come a point that the Tories realize this whole process will push them out of power for a long time, but it’ll be too late then.

 

Second Brexit Referendum Has 16-Point Lead As Half Of Britons Back New Vote

Half of Britons want a public vote on the UK’s final Brexit deal with the EU once the Government’s negotiations are over, a new poll suggests. Of the 1,003 people surveyed in the Survation poll , 497, or 50%, said they would “support holding a referendum asking the public if they will accept or reject the deal”. A total of 343, or 34%, said they were against the idea of a public vote, while 164 (16%) said they did not know. Of the people who were in favour of a referendum on the UK’s deal for exiting the EU, 271 (54.5%) had voted Remain in the 2016 Brexit vote, while 145 (29%) voted Leave.

Jeremy Corbyn is set to become UK PM, if he can shake off Tony Blair, but he hasn’t quite screwed up the courage to turn his back on the Brexit vote, so he’s as much in an impossible split as May is. It’s all he can do is to wait until she makes ever more mistakes and then stumbles over them. Meanwhile, he can carefully open up the second referendum option, because it doesn’t directly contradict the outcome of the first.

 

Corbyn Signals Labour Could Be Open to Second Brexit Referendum

U.K. Labour Party leader Jeremy Corbyn hinted that he could be open to holding a second referendum on Brexit as the consequences of leaving the European Union become clearer. Asked if he was prepared to rule out a second vote after meeting with Portuguese Prime Minister Antonio Costa in Lisbon on Saturday, Corbyn said his party hasn’t fixed its position on the issue. “We’ve not made any decision on a second referendum,’’ Corbyn said at a European Socialist Party conference in the Portuguese capital. “What we’ve said is that we would respect the result of the first referendum.”

And May’s own people are starting to turn their backs on her, slowly at first but that will pick up, because they start fearing for their own future careers if they back her for too long. She has to balance this with her fanatical Brexiteers who are only looking to replace her.

 

Theresa May Faces New Crisis After Mass Walkout Over Social Policy

Theresa May was plunged into a new crisis on Saturday night after the government’s social mobility adviser revealed he and his team were quitting, warning that the prime minister was failing in her pledge to build a “fairer Britain”. In a major blow to No 10, Alan Milburn, the former Labour cabinet minister who chairs the government’s social mobility commission, said that he and all three of his fellow commissioners were walking out – including a leading conservative, Gillian Shephard. The move will be seen as a direct challenge to May’s vow in Downing Street to place fairness and social justice at the heart of her premiership. In his resignation letter, seen by the Observer, Milburn warns that dealing with Brexit means the government “does not seem to have the necessary bandwidth to ensure the rhetoric of healing social division is matched with the reality.

An interesting suggestion from commission chair Milburn was that while he thought May might actually want to tackle inequality and connected issues, he doesn’t think the government has the time to do that, because all its attention is most be focused on Brexit. That suggests the country effectively has no functioning government at the moment, and perhaps for years to come. Great prospect for a country deep in doodoo.

And it’s not a big surprise in this climate that May tries to keep all kinds of things secret. Not a big surprise, but certainly a big mistake.

 

Theresa May Under Growing Pressure To Reveal True Cost Of Divorce Bill

Senior Conservatives are demanding Theresa May be clear about how much the British public will be forced to pay to settle the Brexit “divorce bill”. MPs and peers, including former cabinet ministers, say that with the bill agreed this week and likely to be between £40bn and £50bn, the time has come for the Prime Minister to be completely open on how much Brexit will cost. Labour is threatening to bring the matter to a head by calling on Tory MPs to back a plan to let the UK’s spending watchdogs assess the financial settlement and give Parliament a vote on it, The Independent can reveal.

It comes 24 hours before Ms May will sit down with European Commission President Jean-Claude Juncker to secure an agreement-in-principle on the withdrawal terms of Brexit – including the divorce bill, Irish border and EU citizens’ rights. But despite any deal being likely to gain approval at the European Council in mid-December, the British public have not been told by the Government how big the divorce bill is likely to be, or how it is being worked out.

Indeed, secrecy is a policy in Tory Britain.

 

Irish warn Theresa May: Change Course Or Risk Brexit Chaos

Ministers are under mounting pressure to come clean over the extent of economic damage that a “no deal” outcome could cause to the economy. In the budget, Philip Hammond announced that the Office for Budget Responsibility revised downwards forecasts for UK growth over the next few years, mainly because of concerns of low productivity growth. But the OBR made clear that these downgrades were premised on a benign outcome to Brexit negotiations. Both the Treasury, privately, and leading independent economists recognise that actual growth will be considerably lower than the gloomy budget projections if the UK does not achieve most of its negotiating goals, or if there is a “no deal” result.

Government sources said ministers would this week release sections of assessments into the potential economic impact of Brexit carried out across Whitehall, which until recently they had tried to keep secret. Many MPs believe the published sections will be heavily redacted and will not make clear the extent of potential economic damage. Last night Nicky Morgan, who chairs the Treasury select committee, said it was essential that as many projections as possible were made public.

The latest work by economists at the London School of Economics estimates that, if the UK crashes out of the EU with no deal, the impact will be far more severe than the projections in the budget suggested. Thomas Sampson of the LSE’s Centre for Economic Performance said Brexit could reduce UK living standards by up to 9% in the most pessimistic case.

The best thing by a mile that May could possible do is to get out of the way before the way steamrollers all over her. But as I said, she won’t. And that is as tragic for her as it is for Britain. It’ll be entertaining to see the show -and May- go down. As long as you don’t live in Britain.

 

 

Dec 042017
 
 December 4, 2017  Posted by at 9:46 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Amedeo Modigliani Jeanne Hebuterne 1919

 

The Bitcoin Ramp – Is It Sustainable? (Lebowitz)
UK, EU Plan Regulatory Crackdown On Cryptocurrencies (ZH)
Venezuela To Launch Cryptocurrency To Combat US ‘Blockade’ (G.)
Today’s Central Bank Vol Suppression Will End In Spectacular Fashion (Peters)
Market Is Reminiscent Of 1999 Bubble, On Verge Of Significant Change (ZH)
BIS Joins Chorus Saying Stock Valuations Are Looking ‘Frothy’ (BBG)
Financial Markets Could Be Over-Heating – BIS (G.)
Strong Leadership Across Europe Now Looks Like Wishful Thinking (CNBC)
Theresa May Fails To Strike Border Deal With Irish Government (G.)
Nigel Farage Refuses To Give Up EU Pension (Ind.)
Tony Blair Confirms He Is Working To Reverse Brexit (G.)
Fifth of UK Population Now Live In Poverty (Ind.)
David Attenborough Issues Appeal To Save ‘The Future Of Humanity’ (Ind.)

 

 

Wherever you stand on the issue, that is quite the graph. We’ll do a series on BTC soon.

The Bitcoin Ramp – Is It Sustainable? (Lebowitz)

Believers in BTC claim it is quickly becoming a widely accepted global currency. To better understand their view let’s see how BTC meets the definition of a currency, both as a means of transacting (money) as well as a store of value. Money: money is anything that two parties can agree is acceptable in exchange for goods and services. For example, if I pay you a case of beer to mow my lawn, the beer, in this instance, is money. However, for “money” to be widely accepted, the masses must ascribe similar value to it. While there is an increasing number of vendors accepting BTC, it is nearly impossible to use BTC to meet your everyday needs. Further, the value, or price of money, needs to be relatively stable to be effective. If a dollar bill bought you a case of beer today, but only a single bottle tomorrow and a keg the following week, few consumer or vendors would trust the dollar’s value. BTC’s value can fluctuate 5-10% on an hourly basis.

Store of value: a store of value is something that allows one to save money and retain its value. When we save money we want comfort in knowing the money we earned can buy us the same amount of goods and services tomorrow that it can buy today. Again, the extreme volatility of the price of BTC makes it difficult to project how much purchasing power a BTC will buy you in the future. All currencies fluctuate but typically nowhere near the degree we are witnessing in BTC. If the extreme price movements of BTC subside it is possible that BTC can serve as a widely accepted currency and the believers could be correct.

A second camp believes BTC is a financial bubble. The chart below compares BTC to other recent investment fads. You will notice in all instances above the bubbles rise steadily in price before transitioning to an exponential increase prior to collapse. Often, in the so-called euphoric phase, prices go well beyond the point most investors think is reasonable. In this respect, BTC is following the path of prior bubbles. Bubbles are not solely defined by price movements, but more importantly by a lack of supporting fundamental value. If you subscribe to the value of BTC as does the first camp, the rapid increase in price may well be justified. If you believe there is no value, BTC is showing the classic pattern of most bubbles.

Read more …

Politicians, banks, they’re all trying to get control. But can they?

UK, EU Plan Regulatory Crackdown On Cryptocurrencies (ZH)

However, in retrospect this appears to not have been the case, and as the Telegraph reported just around the time of the big drop, UK “ministers are launching a crackdown on the virtual currency Bitcoin amid growing concern it is being used to launder money and dodge tax.” Taking a page out of the Chinese playbook, the UK Treasury has announced plans to regulate the Bitcoin that will force traders in so-called crypto-currencies to disclose their identities and report suspicious activity. According to the Telegraph, while “until now, anybody buying and selling Bitcoins and other digital currencies have been able to do so anonymously, making it attractive to criminals and tax avoiders. But the Treasury has now said it intends to begin regulating the virtual currency, which has a total value of £145 billion, to bring it in line with rules on anti-money laundering and counter-terrorism financial legislation.”

“John Mann, a member of the Treasury select committee, said he expected to hold an inquiry into the need for better regulation of Bitcoin and other alternative currencies in the new year. He said: “These new forms of exchange are expanding rapidly and we’ve got to make sure we don’t get left behind – that’s particularly important in terms of money-laundering, terrorism or pure theft. “I’m not convinced that the regulatory authorities are keeping up to speed. I would be surprised if the committee doesn’t have an inquiry next year. “It would be timely to have a proper look at what this means. It may be that we want speed up our use of these kinds of thing in this country, but that makes it all the more important that we don’t have a regulatory lag.”

The proposed changes come amid increasing fears that Bitcoin is being used by gangs to launder the proceeds of crime while also attracting currency speculators – with the value of the coin soaring in the past 12 months. In other words, the same reason why the IRS is cracking down on Coinbase clients in the US is also why UK and European regulators are joining China in cracking down on capital flight. While such legislation by the UK alone would hardly have a major impact on crypto pricing – after all the UK is a very minor player in a market that is dominated by Korea and Japan (as proxies for China), and to a growing extent, the US, the new rules will also be applied across the European Union, and “are expected to come into force by the end of the year or early in 2018, the minister in charge has said.”

Read more …

Backed by the world’s biggest oil reserves. But who’s going to buy?

Venezuela To Launch Cryptocurrency To Combat US ‘Blockade’ (G.)

President Nicolas Maduro has said Venezuela would launch a cryptocurrency to combat a US-led financial “blockade,” although he provided few clues about how the economically crippled Opec member would pull off the feat. “Venezuela will create a cryptocurrency … the ‘petro,’ to advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade,” leftist Maduro said during his weekly Sunday televised broadcast. The digital currency will be backed by Venezuelan reserves of gold, oil, gas, and diamonds, he said during the near five-hour show, which included traditional Christmas songs and dancing. “The 21st century has arrived!” Maduro added to cheers, without providing specifics about the currency launch.

Opposition leaders scorned the announcement, which they said needed congressional approval, and some cast doubt on whether the digital currency would ever see the light of day in tumultuous Venezuela. Still, the announcement highlights how US sanctions this year are hurting Venezuela’s ability to move money through international banks. Sources say compliance departments are scrutinising transactions linked to Venezuela, which has slowed some bond payments and complicated certain oil exports. Maduro’s move away from the US dollar comes after the recent spectacular rise of bitcoin, which has been fuelled by signs that the digital currency is slowly gaining traction in the mainstream investment world. Cryptocurrencies typically are not backed by any government or central banks.

Bitcoin already has a strong following among tech-savvy Venezuelans looking to bypass dysfunctional economic controls to obtain dollars or make internet purchases. Venezuela’s traditional currency, meanwhile, is in free fall. Currency controls and excessive money printing have led to a 57% depreciation of the bolivar against the dollar in the last month alone on the widely used black market. That has dragged down the monthly minimum wage to a mere $4.30.

Read more …

A pretend free market suppressed close to a choking point. That cannot end well.

Today’s Central Bank Vol Suppression Will End In Spectacular Fashion (Peters)

After his provocative admission published earlier that he now checks “Breitbart daily and InfoWars too… You can no longer understand America unless you do”, One River’s CIO Eric Peters published the following anecdote revealing an earlier moment of his life, when as a currency trader, he learned a valuable lesson following the spectacular blow up of Europe’s Exchange Rate Mechanism, or ERM, and why the lesson from some 25 years ago, leads Peters to conclude that “Today’s central bank volatility suppression regime resembles it, and will end in spectacular fashion”.

Anecdote: “Let’s step into my office,” he said. So I did. He was my boss. “The firm’s most important client needs help.” I listened, uninterested, unconcerned about clients, their problems. Barely cared about my boss. I had a game to play, solo sport, and loved it to the exclusion of all else. “They need to do a very large trade.” A twenty-six-year-old proprietary trader’s mind is rather primitive. Which is good and bad. Being young and dumb allows you to see things elders can’t. And take risks one rarely should. In 1992, I’d done both. “They need to buy three hundred million Mark/Lira.” Europeans established a mechanism to lock their exchange rates into narrow ranges to reduce market volatility and promote economic convergence. In theory it worked, in practice it didn’t. Politicians named it the ERM.

“What would you like to do?” he asked, calm. I stood there, processing. Such a sum was extraordinary even before the ERM blew up, which it just had. For months, I’d bought options in anticipation of its demise. Honestly, it was obvious. The ERM encouraged speculators to build massive leveraged carry positions, discouraged corporations from hedging exchange rate risk, suppressing volatility and interest rate spreads everywhere. The process was reflexive. Today’s central bank volatility suppression regime resembles it, and will end in spectacular fashion. All such things do. “I want to buy more!” I answered. My foreign-exchange options left me long the exact amount our client needed to buy. No other bank would sell them such a large sum. So naturally, I wanted more.

“You should sell them your whole position,” he told me, firm. I couldn’t understand, it made no sense. “Big customer orders like this usually mark the highs – never forget it,” he said. I left his office angry, irate, sold my whole position. And he was right.

Read more …

There’s far too much crap out there for it all to escape through the emergency exits.

Market Is Reminiscent Of 1999 Bubble, On Verge Of Significant Change (ZH)

Just hours after Neil Chriss announced that his $2.2 billion Hutchin Hill hedge fund is shuttering due to underperformance and admitted that “we fought hard, but did not deliver the performance that you expected from us”, another legendary hedge fund announced it was undergoing a significant restructuring as a result of relentless investor withdrawals: citing a November 30 letter, Bloomberg reported that Paul Tudor Jones’ Tudor Investment Corp, which lost 1.6% YTD, was closing its Discretionary Macro fund “and letting investors shift assets to the main BVI fund as of Jan. 1” with the letter clarifying that “Jones will also principally manage Tudor’s flagship BVI fund, which will be the firm’s only multi-trader fund next year.”

[..] while the internal reorganization of multi-billion hedge funds are hardly of material interest to ordinary retail, or even institutional, investors, PTJ’s outlook on the market always is, and it was concerning: frustrated by the collapse of market vol as a result of record central bank monetary easing, Jones said “the environment is on the verge of a significant change” and that the current market is reminiscent of the bubble of 1999. “That was a year in which Tudor BVI’s macro book was basically flat while U.S. equities experienced one of the greatest bubbles in history,” Jones, 63, wrote. “The termination of that bull market kicked off a three-year macro feast.” adding that “the plot is much the same today but we can substitute Bitcoin and fine art for the Nasdaq 100 of 1999.”

“In the face of a shock, investors may be surprised to find themselves jammed running for the exit,” he wrote. However, as Howard Marks has repeatedly cautioned in the past 3 years, this will be a problem as “the amount and quality of liquidity is lower than people recognize”, and “hidden leverage in the market will make a mass exit even more challenging.”

Read more …

They are the central bank cheerleaders, who now try to issue a warning against what they were cheering for.

BIS Joins Chorus Saying Stock Valuations Are Looking ‘Frothy’ (BBG)

The Bank for International Settlements added its voice to institutions questioning whether stocks have become too expensive, saying they look “frothy” – particularly in the U.S. The BIS weighed in on the debate just days after Goldman Sachs said a prolonged bull market across stocks, bonds and credit left its measure of average valuation at the highest since 1900. Stock prices are above historical averages and U.S. companies may struggle to continue their pace of dividend growth, the BIS said in its quarterly review on Sunday. Warnings on elevated asset prices have become more frequent as the world’s biggest central banks move toward tighter monetary policy. A Bank of America Merrill Lynch survey showed a record 48% of investors say equities are overvalued.

Nobel-Prize winning economist Richard H. Thaler said in October he can’t understand why stocks are still rising. The California State Teachers’ Retirement System CIO said last week that holding shares feels like “sitting on a pin cushion.” The paradox is that financial conditions have continued to ease even in the U.S., by far the most advanced in increasing interest rates, leaving investors struggling to judge how rates will drive prices. “Ultimately, the fate of nearly all asset classes appeared to hinge on the evolution of government bond yields,” the Basel, Switzerland-based institution said. “There is also significant uncertainty about the levels those yields will reach once monetary policies are normalized in the core jurisdictions.”

The price-earnings ratio of the U.S. stock market, cyclically adjusted, was recently above 30, exceeding its post-1982 average by almost 25%, the BIS said. While that’s below the peak of 45 reached in the dotcom bubble of the late 1990s, it’s nearly double the long-term average of 1881–2017. The gauges for European and U.K. equities were at their post-1982 averages.

Read more …

More BIS. Woodford: “Investors have forgotten about risk and this is playing out in inflated asset prices and inflated valuations..”

Financial Markets Could Be Over-Heating – BIS (G.)

Investors are ignoring warning signs that financial markets could be overheating and consumer debts are rising to unsustainable levels, the global body for central banks has warned in its quarterly financial health check. The Bank for International Settlements (BIS) said the situation in the global economy was similar to the pre-2008 crash era when investors, seeking high returns, borrowed heavily to invest in risky assets, despite moves by central banks to tighten access to credit. The BIS, known as the central bankers’ bank, said attempts by the US Federal Reserve and the Bank of England to choke off risky behaviour by raising interest rates had failed so far and unstable financial bubbles were continuing to grow.

Claudio Borio, the head of the BIS, said central banks might need to reconsider changing the way they communicated base interest rate rises or the speed at which they were increasing rates to jolt investors into recognising the need to calm asset markets. “The vulnerabilities that have built around the globe during the long period of unusually low interest rates have not gone away. High debt levels, in both domestic and foreign currency, are still there. And so are frothy valuations. “What’s more, the longer the risk-taking continues, the higher the underlying balance sheet exposures may become. Short-run calm comes at the expense of possible long-run turbulence,” he said. The warning came as Neil Woodford, one of the UK’s most high-profile fund managers, said stock markets were in danger of crashing, resulting in huge losses for millions of people.

The founder of Woodford Investment Management, which manages £15bn worth of assets, told the Financial Times that investors were at risk of the market experiencing a repeat of the dotcom crash of the early 2000s. Woodford said he was concerned that historically low levels of interest rates in most developed nations over the last decade were pushing asset prices to unsustainable levels. “Ten years on from the global financial crisis, we are witnessing the product of the biggest monetary policy experiment in history,” he said. “Investors have forgotten about risk and this is playing out in inflated asset prices and inflated valuations. “There are so many lights flashing red that I am losing count.”

Read more …

I said this before: Merkel’s failure to form a coalition is a big deal all across Europe. Even if she succeeds the second time around. She leaves a big vacuum.

Strong Leadership Across Europe Now Looks Like Wishful Thinking (CNBC)

Strong and stable leadership is difficult to come by these days across Europe. The countries that have traditionally been the bastion of reliable leadership – Germany and the U.K. — are leaving citizens feeling disappointed – and more worryingly, it is having spillover effects into matters outside of domestic politics. Brexit and U.K. leader Theresa May’s ill-fated snap election have left the Conservative government hamstrung and weakened, as the prime minister seems to be hanging onto her position by a thread. The latest installment of this political vacuum was showcased by Ireland, where the minority government was at risk of collapsing after a no-confidence motion was tabled against the Deputy Prime Minister Frances Fitzgerald over a police whistleblower scandal. This could have led to new elections in December.

And in Germany, which is usually considered an absolute beacon of stability, we are facing a political earthquake as exploratory talk on a potential “Jamaica” coalition have faltered spectacularly after the FDP’s (Free Democratic Party) Christian Lindner proclaimed blearily after another long night of talks that he would pull his support for further discussions to form a government. As I am writing this, the parties in Germany are under pressure to deal with shock of the unprecedented nature of the collapse and the utter lack of workable alternatives. New elections have been favored by Chancellor Angela Merkel but talks are still ongoing about a potential return of the much-loathed, yet functioning “grand coalition” between the CDU (Christian Democratic Union), its Bavarian sister party the Christian Social Union (CSU), and the Social Democratic Party (SPD). A revival of talks about a potential Jamaica coalition including the Greens, CDU/CSU and the liberal FDP party has now been ruled out by Lindner.

But surprisingly, the impact on the German economy is non-existent so far. Last month, we saw the German business morale hitting another record high in November, with the IFO Institute adding that the economy is “headed for a boom.” Just last week, data confirmed that the German economy grew by 0.8% in the third quarter, which led to the IFO Institute upgrading its growth forecast for the German economy to 2.3% this year, from 1.9% previously. Talking to me on CNBC, Clemens Fuest, the president of Munich-based IFO Institute, said that only a period of prolonged uncertainty brought about by new elections early next year might impact business sentiment, adding that “we are very far away from that scenario.” Even a minority government might work as this would “revitalize parliamentary debate,” he added.

In fact, when I asked Hans Redeker, head of foreign exchange strategy at Morgan Stanley, about a slowdown in investment in growth as a result of the collapse in coalition talks, he said: “When things are going well in the economy, you don’t necessarily need strong leadership – it is only when the economy isn’t doing well that you need leadership”.

Read more …

What if talks with the EU today fall flat on their face? Will she still stay on?

Theresa May Fails To Strike Border Deal With Irish Government (G.)

Theresa May and the Irish government have failed to reach a deal on the crucial Brexit issue of the Northern Ireland border ahead of a crunch meeting on Monday lunchtime with the European commission president, Jean-Claude Juncker. Despite intense efforts over the weekend to agree a proposal on how to avoid a hard border in Ireland, Irish officials revealed at midnight on Sunday that “there is still a way to go” to achieve a meeting of minds on the issue. “The Irish government remains hopeful – but at this stage it is very difficult to make a prediction,” said an official. The failure to seal a deal threatens to delay the progression of the Brexit negotiations to the second phase covering trade and the UK’s future relationship with the EU. May will meet Juncker with the UK’s final offer on the three main issues in the first round of Brexit talks – the Irish border, citizens’ rights and the financial settlement.

Talks could continue into Wednesday when the European commissioners are due to meet to discuss their recommendation to European leaders on whether “sufficient progress” has been achieved to move talks on to trade and transition arrangements. May had been given the deadline of Monday 4 December to table the offers before a European council summit on 14 December, when EU leaders will decide if “sufficient progress” has been made to proceed to the next phase. But although the money and citizens’ rights issues have been mostly resolved, the future arrangement with Ireland has remained a significant obstacle because the British government has yet to offer a firm commitment explaining how it will guarantee avoiding a return to a hard border after Brexit. For Ireland, and the EU27 as a whole, the problem has become a potential dealbreaker, with Dublin given an effective veto on progress of talks.

Read more …

What hypocrisy is getting worked up about this.

Nigel Farage Refuses To Give Up EU Pension (Ind.)

Nigel Farage has refused to give up his EU pension after Brexit, asking: “Why should my family and others suffer even more?” The former Ukip leader was asked on BBC One’s Andrew Marr Show whether he would stick to his principles and turn down his annual MEP pension. “All I can say is, given the arbitrary way the European Union behaves in terms of money, I’d be very surprised if I get any of it,” Mr Farage said. Mr Farage is entitled to an estimated annual pension of £73,000, The Times reports. The 53-year-old would be able to claim the pension at the age of 63.

Pressed by host Andrew Marr on whether he would stick to his principles and turn down the pension, Mr Farage said: “I’m not going to get it anyway. So I don’t think this would even occur.” When he was asked if he would take it, he said: “Of course I would take it. I’ve said that from day one. Why should my family and others suffer even more?” Replying to accusations of hypocrisy, Mr Farage said: “It is not hypocrisy. I’ve just voted to get rid of my job. I was the turkey that voted for Christmas. How is that hypocrisy? If it was hypocrisy, I’d have said we should stay in the EU.”

Read more …

People should oinstead get worked up about Blair not being able to shut his face. He’s done enough damage.

Tony Blair Confirms He Is Working To Reverse Brexit (G.)

Tony Blair has confirmed that he is trying to reverse Brexit, arguing that voters deserve a second referendum because the “£350m per week for the NHS” promise has now been exposed as untrue. In an interview with the BBC Radio 4’s The World This Weekend on Sunday, the former prime minister said that what was happening to the “crumbling” NHS was a “national tragedy” and that it was now “very clear” that the Vote Leave promise about Brexit leading to higher NHS spending would not be honoured. “When the facts change, I think people are entitled to change their mind,” said Blair, who has always been a strong opponent of Brexit but who has rarely been so explicit about being on a personal mission to stop it happening.

Asked if his purpose in relation to Brexit was to reverse it, Blair replied: “Yes, exactly so.” He added: “My belief is that, in the end, when the country sees the choice of this new relationship, it will realise that it’s either going to be something that does profound damage to the country, or alternatively, having left the European Union, left the single market, we will try and by some means recreate the benefit of that in some new relationship, in which case I think many people will think, ‘What’s the point?’” Blair rejected the argument that he was defying the will of the people. “The will of the people is not something immutable. People can change their mind if the circumstances change,” he said.

Read more …

And certainly get worked up about this: ..400,000 more children and 300,000 more pensioners are now living in poverty than five years ago..”

Fifth of UK Population Now Live In Poverty (Ind.)

Britain’s record on tackling poverty has reached a turning point and is at risk of unravelling, following the first sustained rises in child and pensioner poverty for two decades, a major report has warned. Nearly 400,000 more children and 300,000 more pensioners are now living in poverty than five years ago, during which time there have been continued increases in poverty across both age groups – prompting experts to warn that hard-fought progress towards tackling destitution is “in peril”. The report, by the independent Joseph Rowntree Foundation (JRF), shows that a total of 14 million people in the UK currently live in poverty – more than one in five of the population. While poverty levels fell in the years to 2011-12, changes to welfare policy – especially since the 2015 Budget – have seen the numbers creep up again.

The findings will fuel challenges currently facing Theresa May over failure to improve equality in the UK, after the entire board of her social mobility commission quit over the weekend at the lack of progress towards a “fairer Britain”. ..] The report echoes the concerns of the commission, warning that significant reductions in poverty levels – which researchers measured by the proportion of people in households with an income lower than 60 per cent of the median household income – are at risk of being reversed without immediate action. It warns that the squeeze on living standards now risks storing up problems for the future, with people being caught in a “standstill generation” – unable to build the foundations for a decent, secure life.

Debbie Abrahams MP, Shadow Work and Pensions Secretary, said the 700,000 increase in the number of children and older people in poverty was “totally unacceptable”, adding: “The past seven years of flat-lining wages and austerity cuts, now combined with sharply rising costs of household essentials, is a truly terrifying prospect for millions trying to make ends meet.

Read more …

Attenborough has been in nature for 70 years. Imagine the changes he’s witnessed, the beauty he’s seen disappear.

David Attenborough Issues Appeal To Save ‘The Future Of Humanity’ (Ind.)

Sir David Attenborough has urged people to take action to save the “future of humanity” as he opened up about the heartrending Blue Planet II scene in which a baby albatross was killed by a toothpick. The creature was shown lying dead after its mother had mistaken the plastic toothpick for healthy food. In a column in the Radio Times, the veteran presenter spoke of the threats earth is facing, including the eight million tonnes of plastic dumped into the sea each year, global warming and the rate of overfishing. There are concerns that more than a million birds and 100,000 sea mammals and turtles die every year from eating and getting tangled in plastic waste.

Sir David, 91, also echoed a previous call that he hoped US President Donald Trump would reconsider his threat to withdraw from the Paris Agreement on climate change. He wrote that “never before have we been so aware of what we are doing to our planet – and never before have we had such power to do something about it”. “Surely we have a responsibility to care for the planet on which we live? The future of humanity, and indeed of all life on Earth, now depends on us doing so,” he added. “Plastic is now found everywhere in the ocean, from its surface to its greatest depths,” Sir David wrote. “There are fragments of nets so big they entangle the heads of fish, birds and turtles, and slowly strangle them. Other pieces of plastic are so small that they are mistaken for food and eaten, accumulating in fishes’ stomachs, leaving them undernourished.”

Read more …

 

When nations grow old
The arts grow cold
And commerce hangs on every tree
–William Blake

 

Jul 052017
 
 July 5, 2017  Posted by at 11:14 am Finance Tagged with: , , , , , , ,  4 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Fred Lyon Golden Gate Bridge painter 1947

We Have Fixed Issues That Caused Financial Crisis, Says Mark Carney (G.)
David Cameron Says People Who Oppose Austerity Are ‘Selfish’ (Ind.)
Judge To Review Ban On Prosecuting Tony Blair For Iraq War (G.)
The Grenfell Inquiry Will Be A Stitch-Up. Here’s Why (Monbiot)
Foreigners Account for Just 4.7% of Home Sales in Toronto Region (BBG)
China’s $162 Billion of Dealmaker Debt Raises Alarm
China’s Shadow Banking Lacks Sufficient Regulation: Central Bank (R.)
Arab States To Deliver Verdict On Qatar As Compromise Elusive (R.)
Why Do We Think Poor People Are Poor Because Of Their Own Bad Choices? (G.)
Austrian Troops To Control Migrants On Italy Border (R.)

 

 

Oh come on, get real. Heard that a million times before. This is insulting. Are people really stupid enough to believe Carney? Is he? Hell yeah. Well, here’s what Carney’s predecessor at the BOE, Mervyn King, said in 2007.

We Have Fixed Issues That Caused Financial Crisis, Says Mark Carney (G.)

Fundamental reforms undertaken since the US sub-prime mortgage market triggered the deepest global recession since the second world war have created a safer, simpler and fairer financial system, Mark Carney has said. With the 10th anniversary of the financial crisis next month, Carney said the world’s biggest banks were stronger, misconduct was being tackled, and the toxic forms of shadow banking were no longer a threat. Carney, as well as being governor of the Bank of England, is chairman of the Financial Stability Board, a body created by the G20 group of developed and developing nations in 2009 to recommend ways of remedying the flaws in the system highlighted by the crash.

In a letter to G20 leaders before their meeting in Hamburg later this week, Carney said: “A decade after the start of the global financial crisis, G20 reforms are building a safer, simpler and fairer financial system. The largest banks are considerably stronger, more liquid and more focused.” The FSB chairman said there were still issues to be addressed, such as the risks posed by developments in financial technology (fintech) and the increased vulnerability of digital systems to cyber-attack. But at a press conference in London on Monday, Carney said: “We have fixed the issues that caused the last crisis. They were fundamental and deep-seated, which is why it was such a major job.” The financial crisis of 2007 began in the US mortgage market but rapidly went global as it emerged that banks and unregulated shadow banks were massively exposed in the market for derivatives and did not have enough capital when losses started to mount.

Public anger towards the financial system grew when the biggest banks were bailed out by taxpayers because they were deemed “too big to fail”. Carney said in his letter: “The largest banks are required to have as much as 10 times more of the highest quality capital than before the crisis and are subject to greater market discipline as a consequence of globally agreed standards to resolve too-big-to-fail entities. “A decade ago, many large banks were woefully undercapitalised, with complex business models that relied on the goodwill of markets and, ultimately, taxpayers. A decade on, the largest banks have raised more than $1.5tn of capital, and all major internationally active banks meet minimum risk-based capital and leverage ratio requirements well in advance of the deadline.”

Read more …

Austerity is not about money, that has nothing to do with it. It’s about power, pure and simple.

David Cameron Says People Who Oppose Austerity Are ‘Selfish’ (Ind.)

David Cameron has intervened in the Cabinet row over easing up on austerity by attacking “selfish” politicians demanding higher spending. The former Prime Minister sided with Chancellor Philip Hammond by arguing it would be wrong to bow to growing public pressure and “let spending and borrowing rip”. A string of senior Tories, including Boris Johnson and Michael Gove, have called for the lifting of the one per cent pay cap on awards to millions of public sector workers. But Mr Cameron, speaking to a business conference in South Korea, said: “The opponents of so-called austerity couch their arguments in a way that make them sound generous and compassionate. “They seek to paint the supporters of sound finances as selfish or uncaring. The exact reverse is true. “Giving up on sound finances isn’t being generous, it’s being selfish: spending money today that you may need tomorrow.”

In addition to the row over the pay cap, Education Secretary Justine Greening is pushing for a £1bn cash injection to end school funding cuts. New demands for higher spending added to the pressures on Mr Hammond today, as councils warned they faced a £5.8bn funding gap by the end of the decade. Meanwhile, the Chancellor used a speech to business leaders last night to urge his colleagues to join a “grown-up debate” about how to pay for higher spending. Mr Hammond acknowledged the public was “weary” of austerity, but insisted “we must hold our nerve” and not simply borrow more. Paul Johnson, director of the respected Institute for Fiscal Studies, said “political discipline seems to have fallen apart” in the Cabinet. Alistair Darling, the former Labour Chancellor, said the sight of Cabinet ministers publicly criticising the Chancellor over public sector pay made the Government appear “shambolic”.

Read more …

Don’t get your hopes up.

Judge To Review Ban On Prosecuting Tony Blair For Iraq War (G.)

The most senior judge in England and Wales will hear a case attempting to overturn a ban on prosecuting Tony Blair over the Iraq war, the Guardian has learned. A private criminal prosecution against the former Labour prime minister was blocked in 2016 by Westminster magistrates court when it was ruled Blair would have immunity from any criminal charges. But that ruling by the district judge, Michael Snow, will be reviewed on Wednesday before the lord chief justice, Lord Thomas of Cwmgiedd, and Mr Justice Ouseley. The current attorney general, Jeremy Wright QC, wants the block on proceedings upheld. He will have a barrister in court to try to stop the attempted private prosecution. The hearing follows a decision by the high court in May, which has not previously been reported.

Then a high court judge said those wanting to prosecute Blair could have a hearing to seek permission for a court order allowing their case to go to the next stage. The judge in that case also said the attorney general could formally join in the case. Blair caused controversy when prime minister in deciding to take Britain into the invasion of Iraq in 2003, which was led by the US and sparked huge opposition. The private prosecution seeks a war crimes trial in a British court of Blair, the foreign secretary in 2003, Jack Straw, and Lord Goldsmith, the attorney general at the time the government was deciding to join the invasion of Iraq. The case seeks their prosecution for the crime of aggression. The attorney general in written submissions for Wednesday’s hearing says such an offence does not exist in English law, a claim which is disputed.

The private prosecution attempt is based on the findings of last year’s Chilcot report into the decision by Blair to join the invasion of Iraq, which is criticised, under the false pretext that Saddam Hussein’s regime had weapons of mass destruction. After the Chilcot report was released some families of British service personnel who lost their lives in Iraq said they wanted Blair prosecuted in the courts. This attempt at a private prosecution is brought by Gen Abdul-Wahid Shannan ar-Ribat, former chief of staff of the Iraqi army who is now living in exile. His lawyers are Michael Mansfield QC and Imran Khan, who acted for the family of Stephen Lawrence. In November 2016, a British court ruled against an application to bring a private prosecution. A district judge at Westminster magistrates court ruled Blair had immunity from prosecution over the Iraq war and that any case could also “involve details being disclosed under the Official Secrets Act”.

At the hearing at the Royal Courts of Justice in central London, lawyers for the attorney general will argue that the crime of aggression, while existing in international law, has never been included into English law by parliament. But the government’s stance appears to be undermined by Goldsmith. In his 2003 memo on the legality of the Iraq war, Goldsmith appeared to concede the key point of those now seeking his prosecution. “Aggression is a crime under customary international law which automatically forms part of domestic law,” he wrote.

Read more …

Britain is one scary place. I’m reminded of Travis Bickle: “Someday a real rain will come and wipe this scum off the streets.”

The Grenfell Inquiry Will Be A Stitch-Up. Here’s Why (Monbiot)

We don’t allow defendants in court cases to select the charges on which they will be tried. So why should the government set the terms of a public inquiry into its own failings? We don’t allow criminal suspects to vet the trial judge. Why should the government approve the inquiry’s chair? Even before the public inquiry into the Grenfell Tower disaster has begun, it looks like a stitch-up, its initial terms of reference set so narrowly that government policy remains outside the frame. An inquiry that honours the dead would investigate the wider causes of this crime. It would examine a governing ideology that sees torching public protections as a sacred duty. Let me give you an example. On the morning of 14 June, as the tower blazed, an organisation called the Red Tape Initiative convened for its prearranged discussion about building regulations.

One of the organisation’s tasks was to consider whether rules determining the fire resistance of cladding materials should be removed for the sake of construction industry profits. Please bear with me while I explain what this initiative is and who runs it, as it’s a perfect cameo of British politics. It’s a government-backed body, established “to grasp the opportunities” that Brexit offers to cut “red tape” – a disparaging term for public protections. It’s chaired by the Conservative MP Sir Oliver Letwin, who has claimed that “the call to minimise risk is a call for a cowardly society”. It is a forum in which exceedingly wealthy people help decide which protections should be stripped away from lesser beings.

Among the members of its advisory panel are Charles Moore, who was editor of the Daily Telegraph and the chair of an organisation called Policy Exchange. He was also best man at Letwin’s wedding. Sitting beside him is Archie Norman, the former chief executive of Asda and the founder of Policy Exchange. He was once Conservative MP for Tunbridge Wells – and was succeeded in that seat by Greg Clark, the minister who now provides government support for the Red Tape Initiative. Until he became environment secretary, Michael Gove was also a member of the Red Tape Initiative panel. Oh, and he was appointed by Norman as the first chairman of Policy Exchange. (He was replaced by Moore.) Policy Exchange also supplied two of Letwin’s staff in the Conservative policy unit that he used to run.

Policy Exchange is a neoliberal lobby group funded by dark money, that seeks to tear down regulations. The Red Tape Initiative’s management board consists of Letwin, Baroness Rock and Lord Marland. Baroness Rock is a childhood friend of the former Tory chancellor George Osborne, and is married to the wealthy financier Caspar Rock. Marland is a multimillionaire businessman who owns a house and four flats in London, “various properties in Salisbury”, three apartments in France and two apartments in Switzerland. In other words, the Red Tape Initiative is a representative cross-section of the British public. In no sense is it a self-serving clique of old chums, insulated from hazard by their extreme wealth, whose role is to decide whether other people (colloquially known as “cowards”) should be exposed to risk.

Read more …

“Ontario’s strong housing market is a reflection of our growing economy,” Charles Sousa, the province’s minister of finance, said..

Foreigners Account for Just 4.7% of Home Sales in Toronto Region (BBG)

The Ontario government said overseas buyers accounted for just 4.7% of home purchases in the Toronto area over a recent one-month period. The new data is in line with other surveys, signaling that foreigners haven’t been major drivers of real estate prices in one of Canada’s most expensive markets. Non-residents bought about 860 properties between April 24 to May 26 in the so-called greater golden horseshoe region of Ontario which includes Toronto, Hamilton and Peterborough, the province said in a statement Tuesday. The finance and housing ministries began compiling the figures as part of a new housing plan announced in April meant to make homes more affordable and accessible for Canadian residents. One of the measures included a 15% levy as of April 21 on foreign investors buying residential property in Toronto and nearby cities.

“Ontario’s strong housing market is a reflection of our growing economy,” Charles Sousa, the province’s minister of finance, said in a statement. “While this is great news for the province, the resulting increase in speculative purchases and a spike in home prices created affordability challenges for many and posed a risk to the market.” Toronto is the latest Canadian city to target non-resident buyers, who are often accused of driving up the price of homes by using them as an investments. Prices and sales in the city had been on a tear until early this year, prompting some to point to non-resident factors as a source of the heat. Vancouver last year imposed a 15% foreign buyer tax that preceded a slowdown of sales and price growth, though it was short-lived as the market picks up speed again. Both cities followed the lead by Australia, which forces offshore buyers to purchase through a separate buying program.

Read more …

Buying the world with monopoly money.

China’s $162 Billion of Dealmaker Debt Raises Alarm

China struck deal after deal to acquire companies abroad over the last few years. Now the bill is coming due. The nation’s top corporate dealmakers, including HNA and Fosun International, must pay off the equivalent of at least $11.5 billion in bonds and loans by the end of 2018 – a feat now complicated by government efforts to rein in their aggressive rush overseas. That figure represents just a fraction of the total debt of 1.1 trillion yuan ($162 billion) that the Chinese companies have reported as they projected their money and influence around the world with a record number of acquisitions. The size of their obligations – and whether they will be able to shoulder them – has begun to worry global banks and investors now that Beijing has pressed companies to dial back their ambitions abroad.

“Those companies the banking regulator is checking on have very high financing demand for M&A activities,” said Xia Le, chief Asia economist at BBVA in Hong Kong. “But banks will heighten their risk control when lending to them going forward, which could increase their funding costs and hurt the pace of their expansion.” The moves threaten to end an era of easy access to money for the firms. People familiar with the matter said last month that China Banking Regulatory Commission asked some banks to provide information on overseas loans to HNA, Fosun, Anbang Insurance and Dalian Wanda. Yields on some bonds issued by the firms jumped. The CBRC is examining examples of acquisitions gone awry to assess potential risks to the financial sector, people familiar also said. To be sure, the companies, which are among the biggest private-sector firms in China, are sitting on a cash pile that they can tap to meet upcoming debt deadlines. They have more than 400 billion yuan of cash and cash equivalents…

Read more …

Too late now, boys.

China’s Shadow Banking Lacks Sufficient Regulation: Central Bank (R.)

China’s central bank said on Tuesday the shadow banking sector lacks sufficient regulation and the bank would give more prominence to financial risk controls. Compared with traditional bank lending, the opaque nature of shadow banking products make it easier for them to bypass regulatory requirements and provide credit to restricted areas, the People’s Bank of China said in its annual China Financial Stability Report released online. The central bank will increase supervision over the rapidly growing asset management industry to curb shadow banking risks, it said. Since the first quarter, the PBOC has included banks’ off-the-balance-sheet wealth management products in its examination of broad credit in its Macro Prudential Assessment (MPA) risk-tool.

The world’s second-largest economy faces major challenges, including excess industrial capacity, sluggish growth, high corporate leverage, mounting local government debt, property bubbles in some regions, and the deterioration of banking assets, the PBOC said in its report. As the economy still faces relatively big downward pressures, the bank pledged to create a favourable monetary and financial environment for the development of the real economy this year. The central bank also said it would strengthen coordination with other financial regulators to fend off systemic financial risks.

Read more …

Still can’t help wondering about the timing of this. Why now? What changed?

Arab States To Deliver Verdict On Qatar As Compromise Elusive (R.)

Arab states that have imposed sanctions on Qatar, accusing it of links to terrorism, were due to meet in Cairo on Wednesday to consider Doha’s response to a stiff ultimatum, but settlement of the dispute seemed far off. The editor of the Abu Dhabi government linked al-Ittihad newspaper wrote in an editorial that Qatar was “walking alone in its dreams and illusions, far away from its Gulf Arab brothers”. Foreign ministers of Saudi Arabia, the United Arab Emirates, Egypt and Bahrain will consider whether to escalate, or less likely abandon, the boycott imposed on Qatar last month that has rattled a key oil-producing region and unnerved strategic Western allies. Qatar faces further isolation and possible expulsion from the Gulf Cooperation Council (GCC) if its response to a list of demands made nearly two weeks ago is not deemed satisfactory.

The Arab countries have demanded Qatar curtail its support for the Muslim Brotherhood, shut down the pan-Arab al Jazeera TV channel, close down a Turkish base and downgrade its ties with regional arch-rival Iran. They view Qatar’s independent diplomatic stances and support for 2011 “Arab Spring” uprisings as support for terrorism and a dangerous breaking of ranks – charges Doha vigorously denies. Qatar has countered that the Arab countries want to curb free speech and take over its foreign policy, saying their 13 demands are so harsh they were made to be rejected. The gas-rich state had raised its international profile dramatically in recent years, drawing on huge gas revenues, and developed its economy with ambitious infrastructure projects. It is due to host the soccer world cup in 2022.

Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said at a joint news conference with his German counterpart on Tuesday that its response was “given in goodwill and good initiative for a constructive solution”, but insisted that Doha would not compromise on its sovereignty. Gulf officials have said the demands are not negotiable, signaling more sanctions are possible, including “parting ways” with Doha – a suggestion it may be ejected from the GCC, a regional economic and security cooperation body founded in 1981. “A Gulf national may be obliged to prepare psychologically for his Gulf to be without Qatar,” the editor of the Abu Dhabi al-Ittihad newspaper said.

Read more …

The topic deserves better treatment than this.

Why Do We Think Poor People Are Poor Because Of Their Own Bad Choices? (G.)

Cecilia Mo thought she knew all about growing up poor when she began teaching at Thomas Jefferson senior high school in south Los Angeles. As a child, she remembered standing in line, holding a free lunch ticket. But it turned out that Mo could still be shocked by poverty and violence – especially after a 13-year-old student called her in obvious panic. He had just seen his cousin get shot in his front yard. For Mo, hard work and a good education took her to Harvard and Stanford. But when she saw just how much chaos and violence her LA students faced, she recognized how lucky she had been growing up with educated parents and a safe, if financially stretched, home. Now, as an assistant professor of public policy and education at Vanderbilt University, Mo studies how to get upper-class Americans to recognize the advantages they have.

She is among a group of scholars trying to understand how rich and poor alike justify inequality. What these academics are finding is that the American dream is being used to rationalize a national nightmare. It all starts with the psychology concept known as the “fundamental attribution error”. This is a natural tendency to see the behavior of others as being determined by their character – while excusing our own behavior based on circumstances. For example, if an unexpected medical emergency bankrupts you, you view yourself as a victim of bad fortune – while seeing other bankruptcy court clients as spendthrifts who carelessly had too many lattes. Or, if you’re unemployed, you recognize the hard effort you put into seeking work – but view others in the same situation as useless slackers. Their history and circumstances are invisible from your perspective.

Here’s what has gone wrong: hard work and a good education used to be a sure bet for upward mobility in the US – at least among some groups of people. Americans born in the 1940s had a 90% chance of doing better economically than their parents did – but those born in the 1980s have only 50/50 odds of doing so.

Read more …

Oh yes, the EU will fail yet.

A comment on Twitter: “The last time Austria had tanks on the Italian border it lost Trent and Trieste.”

Austrian Troops To Control Migrants On Italy Border (R.)

Austria is planning to impose border controls and possibly deploy troops to cut the number of migrants crossing from Italy, defense officials said, drawing a warning from Rome and reigniting a row over Europe’s handling of the refugee crisis. Tensions between European Union countries over how to share the burden of migrants flared in 2015 when hundreds of thousands, many fleeing wars in Africa and the Middle East, began arriving in EU territory, mainly via Greece, and headed for Germany, Austria and other nearby affluent states. Austria took in more than 1 percent of its population in asylum seekers at the time, which helped increase support for the far-right Freedom Party. Keen to avoid another influx, it said it would introduce controls at the busy Brenner Pass border crossing with Italy if one materialized there.

That has not yet happened but Italy recently asked other EU countries to help it cope with a surge in migrants reaching its southern Mediterranean shores from Africa, raising concern in Austria that many will soon show up at its border with Italy. That is a political hot potato in Austria, where a parliamentary election is scheduled in October with immigration shaping up as a central issue. Austrian Defence Minister Hans Peter Doskozil told the mass-circulation Kronen Zeitung in an interview published on Tuesday that he expected restrictions would be introduced along the Alpine boundary with Italy “very soon”. Other Austrian officials, including Interior Minister Wolfgang Sobotka, who oversees crossings like Brenner, said there was currently no reason to introduce controls and Austria remained vigilant, a stance Vienna has repeated for the past year.

Read more …

May 272017
 
 May 27, 2017  Posted by at 5:41 pm Finance Tagged with: , , , , , , , , , , ,  13 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Herbert Draper Lament for Icarus 1898

 

There are times when you have to talk about things when it appears most inopportune to do so, because they’re the only times people might listen. Times when people will argue that ‘this is not the right moment’, while in reality it’s the only moment.

A solid 99% of people will have been filled, and rightly so of course, with a mixture of disgust, disbelief and infinite sadness when hearing of yet another attack on civilians in Europe, this one in Manchester. An equally solid 99% will have failed to recognize that while the event was unique for the city of Manchester, it was by no means unique for the world, not even at the time it happened.

Though the footage of parents desperately trying to find their children, and the news that one of the dead was just 8 years old, touches everyone in more or less the same place in our hearts, by far most of us miss out on the next logical step. In a wider perspective, it is easy to see that parents crying for missing children, and children killed in infancy, is what connects Manchester, and the UK, and Europe, to parents in Syria, Libya, Iraq.

What’s different between these places is not the suffering or the outrage, the mourning or the despair, what’s different is only the location on the map. That and the frequency with which terror is unleashed upon a given population. But just because it happens all the time in other places doesn’t make it more normal or acceptable.

It’s the exact same thing, the exact same experience, and still a vast majority of people don’t, choose not to, feel it as such. Which is curious when you think about it. In the aftermath of a terror attack, the mother of a missing, maimed or murdered child undergoes the same heartbreak no matter where they are in the world (“I hope the Russians love their children too”). But the empathy, the compassion, is hardly acknowledged in Britain at all, let alone shared.

Not that it couldn’t be. Imagine that our papers and TV channels would tell us, preferably repeatedly, in their reports in the wake of an attack like the one in Manchester how eerily similar the emotions must be to those felt in Aleppo, Homs and many other cities. That would change our perception enormously. But the media choose not to make the connection, and the people apparently are not capable of doing it themselves.

None of that changes the fact, however, that British lives are not more valuable than Syrian and Libyan ones. Not even when we’ve gotten used to ‘news’ about bombings and drone attacks executed for years now by US-led coalitions, or the images of children drowning when they flee the area because of these attacks.

The overall theme here is that 99.9% of people everywhere in the world are innocent, especially when they are children, but their governments and their societies are not. That doesn’t justify the Manchester attack in any shape or form, it simply lays equal blame and condemnation for western terror attacks in the Middle East and North Africa, perpetrated by the people we elect into power.

This is something people in the west pay no attention to. It’s easier that way, and besides our media with great enthusiasm pave the way for our collective ignorance, by calling some other group of people ‘terrorists’, which while they’re at it is supposed to justify killing some other mother’s child.

There’s another thing that is also different: they didn’t start. We did. The British and French terrorized the region for many decades, since the 19th century, even way before the Americans joined in. The presence of oil, and its rising role in our economies, caused them to double down on that terror.

Yes, it’s awkward to talk about this on the eve of a deadly attack, and it’s easy to find arguments and rhetoric that appear to deflect responsibility. But at the same time this truly is the only moment we can hope that anyone will listen. And lest we forget, the UK carries an outsized share of the responsibility in this tragedy, both historically and in the present.

You can say things about the city coming together, or the country coming together, or “not allowing terrorists to affect our way of life”, but perhaps it should instead really be all the mothers who have children missing or dying, wherever they live, coming together. They all see their ways of life affected, and many on a daily basis.

Those mothers in Syria and Libya, who have been through the same hellhole as those in Manchester, are a lot closer to you than the politicians who send out jet fighters to bomb cities in the desert, or sell arms to individuals and organizations to control these cities for their own narrow personal gain, such as the governments of Saudi Arabia and Turkey.

The traumatized mothers in the desert are not your enemies; your enemies are much closer to home. Still, most of you will tend to react to fear and panic by looking for protection in exactly those circles that are least likely to provide it. The UK government under Theresa May, like those of Tony Blair, Gordon Brown and David Cameron before, is as cynically eager as their predecessors to send bombers into the desert, and sell arms to those living there.

We can illustrate all this with a few bits of news. First, the US-led coalotion, of which the UK is a substantial part, killed more civilians in Syria than at any time since they started bombing the country almost 3 years ago. They keep saying they don’t target civilians, but to put it mildly they don’t appear to go out of their way not to hit them. For instance, a single attack on Mosul, Iraq in March killed over 105 civilians. ‘Collateral damage’ in these cases, and there are hundreds by now, is a very disrespectful term. Moreover, the files released by Chelsea Manning show US soldiers killing people ‘with impunity’.

Deadliest Month For Syria Civilians In US-Led Strikes

US-led air strikes on Syria killed a total of 225 civilians over the past month, a monitor said on Tuesday, the highest 30-day toll since the campaign began in 2014. The Syrian Observatory for Human Rights said the civilian dead between April 23 and May 23 included 44 children and 36 women. The US-led air campaign against the Islamic State jihadist group in Syria began on September 23, 2014. “The past month of operations is the highest civilian toll since the coalition began bombing Syria,” Observatory head Rami Abdel Rahman told AFP. “There has been a very big escalation.” The previous deadliest 30-day period was between February 23 and March 23 this year, when 220 civilians were killed, Abdel Rahman said.

And it’s not as if the British didn’t or couldn’t know what was going on. That was clear as early as 2003, when Tony Blair couldn’t wait to join the Bush coalition to invade Iraq on the false premise of weapons of mass destruction. Before Libya was invaded, which led to Hillary’s disgusting ‘we came we saw he died’, Gaddafi, the one who did die, warned Blair about what would happen. It indeed did, which makes Blair a guilty man.

Gaddafi Warned Blair His Ousting Would ‘Open Door’ To Jihadis

Muammar Gaddafi warned Tony Blair in two fraught phone conversations in 2011 that his removal from the Libyan leadership would open a space for al-Qaida to seize control of the country and even launch an invasion of Europe. The transcripts of the conversations have been published with Blair’s agreement by the UK foreign affairs select committee, which is conducting an inquiry into the western air campaign that led to the ousting and killing of Gaddafi in October 2011. In the two calls the former British prime minister pleaded with Gaddafi to stand aside or end the violence. The transcripts reveal the gulf in understanding between Gaddafi and the west over what was occurring in his country and the nature of the threat he was facing.

In the first call, at 11.15am on 25 February 2011, Gaddafi gave a warning in part borne out by future events: “They [jihadis] want to control the Mediterranean and then they will attack Europe.” In the second call, at 3.25pm the same day, the Libyan leader said: “We are not fighting them, they are attacking us. I want to tell you the truth. It is not a difficult situation at all. The story is simply this: an organisation has laid down sleeping cells in north Africa. Called the al-Qaida organisation in north Africa … The sleeping cells in Libya are similar to dormant cells in America before 9/11.”

Gaddafi added: “I will have to arm the people and get ready for a fight. Libyan people will die, damage will be on the Med, Europe and the whole world. These armed groups are using the situation [in Libya] as a justification – and we shall fight them.” Three weeks after the calls, a Nato-led coalition that included Britain began bombing raids that led to the overthrow of Gaddafi. He was finally deposed in August and murdered by opponents of his regime in October.

What they are guilty of is no more and no less than Manchester. No hyperbole, but a warning from Blair’s own intelligence services back in 2003. The real weapons of mass destruction were not in Iraq, but in the White House and Downing Street no. 10. The CIA issued warnings similar to this.

British Intelligence Warned Tony Blair Of Manchester-Like Terrorism If The West Invaded Iraq

Before the 2003 invasion of Iraq led by the U.S. and U.K., he was forcefully and repeatedly warned by Britain’s intelligence services that it would lead to exactly this type of terrorist attack — and he concealed these warnings from the British people, instead claiming the war would reduce the risk of terrorism. We know this because of the Chilcot Report, the seven-year-long British investigation of the Iraq War released in 2016. The report declassifies numerous internal government documents that illustrate the yawning chasm between what Blair was being told in private and his claims in public as he pushed for war.

On February 10, 2003, one month before the war began, the U.K.’s Joint Intelligence Committee — the key advisory body for the British Prime Minister on intelligence matters — issued a white paper titled “International Terrorism: War With Iraq.” It began: “The threat from Al Qaida will increase at the onset of any military action against Iraq. They will target Coalition forces and other Western interests in the Middle East. Attacks against Western interests elsewhere are also likely, especially in the US and UK, for maximum impact. The worldwide threat from other Islamist terrorist groups and individuals will increase significantly.”

And it concluded much the same way: “Al Qaida and associated groups will continue to represent by far the greatest terrorist threat to Western interests, and that threat will be heightened by military action against Iraq. The broader threat from Islamist terrorists will also increase in the event of war, reflecting intensified anti-US/anti-Western sentiment in the Muslim world, including among Muslim communities in the West.”

Not long behind Blair came David Cameron, a man after Tony’s heart:

Cameron Brags Of ‘Brilliant’ UK Arms Trade As EU Embargoes Saudi Arabia

European ministers have embarrassed David Cameron by voting to impose an arms embargo on Saudi Arabia on the same day the British prime minister praised the UK for selling “brilliant” arms to the country. Speaking at a BAE Systems factory in Preston, the prime minister said the UK had pushed the sale of Eurofighter Typhoons to countries in the Middle East, including Oman and Saudi Arabia. [..] Cameron’s speech in Preston came at the same time the European Parliament voted to impose an EU-wide ban on arms exports to Saudi Arabia, citing criticism from the UN of its bombing in Yemen.

Asked at the talks how he was helping to export the planes, Cameron said: “With the Typhoon there is an alliance of countries: the Italians, Germans and ourselves. We spend a lot of time trying to work out who is best placed to win these export orders. We’ve got hopefully good news coming from Kuwait. The Italians have been doing a lot of work there. The British have been working very hard in Oman.” The vote will not force EU members to comply with the ban, but will force the government to examine its relationship with Saudi Arabia.

In the last year the British government has sold £3 billion (US$4.18 billion) worth of arms and military kit to the Gulf state, as well as providing training to Saudi forces. A report released by Amnesty International on Friday called the ongoing trade with Saudi Arabia “truly sickening,” and urged governments to attend meetings in Geneva on Monday to discuss the implementation of the Arms Trade Treaty (ATT). The report names the UK, France, Germany, Italy, Montenegro, the Netherlands, Spain, Sweden, Switzerland, Turkey and the US as having issued licenses for arms to Saudi Arabia worth more than £18 billion in 2015.

The arms sold include drones, bombs, torpedoes, rockets and missiles, which have been used by Saudi Arabia and its allies for gross violations of human rights and possible war crimes during aerial and ground attacks in Yemen, the campaign group said. Control Arms Director Anna Macdonald said: “Governments such as the UK and France were leaders in seeking to secure an ATT – and now they are undermining the commitments they made to reduce human suffering by supplying Saudi Arabia with some of the deadliest weapons in the world. It’s truly sickening.”

British MPs from Cameron’s own party didn’t like it either, but what meaning does that have if it takes 5 years to issue a report, and moreover he can simply refuse to give evidence?

MPs Deliver Damning Verdict On David Cameron’s Libya Intervention

David Cameron’s intervention in Libya was carried out with no proper intelligence analysis, drifted into an unannounced goal of regime change and shirked its moral responsibility to help reconstruct the country following the fall of Muammar Gaddafi, according to a scathing report by the foreign affairs select committee. The failures led to the country becoming a failed a state on the verge of all-out civil war, the report adds. The report, the product of a parliamentary equivalent of the Chilcot inquiry into the Iraq war, closely echoes the criticisms widely made of Tony Blair’s intervention in Iraq, and may yet come to be as damaging to Cameron’s foreign policy legacy.

It concurs with Barack Obama’s assessment that the intervention was “a shitshow”, and repeats the US president’s claim that France and Britain lost interest in Libya after Gaddafi was overthrown. Cameron has refused to give evidence to the select committee. In one of his few reflections on his major military intervention, he blamed the Libyan people for failing to take their chance of democracy.

The committee, which has a majority of Conservative members, did not have Chilcot-style access to internal papers, but took voluminous evidence from senior ministers at the time, and other key players such as Blair, the chief of the defence staff, Lord Richards, and leading diplomats. The result of the French, British and US intervention, the report finds, “was political and economic collapse, inter-militia and inter-tribal warfare, humanitarian and migrant crises, widespread human rights violations, the spread of Gaddafi regime weapons across the region and the growth of Isil [Islamic State] in north Africa”.

It seems obvious that if there were an impartial international body with the power to prosecute, Bush, Cheney, Blair, Cameron, Hillary etc. etc. (don’t forget France) would be charged with war crimes. And Obama too: his ‘shitshow’ comment must be seen in light of the ‘we came we saw he died’ comment by Hillary Clinton, his Secretary of State. Think he didn’t know what was happening?

Another person who should be charged is Theresa May, Cameron’s Home Secretary from May 2010 till July 2016, and of course Britain’s present PM, who sells as much weaponry to Saudi Arabia as she possibly can while the Saudi’s are shoving the few Yemeni’s they leave alive back beyond the Stone Age. And then May has the gall to talk about humanitarian aid.

Theresa May Defends UK Ties With Saudi Arabia

Theresa May has defended her trip to Saudi Arabia, saying its ties with the UK are important for security and prosperity. The prime minister is facing questions about the UK’s support for the Saudi-led coalition which is fighting rebels in neighbouring Yemen. Labour Party leader Jeremy Corbyn said UK-made weapons were contributing to a “humanitarian catastrophe”. [..] Mrs May said humanitarian aid was one of the issues she would be discussing on her trip. “We are concerned about the humanitarian situation – that’s why the UK last year was the fourth largest donor to the Yemen in terms of humanitarian aid – £103m. We will be continuing with that,” she told the BBC.

[..] Mr Corbyn called for the immediate suspension of UK arms exports to Saudi Arabia. He criticised the “dictatorial Saudi monarchy’s shocking human rights record” and said the PM should focus on human rights and international law at the centre of her talks. “The Saudi-led coalition bombing in Yemen, backed by the British government, has left thousands dead, 21 million people in need of humanitarian assistance and three million refugees uprooted from their homes,” he said. “Yemen urgently needs a ceasefire, a political settlement, and food aid, not more bombing. “British-made weapons are being used in a war which has caused a humanitarian catastrophe.”

The one person who would probably not be in front of such a court is Jeremy Corbyn, opponent of May’s in the June 8 elections. Though there is the issue that he never protested in much stronger terms as an MP. Still, if you have to pick one of the two, what is not obvious?

Theresa May Claims Selling Arms To Saudi Arabia Helps ‘Keep People On The Streets Of Britain Safe’

Theresa May has staunchly defended selling arms to Saudi Arabia despite the country facing accusations of war crimes, insisting close ties “keep people on the streets of Britain safe”. Jeremy Corbyn called on the Prime Minister to halt those sales because of the “humanitarian devastation” caused by a Saudi-led coalition waging war against rebels in Yemen. The Labour leader spoke out after the Parliamentary committee charged with scrutinising arms exports said it was likely that British weapons had been used to violate international law.

The Saudis stand accused of bombing multiple international hospitals run by the charity Médecins Sans Frontières, as well as schools, wedding parties and food factories. In the Commons, Mr Corbyn linked weapons sales to the ongoing refugee crisis, which he said should be Britain’s “number one concern and our number one humanitarian response”. He added: “That is why I remain concerned that at the heart of this Government’s security strategy is apparently increased arms exports to the very part of the world that most immediately threatens our security.

The British Government continue to sell arms to Saudi Arabia that are being used to commit crimes against humanity in Yemen , as has been clearly detailed by the UN and other independent agencies.”

But, in response, Ms May pointed out she had called on Saudi Arabia to investigate the allegations about Yemen when she met with the kingdom’s deputy crown prince at the recent G20 summit in China. The Prime Minister dismissed Mr Corbyn’s suggestion that “what happened in Saudi Arabia was a threat to the safety of people here in the UK”. Instead, she said: “Actually, what matters is the strength of our relationship with Saudi Arabia. When it comes to counter-terrorism and dealing with terrorism, it is that relationship that has helped to keep people on the streets of Britain safe.”

May’s, and Britain’s, utterly mad stance in this is perhaps best exemplified, in one sentence, by her comments during the speedy trip she made to Turkey, again to sell more arms to an at best highly questionable regime. Why do it, why drag your entire nation through the moral gutter for $100 million or a few billion? The military industrial complex.

Theresa May Signs £100m Fighter Jet Deal With Turkey’s Erdogan

Theresa May issued a stern warning to Turkish president Recep Tayyip Erdogan about respecting human rights yesterday as she prepared to sign a £100m fighter jet deal that Downing Street hopes will lead to Britain becoming Turkey’s main defence partner.

And once again, no, none of this justifies the Manchester bombing. Neither a government nor an extremist movement has any right to kill innocent people. But let’s make sure we know that neither does.

There’s another aspect to the story. MI6 had close links to the Libyan community in Manchester.

‘Sorted’ by MI5: How UK Government Sent British-Libyans To Fight Gaddafi

The British government operated an “open door” policy that allowed Libyan exiles and British-Libyan citizens to join the 2011 uprising that toppled Muammar Gaddafi even though some had been subject to counter-terrorism control orders, Middle East Eye can reveal. Several former rebel fighters now back in the UK told MEE that they had been able to travel to Libya with “no questions asked” as authorities continued to investigate the background of a British-Libyan suicide bomber who killed 22 people in Monday’s attack in Manchester.

Salman Abedi, 22, the British-born son of exiled dissidents who returned to Libya as the revolution against Gaddafi gathered momentum, is also understood to have spent time in the North African country in 2011 and to have returned there on several subsequent occasions. Sources spoken to by MEE suggest that the government facilitated the travel of Libyan exiles and British-Libyan residents and citizens keen to fight against Gaddafi including some who it deemed to pose a potential security threat.

One British citizen with a Libyan background who was placed on a control order – effectively house arrest – because of fears that he would join militant groups in Iraq said he was “shocked” that he was able to travel to Libya in 2011 shortly after his control order was lifted. “I was allowed to go, no questions asked,” said the source. He said he had met several other British-Libyans in London who also had control orders lifted in 2011 as the war against Gaddafi intensified, with the UK, France and the US carrying out air strikes and deploying special forces soldiers in support of the rebels.

“They didn’t have passports, they were looking for fakes or a way to smuggle themselves across,” said the source. But within days of their control orders being lifted, British authorities returned their passports, he said. Many Libyan exiles in the UK with links to the LIFG [Libyan Islamic Fighting Group ] were placed on control orders and subjected to surveillance and monitoring following the rapprochement between the British and Libyan governments sealed by the so-called “Deal in the Desert” between then-British Prime Minister Tony Blair and Gaddafi in 2004.

According to documents retrieved from the ransacked offices of the Libyan intelligence agency following Gaddafi’s fall from power in 2011, British security services cracked down on Libyan dissidents in the UK as part of the deal, as well as assisting in the rendition of two senior LIFG leaders, Abdel Hakim Belhaj and Sami al-Saadi, to Tripoli where they allege they were tortured.

Torture one day, passports the other. Lovely. And it still gets better: MI6 didn’t just have close contacts with Libyans in Manchester, it knew the alleged perpetrator’s family, and used his father multiple times as on operative:

Manchester Attack as MI6 Blowback

According to Scotland Yard, the attack on the crowd leaving the Ariana Grande concert at Manchester Arena, 22 May, has been perpetrated by Salman Abedi. A bankcard has been conveniently found in the pocket of the mutilated corpse of the ‘terrorist’. This attack is generally interpreted as proof that the United Kingdom is not implicated in international terrorism and that, on the contrary, it is a victim of it.

[..] In 1992, Ramadan Abedi [Salman’s father] was sent back to Libya by Britain’s MI6 and was involved in a British-devised plot to assassinate Muammar Gaddafi. The operation having been readily exposed, he was exfiltrated by MI6 and transferred back to the UK where he obtained political asylum. He moved in 1999 to Whalley Range (south of Manchester) where there was already resident a small Libyan Islamist community. In 1994, Ramadan Abedi returned again to Libya under MI6’s direction. In late 1995 he is involved in the creation of the Libyan Islamic Fighting Group (LIFG), a local branch of Al-Qaeda, in conjunction with Abdelhakim Belhadj.

The LIFG was then employed by MI6 again to assassinate Gaddafi, for a payoff of £100,000. This operation, which also failed, provoked heated exchanges within British Intelligence, leading to the resignation of one David Shayler. Other former members of the LIFG have also lived at Whalley Range, including Abedi’s friend Abd al-Baset-Azzouz. In 2009, this last joined Al-Qaeda in Pakistan and became a close associate of its chief, Ayman al-Zawahiri. In 2011, al-Baset-Azzouz is active on the ground with the NATO operation against Libya.

On 11 September 2012, he directs the operation against the US Ambassador in Libya, Christopher Stevens, assassinated at Benghazi. He is arrested in Turkey and extradited to the US in December 2014, his trial still pending. Nobody pays attention to the fact that Ramadan Abedi has linked LIFG members to the formation of Al-Qaeda in Iraq and, in 2011, he takes part in MI6’s ‘Arab Spring’ operations, and in LIFG’s role on the ground in support of NATO. In any event, Abedi returned to Libya after the fall of Gaddafi and moves his family there, leaving his older children in the family home at Whalley Range.

According to the former Spanish Prime Minister José Maria Aznar, Abdelhakim Belhadj was involved in the assassinations in Madrid of 11 March 2004. Later, he is secretly arrested in Malaysia by the CIA and transferred to Libya where he is tortured not by Libyan or American functionaries but by MI6 agents. He is finally freed after the accord between Saif al-Islam Gaddafi [Gaddafi’s son] and the jihadists.

Luckily, perhaps the Brits are not that stupid:

Half of Britons Blame UK’s Foreign Wars for Terror Attacks at Home

Slightly over a half of people in the UK agree that the nation’s involvement in wars abroad has increased the terror threat to the country, a poll out Friday has showed. The survey found that 53% of 7,134 UK adults sampled by YouGov said they believed wars the UK supported or fought were in part responsible for terror attacks at home. [..] Labour leader Jeremy Corbyn, who made a speech earlier in the day to mark his return to general election campaigning, said UK’s war on terror had not worked. He cited intelligence experts who said foreign wars, including in Libya, threatened the country’s security.

If that is true, Theresa May obviously should have no chance of winning. May can and will try to use the horror of Manchester, and the subsequent pause in the campaign, to strengthen her position in the upcoming election, by playing on people’s fear and making them believe she’s in control. Even if the very attack itself makes clear that she’s not. The Tories have already attacked Corbyn for saying their policies have failed; it was the wrong time to say that, according to them.

But it’s not. It’s the very best time. This is when people pay attention. And having this discussion doesn’t disrespect the victims of Manchester. If anything, it shows more respect than not having the discussion. Because you want to make sure this doesn’t happen again, neither here nor there. And to achieve that, you have to look at why these things happen.

An 8-year old child in Manchester, just like one in Mosul or Aleppo, is innocent. Yourself, perhaps not so much. The politicians you vote into power, and the media you read and watch to inform you, not a chance. Guilty as hell.

 

 

Nov 272016
 
 November 27, 2016  Posted by at 10:14 am Finance Tagged with: , , , , , , , , , ,  1 Response »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Unknown Paris 1900

This Is The Greatest Suckers’ Rally Of All Time: David Stockman (CNBC)
More Than Half Of New Yorkers One Paycheck Away From Homelessness (Gothamist)
US Thanksgiving, Black Friday Store Sales Fall 10.4%, Online Rises (R.)
Dollar to Benefit if $2.5 Trillion in Cash Stashed Abroad Is Repatriated (WSJ)
China’s Property Frenzy And Surging Debt Raises Red Flag For Economy (AFP)
India’s Rural Economy Hit Hard As Informal Lending Breaks Down (R.)
UK MPs Launch New Attempt To Interrogate Tony Blair Over Iraq (G.)
First Brexit then Trump. Is Italy Next For The West’s Populist Wave? (G.)
Clinton Camp Splits From White House On Jill Stein Recount Push (G.)
Justin Trudeau Ridiculed Over Praise Of ‘Remarkable’ Fidel Castro (G.)
Military Veterans Seek New Role In South Africa Poaching War (AFP)

 

 

Sell everything!

This Is The Greatest Suckers’ Rally Of All Time: David Stockman (CNBC)

The Trump rally raged on this week with all major U.S. indexes hitting record highs, but despite the historic run, David Stockman is doubling down on his call for investors to sell everything. “This 5% eruption is meaningless. It’s some robo machine trying to tag new highs,” Stockman said Tuesday on CNBC’s “Fast Money,” in a dismissal of the S&P 500 rally. “I see a recession coming down the pike in 2017. The stock market is going to go down and it’s going to stay down long and hard because, for the first time in 25 years, there’s nothing to bail it out.” This echoed the initial call Stockman made Nov. 3, when he urged investors to sell stocks and bonds before the presidential election. However, since the Nov. 8 election, the Dow Jones industrial average has gained 4% en route to surpassing 19,000.

Additionally, the S&P 500 and Nasdaq also hit record highs in the same time period, gaining 3% and 4%, respectively. Yet Stockman, who was director of the Office of Management and Budget under President Ronald Reagan, reaffirmed that markets are heading for disaster. “My call stands. Sell the stocks, sell the bonds, get out of the casino,” Stockman explained to CNBC in an off-camera interview. “Bonds have already cratered by nearly $2 trillion worldwide and have miles to go. This isn’t a rotation into stocks, either. It’s the greatest sucker’s rally ever.” Stockman, author of “Trumped: A Nation on the Brink of Ruin… And How to Bring It Back,” lamented that there will be no Trump stimulus or Reagan-style boom.

He further added that he expects “an unprecedented fiscal bloodbath” resulting from the $20 trillion worth of debt that the U.S. currently has on the books. “This isn’t Ronald Reagan with a clean $1 trillion balance sheet and with a fluke GOP and a Southern Democratic coalition that only materialized because he got shot,” Stockman said in reference to John Hinkley Jr. attempting to assassinate Reagan in Washington, D.C., in 1981. “Nor is it LBJ in 1965 with a thundering electoral mandate and a massive congressional majority for the Great Society.” On the contrary, Stockman, who initially predicted that Trump would win the election, added that Washington will be in chaos by June. This is because he anticipates ongoing disruptions from the tea party, which Stockman doesn’t foresee as allowing additional deficit increases.

Read more …

“..landlords are increasingly claiming “chronic rent delinquency” after just a single late payment..”

More Than Half Of New Yorkers One Paycheck Away From Homelessness (Gothamist)

More than half of all New Yorkers don’t have enough money saved to cover them in the event of a lost job, medical emergency, or other disaster, according to a new report by the Association for Neighborhood & Housing Development. Nearly 60% of New Yorkers lack the emergency savings necessary to cover at least three months’ worth of household expenses including food, housing, and rent, but that statistic isn’t spread evenly across the five boroughs. The Bronx has the highest rate of families without adequate emergency savings: in Mott Haven, Melrose, Hunts Point, Longwood, Highbridge, South Concourse, University Heights, Fordham, Belmont, and East Tremont, 75% of families have inadequate emergency savings.

The Staten Island neighborhoods of Tottenville and Great Kills have the lowest rate, with just 41% of families lacking the funds necessary to cover three months’ worth of expenses. Without these savings, families who face emergencies could be at risk of eviction, foreclosure, damaged credit, and even homelessness. In Brooklyn, families in Brownsville (70%), Bed-Stuy (67%), Bushwick (68%), East New York (67%), and South Crown Heights/Prospect Heights (67%) are the most at-risk—in Manhattan, an average of 67% of families in Harlem, Washington Heights, and Inwood lack necessary savings. In Queens, the neighborhoods with the highest%age of these households were Elmhurst/Corona (64%), Rockaway/Broad Channel (60%), Sunnyside/Woodside (59%), and Jackson Heights (59%).

As DNAinfo notes, advocates say that rental assistance is crucial in preventing homelessness citywide, especially in neighborhoods where rents rise faster than incomes—many of which overlap with the neighborhoods where families lack adequate savings. And although an increase in rental assistance services like the one proposed by Queens Assemblyman Andrew Hevesi could cost the cost $450 million in state and federal funding, it would be more cost-effective than allowing more families to enter the chronically underfunded shelter system. Many tenants don’t know where to get emergency rental assistance, which can prevent them from falling behind on their rent. And landlords are increasingly claiming “chronic rent delinquency” after just a single late payment, which allows them to begin eviction proceedings earlier on than they would otherwise.

Read more …

“Net sales on Black Friday slid 10.4% for brick-and-mortar chains..”

US Thanksgiving, Black Friday Store Sales Fall 10.4%, Online Rises (R.)

Sales and traffic at U.S. brick-and-mortar stores on Thanksgiving Day and Black Friday declined from last year, as stores offered discounts well beyond the weekend and more customers shopped online. Internet sales rose in the double digits on both days, surpassing $3 billion for the first time on Black Friday, according to data released on Saturday. Data from analytics firm RetailNext showed net sales at brick-and-mortar stores fell 5.0% over the two days, while the number of transactions fell 7.9%. Preliminary data from retail research firm ShopperTrak showed that shopper visits to such stores fell a combined 1% during Thanksgiving and Black Friday when compared with the same days in 2015.

The data highlights the waning importance of Black Friday, which until a few years ago kicked off the holiday shopping season, as more retailers start discounting earlier in the month and opened their doors on Thanksgiving Day. “We knew it (holiday season) was going to be off to a slow start,” Shelley Kohan, vice president of retail consulting at RetailNext, said. “The first couple of weeks with the election were a complete distracter from the normal course of business and…a warmer climate in November may have made the sales more stubborn,” she said, adding that she saw sales picking up in December.

Net sales on Black Friday slid 10.4% for brick-and-mortar chains, according to RetailNext. “Stores that opened on Thursday were not very busy on Black Friday,… and while the Thanksgiving Day opt-outs were busier on Black Friday, they didn’t see the crowds they saw in previous years,” NPD group’s Chief Industry analyst Marshal Cohen said. Still, total holiday season sales are expected to jump 3.6% to $655.8 billion this year, according to the National Retail Federation, due to a tightening job market.

Read more …

Only if buybacks are banned.

Dollar to Benefit if $2.5 Trillion in Cash Stashed Abroad Is Repatriated (WSJ)

Part of $2.5 trillion in profits held overseas by companies such as Apple and Microsoft could be heading back to the U.S., a move analysts say could further fuel the U.S. dollar’s powerful rally. U.S. corporations have been holding billions in earnings and cash abroad to avoid paying a 35% tax that would be levied whenever the money is brought home. President-elect Donald Trump has said he would propose a one-time cut of the repatriation tax to 10% to lure money back to the U.S. that can be spent on hiring, business development and funding Mr. Trump’s fiscal stimulus proposals. Market optimism that the stimulus plan can generate U.S. economic growth and push the Federal Reserve to raise interest rates has buoyed the dollar against a basket of major trading partners toward 14-year-highs since the Nov. 8 presidential election.

Now, some say the prospect of companies repatriating perhaps hundreds of billions of dollars could offer more impetus to the U.S. currency’s rally. “However small, however big this flow of money will be, it will be positive for the case of dollar strength,” said Daragh Maher at HSBC. “There will most likely be an inflow into dollars.” When a company repatriates earnings from abroad, it may have to exchange the local currency for the U.S. dollar. The $2.5 trillion hoard of overseas earnings is highly concentrated in the technology and pharmaceutical sectors, according to Capital Economics. Microsoft held about $108 billion in earnings overseas as of 2015, while pharmaceutical giant Pfizer had $80 billion. General Electric had $104 billion overseas, according to Capital Economics. Analysts note that many companies already hold their overseas earnings in U.S. dollar assets, which would mute the demand for dollars.

Read more …

Famous last words: “The notion that Chinese people do not like to borrow is clearly outdated..”

China’s Property Frenzy And Surging Debt Raises Red Flag For Economy (AFP)

Chinese household debt has risen at an “alarming” pace as property values have soared, analysts have said, raising the risk that a real estate downturn could wreak havoc on the world’s second largest economy. Loose credit and changing habits have rapidly transformed the country’s famously loan-averse consumers into enthusiastic borrowers. Rocketing real estate prices in major Chinese cities in recent years have seen families’ wealth surge. But at the same time they have fuelled a historic boom in mortgage lending, as buyers race to get on the property ladder, or invest to profit from the phenomenon. Now the debt owed by households in the world’s second largest economy has surged from 28% of GDP to more than 40% in the past five years.

“The notion that Chinese people do not like to borrow is clearly outdated,” said Chen Long of Gavekal Dragonomics. The share of household loans to overall lending hit 67.5% in the third quarter of 2016, more than twice the share of the year before. But this surge has raised fears that a sharp drop in property prices would cause many new loans to go bad, causing a domino effect on interest rates, exchange rates and commodity prices that “could turn out to be a global macro event”, ANZ analysts said in a note. While China’s household debt ratio is still lower than advanced countries such as the US (nearly 80% of GDP) and Japan (more than 60%), it has already exceeded that of emerging markets Brazil and India, and if it keeps growing at its current pace will hit 70% of GDP in a few years.

It still has some way to go before it outstrips Australia, however, which has the world’s most indebted households at 125% of GDP. The ruling Communist party has set a target of 6.5-7% economic growth for 2017, and the country is on track to hit it thanks partly to a property frenzy in major cities and a flood of easy credit. But keeping loans flowing at such a pace creates such “substantial risks” that it could be a “self-defeating strategy”, Chen said. China’s total debt – including housing, financial and government sector debt – hit 168.48 trillion yuan ($25 trillion) at the end of last year, equivalent to 249% of national GDP, according to estimates by the Chinese Academy of Social Sciences, a top government think tank.

Read more …

“..the informal sector accounts for [..] 80% of employment..”

India’s Rural Economy Hit Hard As Informal Lending Breaks Down (R.)

Life was good for Mitharam Patil, a wealthy money lender from a small village in the Indian state of Maharashtra. Small-time financiers like Patil would typically lend cash to farmers and traders every day, providing a vital source of funding for a rural economy largely shut out of the banking sector, albeit at interest rates of about 24%. All that came crashing down on Nov. 8, when Prime Minister Narendra Modi banned 500 and 1,000 rupee ($7.30-$14.60) banknotes, which accounted for 86% of currency in circulation. The action was intended to target wealthy tax evaders and end India’s “shadow economy”, but it has also exposed the dependency of poor farmers and small businesses on informal credit systems in a country where half the population has no access to formal banking.

Patil was stuck with 700,000 rupees ($10,144) of worthless cash. He can also only withdraw up to 24,000 rupees from his account every week, barely enough for his own personal needs given he also works as a farmer. That is bad news for farmers and traders who had come to depend on Patil, despite his high interest rates, given that bank branches are located far from the village, while the process to obtain loans is long and cumbersome. It may also hurt India’s economy, as the informal sector accounts for 20% of GDP and 80% of employment. The country is due to report July-September GDP on Wednesday. “Sowing of winter crops has been started and farmers badly need money. But I couldn’t lend (to) them due to restrictions on withdrawal,” Patil said.

Some farmers and small businesses say India’s informal credit system has ground to a virtual halt, despite government measures to steer more funds to them, including 230 billion rupees in crop loans. Not only are money lenders struggling to lend, they are also struggling to get paid. Saumya Roy, CEO of Vandana Foundation, a micro finance firm, said it has encountered difficulties in collecting payments from borrowers, which will have a knock-on effect on how much they can lend to others. “We can’t go on lending and suffer losses,” she said. “How can we force people to pay back when they don’t have money to buy food. How will they pay us?”

Read more …

That should be fun.

UK MPs Launch New Attempt To Interrogate Tony Blair Over Iraq (G.)

A cross-party group of MPs will make a fresh effort to hold Tony Blair to account for allegedly misleading parliament and the public over the Iraq war. The move, which could see Blair stripped of membership of the privy council, comes as the former prime minister tries to re-enter the political fray, promising to champion the “politically homeless” who are alienated from Jeremy Corbyn’s Labour and the Brexit-promoting government of Theresa May. The group, which includes MPs from six parties, will put down a Commons motion on Monday calling for a parliamentary committee to investigate the difference between what Blair said publicly to the Chilcot inquiry into the war and privately, including assurances to then US president George W Bush.

Backing the motion are Alex Salmond, the SNP MP and former first minister of Scotland; Hywel Williams, Westminster leader of Plaid Cymru; and Green party co-leader Caroline Lucas. Senior Tory and Labour MPs are also backing the move, which reflects widespread frustration that the publication of the Chilcot report in July, after a seven-year inquiry, did not result in any government action or accountability for Blair. Salmond said some MPs believe that senior civil servants were “preoccupied with preventing previous and future prime ministers being held accountable”. He said: “An example should be set, not just of improving government but holding people to account.”

He pointed to last week’s Observer story revealing that, according to documents released under the Freedom of Information Act, the inquiry was designed by senior civil servants to “avoid blame” and reduce the risk that individuals and the government could face legal proceedings. Salmond also noted that documents show many officials involved in planning the inquiry, including current cabinet secretary Sir Jeremy Heywood, were involved in the events that led to war. The new motion will be debated on Wednesday in Commons time allotted to the SNP.

Read more …

What Renzi’s Dec. 4 constitutional referendum tries to achieve: “They’re sealing the system off so it can’t be changed in the future.”

First Brexit then Trump. Is Italy Next For The West’s Populist Wave? (G.)

On a bitterly cold evening, MPs and senators representing the Five Star Movement (M5S), launched by Beppe Grillo, the comedian-turned-political rabble rouser, implored a packed piazza to use a referendum on the constitution on Sunday 4 December to send the prime minister, Matteo Renzi, packing. Renzi, the telegenic, youthful leader of the centre-left Democratic party (PD), has placed his authority behind proposals to limit the powers of the senate, Italy’s second chamber. His plan involves cutting the number of senators from 315 to 100, all of whom would be appointed – rather than elected, as at present – and restricting their power to influence legislation.

Since 1948 the Italian constitution has preserved a perfect balance of powers between the two houses of parliament, frequently leading to legislative gridlock in Rome. Renzi claims that slimming down the role of the senate will, along with other reforms to strengthen executive power, finally free governments to govern. Crucially, he has indicated he will step down if the vote goes against him. In other eras, a dry and technical debate might have preoccupied a few constitutional cognoscenti. But these are not ordinary times in western democracies. In Ferrara’s Piazza Trento e Trieste, Alessandro Di Battista, a rising star of Grillo’s movement, issued a populist call to arms. Renzi’s referendum, he told the crowd, was just the latest gambit by a political class determined to insulate itself from the people it should serve.

“This unelected senate will be constituted by the arselickers of the various parties”, said Di Battista, “and by those who are in trouble with the courts and need parliamentary immunity. They’re sealing the system off so it can’t be changed in the future.” Such a devious manoeuvre should, he said, come as no surprise: “There are two Italys: on the one side the very wealthy few who look after themselves, and on the other the masses who live every day with problems of transport and public health.” As his audience launched into a favourite Five Star chant, “A casa! A casa!” (“Send them home”), Di Battista referenced the political earthquake that was in everyone’s mind. “The election of Donald Trump is the American people’s business,” he said. “But what that election does show is that so many citizens are simply not taking the establishment’s bait any more.”

Read more …

Did Stein really raise more money for this than for her entire 2016 campaign?

Clinton Camp Splits From White House On Jill Stein Recount Push (G.)

Hillary Clinton’s presidential campaign said on Saturday it would help with efforts to secure recounts in several states, even as the White House defended the declared results as “the will of the American people”. The campaign’s general counsel, Marc Elias, said in an online post that while it had found no evidence of sabotage, the campaign felt “an obligation to the more than 64 million Americans who cast ballots for Hillary Clinton”. “We certainly understand the heartbreak felt by so many who worked so hard to elect Hillary Clinton,” Elias wrote, “and it is a fundamental principle of our democracy to ensure that every vote is properly counted.”

In response, President-elect Donald Trump said in a statement: “The people have spoken and the election is over, and as Hillary Clinton herself said on election night, in addition to her conceding by congratulating me, ‘We must accept this result and then look to the future.’” Wisconsin began recount proceedings late on Friday after receiving a petition from Jill Stein, the Green party candidate. Stein claims there are irregularities in results reported by Wisconsin as well as Michigan and Pennsylvania, where she plans to request recounts next week, having raised millions of dollars from supporters. Trump called Stein’s effort a “scam” and said it was “just a way … to fill her coffers with money, most of which she will never even spend on this ridiculous recount”. “The results of this election should be respected instead of being challenged and abused,” he added, “which is exactly what Jill Stein is doing.”

Read more …

I bet you there’s hardly a single American -or European- who knows Cuba has been one of Canada’s most popular holiday destinations for many years.

Justin Trudeau Ridiculed Over Praise Of ‘Remarkable’ Fidel Castro (G.)

Justin Trudeau, the Canadian prime minister, has been mocked and criticised over his praise of the late Cuban leader Fidel Castro. Following the death of Castro, Trudeau, whose father had a close relationship with the revolutionary, released a statement mourning the loss of a “remarkable leader”. Castro, who died on Friday aged 90, won support for bringing schools and hospitals to the poor but also created legions of enemies for his ruthless suppression of dissent. Trudeau’s comments were markedly more positive than most western leaders, who either condemned Castro’s human rights record or tip-toed around the subject. Instead, Trudeau warmly recalled his late father’s friendship with Castro and his own meeting with Castro’s three sons and brother – Raul, Cuba’s current president – during a visit to the island nation earlier this month.

“While a controversial figure, both Mr Castro’s supporters and detractors recognized his tremendous dedication and love for the Cuban people who had a deep and lasting affection for ‘el Comandante’,” Trudeau said in the statement. He called Castro “larger than life” and “a legendary revolutionary and orator”. Fidel Castro was an honorary pall bearer at the 2000 funeral of Trudeau’s father, former prime minister Pierre Trudeau. In 1976, the senior Trudeau became the first Nato leader to visit Cuba under Castro’s rule, at one point exhorting “Viva Castro!”. “I know my father was very proud to call him a friend and I had the opportunity to meet Fidel when my father passed away,” Trudeau said.

Read more …

Better be careful with private armies getting involved.

Military Veterans Seek New Role In South Africa Poaching War (AFP)

In another life, Lynn was a sniper in Afghanistan, Damien trained paramilitary forces in Iraq, and John worked undercover infiltrating drug cartels in central America. Now all three are back in action, this time fighting what they describe as a “war” against poachers in southern Africa as the killing of rhinos escalates into a crisis that threatens the survival of the species. In 2008, less than 100 rhinos were poached in South Africa, but in recent years numbers have rocketed with nearly 1,200 killed in 2015 alone. Faced with such slaughter, conservationists and government authorities have been desperately searching for ways to protect the animals.

Many ideas have been tried, including drones, tracking dogs, satellite imagery, DNA analysis, hidden cameras and even cutting horns off live animals before poachers can get to them. But the killing has continued, and now military veterans from the United States, Australia and elsewhere have been drafted to bring their expertise to the uphill battle to save the rhinos. “You have animals who are targeted by people using automatic weapons,” Damien Mander, a former Australian Navy special forces officer, told AFP. “You can not go to the communities and ask them nicely to stop. This is a war. We are fighting a war out there.”

Read more …

Nov 222016
 
 November 22, 2016  Posted by at 9:08 am Finance Tagged with: , , , , , , , , , ,  1 Response »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Library of Congress Crowds of people waving at President Kennedy’s motorcade, Dallas, Texas Nov. 22 1963

Donald Trump To Withdraw From TPP On First Day In Office (G.)
Fed Should Allow “Elephant Size Quantitative Eurodollar Easing” (BBG)
China May Have To Float The Yuan If Tighter Capital Controls Fail (BBG)
Eurozone Nations Turn To Hedge Funds To Meet Borrowing Needs (R.)
Goldman: How Corporations Will Spend Their Huge Piles of Overseas Cash (BBG)
Why Free Trade Doesn’t Work for the Workers – Steve Keen (ET)
Boo-Hoo (Jim Kunstler)
Top Network Executives, Anchors Meet With Donald Trump (CNN)
Trump Is ‘Just The President’ – Snowden (AFP)
Nigel Farage Would Be Great UK Ambassador To US – Trump (G.)
Richard Branson To Bankroll Secret Blairite Campaign To Stop Brexit (Ind.)
Brexit Vote Wiped $1.5 Trillion Off UK Household Wealth In 2016 (G.)
Merkel’s ‘Days Are Numbered’, Warns France’s Le Pen (CNBC)
Greek Doctors Continue To Emigrate In Large Numbers (Kath.)
Why Don’t We Grieve For Extinct Species? (G.)

 

 

Still think it’s a lot of fuzz over a Pacific deal that excludes China.

Donald Trump To Withdraw From TPP On First Day In Office (G.)

Donald Trump has issued a video outlining his policy plans for his first 100 days in office and vowing to issue a note of intent to withdraw from the Trans-Pacific Partnership “from day one”. In the brief clip posted to YouTube on Monday, the president-elect said that “our transition team is working very smoothly, efficiently, and effectively”, contradicting a wealth of media reports telling of chaos in Trump Tower as Trump struggles to build a team. He said that he was going to issue a note of intent to withdraw from the TPP trade deal, calling it “a potential disaster for our country”. Instead he said he would “negotiate fair bilateral trade deals that bring jobs and industry back”.

Hours before Trump’s announcement, Japan’s prime minister, Shinzo Abe, warned that the TPP would be “meaningless” without US participation. Speaking to reporters in Buenos Aires on Monday, Abe conceded that other TPP countries had not discussed how to rescue the agreement if Trump carried out his promise to withdraw. Abe, a vocal supporter of the 12-nation agreement, appears to have failed in his recent attempts to coax Trump out of his “America first”, protectionism. The TPP, which excludes China, is thought to have been high on Abe’s agenda when he became the first foreign leader to meet the president-elect in New York last week.

While details of their 90-minute meeting have not been released, Abe would have used the time to try to persuade Trump to go back on his campaign threat to pull the US out of TPP on day one of his presidency. “The TPP would be meaningless without the United States,” Abe said, after Japan and other TPP countries had discussed the agreement on the sidelines of the Apec summit in Lima at the weekend. He added that the pact could not be renegotiated. “This would disturb the fundamental balance of benefits,” he said.

Read more …

Dollar liquidity is under severe strain. There’s only one reserve currency. And letting this push up the value of the USD without limit will hurt the US in the end.

Fed Should Allow “Elephant Size Quantitative Eurodollar Easing” (BBG)

As Donald Trump threatens to turn away from the rest of the world, the Fed will find itself under increasing pressure to extend a helping hand outwards. That’s the prognosis from Credit Suisse Director of U.S. Economics Zoltan Pozsar, who contends that the U.S. central bank needs to take a much more activist approach to ensuring adequate availability of the world’s reserve currency in light of recent regulatory changes that have raised bank funding costs and constrained sources of dollar funding. The liquidity financial institutions can draw upon has been drained by new rules that require banks to hold vast buffers of easy-to-sell assets, on the one hand, and a larger-than-expected exodus from prime money-market funds linked to financial reforms implemented in October, on the other.

That’s induced a pick-up in bank funding costs that looks to be permanent, the analyst said. That means that when foreign banks need dollars, they’re increasingly forced to procure them through currency swaps from U.S. banks and asset managers — who are themselves balance-sheet constrained. The cost of converting local currency payments in euros and yen into dollars is now at its most expensive since 2012, as implied by persistently negative cross-currency basis swap rates. The net result is an “existential trilemma” for the Federal Reserve, as it is forced to choose between two of the following three objectives: shoring up banks’ balance sheets, stabilizing costs for onshore and offshore dollar borrowing, and an independent monetary policy.

The best possible solution, according to Pozsar, is for the U.S. central bank to let its own balance sheet go: serving as a “dealer of last resort” by way of “elephant size quantitative eurodollar easing,” in other words, that it should allow the unlimited use of its dollar swap lines to prevent foreign banks’ dollar borrowing costs from getting too high in an environment of constrained bank balance sheets. “The tool to use is the Fed’s dollar swap lines but the aim would no longer be to backstop funding markets, but to police the range within which various cross currency bases trade,” Pozsar writes, arguing for the “fixed-price, full-allotment broadcast of eurodollars globally” by the U.S. central bank.

Read more …

The flipside of a strong dollar. And of Trump’s America first.

China May Have To Float The Yuan If Tighter Capital Controls Fail (BBG)

Dollar strength and rising U.S. interest rates under President-elect Donald Trump would intensify pressure on capital outflows from China, forcing its policy makers to choose between tightening capital controls or a drastic floating of the currency in coming months. That’s according to Victor Shih, a University of California at San Diego professor who studies China’s government and finance and specializes in tracking politics at the most elite level. “Given the Chinese government’s consistent preference for control, we may see much more Draconian capital controls before a decision to float the currency can be made,” Shih said in an interview in Beijing. “The main objective is to avoid a panicky float.”

Federal Reserve Chair Janet Yellen has indicated a rate hike could be appropriate “relatively soon,” and investors anticipate Trump’s proposals to cut taxes and boost infrastructure will spur faster U.S. growth and inflation. At the same time, the record indebtedness of China’s companies limits the government’s ability to raise interest rates because doing so would increase the cost of repaying debt. China may face a stark choice between abandoning recent policy changes to tie the yuan more to a basket of currencies and letting it float more freely or stringent capital controls sometime in the next six to 18 months, said Shih. The Communist Party’s preference for control suggests economic reform is unlikely to accelerate, Shih said. He sees China following Russia toward slower growth and rising currency volatility.

Read more …

More signs the euro is failing.

Eurozone Nations Turn To Hedge Funds To Meet Borrowing Needs (R.)

Eurozone governments are increasingly relying on hedge funds to help them meet their borrowing needs, which risks leaving them vulnerable to a debt market sell-off driven by a class of investors dubbed “fast money” for their speculative approach. With banks playing a less active part in the sovereign debt market because of pressures on their balance sheets, several countries have turned to hedge funds to sell their targeted amount of bonds, according to data, officials and bankers. Hedge funds tend to look for quick returns on investments, which could increase the volatility of government bond markets as they face several tests of sentiment in coming months.

A populist revolt that propelled Donald Trump and the Brexit vote is sweeping the developed world and threatens to unseat established leaders in an Italian referendum next month, and Dutch, French and German elections in 2017. Any such political shocks, compounded by rising bond market volatility, could potentially trigger a sell-off – a risk that stirs painful memories of the region’s debt crisis in 2010-2012 when a bond rout led to several countries unable to pay their debts and raised fears the euro zone could unravel. Hedge funds have been particularly active in the market for long-dated bonds as they offer the higher risk and reward that they traditionally seek.

Spain, Italy, Belgium and France have sought to lock in record-low borrowing rates this year with 50-year bond issues for €3-5 billion. Each of them reported a historically high allocation of 13-17% to hedge funds. By contrast, just three years ago, Spain, Italy and Belgium were selling only 4-7% of their syndicated bond sales to that community of investors.

Read more …

Trump should penalize buybacks, make sure the money is used productively.

Goldman: How Corporations Will Spend Their Huge Piles of Overseas Cash (BBG)

Companies in the S&P 500 Index will spend most of their sizable cash hoard buying back stock next year, analysts at Goldman Sachs write in a new note. If so, it would be only the second time in the past 20 years that buybacks have accounted for the largest share of cash usage. Much of this, Goldman says, would be due to the enacting of plans President-elect Donald Trump proposed on the campaign trail, such as a tax holiday for overseas income and changes to the corporate tax code. “A significant portion of returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004,” the team, led by Chief U.S. Equity Strategist David Kostin, write. They estimate that $150 billion (or 20% of total buybacks) will be driven by repatriated overseas cash.

They predict buybacks 30% higher than last year, compared to just 5% higher without the repatriation impact. Other areas that will see a boost include capital expenditures, research and development, as well and mergers and acquisitions. Here’s a broader look at how the analysts see firms allocating their cash in 2017. Other Wall Street banks have started looking at the potential impacts of repatriation as well. A new note from Morgan Stanley analysts Todd Castagno and Snehaja Mogre says that this is one of the top questions they are receiving from clients, and that most are overestimating how much cash will be brought back from overseas.

“The often cited $2.5 trillion statistic [of cash for repatriation] represents accumulated foreign earnings that companies have declared permanently reinvested abroad for GAAP accounting purposes,” they write. “We estimate that only 40% of this amount, or roughly $1 trillion, is available in the form of cash and marketable securities. Thus, the other $1.5 trillion has been reinvested to support foreign operations and exists in the form of other operating assets, such as inventory, property, equipment, intangibles and goodwill.” The note did not provide more detail on how much of that available cash the analysts expect to be used for buying back stock.

Read more …

Can America still reverse this, or is it too late? “You haven’t just lost the industrial capacity, you have lost the skill-base as well, you don’t have the engineers and designers anymore.”

Why Free Trade Doesn’t Work for the Workers – Steve Keen (ET)

Once you have transferred all your capacity offshore, it’s very hard to reverse the process. You haven’t just lost the industrial capacity, you have lost the skill-base as well, you don’t have the engineers and designers anymore. They used to build news versions every year; now they are gone. What [Trump] can do on the fiscal front is his plan to invest in infrastructure. If he goes into this massive program as he has talked about and insists on a made-in-America policy, which he will do, that will provide the financing for the reindustrialization to occur. I’m not worried about a potential deficit because he has the world reserve currency in his hands and the Fed can print as much of it as necessary.

Then, if you produce all the infrastructure components onshore, you don’t even need trade tariffs. In my opinion, this wouldn’t be a trade barrier under WTO rules, but this could be the first dispute he has with the WTO. Because there is demand by the government and the components have to be manufactured onshore, capital needs to be invested and workers trained for the job. On top, you have the increases in productivity through infrastructure, another positive.

Epoch Times: What about tariffs? Mr. Keen: It’s not going to be peaceful, and there will be repercussions for American companies. Trump is used to playing hardball, and now he will have to negotiate with bureaucrats and their corporate backers. There will be attempts to control what Trump does through the WTO and it will be interesting to see how successful those attempts will be.


World Merchandise Exports in trillions of dollars. (World Bank)

Read more …

“Mommy is all about feelings and Daddy’s role is action and that is another reason that Hillary lost and Trump won.”

Boo-Hoo (Jim Kunstler)

America didn’t get what it expected, but perhaps it got what it deserved, good and hard. Daddy’s in the house and he busted straight into the nursery and now the little ones are squalling in horror. Mommy was discovered to be a grifting old jade who ran the household into a slum and she’s been turned out to solemnly await the judgment of the courts, nowhere to run, nowhere to hide. The kids on campus have gone temporarily insane over this domestic situation and some wonder if they’ll ever get over it. Trump as The USA’s Daddy? Well, yeah. Might he turn out to be a good daddy? A lot of people worry that he can’t be. Look how he behaved on the campaign trail: no behavioral boundaries… uccchhh. He even lurches as he walks, like Frankenstein.

Not very reassuring — though it appears that somehow he raised up a litter of high-functioning kids of his own. Not a tattoo or an earplug among them. No apparent gender confusion. All holding rather responsible positions in the family business. Go figure…. Judging from the internal recriminations among Democratic Party partisans playing out in the newspapers, it’s as if they all woke up simultaneously from a hypnotic trance realizing what an absolute dud they put up for election in Hillary Clinton — and even beyond that obvious matter, how deeply absurd Democratic ideology had become with its annoying victimology narrative, the incessant yammer about “diversity” and “inclusion,” as if pixie dust were the sovereign remedy for a national nervous breakdown. But can they move on from there?

I’m not so sure. For all practical purposes, both traditional parties have blown themselves up. The Democratic Party morphed from the party of thinking people to the party of the thought police, and for that alone they deserve to be flushed down the soil pipe of history where the feckless Whigs went before them. The Republicans have floundered in their own Special Olympics of the Mind for decades, too, so it’s understandable that they have fallen hostage to such a rank outsider as Trump, so cavalier with the party’s dumb-ass shibboleths. It remains to be seen whether the party becomes a vengeful, hybrid monster with an orange head, or a bridge back to reality. I give the latter outcome a low percentage chance.

Mommy is all about feelings and Daddy’s role is action and that is another reason that Hillary lost and Trump won. We’ve heard enough about people’s feelings and it just doesn’t matter anymore. You’re offended? Suck an egg. Someone appropriated your culture? Go shit in your sombrero. What matters is how we’re going to contend with the winding down of Modernity — the techno-industrial orgy that is losing its resource and money mojo. The politics of sacred victimhood has got to yield to the politics of staying alive.

Read more …

“Trump senior adviser Kellyanne Conway, who arranged the meeting, said afterward that it was “very cordial, candid and honest.”

Top Network Executives, Anchors Meet With Donald Trump (CNN)

Executives and anchors from the country’s five biggest television networks met with President-elect Donald Trump at Trump Tower on Monday afternoon. And they got an earful. Trump vented about media coverage, according to sources who spoke on the condition of anonymity. He was highly critical of CNN and other news organizations. But while Trump showed disdain for the news media, he also answered questions; listened to the journalists’ arguments about the importance of access; and committed to making improvements. A source in the room told CNNMoney that there was “real progress” made with regards to media access to Trump and his administration. One specific topic was the importance of the “press pool,” a small group of journalists that traditionally travels with the president.

The hour-long meeting was off the record, meaning the participants agreed not to talk about the substance of the conversations. But Trump senior adviser Kellyanne Conway, who arranged the meeting, said afterward that it was “very cordial, candid and honest.” While there was “no need to mend fences,” she said, “from my own perspective, it is great to hit the reset button, it was a long, hard-fought campaign.” Some of the attendees were struck by Trump’s anti-media posture. During the meeting, Trump revived some of the specific arguments he made weeks before winning the presidency. According to Politico, among Trump’s complaints, even as he asked for a “cordial” relationship, was that NBC had used unflattering pictures of him. But one of the participants told CNNMoney that Trump also asked for a positive relationship between his White House and the media.

The participant said that a New York Post account – which had a source describing it as Trump giving the assembled members of the media a “dressing down” like a “firing squad” – was overstated. Conway herself has also criticized the Post report. [..] NBC’s Chuck Todd and Lester Holt; CNN’s Wolf Blitzer and Erin Burnett; CBS’s Norah O’Donnell, Charlie Rose, John Dickerson, and Gayle King; and ABC’s George Stephanopoulos, David Muir and Martha Raddatz were some of the anchors seen entering Trump Tower shortly before 1 p.m. Several executives from the network news divisions were also spotted on the way into Trump Tower, including ABC News president James Goldston; CNN president Jeff Zucker; Fox News co-presidents Bill Shine and Jack Abernethy; NBC News president Deborah Turness; MSNBC president Phil Griffin; and CBS News vice president Chris Isham.

Read more …

“But if I get hit by a bus, or a drone, or dropped off an airplane tomorrow, you know what? It doesn’t actually matter that much to me, because I believe in the decisions that I’ve already made.”

Trump Is ‘Just The President’ – Snowden (AFP)

Former US National Security Agency contractor Edward Snowden on Monday downplayed the importance of President-elect Donald Trump and again defended his decision to leak documents showing massive surveillance of US citizens’ communications. “Donald Trump is just the president. It’s an important position. But it’s one of many,” Snowden told an internet conference in Stockholm, speaking via a video link from Russia, where he has been living as a fugitive. The 33-year-old is wanted in the United States to face trial on charges brought under the tough Espionage Act after he leaked thousands of classified documents in 2013 revealing the vast US surveillance of private data put in place after the September 11, 2001 attacks.

He said he was not worried about the Trump administration stepping up efforts to arrest him and stood by his decision to leak the classified material. “I don’t care,” he said. “The reality here is that yes, Donald Trump has appointed a new director of the CIA who uses me as a specific example to say that, look, dissidents should be put to death. “But if I get hit by a bus, or a drone, or dropped off an airplane tomorrow, you know what? It doesn’t actually matter that much to me, because I believe in the decisions that I’ve already made.”

Read more …

Just a president-to-be having some fun.

Nigel Farage Would Be Great UK Ambassador To US – Trump (G.)

US president-elect Donald Trump has suggested that Nigel Farage, controversial leader of the United Kingdom Independence party, should be the UK’s ambassador to the US. “Many people would like to see @Nigel_Farage represent Great Britain as their Ambassador to the United States,” Trump tweeted on Monday evening. “He would do a great job!” In a brief call with BBC Breakfast, Farage said he had been awake since 2am UK time when the tweet was first posted. The Ukip leader said he was flattered by the tweet, calling it “a bolt from the blue” and said he did not see himself as a typical diplomatic figure “but this is not the normal course of events”. But a Downing Street spokesman said: “There is no vacancy. We already have an excellent ambassador to the US.”

Farage, a member of the European parliament and on-again-off-again leader of Ukip for a decade, recently suggested he could launch an eighth bid to become an MP. Seven previous attempts were unsuccessful. It is unprecedented for an incoming US president to ask a world leader to appoint an opposing party leader as ambassador, and the statement puts British prime minister Theresa May in a difficult position. The role of UK ambassador to the US is among the most prestigious in the diplomatic service. Sir Kim Darroch, formerly the UK’s national security adviser and permanent representative to the European Union (EU), took over the role in January this year. The Ukip leader has previously said it was “obvious” that Darroch should resign his post, calling him part of the “old regime”.

But he told Sky News at that time he did not see himself as Darroch’s replacement: “I don’t think I will be the ambassadorial type. Whatever talents or flaws I have got I don’t think diplomacy is at the top of my list of skills.”

Read more …

Bringing Blair back would be the end of Labour.

Richard Branson To Bankroll Secret Blairite Campaign To Stop Brexit (Ind.)

Richard Branson’s Virgin Group is to help bankroll a campaign set up in secret by Blairite former ministers and advisers to derail Brexit, The Independent can reveal. An email seen by The Independent highlights the scale of backing the group has already secured. It shows the campaign has been months in the planning and claims “substantial progress” has already been made, including the identification of “an excellent potential CEO”. The memo was written by Alan Milburn, who was one of Tony Blair’s closest cabinet allies. It reveals the group has heavy financial, political and corporate backing and is receiving advice and support from a host of high-level business and communications organisations. High-profile MPs including former Deputy Prime Minister Nick Clegg and Labour MP Chuka Umunna are believed to have had contact with the group, as have celebrities such as Bob Geldof.

Freuds, a leading public relations agency that was founded by Matthew Freud, a close friend of both Mr Blair and David Cameron, is understood to have been commissioned to manage the strategy and marketing of the campaign. The email says: “We have been beavering away over the last few months to get a Europe campaign up and running. I’m pleased to say that substantial progress has been made.” “I have met the Freuds team several times and we are making good progress. “I have been in discussions with an excellent potential CEO to lead the campaign. “Virgin … are keen to help … Since we last spoke [they] have offered a further £25k, plus bigger office space, help with legal advice and a possible secondment. “I have held discussions with Stronger In, Chuka Umunna, a new organisation called Common Ground, Bob Geldof and a number of senior politicians across the party spectrum.”

Read more …

Catchy headline and all, but hardly what the report in question is about.

Brexit Vote Wiped $1.5 Trillion Off UK Household Wealth In 2016 (G.)

The UK saw $1.5tn (£1.2tn) wiped off its wealth during 2016 after the Brexit vote sent the pound tumbling and the stock market into reverse, according to a survey by Credit Suisse. A fall in values at the top-end of the property market also contributed to about 400,000 Britons losing their status as dollar millionaires and one of the biggest drops in wealth among the major economies. But the UK remained third for the number of ultra-high-net-worth individuals, who own more than £50m in assets, behind the US and China. And the UK’s top 1% of richest people also continued to own 24% of the nation’s wealth, the report said.

Across the globe, the richest 1% own more wealth than the rest of the world put together, continuing the dominance seen in last year’s report. A recovering in the global stock markets in recent weeks is also likely to reverse some of the losses suffered by pension savers and wealthy individuals. Oxfam said the huge gap between rich and poor was “undermining economies, destabilising societies and holding back the fight against poverty”.

The findings from the Credit Suisse Research Institute’s seventh annual global wealth report that found the overall growth in global wealth remained flat in 2016, following a trend that emerged in 2013 and contrasting sharply with the double-digit growth rates witnessed before the global financial crisis of 2008. Michael O’Sullivan, chief investment officer in Credit Suisse’s wealth management arm: “The impact of the Brexit vote is widely thought of in terms of GDP but the impact on household wealth bears watching. “Since the Brexit vote, UK household wealth has fallen by $1.5tn. Wealth per adult has already dropped by $33,000 to $289,000 since the end of June. In fact, in US dollar terms, 406,000 people in the UK are no longer millionaires.”

Read more …

“Merkel is isolated given she represents the status quo while the pace of change in Europe is accelerating”

Merkel’s ‘Days Are Numbered’, Warns France’s Le Pen (CNBC)

German Chancellor Angela Merkel’s “days are numbered,” according to the leader of France’s right-wing National Front party, Marine Le Pen. Merkel confirmed on Sunday she would run for a fourth term in 2017, however, Le Pen says the German leader does not fit the mood of the times. Speaking to CNBC on Monday, the National Front’s presidential candidate claims Merkel is isolated given she represents the status quo while the pace of change in Europe is accelerating. Turning to another international relationship, Le Pen said it would be natural for France to retain relations with Russia given the close history of the two countries. Arguing she sees no reason why we cannot live in a multi-polar world, she lambasted the U.S. for taking the world into the Cold War, saying it put France and Europe at great risk, given they were caught in the middle.

Read more …

The numbers look a bit shaky, but the trend is glaringly obvious. The Troika is dismantling what until just a few years ago was an absolute world class health system.

Greek Doctors Continue To Emigrate In Large Numbers (Kath.)

For a sixth consecutive year, Greece has been unable to stem the flow of doctors leaving the country. The numbers emigrating during 2016 have been high again, with most opting for work in other European countries. The only difference this year is that there has been a slight dip in those leaving for the UK, which may be due to Brexit. Overall, the Athens Medical Association (ISA) issued a total of 1,018 certificates between January 1 and October 24 allowing Greek doctors to practice abroad. During the whole of 2015, ISA issued 1,521 such documents, which was slightly higher than the 1,380 it produced in 2014 and 1,488 in 2013. The year which saw the highest level of emigration among Greek doctors was in 2013, when ISA issued 1,808 certificates. In total, between 2010 and this year, ISA has readied paperwork for more than 9,300 medical professionals looking to leave Greece.

[..] While Greek doctors pursue their futures abroad, the Greek National Health System (ESY) is buckling due to the shortage of medical staff. According to the Federation of Greek Hospital Doctors’ Unions (OENGE), Greece lacks some 6,000 specialized doctors. The vast majority of doctors hired over the last few years were on fixed-term contracts, which is not a very attractive proposition for those in the medical field. According to the Health Ministry, ESY employs 1,464 auxiliary doctors at the moment. “The medical world has been seriously affected by the crisis over the last few years,” ISA president Giorgos Patoulis told Kathimerini. “The proliferation of mostly young doctors and the low rate at which they are absorbed into the public or private sector creates serious challenges for them in finding work and drives wages down.

“In combination with the government’s failure to set out a sustainable and effective health policy, this has caused an unprecedented migratory wave. This leaves us facing a paradox: Even though there is a plethora of young doctors who are unemployed, the health system is getting old and collapsing due to a lack of personnel.”

Read more …

Seems a tad quirky, but there’s more than meets the initial eye.

Why Don’t We Grieve For Extinct Species? (G.)

In early 2010, artist, activist and mother, Persephone Pearl, headed to the Bristol Museum. Like many concerned about the fate of the planet, she was in despair over the failed climate talks in Copenhagen that winter. She sat on a bench and looked at a stuffed animal behind glass: a thylacine. Before then, she’d never heard of the marsupial carnivore that went extinct in 1936. “Here was this beautiful mysterious lost creature locked in a glass case,” she said. “It struck me suddenly as unbearably undignified. And I had this sudden vision of smashing the glass, lifting the body out, carrying the thylacine out into the fields, stroking its body, speaking to it, washing it with my tears, and burying it by a river so that it could return to the earth.”

[..] .. grief doesn’t occur only when we lose loved ones. Ask anyone who has seen a local forest they once played in as a child demolished for another cookie-cutter development or has watched as fewer bees and butterflies show up in their garden each summer. Or ask any conservationist who has to witness year-after-year as the species they work with slowly vanish, ask any marine biologist about coral reefs or any Arctic biologist about sea ice. Grief can extend far beyond our human parochialism. “We realised that there was a hunger for a way of grieving ecological loss through ritual,” said Porter who in 2011 directed a Funeral for Lost Species through her group, Feral Theatre. This was an outdoor theatrical performance in a churchyard that included various traditional forms of mourning and tilted between somber and whimsical.

Porter believes many people are simply “stuck in a kind of denial” when it comes to extinction, biodiversity loss and environmental crises. “If we face it honestly and fully we have to face our own collective shadow, our out-of-control destructive urges and acts. These are terrible, terrifying things to face alone,” she said. Part of this denial is also due to our growing disconnect from nature. “Many humans now solely interact with domesticated animals and plants. Some have no experience whatsoever of intact forest, field, and aquatic community. The total loss of other community members, their families, and life affirming ways then is an utterly distant abstraction,” Hollingsworth said. “Yet in grief, as in love, humans are wired for intimacy. “


A thylacine, or Tasmanian tiger, in captivity sometime in the 1920s. The thylacine was killed off by European settlers in Australia who erroneously viewed it as a sheep killer. Photograph: Popperfoto

Read more …

Jul 102016
 
 July 10, 2016  Posted by at 8:42 am Finance Tagged with: , , , , , , , , , , ,  6 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


G.G. Bain Political museums, Union Square, New York 1909

Bank Earnings Loom Large As Stocks Near Record on Wall Street (R.)
The Epic Collapse Of The World’s Most Systemically Dangerous Bank (ZH/VC)
Bank of England Considers Curbs On Property Funds (R.)
China June Inflation Eases Further, More Policy Stimulus Anticipated (R.)
China Healthcare Costs Forcing Patients Into Crippling Debt (R.)
Gorbachev: ‘The Next War Will Be the Last’ (Sputnik)
Blair’s Deputy PM Says Iraq Invasion Broke International Law (BBC)
Families Of Soldiers Killed In Iraq Vow To Sue Blair For ‘Every Penny’ (Tel.)
Australia’s Other Great Reef Is Also Screwed (Atlantic)
10,000 Hectares Of Mangroves Die Across Northern Australia (ABC.au)
Global Insect Populations Fall 45% In Past 40 Years (e360)

 

 

Markets are now completely divorced from reality.

Bank Earnings Loom Large As Stocks Near Record on Wall Street (R.)

The focus on Wall Street will shift to corporate earnings next week after a strong June jobs report on Friday gave investors confidence that the U.S. economy was on stable footing and left the S&P 500 within a whisper of a new closing record high. Earnings next week are expected from big banks JPMorgan, Citigroup and Wells Fargo as well as other financial companies such as BlackRock and PNC Financial Services. Earnings for the sector are expected to decline 5.4%. If bank earnings come in better than expected, the S&P 500 is likely to push through its record highs set in May 2015 after several failed attempts, as Friday’s jobs number helped push the benchmark index to less than one point from its closing record high of 2,130.82.

“Banks are definitely in the spotlight,” said Tim Ghriskey, CIO of Solaris Group in Bedford Hills, New York. “There is some trepidation in the market going into this earnings season, the quarter economically was not particularly strong.” Financials have been the worst performing of the 10 major S&P sector groups this year, down nearly 6%, as they were hit by reduced expectations for a U.S. interest rate hike by the Federal Reserve and uncertainty in the wake of “Brexit.” Second-quarter earnings overall are expected to decline 4.7%, according to Thomson Reuters data, the fourth straight quarter of negative earnings, but up slightly from the 5% decline in the first quarter.

Investors will be looking for confirmation this quarter that earnings are starting to turn, with analysts anticipating a return to growth in the back half of the year, starting with expectations for a 1.8% increase in the third quarter.

Read more …

Two things still stuck in German media (Google translate for them is awful) as I write this: the chief economist for Deutsche Bank calls for a €150 billion bailout for European banks, and German top-economist Hans-Werner Sinn says Finland will be next to leave EU and first to leave eurozone.

The Epic Collapse Of The World’s Most Systemically Dangerous Bank (ZH/VC)

It’s been almost 10 years in the making, but the fate of one of Europe’s most important financial institutions appears to be sealed. After a hard-hitting sequence of scandals, poor decisions, and unfortunate events,Visual Capitalist’s Jeff Desjardins notes that Frankfurt-based Deutsche Bank shares are now down -48% on the year to $12.60, which is a record-setting low. Even more stunning is the long-term view of the German institution’s downward spiral. With a modest $15.8 billion in market capitalization, shares of the 147-year-old company now trade for a paltry 8% of its peak price in May 2007.

If the deaths of Lehman Brothers and Bear Stearns were quick and painless, the coming demise of Deutsche Bank has been long, drawn out, and painful. In recent times, Deutsche Bank’s investment banking division has been among the largest in the world, comparable in size to Goldman Sachs, JP Morgan, Bank of America, and Citigroup. However, unlike those other names, Deutsche Bank has been walking wounded since the Financial Crisis, and the German bank has never been able to fully recover. It’s ironic, because in 2009, the company’s CEO Josef Ackermann boldly proclaimed that Deutsche Bank had plenty of capital, and that it was weathering the crisis better than its competitors.

It turned out, however, that the bank was actually hiding $12 billion in losses to avoid a government bailout. Meanwhile, much of the money the bank did make during this turbulent time in the markets stemmed from the manipulation of Libor rates. Those “wins” were short-lived, since the eventual fine to end the Libor probe would be a record-setting $2.5 billion. The bank finally had to admit that it actually needed more capital. In 2013, it raised €3 billion with a rights issue, claiming that no additional funds would be needed. Then in 2014 the bank head-scratchingly proceeded to raise €1.5 billion, and after that, another €8 billion. In recent years, Deutsche Bank has desperately been trying to reinvent itself.

Having gone through multiple CEOs since the Financial Crisis, the latest attempt at reinvention involves a massive overhaul of operations and staff announced by co-CEO John Cryan in October 2015. The bank is now in the process of cutting 9,000 employees and ceasing operations in 10 countries. This is where our timeline of Deutsche Bank’s most recent woes begins – and the last six months, in particular, have been fast and furious. Deutsche Bank started the year by announcing a record-setting loss in 2015 of €6.8 billion. Cryan went on an immediate PR binge, proclaiming that the bank was “rock solid”. German Finance Minister Wolfgang Schäuble even went out of his way to say he had “no concerns” about Deutsche Bank. Translation: things are in full-on crisis mode.

Read more …

Just in time delivery?!

Bank of England Considers Curbs On Property Funds (R.)

The Bank of England is considering curbs on withdrawals from property investment funds after Britain’s vote to leave the EU roiled the sector, the Sunday Telegraph newspaper said late on Saturday. The paper said it understood that the BoE was considering “enforced notice periods before redemptions, slashing the price for investors who rush to the door, or additional liquidity requirements for funds”. Andrew Bailey, the head of Britain’s Financial Conduct Authority, told a BoE news conference on Tuesday that the structure of open-ended real estate funds needed to be reviewed, as investors rushed to cash in their investments.

The BoE – where Bailey was deputy governor until he moved to the FCA this month – last year expressed concern about funds that invest in assets which can become illiquid in a crisis, but allow investors to withdraw funds without notice. On Friday the FCA issued guidance to property funds to avoid disadvantaging investors who had not sought to redeem funds. The Telegraph said regulators were considering requiring funds to ask investors to give a notice period of 30 days to six months for redemptions, or to hold more liquid assets to meet withdrawals, such as cash or shares and bonds in property-related companies. More than six British property funds suspended withdrawals last week to tackle a tide of redemptions after the June 23 vote to leave the EU unnerved investors who are worried that the uncertainty will hit demand to rent and buy commercial property.

Read more …

As I said, China’s entered deflation.

China June Inflation Eases Further, More Policy Stimulus Anticipated (R.)

China’s June consumer inflation grew at its slowest pace since January as increases in food prices eased, while producer prices extended their decline, reinforcing economists’ views that more government stimulus steps will be needed to support the economy. The consumer price index (CPI) rose 1.9% in June from a year earlier, compared with a 2.0% increase in May, the National Bureau of Statistics said on Sunday. Analysts had expected a 1.8% gain, a Reuters poll showed. Consumer inflation has remained low compared with the official target of around 3% for this year, indicating persistently weak demand in the world’s second-largest economy. Food prices were up 4.6% in June, compared with a 5.9% gain in the previous month.

Prices of China’s staple meat pork rose 30.1%, compared with a 33.6% increase in May. But recent flooding in China “is likely to push vegetable and fruit prices higher in the coming months,” ANZ economists Raymond Yeung and Louis Lam wrote in a research note. Non-food prices inched up 1.2% in June versus May’s 1.1% gain. “In our view, while China reiterates the importance of supply-side reform due to debt and overcapacity concerns, the authorities still need to stimulate demand in order to achieve its growth target,” Zhou Hao, senior Asia emerging market economist at Commerzbank in Singapore, said in a note. The People’s Bank of China last cut interest rates on Oct. 23, the seventh time since late 2014, as the government took steps to counter slowing economic growth.

Read more …

Hmmm. Which other country does this remind you of? Official data show up to 44% of families pushed into poverty were impoverished by illness. Does that sound like communism to you?

China Healthcare Costs Forcing Patients Into Crippling Debt (R.)

As China’s medical bills rise steeply, outpacing government insurance provision, patients and their families are increasingly turning to loans to pay for healthcare, adding to the country’s growing burden of consumer debt. While public health insurance reaches nearly all of China’s 1.4 billion people, its coverage is basic, leaving patients liable for about half of total healthcare spending, with the proportion rising further for serious or chronic diseases such as cancer and diabetes. That is likely to get significantly worse as the personal healthcare bill soars almost fourfold to 12.7 trillion yuan ($1.9 trillion) by 2025, according to Boston Consulting Group estimates. For many, like Li Xinjin, a construction materials trader whose son was diagnosed with leukemia in 2009, that means taking on crippling debt.

Li, from Cangzhou in Hebei province, scoured local papers and websites for small lenders to finance his son’s costly treatment at a specialist hospital in Beijing, running up debts of more than 1.7 million yuan, about 10 times his typical annual income. “At that time, borrowing money and having to make repayments, I was very stressed. Every day I worried about this,” said Li, 47, adding that he and his wife had at times slept rough on the streets near the hospital. “But I couldn’t let my son down. I had to try to save him,” he said. Li’s boy died last year. The debts will weigh him down for a few more years yet. Medical loans are just part of China’s debt mountain – consumer borrowing has tripled since 2010 to nearly 21 trillion yuan, and in eight years household debt relative to the economy has doubled to nearly 40% – but they are growing.

That is luring big companies like Ping An Insurance, as well as small loan firms and P2P platforms, as China’s traditional savings culture proves inadequate to the challenge of such heavy costs. The stress is particularly apparent in lower-tier cities and rural areas where insurance has failed to keep pace with rising costs, said Andrew Chen, Shanghai-based healthcare head for consultancy Parthenon-EY. “It’s a storm waiting to happen where patients from rural areas will have huge financial burdens they didn’t have to face before,” he said, adding people would often take second mortgages on their homes or turn to community finance schemes.

Read more …

“..In the current situation…all political, economic, diplomatic and cultural forces should be engaged to pacify the world..”

Gorbachev: ‘The Next War Will Be the Last’ (Sputnik)

Former Soviet President Mikhail Gorbachev declared in an interview with radio station Echo Moskvy that if the crisis escalates to another war, this war will be the last. NATO leaders agreed on Friday to deploy military forces to the Baltic states and eastern Poland while increasing air and sea patrols to demonstrate readiness to defend eastern members against the alleged ‘Russian aggression.’ Mikhail Gorbachev reportedly said after the summit that the decisions made at NATO summit in Warsaw should be regarded as a preparation for a hot war with Russia. On Saturday, Gorbachev told Echo Moskvy in an interview that he sticks to what he had said earlier and that he considers NATO decisions short-sighted and dangerous.

“Such steps lead to tension and disruption. Europe is splitting, the world is splitting. This is a wrong path for the global community” He said. “There are too many global and individual crises to abandon cooperation. It is essential to revive the dialogue.” According to the ex Soviet President, by irresponsibly deploying four multinational battalions to Russian borders, “within shooting distance”, the alliance draws closer another Cold War and another Arms Race. “There are still ways to…avoid military action.” Gorbachev stressed. “I would say that UN should be called upon on that matter.” He also called on Moscow not to respond to provocations but to come to the negotiating table. “In the current situation…all political, economic, diplomatic and cultural forces should be engaged to pacify the world. Mind you, the next war will be the last.”

Read more …

Closing the net on Tony.

Blair’s Deputy PM Says Iraq Invasion Broke International Law (BBC)

John Prescott, who was deputy prime minister when Britain went to war with Iraq in 2003, says the invasion by UK and US forces was “illegal”. Writing in the Sunday Mirror, he said he would live with the “catastrophic decision” for the rest of his life. Lord Prescott said he now agreed “with great sadness and anger” with former UN secretary general Kofi Annan that the war was illegal. He also praised Labour’s Jeremy Corbyn for apologising on the party’s behalf. Lord Prescott also said Prime Minister Tony Blair’s statement that “I am with you, whatever” in a message to US President George W Bush before the invasion in March 2003, was “devastating”.

“A day doesn’t go by when I don’t think of the decision we made to go to war. Of the British troops who gave their lives or suffered injuries for their country. Of the 175,000 civilians who died from the Pandora’s Box we opened by removing Saddam Hussein,” he went on. Lord Prescott said he was “pleased Jeremy Corbyn has apologised on behalf of the Labour Party to the relatives of those who died and suffered injury”. He also expressed his own “fullest apology”, especially to the families of British personnel who died. The former deputy PM said the Chilcot report had gone into great detail about what went wrong, but he wanted to identify “certain lessons we must learn”.

“My first concern was the way Tony Blair ran Cabinet. We were given too little paper documentation to make decisions,” he wrote. No documentation was provided to justify Attorney-general Lord Goldsmith’s opinion that action against Iraq was legal, he added.

Read more …

…and taking all his money too…

Families Of Soldiers Killed In Iraq Vow To Sue Blair For ‘Every Penny’ (Tel.)

Tony Blair will be pursued through the courts for “every penny” of the fortune he has earned since leaving Downing Street, the families of soldiers killed in Iraq vowed. Mr Blair faces a civil law suit over allegations he abused his power as prime minister to wage war in Iraq. The damages, according to legal sources close to the case, are unlimited. A well-placed source told The Telegraph that the Chilcot report appeared to provide grounds for the launch of a lawsuit. “It gives us a lot of threads to pursue and those threads make a powerful rope to catch him,” said the source. So far 29 families of dead soldiers have asked the law firm McCue & Partners to pursue a claim against Mr Blair. Others are expected to come on board.

The firm is looking at bringing a civil case of misfeasance in public office, which would see Mr Blair dragged through the courts for the first time over his decision to take the UK to war. Legal sources say for any case to be successful, lawyers would have to show that Mr Blair “had acted in excess of his powers” and that in doing so “harm has been caused and that the harm could have been predicted”. Sir John Chilcot, in his findings published on Wednesday, said Mr Blair should have seen the problems that resulted from the invasion in 2003 and came as he could to suggesting the military action was illegal.

Mr Blair has earned a fortune estimated at as much as £60 million since resigning as prime minister in 2007, largely through a complex network of companies that offers investment and strategic advice to private companies and international governments. Reg Keys, whose son Tom was one of six Royal Military Police killed at Majar al-Kabir in 2003, said: “Tony Blair has made a lot of money from public office which I believe he misused. He misused the powers of that office and has gone on to make a lot of money after leaving that office, a lot of it from the contacts he made while in Downing Street.”[..] “I would like to see him stripped of every penny he has got. I would like to see him dragged through the civil courts.”

Read more …

Runs along the entire south coast of the continent.

Australia’s Other Great Reef Is Also Screwed (Atlantic)

Imagine arriving at a region famed for its forests—the Pyrenees or the Rockies, perhaps—and discovering that all the trees had vanished. Where just a few years ago there were trunks and leaves, now there is only moss. That’s how Thomas Wernberg and Scott Bennett felt in 2013, when they dropped into the waters of Kalbarri, halfway up the western coast of Australia.

They last dived the area in 2010. Then, as in the previous decade, they had swum among vast forests of kelp—a tagliatelle-like seaweed whose meter-tall fronds shelter lush communities of marine life. But just three years later, the kelps had disappeared. The duo searched for days and found no traces of them. They only saw other kinds of seaweed, growing in thin, patchy, and low-lying lawns. “We thought we were in the wrong spot,” says Bennett. “It was like someone had bulldozed the reef. It was like a moonscape underwater—scungy, brown, and empty.”

The culprit—surprise, surprise—is climate change. The waters near western Australia were already among the fastest-warming regions in the oceans before being pummeled by a recent series of extreme heat waves. In the summer of 2011, temperatures rose to highs not seen in 215 years of records, highs far beyond what kelps, which prefer milder conditions, can tolerate. As a result, the kelp forests were destroyed. Before the heat wave, the kelps stretched over 800 kilometers of Australia’s western flank and cover 2,200 square kilometers. After the heat wave, Wernberg and Bennett found that 43% of these forests disappeared, including almost all the kelps from the most northerly 100 kilometers of the range. “It was just heartbreaking,” says Bennett.

“It really brought home to me the impact that climate change can have on these ecosystems, right under our noses.” “They have provided alarming and detailed evidence for one of the most dramatic climate-driven ecosystem shifts ever recorded,” adds Adriana Verges from the University of New South Wales.

Read more …

Soon, Australia will have only barren coasts left.

10,000 Hectares Of Mangroves Die Across Northern Australia (ABC.au)

Close to 10,000 hectares of mangroves have died across a stretch of coastline reaching from Queensland to the Northern Territory. International mangroves expert Dr Norm Duke said he had no doubt the “dieback” was related to climate change. “It’s a world-first in terms of the scale of mangrove that have died,” he told the ABC. Dr Duke flew 200 kilometres between the mouths of the Roper and McArthur Rivers in the Northern Territory last month to survey the extent of the dieback. He described the scene as the most “dramatic, pronounced extreme level of dieback that I’ve ever observed”.

Dr Duke is a world expert in mangrove classification and ecosystems, based at James Cook University, and in May received photographs showing vast areas of dead mangroves in the Northern Territory section of the Gulf of Carpentaria. Until that time he and other scientists had been focused on mangrove dieback around Karmuba, Queensland, at the opposite end of the Gulf. “The images were compelling. They were really dramatic, showing severe dieback of mangrove shoreline fringing — areas just extending off into infinity,” Dr Duke said. “Certainly nothing in my experience had prepared me to see images like that.”

Dr Duke said he wanted to discover if the dieback in the two states was related. “We’re talking about 700 kilometres of distance between incidences at that early time,” he said. The area the Northern Territory photos were taken in was so remote the only way to confirm the extent and timing of the mangrove dieback was with specialist satellite imagery. With careful analysis the imagery confirmed the mangrove dieback in both states had happened in the space of a month late last year, coincident with coral bleaching on the Great Barrier Reef. “We’re talking about 10,000 hectares of mangroves were lost across this whole 700 kilometre span,” Dr Duke said.

Read more …

It doesn’t get much scarier than this, without insects mankind doesn’t stand a chance: ”..out of 3,623 terrestrial invertebrate species on the International Union for Conservation of Nature [IUCN] Red List, 42% are classified as threatened with extinction.”

Global Insect Populations Fall 45% In Past 40 Years (e360)

Every spring since 1989, entomologists have set up tents in the meadows and woodlands of the Orbroicher Bruch nature reserve and 87 other areas in the western German state of North Rhine-Westphalia. The tents act as insect traps and enable the scientists to calculate how many bugs live in an area over a full summer period. Recently, researchers presented the results of their work to parliamentarians from the German Bundestag, and the findings were alarming: The average biomass of insects caught between May and October has steadily decreased from 1.6 kilograms (3.5 pounds) per trap in 1989 to just 300 grams (10.6 ounces) in 2014.


According to global monitoring data for 452 species, there has been a 45% decline in invertebrate populations over the past 40 years.

“The decline is dramatic and depressing and it affects all kinds of insects, including butterflies, wild bees, and hoverflies,” says Martin Sorg, an entomologist from the Krefeld Entomological Association involved in running the monitoring project. Another recent study has added to this concern. Scientists from the Technical University of Munich and the Senckenberg Natural History Museum in Frankfurt have determined that in a nature reserve near the Bavarian city of Regensburg, the number of recorded butterfly and Burnet moth species has declined from 117 in 1840 to 71 in 2013. “Our study reveals, through one detailed example, that even official protection status can’t really prevent dramatic species loss,” says Thomas Schmitt, director of the Senckenberg Entomological Institute.

Declines in insect populations are hardly limited to Germany. A 2014 study in Science documented a steep drop in insect and invertebrate populations worldwide. By combining data from the few comprehensive studies that exist, lead author Rodolfo Dirzo, an ecologist at Stanford University, developed a global index for invertebrate abundance that showed a 45% decline over the last four decades. Dirzo points out that out of 3,623 terrestrial invertebrate species on the International Union for Conservation of Nature [IUCN] Red List, 42% are classified as threatened with extinction.

Read more …

Jul 082016
 
 July 8, 2016  Posted by at 8:05 am Finance Tagged with: , , , , , , , , , , ,  4 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Lewis Wickes Hine Whole family works, Browns Mills, New Jersey 1910

Brexit Opens Up Bank Fault Line From Milan To Lisbon (R.)
Europe Banks Close to Breaching 2011 Crisis Lows on Italy Woes (BBG)
EU Declares Spain, Portugal In Violation Of Deficit Rules (EuA)
UK Property Fund Turmoil Continues As Three More Firms Cut Value (G.)
World Faces Deflation Shock As China Devalues At Accelerating Pace (AEP)
Forget Brexit, Watch China And The Renminbi (VW)
Central Banks Put Squeeze on Sovereign-Debt Market (WSJ)
Bond Market Is In An ‘Epic Bubble Of Colossal Proportions,’ Says Boockvar (CNBC)
Race And Real Estate: How Hot Chinese Money Is Making Vancouver Unlivable (G.)
Why Australia Could Be About To Lose Its AAA Rating (VW)
Chilcot’s Judgment Is Utterly Damning – But It’s Still Not Justice (Monbiot)
More Obscuration From The British Establishment (Paul Craig Roberts)
The United States and NATO Are Preparing for a Major War With Russia (Klare)
Pressure Mounts For Varoufakis’ Secret Plan X To Be Investigated (Kath.)
The Strange Gaps in Hillary Clinton’s Email Traffic (Pol.)
Marine’s Defense For Handling Classified Info Will Cite Hillary Case (WaPo)
Europe Is Full … Of Empty Houses (LifeSeekers)

 

 

Beautiful Brexit bursts bubbles.

Brexit Opens Up Bank Fault Line From Milan To Lisbon (R.)

The ripples from Britain’s decision to leave the EU have spread across Europe to its southwestern edge, where Portugal is quietly struggling to contain a banking crisis. Since Britain’s shock vote on June 23 for a “Brexit”, attention in the banking sector has mainly focused on Italy, where non-performing loans are causing concern, bank shares have tumbled and confidence has sunk. Political tensions in Europe have also deepened, with Rome and Lisbon trying to bend EU rules on helping laggard banks but meeting resistance from economic powerhouse Germany and the executive European Commission. “It’s putting the whole banking system under stress,” said Gunnar Hokmark, a lawmaker in the European Parliament, echoing the nervousness expressed by investors who spoke to Reuters.

“It will be serious for countries in a fragile situation,” said Hokmark, who helped write rules imposing losses on bondholders and large depositors of failing banks which Portugal and Italy want loosened to allow state help. Portugal’s problems have attracted fewer headlines than Italy’s but its predicament is potentially no less painful. Data show Portuguese savings are being spent, unlike in Italy, and private debt is much higher. A euro zone official who asked not be identified said Portugal’s situation was as critical as Italy’s but it was unlikely to be treated with leniency because it was smaller and posed no “systemic” threat to Europe’s financial stability. Portugal sees it differently. “Wherever you look, there is a threat or a risk,” said Filipe Garcia, a financial expert and consultant in Portugal.

Read more …

How much did Draghi spend to reach this point?

Europe Banks Close to Breaching 2011 Crisis Lows on Italy Woes (BBG)

European banks have fallen to levels not seen since the worst days of the region’s debt crisis as turmoil surrounding Italy’s lenders intensified. Worries about market contagion dragged the Stoxx Europe 600 Banks Index just 1.4% away from its 2011 low. Most of Europe’s banks lost at least 40% of their value in the last year – Banco Popular Espanol, Banca Monte dei Paschi di Siena, Deutsche Bank and Credit Suisse reached fresh record lows this week.

Read more …

If EU sanctions Madrid and Lisbon, it can’t leave others be.

EU Declares Spain, Portugal In Violation Of Deficit Rules (EuA)

The European Commission on Thursday (7 July) officially declared Spain and Portugal in violation of the EU rules on government overspending, the first step towards unprecedented penalties against members of the 28-country bloc. “The Commission confirms that Spain and Portugal will not correct their excessive deficits by the recommended deadline,” the EU’s executive arm said in a statement. If endorsed by the EU’s finance ministers, the Commission is then legally obliged to propose fines against the two neighbouring countries, which were both hit hard by the financial crisis. “Lately, the two countries have veered off track in the correction of their excessive deficits and have not met their budgetary targets,” said Valdis Dombrovskis, the EU Commission’s VP in charge of the euro.

“We stand ready to work together with the Spanish and Portuguese authorities to define the best path ahead,” he said. Many EU powers led by Germany have long hoped for the Commission to finally crack down on public overspenders, but with populist fires burning after the Brexit vote, ministers meeting in Brussels on Tuesday could decide to delay their immediate endorsement. “There is uncertainty creeping in light of the UK vote result,” an EU diplomat told AFP. France and Italy will be the most willing to delay the penalty process, fearing that their own years of EU rule breaking would put them next in line for a sanction by Brussels. Ahead of the Commission announcement, Portuguese Prime Minister Antonio Costa warned that Brussels would foster a rise in Euroscepticism in Portugal if EU sanctions are applied.

Read more …

Brexit bursts bubbles. Is that a bad thing?

UK Property Fund Turmoil Continues As Three More Firms Cut Value (G.)

Shopping centres, office blocks and warehouses worth up to £5bn could be put up for sale as the turmoil in the UK commercial property sector prompted by the Brexit vote forces fund managers to revalue their portfolios or temporarily prevent investors withdrawing their savings. With the pound under pressure on the foreign exchange markets, fund managers Legal & General, Foreign & Colonial and Dutch-owned Kames cut the value of their property funds on Thursday. L&G cut the value of its £2.3bn fund by 10% – following a 5% cut last week – while F&C and Kanes both cut by 5%. Aberdeen Fund Management announced on Wednesday it was halting trading in its property fund for 24 hours and devaluing it by 17% – thought to be the biggest adjustment ever made by a property fund.

Aberdeen has since extended the trading ban until Monday. Others have suspended dealings for longer, starting with Standard Life’s decision on Monday to halt trading in its £2.9bn commercial property fund, leading to a cascade effect with Aviva, Prudential’s M&G, Henderson, Columbia Threadneedle and Canada Life following suit – taking the total value of property funds suspended to £18bn. Mike Prew, equity analyst at Jefferies, said buildings could be sold to find the cash to repay investors in the funds: “We estimate that £3bn to £5bn of assets could be put up for sale but it’s a trading vacuum and what sells is likely to get a hefty Brexit discount. “Buildings are now being readied for sale but keys to cash can typically take three to six months.”

One of the factors weighing on sentiment is uncertainty about the role of London as a financial centre outside the EU. George Osborne, the chancellor, met the heads of major international banks including Goldman Sachs and Morgan Stanley on Thursday to discuss ways to keep the City as a major trading centre. “We are determined to work together,” they said in a joint statement.

Read more …

Ambrose lags me by a week: Deflation Is Blowing In On An Eastern Trade Wind

World Faces Deflation Shock As China Devalues At Accelerating Pace (AEP)

China has abandoned a solemn pledge to keep its exchange rate stable and is carrying out a systematic devaluation of the yuan, sending a powerful deflationary impulse through a global economy already caught in a 1930s trap. The country’s currency basket has been sliding at an annual pace of 12pc since the start of the year. This has picked up sharply since the Brexit vote, suggesting that the People’s Bank (PBOC) may be taking advantage of the distraction to push through a sharper devaluation. “This makes a mockery of the PBOC’s suggestion that its policy is to keep the currency’s value stable,” said Mark Williams, chief China economist at Capital Economics. “Markets will not take PBOC policy statements at face value in the future.”

Mr Williams said it is unclear whether Beijing intended to deceive investors all along when it gave categorical assurances earlier this year, or whether it is feeding on events. Either way the markets have stopped believing what they are told, storing serious trouble for the authorities should there be another surge in capital flight later this year, as widely expected. “When it comes, the PBOC will find itself sorely lacking in credibility. It may have to intervene on a large scale to maintain control,” he said. Factory gate prices within China are falling at a rate of 2.9pc, further amplifying the deflationary impact. Analysts fear that Beijing is engaged is an undeclared policy of beggar-thy-neighbour mercantilism, trying to avert an industrial crisis at home by exporting its overcapacity in steel, shipbuilding, chemicals, plastics, paper, glass, and even solar panels, to the rest for the world.

“When you have a relatively closed capital account like China, it means that any currency move like this is a policy decision,” said Hans Redeker, currency chief at Morgan Stanley. “They seem to be overriding their own model and letting the remnimbi (yuan) fall to improve competitiveness. They are in the same sort of deflationary syndrome as Japan in the 1990 but on a much bigger scale. The global economy is in no position to absorb this.”

Read more …

Again, Deflation Is Blowing In On An Eastern Trade Wind.

Forget Brexit, Watch China And The Renminbi (VW)

As the world’s attention has been fixed on Brexit and meltdown of the European financial system, China has been quietly devaluing its currency without causing too much turbulence in the financial markets as it did the last time policymakers attempted such a strategy. On Wednesday the yuan fell to a fresh five-and-a-half-year low against the dollar extending its slide to a fifth straight session, after China’s central bank sharply weakened its official guidance rate as the dollar surged. The yuan traded as low as 6.6955 against the dollar at one point, closing in on the psychologically important 6.7 level. China’s policymakers have made it clear that they are willing to let the yuan fall as low as 6.8 per dollar in 2016 to support struggling exporters, a depreciation of 4.5% for the full year matching last year’s decline.

This time around China’s central bank is trying to send a message to the markets that it has the depreciation under control. Reuters reports that traders believe state-owned banks across the country are offering dollars to soothe markets while the People’s Bank of China has been intervening in the foreign exchange market to slow down the yuan’s decline. Forex reserves fell by $27.9 billion in May to $3.19 trillion, their lowest since December 2011 although currency movements are almost entirely to blame for the decline. The renminbi depreciated by 1.8% during May. FX reserves increased by $10.3 billion during March and $7.1 billion during April.

Read more …

Not enough paper left.

Central Banks Put Squeeze on Sovereign-Debt Market (WSJ)

Christopher Sullivan, a money manager in New York, is worried that when he needs U.S. Treasury bonds one day, he might not be able to get them. On the surface, the concern might seem unwarranted: The U.S. Treasury has $13.4 trillion in debt securities outstanding, making the U.S. bond market the largest in the world and Treasurys among the most easily traded asset classes. But Mr. Sullivan, who oversees $2.3 billion as chief investment officer at the United Nations Federal Credit Union, said he is afraid that he may soon be squeezed out of that market as central banks continue to vacuum up high-quality debt around the world and nervous overseas investors turn to Treasurys for relief.

A buying spree by central banks is reducing the availability of government debt for other buyers and intensifying the bidding wars that break out when investors get jittery, driving prices higher and yields lower. The yield on the benchmark 10-year Treasury note hit a record low Wednesday. “The scarcity factor is there but it really becomes palpable during periods of stress when yields immediately collapse,’’ he said. ”You may be shut out of the bond market just when you need it the most.’’

On Wednesday, the yield on the 20-year Japanese government bond fell below zero for the first time, joining a pool of negative-yielding bonds around the world that has expanded rapidly over the past year. In Switzerland, government bonds through the longest maturity, a bond due in nearly half a century, are now yielding below zero. In Germany, government debt with maturities out as far as January 2031 is trading with negative yields.

Read more …

Kuroda and Bernanke are meeting next week.

Bond Market Is In An ‘Epic Bubble Of Colossal Proportions,’ Says Boockvar (CNBC)

One of the most crowded trades on Wall Street is about to implode, says one market watcher. “We’re in an epic bubble of colossal proportions,” Peter Boockvar, at The Lindsey Group, said Tuesday on CNBC’s ” Futures Now “. Global yields have been tumbling to record lows, with many dipping into negative territory. The U.S. 10-year hit its lowest level ever this week as traders continue to seek safety in the bond market. Yields move inversely to prices. However, Boockvar believes that this activity is a ticking time bomb for the global economy. He reasoned that U.S. Treasury yields are being dragged down by negative-yielding debt out of Germany, Japan and Switzerland and misplaced monetary policy, and is therefore skeptical as to how much longer the rally can continue.

“It could be central banks that end this,” said Boockvar in regard to upward momentum for bonds. In his recent coverage, he reacted to the newly released FOMC minutes and further questioned the Fed’s ability to act effectively. “They’ll call it being ‘patient.’ Their forecasts are now irrelevant, their communication is now meaningless and their tools to handle whatever might come our way are toothless,” noted Boockvar when describing the Fed’s ability to address a flattening yield curve. In Europe, concern for Italy’s economy continues to rise as that nation struggles to maintain negative interest rates while simultaneously raising capital for its banking system, which is straddled with mounting debt.

“Maybe Italian banks are telling us that central bankers and their negative interest rate policies are actually destroying the Japanese and European banking system?” asked Boockvar in the CNBC interview. He reasoned that Bank of Japan Governor Haruhiko Kuroda and ECB President Mario Draghi could take a look at what’s happening in Italy and decide that their respective monetary policies are the wrong course of action. Ultimately, Boockvar warned of the fallout that could occur if multiple nations opt to end what he referred to as a “negative deposit rate regime.” “Even if they put it back to zero, imagine the carnage, at least in the short-term bond markets,” concluded Boockvar.

Read more …

Once again: how to kill a city.

Race And Real Estate: How Hot Chinese Money Is Making Vancouver Unlivable (G.)

Here’s one,” says Melissa Fong. She’s browsing online real estate listings in a cafe near Vancouver’s City Hall. Behind her, the mountains of the North Shore – the view that launched a thousand bidding wars – rise through mist. “Three-bedroom townhouse, 1,400 sq ft, C$1.5m (£800,000). You could start a family in a place like this. Way, way out of my price range, though.” Fong moves on, scrolling through half a dozen homes, each smaller than the last, until she arrives at a tiny, 500 sq ft condominium on the east side of the city. “Unassuming” would be a generous way to describe how it looks from the photos, which, tellingly, are all exterior shots. “You could live there if you only had one kid, right?” she says with a grim smile.

An urban planning researcher, Fong divides her time between Vancouver, where her elderly parents live, and Toronto, where she’s finishing a doctorate. She grew up in Vancouver, has deep roots in the city, and plans to settle here with her husband, a home renovator. But she has looked on with a mixture of frustration and horror as the cost of housing in Canada’s famously liveable city rise beyond the means of young professionals like her. “When you think it can’t get any worse, it does. So you keep adjusting your expectations, you know?”

Over the past year, the price of a single family house in Vancouver increased by an incredible 30%, to an average of $1.4m. It’s just the latest, most dramatic jump in an already dramatic long-term trend that has turned the beautiful but unassuming Canadian city into one of the world’s least affordable, with a housing price-to-income ratio of 10.8. That’s third after Hong Kong and Sydney, and well ahead of London, which ranks eighth at 8.5. Driving the rise is an unprecedented flood of foreign capital, mainly from China.

“What you have is a huge pool of very wealthy people who want to hedge against uncertainty back home,” says Thomas Davidoff, a real estate economist at the University of British Columbia (UBC). “Combine anxious money – a lot of it – with a beautiful gateway city that has limited space to build, low property taxes, lax regulation on capital flows, and wealth-friendly immigration programmes, and you get a market like this one,” – a market where an ordinary house with a waterfront view can sell for $15m while people earning local wages struggle to buy or rent a home.

Read more …

Lemme guess. Because it’s f**king broke?

Why Australia Could Be About To Lose Its AAA Rating (VW)

Australia’s AAA credit rating was under pressure even before the election and is now looking decidedly shaky. Ratings agency Standard & Poors has moved Australia’s rating outlook from “stable” to “negative”, due to debt and a poor chance of budget repair. This follows warnings from the other major credit rating agencies – Moody’s and Fitch Ratings. The problem is budget repair will only become harder over the coming years, whatever the final numbers in the parliament. On the parties’ approach to budget repair, the Coalition and Labor are virtually indistinguishable as far as the credit agencies are concerned. The May budget projected a deficit (in underlying cash terms) of A$37 billion in 2016-17, gradually falling to $6 billion over the four-year forward estimates.

Labor’s plan is to reduce the deficit from $39 billion to $11 billion over that time. Both Coalition and Labor forecast a return to surplus over the subsequent years and indeed quite large surpluses ten years from now. Budget repair on this scale was utterly implausible before the election and is fiction now. The government’s so-called “zombie” budget measures were baked into its projections over the forward estimate period. These were mainly the cuts to university funding, family payments and the Pharmaceutical Benefits Scheme. None of these had any prospect of being legislated with the past Senate, never mind with a larger, more powerful set of crossbench senators.

The Parliamentary Budget Office estimates these “zombie” measures to be worth $8 billion in total over the forward estimates. This accounts for roughly half of the difference between the total projected deficits of Coalition and Labor over the same period. In short, there is little or no prospect of achieving the budget repair that is a pre-requisite for maintaining Australia’s AAA credit rating. Both sides of politics need to spell out to all Australians what this means. The effect of a credit downgrade is like an income cut to households, businesses and government.

Read more …

Blair won’t be jailed, neither will Dubya or Cheney. But we could at least try to make sure this can’t happen again. By telling them of consequences before they pull these things.

Chilcot’s Judgment Is Utterly Damning – But It’s Still Not Justice (Monbiot)

Little is more corrosive of democracy than impunity. When politicians do terrible things and suffer no consequences, people lose trust in both politics and justice. They see them, correctly, as instruments deployed by the strong against the weak. Since the first world war, no British prime minister has done anything as terrible as Tony Blair’s invasion of Iraq. This unprovoked war caused the deaths of hundreds of thousands of people and the mutilation of hundreds of thousands more. It flung the whole region into chaos, which has been skillfully exploited by terror groups. Today, three million people in Iraq are internally displaced, and an estimated 10 million need humanitarian assistance.

Yet Blair, the co-author of these crimes, whose lethal combination of appalling judgment and tremendous powers of persuasion made the Iraq war possible, saunters the world, picking up prizes and massive fees, regally granting interviews, cloaked in a forcefield of denial and legal impunity. If this is what politics looks like, is it any wonder that so many people have given up on it? The crucial issue – the legality of the war – was, of course, beyond Sir John Chilcot’s remit. A government whose members were complicit in the matter under investigation (Gordon Brown financed and supported the Iraq war) defined his terms of reference.

This is a fundamental flaw in the way inquiries are established in this country: it’s as if a defendant in a criminal case were able to appoint his own judge, choose the charge on which he is to be tried and have the hearing conducted in his own home. But if Brown imagined Chilcot would give the authors of the war an easy ride, he could not have been more wrong. The Chilcot report, much fiercer than almost anyone anticipated, rips down almost every claim the Labour government made about the invasion and its aftermath. Two weeks before he launched his war of choice, Tony Blair told the Guardian: “Let the day-to-day judgments come and go: be prepared to be judged by history.” Well, that judgment has just been handed down, and it is utterly damning.

Read more …

PCR gets mad: Elect Hillary and die.

More Obscuration From The British Establishment (Paul Craig Roberts)

Sir John Chilcot, a member of the British establishment and also a member of the Butler Inquiry, the responsibility of which was to determine if the so-called “intelligence” used as the excuse for the US/UK invasion of Saddam Hussein’s Iraq was “fixed” to justify the invasion, has, after seven years of delay, finally issued its report. Remember, there was a leaked memo from the head of British intelligence that the intelligence justifying the Iraqi Invasion was “fixed” or orchestrated to produce the justification for the invasion, a war crime under the Nuremberg standard established by the United States. Chilcot’s job was to make this fact go away or assume less importance and to protect the Butler Inquiry’s orchestrated verdict that, despite the word of the head of British intelligence, the intelligence was not fixed.

In other words, Sir John’s assigned task under the guise of an “impartial inquiry” was to absolve former UK PM and war criminal Tony Blair not of all responsibility but of all responsibility deserving of prosecution. Sir John’s report is akin to FBI director Comey’s report on Hillary: They did it but they didn’t do it enough to be prosecuted. In the context of democratic politics, if such existed in England, Tony Blair would be in the crosshairs of the ruling UK party, the Tories or Conservatives. Yet, as both parties represent the same private interest groups, the Conservative Prime Minister, David Cameron, who has announced his resignation effective next October, rushed to the opposition party’s defense and gave in Parliament what former British Ambassador Craig Murray calls a “dishonest, apologia for the invasion that bore no relationship to the Chilcot report.”

The UK media, for the most part, also came out in defense of Tony Blair, the war criminal and liar, providing, according to Amb. Murray, “unlimited airtime to Blair and his defender Alastair Campbell” and “almost no airtime to those who campaigned against the war.” Here is the judgement of a British Ambassador, Craig Murray: “Blair is still a creature of absolute self-serving slime.” You could make the same judgment on almost every member of the Bill Clinton, George W. Bush, and Obama regimes. And Hillary’s regime would be even worse. My prediction is that life on earth would not survive Hillary’s first term. Elect Hillary and die.

Read more …

Not Klare’s strongest effort, but the risk is there.

The United States and NATO Are Preparing for a Major War With Russia (Klare)

For the first time in a quarter-century, the prospect of war—real war, war between the major powers—will be on the agenda of Western leaders when they meet at the NATO Summit in Warsaw, Poland, on July 8 and 9. Dominating the agenda in Warsaw (aside, of course, from the “Brexit” vote in the UK) will be discussion of plans to reinforce NATO’s “eastern flank”—the arc of former Soviet partners stretching from the Baltic states to the Black Sea that are now allied with the West but fear military assault by Moscow. Until recently, the prospect of such an attack was given little credence in strategic circles, but now many in NATO believe a major war is possible and that robust defensive measures are required.

In what is likely to be its most significant move, the Warsaw summit is expected to give formal approval to a plan to deploy four multinational battalions along the eastern flank—one each in Poland, Lithuania, Latvia, and Estonia. Although not deemed sufficient to stop a determined Russian assault, the four battalions would act as a “tripwire,” thrusting soldiers from numerous NATO countries into the line of fire and so ensuring a full-scale, alliance-wide response. This, it is claimed, will deter Russia from undertaking such a move in the first place or ensure its defeat should it be foolhardy enough to start a war.

The United States, of course, is deeply involved in these initiatives. Not only will it supply many of the troops for the four multinational battalions, but it is also taking many steps of its own to bolster NATO’s eastern flank. Spending on the Pentagon’s “European Reassurance Initiative” will quadruple, climbing from $789 million in 2016 to $3.4 billion in 2017. Much of this additional funding will go to the deployment, on a rotating basis, of an additional armored-brigade combat team in northern Europe.

As a further indication of US and NATO determination to prepare for a possible war with Russia, the alliance recently conducted the largest war games in Eastern Europe since the end of the Cold War. Known as Anakonda 2016, the exercise involved some 31,000 troops (about half of them Americans) and thousands of combat vehicles from 24 nations in simulated battle maneuvers across the breadth of Poland. A parallel naval exercise, BALTOPS 16, simulated “high-end maritime warfighting” in the Baltic Sea, including in waters near Kaliningrad, a heavily defended Russian enclave wedged between Poland and Lithuania.

Read more …

Greek politics has degenerated into Class B theater, and that’s if you want to be overly generous.

Pressure Mounts For Varoufakis’ Secret Plan X To Be Investigated (Kath.)

Opposition parties kept up the pressure on the government Wednesday to give a clearer account of its actions over the revelations in US economist James K. Galbraith’s latest book regarding preparations in Greece last year for a possible exit from the euro. The opposition pressed home its views on the matter despite the fact that coalition officials distanced themselves from the academic, who clarified exactly what role he played in 2015 while Yanis Varoufakis was finance minister. Writing on the website belonging to the DiEM25 movement founded by Varoufakis, Galbraith said that he had been asked by the then finance minister in March 2015 to “help with a delicate task.” “This was the preparation of a preliminary plan – requested by the prime minister – for the contingency that Greece might be forced out of the euro,” he wrote.

Galbraith said that he worked on a memorandum, called Plan X, for six weeks with a small group of experts that were sworn to secrecy. The economist insisted that the final note, which touched on issues such as issuing a new currency, setting up a new central bank and ensuring law and order, was not intended as a blueprint for exiting the euro but “an outline of measures that might have to be taken and of problems that could occur.” “It was not our mission to make recommendations, and we made none; we were preparing for a scenario that everyone had hoped to avoid,” wrote Galbraith. Despite the academic’s explanation, Alternate Finance Minister Giorgos Houliarakis launched a strong attack on Galbraith during a session in Parliament Wednesday. “Who is this gentleman?” said the ministry official. “What he is saying is unbelievably frivolous.”

Read more …

“Clinton signed documents declaring she had turned over all of her work-related emails. We now know that is not true. But even more importantly, the absence of emails raises troubling questions about the nature of the correspondence that might have been deleted.”

The Strange Gaps in Hillary Clinton’s Email Traffic (Pol.)

The past few weeks have brought a myriad of revelations about the private server Hillary Clinton used while she was secretary of state. First, there was the State Department inspector general’s devastating critique of the former secretary’s email practices. Then came sworn testimony of two key Clinton aides about how the server was set up and how the system worked (or didn’t). Just this weekend, Clinton met with the FBI to discuss her email arrangements. And on Tuesday, FBI Director James Comey announced that the agency would not recommend criminal charges over the handling of these emails, while at the same time offering a brutal assessment of how poorly Team Clinton handled classified information.

But, when it comes to Clinton’s correspondence, the most basic and troubling questions still remain unanswered: Why are there gaps in Clinton’s email history? Did she or her team delete emails that she should have made public? The State Department has released what is said to represent all of the work-related, or “official,” emails Clinton sent during her tenure as secretary—a number totaling about 30,000. According to Clinton and her campaign, when they were choosing what correspondence to turn over to State for public release, they deleted 31,830 other emails deemed “personal and private.” But a numeric analysis of the emails that have been made public, focusing on conspicuous lapses in email activity, raises troubling concerns that Clinton or her team might have deleted a number of work-related emails.

We already know that the trove of Clinton’s work-related emails is incomplete. In his comments on Tuesday, Comey declared, “The FBI … discovered several thousand work-related e-mails that were not in the group of 30,000 that were returned by Secretary Clinton to State in 2014.” We also already know that some of those work-related emails could be permanently deleted. Indeed, according to Comey, “It is also likely that there are other work-related e-mails that [Clinton and her team] did not produce to State and that we did not find elsewhere, and that are now gone because they deleted all emails they did not return to State, and the lawyers cleaned their devices in such a way as to preclude complete forensic recovery.”

Why does this matter? Because Clinton signed documents declaring she had turned over all of her work-related emails. We now know that is not true. But even more importantly, the absence of emails raises troubling questions about the nature of the correspondence that might have been deleted.

Read more …

Saw that coming from miles away.

Marine’s Defense For Handling Classified Info Will Cite Hillary Case (WaPo)

A Marine Corps officer who has been locked in a legal battle with his service after self-reporting that he improperly disseminated classified information will use Hillary Clinton’s email case to fight his involuntary separation from the service, his lawyer said. Maj. Jason Brezler’s case has been tied up in federal court since he sued the service in December 2014. He became a cause celebre among some members of Congress, Marine generals and military veterans after he sent a classified message using an unclassified Yahoo email account to warn fellow Marines in southern Afghanistan about a potentially corrupt Afghan police chief. A servant of that police official killed three Marines and severely wounded a fourth 17 days later, on Aug. 10, 2012, opening fire with a Kalashnikov rifle in an insider attack.

An attorney for Brezler, Michael J. Bowe, said that he intends to cite the treatment of Clinton “as one of the many, and most egregious examples” of how severely Brezler was punished. FBI Director James B. Comey announced Tuesday that he would not recommend the U.S. government pursue federal charges against Clinton, but he rebuked her “extremely careless” use of a private, unclassified email server while serving as secretary of state. The FBI found that 110 of her emails contained classified information. Bowe said it is impossible to reconcile President Obama’s statement that Clinton’s intentional act of setting up a secret, unsecured email server did not detract “from her excellent ability to carry out her duties” while Brezler received a “completely opposite finding… involving infinitely less sensitive and limited information.”

Read more …

“..there are at least 15.8 million verified empty homes in Europe..”

Europe Is Full … Of Empty Houses (LifeSeekers)

“Our country is full” is a statement you might often hear as a justification for not accepting any more migrants and refugees. According to this opinion, European countries do not have capacity to accept more newcomers, who put pressure on infrastructure – and especially housing. But when we look more closely, can it really be said that Europe is full? According to data from the censuses conducted across Europe in 2011, there are at least 15.8 million verified empty homes in Europe; in other words, there are enough empty homes in Europe to house all the asylum seekers that arrived in Europe last year, and all of Europe’s 4 million homeless people, several times over.

However, many Europeans are struggling with a housing market that makes it even more difficult for them to buy or rent a home. There are many reasons for this, including housing speculation, where investors buy houses to use simply as assets to be sold on when their value increases, as well as the economic situation and unstable employment. But what seems clear is that this market is not working for European people, and migrants and refugees are not the cause of the problem. This unfair housing market is especially serious for young people in Europe. Ever-rising rents mean that living situations for most young Europeans are unstable: it’s no surprise that over 48% of young people (aged 18-34) in the EU still live with their parents, unable to truly realise their independence. And meanwhile, there are millions of homes sitting empty.

Read more …

Jul 032016
 
 July 3, 2016  Posted by at 8:43 am Finance Tagged with: , , , , , , , ,  10 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


G. G. Bain Hudson-Fulton celebration. Union League Club. New York. 1909

Post-Brexit Worry Could Ignite A Powerful US Stock Rally (MW)
Brexit and the Derivatives Time Bomb (Ellen Brown)
EU: Going … Going … Gone (Tenebrarum)
The Economy Was Struggling Long Before Brexit (ZH)
Almost Everyone Thinks the Pound’s Days Are Numbered (BBG)
Humpty-Dumpty, Teetering On The Eccles Building Wall (David Stockman)
Why Central Planners Can’t Generate Any Inflation (ZH)
Europeans Contest US Anti-Russian Hype (Lauria)
British MPs Seek To Impeach Tony Blair Using Ancient Law (Ind.)
Nearly Half A Million Greeks Have Left Their Country Since 2008 (Kath.)
Greece – Life in a Modern-day Debt Colony (Nevradakis)

 

 

Good bad news.

Post-Brexit Worry Could Ignite A Powerful US Stock Rally (MW)

The U.S. stock market kicks off the second half of 2016 facing a huge Wall of Worry. And that’s bullish. In fact, one stock market sentiment index is now in the vicinity of the extremely low levels that, in the past, preceded sizeable rallies. Consider the average recommended equity exposure among a subset of short-term Nasdaq-oriented stock-market timers monitored by the Hulbert Financial Digest (as measured by the Hulbert Nasdaq Newsletter Sentiment Index, or HNNSI). Since the Nasdaq responds especially quickly to changes in investor mood, and because those timers are themselves quick to shift their recommended exposure levels, the HNNSI is my most sensitive barometer of investor sentiment.

This average currently stands at minus 55.6%, which means the average Nasdaq-oriented stock market timer is allocating more than half of his short-term equity trading portfolio to going short. That is an aggressive bet that the market will keep declining. As you can see from the chart above, the HNNSI just recently was quite a bit higher. On June 9 it stood at +73.5%. That means in just three weeks the average recommended equity exposure has fallen 129 percentage points. That’s an extraordinary drop in such a short period. Further evidence of how bearish the market-timing community is: Since Monday, the day of the post-Brexit correction low, the HNNSI has fallen an additional eight percentage points — even while the market staged a powerful rally. That’s not the kind of sentiment behavior typically seen at major market tops.

Read more …

Excellent point from Ellen: ..Britain has left, and Armageddon hasn’t hit. Other Eurozone nations can now threaten to do the same if they don’t get debt forgiveness or a restructuring.

Brexit and the Derivatives Time Bomb (Ellen Brown)

Brexit could trigger a $500 trillion derivatives meltdown, by forcing the EU to allow insolvent member governments and banks to write down debt. Italy is in financial crisis and is already petitioning for that concession. How to avoid collapse of the massive derivatives house of cards? Alternatives are considered. Sovereign debt – the debt of national governments – has ballooned from $80 trillion to $100 trillion just since 2008. Squeezed governments have been driven to radical austerity measures, privatizing public assets, slashing public services, and downsizing work forces in a futile attempt to balance national budgets. But the debt overhang just continues to grow. Austerity has been pushed to the limit and hasn’t worked. But default or renegotiating the debt seems to be off the table. Why? According to a June 25th article by Graham Summers on ZeroHedge:

“. . . EVERY move the Central Banks have made post-2009 has been aimed at avoiding debt restructuring or defaults in the bond markets. Why does Greece, a country that represents less than 2% of EU GDP, continue to receive bailouts instead of just defaulting?” Summers’ answer – derivatives: “[G]lobal leverage has exploded to record highs, with the sovereign bond bubble now a staggering $100 trillion in size. To top it off, over $10 trillion of this is sporting negative yields in nominal terms. . . .” Globally, over $500 trillion in derivatives trade [is] based on bond yields. But Brexit changes everything, says Summers. Until now, the EU has been able to reject debt forgiveness as an alternative, using the threat of financial Armageddon if the debtor country left the EU. But Britain has left, and Armageddon hasn’t hit.

Other Eurozone nations can now threaten to do the same if they don’t get debt forgiveness or a restructuring. That has evidently started happening, with Italy as the first challenger of EU rules. On June 27th, Ambrose Evans-Pritchard reported in the UK Telegraph that the first serious casualty of the Brexit contagion had struck. The Italian government is preparing a €40 billion rescue of its financial system, as Italian bank shares collapse. The government is now studying a direct state recapitalization of Italian banks, to be funded by a special bond issue. They also want a moratorium of the bail-in rules and bondholder write-downs, although those steps are prohibited under EU laws.

Read more …

“Due to scientific, technological and economic progress we are all trained to believe that whatever comes later must be better. But this just isn’t so..”

EU: Going … Going … Gone (Tenebrarum)

[..] we personally always thought it would be best if the world consisted of a collection of territories the biggest of which was Switzerland. The Germany we like best politically is the one that consisted of more than 360 independent sovereign states, prior to 1794. Citizens could literally “vote with their feet” – and nothing is better to keep one’s rapacious and power-hungry rulers in check. However, we are not “isolationist” by any means – as our readers know, we fully support free markets, free trade, and free movement of people and capital. In fact, one can have all these things, even if there is no central political power imposing them (actually: especially when there is no such central power!).


Germany before 1794: a collection of independent ecclesiastical principalities, free imperial cities, secular principalities and other minor self-ruling entities. Click to enlarge in new window

For instance, the 360 German states mentioned above all used the same money (the coins all had different pictures, but the mints had gotten together to standardize weights), and traded freely with each other. As to the free movement of people – no-one would even have thought to wonder about that point or would have considered “should people be free to go where they want” a legitimate question – passports didn’t even exist yet! Locking up people within the territory ruled over by a specific force monopolist and forcing them to carry papers and ask their bureaucratic overlords for permission to travel is an invention of the modern “free world”.

Due to scientific, technological and economic progress we are all trained to believe that whatever comes later must be better. But this just isn’t so (the science of economics is a pertinent example). We have gained many valuable things, even liberties, we didn’t have before – but we have also lost a great many things that would have been well worth preserving. The Dark Ages weren’t as dark as most people assume, so to speak…in fact, the darkest of all ages was the 20th century, when governments murdered more people than in all of the rest of history combined – all for the “greater good”! As an aside to this, what ended the brief period of economic liberty that followed on the heels of the Western Roman Empire’s collapse?

Charlemagne – the first medieval central planner, who at the synod of Aachen in AD 789 and at the Council of Nijmegen in AD 806 introduced a “usury ban”, price controls, and a “ban on speculation”. In short, as soon as a new central power arose in Europe, it was all over with leaving people alone to do their thing in peace. If Europeans want to have free trade, do they really need a bureaucratic Leviathan in Brussels regulating every nook and cranny of their lives? No. All they need is the back of a napkin, on which they could write: “Henceforth, there will be no more tariffs between us” – and then shake hands on it. Alas, they probably won’t sleep as well anymore. Brussels has ensured that Europe’s citizens all sleep like babies: There are 109 EU regulations concerning pillows, 5 EU regulations concerning pillow cases, and 50 EU laws regulating duvets and sheets.

Read more …

“..the new narrative isn’t the whole truth.”

The Economy Was Struggling Long Before Brexit (ZH)

As a result of Brexit, we pointed out that companies now will have a convenient scapegoat for any future earnings misses, or at the very least use Brexit as a reason to lower guidance for the remainder of the year without any pushback from analysts. We also noted that with the referendum behind us, everyone would conveniently forget that earnings expectations had already been continuously revised down for quite some time now, long before Brexit.But if you don’t want to take our word for it, here is CLSA reminding everyone as well. In a recent note, CLSA wrote that world trade growth had hit a new post-global financial crisis low long before Brexit ever came about. From CLSA:

The UK’s surprise Brexit vote has caused a spike in risk perceptions but even before the vote the global economy was struggling. With the March data world trade growth hit a new post-GFC low. Emerging Market demand has contracted on a YoY basis for six back-to-back months. And developed economy demand has weakened, from +3.7% YoY in the three months to November 2015 to 1.2% YoY in the three months to March.

Of course this won’t stop companies from using Brexit as a hall pass in order to explain away any and all misses and forward guidance revisions, and it also won’t stop analysts from using the infamous “one-time adjustment” line in order to paper over the weaker earnings, but it is good to keep this in mind that the new narrative isn’t the whole truth.

Read more …

Bloomberg’s ‘expert analysts’ strike again.

Almost Everyone Thinks the Pound’s Days Are Numbered (BBG)

The pound will fall even further than its three-decade low reached in the immediate aftermath of the Brexit vote, according to almost all the analysts who’ve changed their forecasts since the referendum. Of the 36 new predictions in a Bloomberg survey, 32 are for sterling to end the year at or below $1.30, with only two forecasting a rally from current levels. The median estimate is even more bearish at $1.25. That’s 6% weaker than the pound’s level of $1.3277 at 5 p.m. London time on Friday and would push the currency through the 31-year low of $1.3121 set on June 27 as traders digested the U.K.’s vote to leave the European Union.

Even after a two-day rally earlier in the week, the pound was still down 11% versus the dollar since polls closed on June 23. The U.K. currency fell further Thursday and Friday after Bank of England Governor Mark Carney signaled the central bank may ease policy within months to deal with the economic fallout of the vote. It dropped 3% last week. “The pound will continue to bear the brunt of the Brexit result,” said Roberto Mialich at UniCredit in Milan, who’s cut his year-end forecast to $1.20. The pound tumbled the most on record on June 24 as the referendum plunged the country into political and market turmoil, leading to the resignation of Prime Minister David Cameron.

Read more …

“What is happening is that after dithering for 90 months on the zero bound the Fed has run out the clock.”

Humpty-Dumpty, Teetering On The Eccles Building Wall (David Stockman)

The Eccles Building trotted out Vice-Chairman Stanley Fischer this morning. Apparently his task was to explain to any headline reading algos still tracking bubblevision that things are looking up for the US economy again and that Brexit won’t hurt much on the domestic front. As he told his fawning CNBC hostess: “First of all, the U.S. economy since the very bad data we got in May on employment has done pretty well. Most of the incoming data looked good,” Fischer said. “Now, you can’t make a whole story out of a month and a half of data, but this is looking better than a tad before.” You might expect something that risible from Janet Yellen – she’s just plain lost in her 50-year old Keynesian time warp. But Stanley Fischer presumably knows better, and that’s the real reason to get out of the casino.

What is happening is that after dithering for 90 months on the zero bound the Fed has run out the clock. The current business cycle expansion—as tepid as is was— is now clearly rolling over. So the Fed has no option except to sit with its eyes wide shut while desperately trying to talk-up the stock market. And that means happy talk about the US economy, no matter how implausible or incompatible with the facts on the ground. No stock market correction or sell-off of even 5% can be tolerated at this fraught juncture. That’s because the U.S. economy is so limp that a proper correction of the massive financial bubble the Fed and other central banks have re-inflated since March 2009 would send it careening into an outright recession.

And that, in turn, would blow to smithereens all of the FOMC’s demented handiwork since September 2008, and indeed since Greenspan launched the era of Bubble Finance back in October 1987. So when Fischer used the phrase “the incoming data looked good”, he was doing his very best impersonation of Lewis Carroll’s version of Humpty Dumpty. “Good” is exactly what our monetary politburo says it is: “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.” The fact is, the “lesses” have it by a long shot, but the Fed cannot even whisper a word about the giant risks, challenges and threats which loom all across the horizon.

Read more …

See my article yesterday: Deflation Is Blowing In On An Eastern Trade Wind.

Why Central Planners Can’t Generate Any Inflation (ZH)

As China continues to weaken the Yuan, it’s important to note the impact that it has on the inflation expectations of other economies, namely the US, Japan, and Europe. As central planners aggressively try to boost inflation, and in the meantime have created a stunning $11.7 trillion in negative yielding debt, China could be hindering that effort quite a bit. As Morgan Stanley points out, CNY has weakened over the last year or so versus the Euro, Yen, and Dollar and is helping to explain the continued undershoot of inflation in Japan and Europe – and we would add in the US. From MS: “The RMB decline has materialized mainly against the EUR and even more so against the JPY. This may explain the continued undershoot of inflation in Europe and Japan.”

MS goes on to note that the overcapacity in Asia (something we have discussed often) and a weaker currency will continue to lead to lower export prices, and thus dampen future inflation expectations, which can be seen in the US 5y5y inflation expectations. MS also observes that developed market inflation behavior is led by movements in Chinese prices, and the rally in global bonds will continue to push the USD higher, putting further downward pressure on prices.

Moderate US growth together with overcapacity in Asia and a weaker RMB will likely result in lower export prices from Asia. Market-based US inflation expectations are now lower than April, supported by Michigan survey data, all despite commodity prices being generally higher. Post Brexit our rates strategy team remains long duration, which is further supported by this lacklustre inflation environment. Inflation expectations might be held back by falling import prices from economies that run spare capacity. Exhibit 23 shows that the recent DM inflation behaviour was actually led by the movements in Chinese prices. The rally in global bonds, particularly in the US, may actually push USD higher as foreign investors look for places with a relatively high yield.

MS concludes by saying that deflationary pressures are likely to remain in place as overcapacity persists.

Important for the outcome is the evaluation of global deflationary pressures, which may be primarily fed from Asia. Yes, China’s PPI has improved from -5.9%Y to -2.9%Y, but RMB has declined over the past couple of quarters at an annualized rate of 11%, suggesting that import price deliveries from China are currently falling by 5%. Importantly, deflationary pressures are likely to remain in place as overcapacity persists. Take for instance the steel sector, where production capacity has increased by 35 million tons as China progressed through its recent mini-cycle.

Read more …

This could turn into a big challenge to Merkel, both domestically and from other European countries. Ironically, Merkel knows better than anyone that she’s dead wrong.

Europeans Contest US Anti-Russian Hype (Lauria)

“The statesmen will invent cheap lies, putting the blame upon the nation that is attacked, and every man will be glad of those conscience-soothing falsities, and will diligently study them, and refuse to examine any refutations of them; and thus he will by and by convince himself the war is just, and will thank God for the better sleep he enjoys after this process of grotesque self-deception,” wrote Mark Twain.

So suddenly, after many years of an air-tight, anti-Russia campaign believed unquestioningly by hundreds of millions of Westerners, comes Steinmeier last week blurting out the most significant truth about Russia uttered by a Western official perhaps in decades. “What we shouldn’t do now is inflame the situation further through saber-rattling and warmongering,” Steinmeier stunningly told Bild am Sontag newspaper. “Whoever believes that a symbolic tank parade on the alliance’s eastern border will bring security is mistaken.” Instead Steinmeier called for dialogue with Moscow. “We are well-advised to not create pretexts to renew an old confrontation,” he said, saying it would be “fatal to search only for military solutions and a policy of deterrence.”

In keeping with the U.S. propaganda strategy, the U.S. corporate media virtually ignored the remarks, which should have been front-page news. The New York Times did not report Steinmeier’s statement, but two days later ran a Reuter’s story only online leading with the U.S. military’s rejection of his remarks. Just a day after Steinmeier was quoted in Bild, General Petr Pavel, chairman of NATO’s military committee, dropped another bombshell. Pavel told a Brussels press conference flat out that Russia was not at a threat to the West. “It is not the aim of NATO to create a military barrier against broad-scale Russian aggression, because such aggression is not on the agenda and no intelligence assessment suggests such a thing,” he said.

What? What happened to Russian “aggression” and the Russian “threat?” What is the meaning then of the fear of Russia pounded every day into the heads of Western citizens? Is it all a lie? Two extraordinary on-the-record admissions by two men, Steinmeier, the foreign minister of Europe’s most powerful nation, and an active NATO general in charge of the military committee, both revealing that what Western officials repeat every day is indeed a lie, a lie that may be acknowledged in private but would never before be mentioned in public.

Read more …

Next week?! Chilcot. Pack your pajamas, Tony!

British MPs Seek To Impeach Tony Blair Using Ancient Law (Ind.)

Chilcot Inquiry: A number of MPs are seeking to impeach former prime minister Tony Blair using an ancient Parliamentary law. The move, which has cross-party support, could be launched in the aftermath of the Chilcot Inquiry report because of the Labour leader’s alleged role in misleading Parliament over the Iraq War. MPs believe Mr Blair, who was in office between 1997 and 2007, should be prosecuted for breaching his constitutional duties and taking the country into a conflict that resulted in the deaths of 179 British troops. Not used since 1806, when Tory minister Lord Melville was charged for misappropriating official funds, the law is seen in Westminster as an alternative form of punishment if, as believed, Mr Blair will escape serious criticism in the Chilcot Inquiry report.

Triggering the process simply requires an MP to propose a motion, and support evidence as part of a document called the Article of Impeachment. If the impeachment attempt is approved by MPs, the defendant is delivered to Black Rod ahead of a trial. A simple majority is required to convict, at which point a sentence can be passed, which could, in theory, involve Mr Blair being sent to prison. Last year, current Labour leader Jeremy Corbyn said the former prime minister could be made to stand trial for war crimes, saying that he thought the Iraq War was an illegal one and that Mr Blair “has to explain that”. He added: “We went into a war that was catastrophic, that was illegal, that cost us a lot of money, that lost a lot of lives. “The consequences are still played out with migrant deaths in the Mediterranean, refugees all over the region.”

Read more …

There is no more surefire way of destroying an economy and society than chasing out its educated young.

Nearly Half A Million Greeks Have Left Their Country Since 2008 (Kath.)

Nearly half a million Greeks have left the country in search of better opportunities abroad since 2008 due to the financial crisis, with educated professionals among those leading the exodus, a Bank of Greece report has shown. According to the report, which Kathimerini made public on Saturday, more than 427,000 Greeks have emigrated since 2008. The exodus started gradually in 2008, a year before Greece’s debt crisis erupted, exceeding 100,000 in 2013 and growing in 2014 and 2015. As noted in the report, Greek emigres’ main motive is to find work as opportunities in crisis-hit Greece are few and far between, with an unemployment rate that remains above 25%.

It is not the first time that Greeks have abandoned their country en masse. Over the past century, Greece has seen two other major exoduses, one between 1903 and 1917 and the other between 1960 and 1972. The difference between the first two and the current one is that in the 20th century, it was mostly unskilled workers and farmers that left while now educated professionals and young graduates are leading the exodus. There are similarities, however, as pointed out in the report. “It is no coincidence that both phases took place following an intense period of recessionary upheaval that widened the chasm between our country and developed nations and fueled the mass departure of people, chiefly young people, who were seeking new opportunities and prospects for progress,” Sofia Lazaretou, a BoG economist and the author of the report, told Kathimerini.

In the first exodus, between 1903 and 1917, Greeks traveled chiefly to the USA, Australia, Canada, Brazil and southeastern Africa, according to the report, which noted that seven in 10 were aged between 15 and 44 and fewer than two in 10 were women. In the second wave, in 1960-72, seven out of 10 were young people aged 20-34, with five in 10 declaring themselves as manual workers. Six out of 10 traveled to Germany or Belgium to work in factories. The current exodus is being led by young professionals seeking their fortune in Germany, the UK and the United Arab Emirates, the report said. Greece ranks fourth among the 28 EU member-states in terms of mass emigration in proportion to its work force, after Cyprus, Ireland and Lithuania. It ranks third, after Cyprus and Spain, in terms of the proportion of young people leaving the country.

Read more …

Why Brexit is a good thing: this must stop.

Greece – Life in a Modern-day Debt Colony (Nevradakis)

In May, likely for the first time in the post-war history of the Western world, a national parliament willingly ceded what remained of its country’s sovereignty, essentially voting itself obsolete. This development, however, did not make headlines in the global news cycle and was also ignored by most of the purportedly “leftist” media. The country in question is Greece, where a 7,500-page omnibus bill was just passed, without any parliamentary debate, transferring control over all of the country’s public assets to a fund controlled by the European Stability Mechanism, for the next 99 years. This includes all public infrastructure, harbors, airports, public beaches, and natural resources, all passed to the control of the ESM, a non-democratic, supranational body which answers to no parliamentary or elected body.

Within this same bill, the “Greek” parliament also rendered itself voteless: the legislation annuls the role of the parliament to create a national budget or to pass tax legislation. These decisions will now be made automatically, at the behest of the European Union: if fiscal targets set by the EU, the IMF, and the ESM are not met, automatic “cuts” will be activated, without any parliamentary debate, which could slash anything from social spending, to salaries and pensions. In earlier legislation, the Greek parliament agreed to submit all pending bills to the “troika” for approval. For historical precedent, one needs to look no further than the “Enabling Act” passed by the Reichstag in 1933, where the German parliament voted away its right to exercise legislative power, transferring absolute power to govern and to pass laws, including unconstitutional laws, to Chancellor Adolf Hitler.

The Greek omnibus bill was preceded by another piece of legislation, “reforming” Greece’s pension system through the enactment of further cuts to pensions, while increasing taxes almost entirely across the board.

Despite government lies to the contrary, these cuts are regressive and will disproportionately impact the poorer strata of society: the basic pension has been cut to €345 per month, supplementary pensions to poor individuals have been eliminated, the value-added tax on many basic goods has been raised to 24%, the number of households which qualify for heating oil subsidies has been slashed in half while taxes on oil and fuel have again been increased, co-pays on prescription drugs covered by public health insurance have been hiked by 25%, employees’ contributions to the social security fund have been raised (effectively lowering salaries), special taxes have been introduced on coffee and alcoholic beverages, while Greece’s suffering small businesses have been saddled with an increase in their tax rate from 26% to 29%.

Read more …