It wasn’t really the plan to make this a series, but it seems to have turned into one. Part 1 is here: The Fed Detests Free Markets. Part 3 will follow soon. And yeah, I did think perhaps I should have called this one “End The Fed” Is No Longer Enough. Because that’s the idea here. But what’s in a name?
Okay, let’s talk a bit more about finance again. Though I still think this requires caution, because the meaning of the terminology used in such conversations appears to have acquired ever more diverse meanings for different groups of people. Up to the point where you must ask: are we really still talking about the same thing here?
I’ve said multiple times before that there are no more markets really, or investors, because central banks have killed off the markets. There are still “contraptions” that look like them, like the real thing, but they’re fake. You can see this every time a Fed chief opens their mouth and every single person involved in the fake markets hangs on their lips.
They do that because that Fed head actually determines what anything will be worth tomorrow, not the markets, since the Fed buys everything up, and puts interest rates down so more people can buy grossly overpriced property and assets, and allows companies to buy their own shares so nobody knows what they’re worth anymore.
The Fed today is in the business of propping up zombies. And when I say the Fed, that also means the ECB and BOJ, western central banks. I won’t get into the PBOC here, but they’re not far behind.
Recently, Christine Lagarde, the new ECB head, said the most incredible thing (at least to my ears, I guess not to hers):
We should be happier to have a job than to have our savings protected … I think that it is in this spirit that monetary policy has been decided by my predecessors and I think they made quite a beneficial choice.
Who on earth ever claimed jobs vs savings is some necessary or inevitable “choice”? Why should it be? If this were true, isn’t that a sign that something is terribly wrong? That you can have a job, but you can’t save anything? And aren’t the central banks to blame for that then?
The entire system has been built for decades around the notion that people save, either to purchase big items, or for their old age, and that people put money into their pension systems. And now central banks come along and in no time destroy what has been valid for all these years. And they never even warned about it.
Anyway, after Lagarde’s remarks, I guess the Fed’s Jay Powell felt he couldn’t be left behind and said:
US central bankers see a “sustained expansion” ahead for the country’s economy, with the full impact of recent interest rate cuts still to be felt and low unemployment boosting household spending, Federal Reserve chairman Jay Powell said on Wednesday in remarks that brushed aside any worries of a looming slowdown.
“The baseline outlook remains favorable,” and the current level of interest rates “appropriate,” Mr Powell said in remarks prepared for delivery to the joint economic committee of congress, a panel that includes some members from the House of Representatives and Senate.
His comments tracked closely to those in his news conference last month after the US central bank cut rates for the third time this year and signaled it was likely done reducing borrowing costs absent a significant change in the economic outlook. Despite “noteworthy risks” including slowing global growth and fallout from the US-China trade war, “my colleagues and I see a sustained expansion of economic activity … as most likely,” Mr Powell said in his prepared remarks for the hearing.
Former Goldman and Bear Stearns banker, and friend of the Automatic Earth, Nomi Prins, tweeted yesterday: “Tuesday, the Fed added $95 billion in liquidity to financial markets. Today, Fed’s vice chair told Congress, “The Board’s latest [review] confirms the current health of the banking system. It depicts a stable, healthy, and resilient banking sector…” The Fed’s official for supervision and regulation told Congress, “The Board’s latest Supervision and Regulation Report… describes steady improvements in safety and soundness, with a gradual decline in outstanding supervisory actions at both the largest & smallest organizations..”
“The baseline outlook remains favorable,” Powell said. That must be why they have been pulling out all the stops and invented new ones, for a decade+. Bernanke, Yellen, the lot of them, all because the baseline has remained so favorable. Why would anyone want to listen to this guy, who so obviously dabbles in complete nonsense? Well, because he’s the one giving the money away.
I think I can tell Mr. Powell what the “full impact of recent interest rate cuts” will be, what it will feel like, and it won’t be anywhere near what he pretends it will be. I must think he knows that too, or he’s an utter fool, and I don’t think he is. He’s just doing a job, while he’s worth $100 million, and that job is very different from how it’s presented to the public.
I’ll tell you about that full impact in part 3 of this Fed essay, which I left on the shelf for a long time because I thought people would declare me nuts, but which now, with increasing chatter of a next recession, maybe can be exposed to daylight. It’s about how grave the damage is that central banks have inflicted on their economies, something I never see discussed. Powell and Draghi/Lagarde and Kuroda are not just the ones giving the money away, they’re also taking it away, just not from the same people. And that latter part is much more important to societies and economies.
The direction taken by the BOJ could determine whether Japan’s banking sector avoids a hard landing and whether Abe or his successor will lean on the central bank to take the most extreme step remaining: printing money for the explicit purpose of financing a national debt that is now more than twice the size of Japan’s economy. That could risk a costly downgrade by credit rating agencies for Japan, and, by extension, Japanese corporate borrowers.
The spurning of Kuroda-nomics also has political implications. It is part of a broader public dissatisfaction with what has been labeled “Abenomics” – the prime minister’s plan to reflate the economy out of prolonged stagnation through a combination of aggressive monetary easing, bold fiscal spending and fundamental structural reforms in the economy.
“Kuroda’s radical stimulus kept interest rates low, allowing politicians to delay reforms to get Japan’s fiscal house in order,” said Koichi Haji, executive research fellow at NLI Research Institute. “The foot-dragging could cost Japan dearly. The options left for the BOJ all seem extreme.”
Options left for the BOJ will be even more extreme because Japan’s Birth Rate Has Hit Its Lowest Level Since Records Began In 1899. As a Dutch comment on that report said: “by 2050 there will be one working Japanese for every child or pensioner [..] Japan adopted a law in April designed to make it easier for foreigners to work in Japan. The goal was to attract 350,000 foreign workers. 8 months later, just 400 had arrived”.
And just this week we read that Japan is preparing another $120-$230 billion stimulus package. Extreme has become normal in no time. Only, the ratings agencies could lower their rating for Japan, because of this. Then again, why should they do it only for Japan? Everyone’s in “extreme” territory, or as Ben Bernanke called it in 2008, “uncharted territory”. Same difference.
But Lagarde is right on one thing: it is “the monetary policy decided by her predecessors” that has destroyed savings -and pensions-. How on earth she can call that “beneficial” is very hard to grasp. What is the goal, what is all these central bankers’ goal? That in the end nobody has any savings or pensions anymore, and they all must go into debt or perish? That would create entire societies made up of zombies. And that’s “policy”?
It’s policy to spin a fantasy tale so people like Jay Powell can claim that “the baseline outlook remains favorable” and “sustained expansion” lies ahead for the economy, and it’s policy to pay for that fantasy with money that belongs to savers and pensioners, and that you can then hand out to a bunch of zombie “investors”. That’s policy.
The role of today’s central bankers is possible only because the public are made to think these are very smart people that have the interest of Joe Blow at heart, and because they have “unlimited resources” to make stocks and bonds and the housing market look good. But what would happen if Joe Blow knew what is going on?
The Fed is now considering “policy” that “makes up for lost inflation”. No, stop laughing, I’m serious. Their extreme policies in uncharted territory have failed so dismally, they’ve obviously not been extreme enough.
Once they’ve gone down the path of extreme stimulus (not that they call it that), there’s no way back. Because they’ve just destroyed the markets, and then they go: let’s see how the markets react to that. Well, they don’t. They’re dead. You killed them. There are parties left who love feeding off of your free money teats, but they’re not the markets or even market participants. They’re rich socialists. But they’re also the only ones the Fed cares about.
Still, a central bank that doesn’t have the population at large, at the center of its policies, is a scourge on a society and/or country. And it should be abolished. But in the case of the Fed, ECB and BOJ, it is probably already too late for that. They have done their damage. “End The Fed” is no longer enough. Societies need to develop emergency measures to counter the damage done, or face untold misery, unrest and eventually, revolution.
People don’t see this, because these central banks -temporarily- taper over the disaster they’ve wrought with their “policies”. Time for the media to step in? No, it’s too late for that too, and besides, what media? They’ve been silent all along, why would they speak up now?
More in part 3.
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To be completely honest, I wrote -most of- the second part of this a while ago, and then I was thinking this first part should be part of the second, if you can still follow me. But it doesn’t really, it’s fine. I wanted to write something to address how little people know and acknowledge about how disastrous central bank policies have been for our societies and economies.
Because they don’t, and they have no clue, largely and simply because of the way central banks are presented both by themselves and by the financial press that covers them. Make that “covers”. Still, going forward, we will have no way to ignore the damage done. All the QE and ZIRP and NIRP will turn out to be so destructive for us all they will rival climate change or actual warfare. That’s what I wanted to talk about.
You see, free markets are a great idea in theory. Or you can call it “capitalism”, or combine the two and say “free market capitalism”. There’s very little wrong with it in theory. You have an enormous multitude of participants in an utterly complex web of transitions, too complex for the human mind to comprehend, and in the end that web figures out what values all sorts of things, and actions etc., have.
I don’t think capitalism in itself is a bad thing; what people don’t like is when it veers into neo-liberalism, when everything is for sale, when communities or their governments no longer own anything, when roads and hospitals and public services and everything that holds people together in a given setting is being sold off to the highest bidder. There are many things that have values other than monetary ones, and neo-liberalism denies that. Capitalism in itself, not so much.
It’s like nature, really, like evolution, but it’s Darwin AND empathy, individuals AND groups. The problem is, and this is where it diverges from nature, you have to make sure the markets remain free, that certain participants -or groups thereof- don’t bend the rules in their own favor. In that sense it’s very similar to what the human race has been doing to nature for a long time, and increasingly so.
Now, if you limit the discussion to finance and economics, there would appear to be one institution that’s in an ideal place to make sure that this “rule-bending” doesn’t take place, that markets are fair and free, or as free as can be. That institution is a central bank. But whaddaya know, central banks do the exact opposite: they are the ones making sure markets are not free.
In the ideal picture, free markets are -or would be- self-correcting, and have an inbuilt self-regulating mechanism. If and when prices go up too much, the system will make sure they go lower, and vice versa. It’s what we know from physics and biology as a negative -self correcting- feedback loop. The self-correcting mechanism only activates if the system has veered too much in one direction, but we fail to see that as good thing when applied to both directions, too high and too low (yes, Goldilocks, exactly).
It’s only when people start tweaking and interfering with the system, that it fails. Negative feedback vs positive feedback are misunderstood terms simply because of their connotation. After all, who wants anything negative? But this is important in the free markets topic, because as soon as a central bank starts interfering in, name an example, housing prices in a country, the system automatically switches from negative feedback to positive -runaway- feedback, there is no middle ground and there is no way out anymore, other than a major crash or even collapse.
Well, we’re well on our way to one of those. Because the Fed refused to let the free market system work. They, and the banks they represent, wanted the way up but then refused the way down. And now we’re stuck in a mindless positive feedback loop (new highs in stocks on a daily basis), and there’s nothing Jay Powell and his minions can do anymore to correct it.
The system has its own correction mechanism, but Greenspan, Bernanke, Yellen and now Powell thought they could do better. Or maybe they didn’t and they just wanted their banker friends to haul in all the loot, it doesn’t even matter anymore. They’ve guaranteed that there are no free markets, because they murdered self-correction.
Same goes, again, for ECB and BOJ; they’re just Fed followers (only often even crazier). In fact since they have no petrodollar, they don’t just follow, they have to do the Fed one better. Which is why they have negative interest rates -and the US does not -yet-: it’s the only way to compete with the reserve currency. Of course today even the Fed, and “even even” the PBOC, are discussing moving to negative rates, and by now we’re truly talking lemmings on top of a cliff.
“Let’s throw $10 trillion at the wall just so home prices or stock prices don’t go down!” Yeah, but if they’ve been rising a lot, maybe that’s the only direction they can and should go. It may not be nice for banks and so-called “investors”, but it’s the only way to keep the system healthy. If you don’t allow for the negative feedback self-correction, you can only create much bigger problems than you already have. And then you will get negative feedback squared and cubed.
Unless, of course, you have stellar economic growth, and you find unparalleled amounts of oil, and you have a growing population with way more kids born than people dying. But in case you don’t, you’re merely making an initially relatively minor problem much much worse with QE and ZIRP.
What central banks have been doing is they’ve utterly destroyed savings and pensions, i.e. the only thing “ordinary” people had to stave off their own personal collapse and that of their communities. ZIRP and NIRP move all those savings and pensions towards the bankers. And yes, pension funds may have moved into equities from bonds, and they may look good momentarily, but the current parade of new highs in stock markets only exists because of central banks’ QE and ZIRP.
There are tons of zombie enterprises in the world, many of whom have been kept alive by central bank policies, but wait till it becomes evident that the pension funds and systems themselves have turned into zombies. That’ll wake you up. Because who’s going take care of grandma, or her daughter, in a few years’ time? One thing’s for sure, it won’t be Jay Powell.
This has gotten so long already I’ll leave the part 2 I mentioned above to be its own, separate, part 2. Soon.
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I intentionally start writing this mere minutes away from Fed chair Jay Powell’s latest comments. Intentionally, because the importance ascribed to those comments only means we have gotten so far removed from what capitalism and free markets are supposed to be about, that it’s pathetic. The comments mean something for rich socialists, but nothing for the man in the street. Or, rather, they mean that the man in the street will get screwed worse for longer.
And it’s not just the Fed, all central banks have it and do it. They play around with rates and definitions and semantics until the cows can never come home again. And they have such levels of control over their respective societies and economies that the mere use of the word “markets” should result in loud and unending ridicule. There are no markets, because there is no price discovery, the Fed and ECB and BOJ got it all covered. Any downside risks, that is.
But it doesn’t, because the people who pretend they’re in those markets hang on central banks’ every word for their meal tickets. These are the same people we once knew as traders and investors, but who today function only as rich socialists sucking the Fed’s teats for ever more mother’s milk.
Our economic systems have been destroyed by our central bankers. Who pretend they’re saving them. And we all eat it up hook line and sinker. Because the rich bankers and their media have no reasons to counter Fed or ECB actions and word plays, and because anyone who’s not a rich banker or investor is kept by the media from understanding those reasons.
What the Fed and ECB have done, and the BOJ, between Greenspan and Bernanke and Yellen and Powell and Draghi and Kuroda, is they have made it impossible for economies to let zombies go to die as they should. They have instead kept those zombies, banks, corporations, alive to the point where they are today a very big live threat to those economies, and growing. Look at Deutsche Bank.
How healthy do you think your economy can be if all the wealthy people are focused on whether Powell uses the word “patient” or not in his notes? Why would a vibrant company or entrepreneur give a flying damn about whether he does or not use a certain word? There is no reason.
But we have let our central banks take over, and that’s what they did. And it will be very hard to take back that power, but we will have to. Because central banks, while pretending to guard over the entire economy, in fact only protect the interests of commercial banks, and rich “investors”. And then tell you it’s the same difference.
There’s a case to be made that Paul Volcker was right when he raised US interest rate in the 1980s, but after Volcker it’s only been one big power and money grab for Wall Street, starting with Alan Greenspan and the housing bubble he blew. The Oracle my behind.
Japan is only just beginning to assess the damage Kuroda and Abenomics have done, and that’s at a point where both these men are still in power, and hell bent on doing more of the same. Something all central banks have in common; there are very few tools in their boxes, so they just repeat and repeat even as they fail. And that failure, by the way, is inevitable.
The Bank of Japan by now owns half the country, and they just want to do more. Kuroda’s plan to get rid of deflation was to force the Japanese to spend their money/savings. But the fully predictable result was that the grandmas did the exact opposite: they clued into the fact that if he wanted that, they had reason to be afraid, and so they sat on their money. And now it’s ten years later.
Draghi is going to leave in a few months’ time, and he’ll lower rates even more (towards 0º Kelvin), even if he knows that’s a really bad idea (it is), because at this point it’s about his legacy (after me, the flood). Same thing that Bernanke, Yellen did, clueless intellectuals who told themselves they had a grip on this. They never came near. That’s why they were elected, for being clueless. Wall Street doesn’t want Fed heads who know.
The pivotal moment was when Bernanke said they were running into “uncharted territory”, and then never looked back and started pretending he knew where he was. He didn’t and none of them ever did since. But they have academic degrees, and they’re willing to sell their souls for money, so there you are.
Central banks, or let’s say handing them the powers that we have, are the worst thing we have ever invented, and that’s saying something in the age of Pompeo and Bolton and Trump and the Clintons. The latter may take us into war with Iran, or any other country from a long list, but central banks are set to destroy our societies and economies from within.
It’s real simple: your central bank does NOT serve your interests. So get rid of it. Don’t wonder whether it’ll use the word “patient” or raise or lower rates by 25 or 50 points, get rid of the entire thing. There’s nothing there that benefits you, it only ever benefits bankers.
Now, of course, if you’re a banker…..
Note: I knicked the headline from something Tyler Durden said yesterday, that central banks are back to square minus zero. Too good to let go. Draghi back to square one, but then again not. Central banks should be abolished.
The United States is “opening fire” on the world with its threatened tariffs, the Chinese government warned on Thursday, saying Beijing will respond the instant U.S. measures go into effect as the two locked horns in a bitter trade war. The Trump administration’s tariffs on $34 billion of Chinese imports are due to go into effect at 12.01 am eastern time on Friday (0401 GMT Friday), which is just after midday on Friday Beijing time. U.S. President Donald Trump has threatened to escalate the trade conflict with tariffs on as much as a total of $450 billion in Chinese goods if Beijing retaliates, with the row roiling financial markets including stocks, currencies and global trade of commodities from soy beans to coal.
China has said it will not “fire the first shot”, but its customs agency said on Thursday in a short statement that Chinese tariffs on U.S. goods will take effect immediately after Washington’s tariffs on Chinese goods kick in. Speaking at a weekly news conference, Chinese Commerce Ministry spokesman Gao Feng warned the proposed U.S. tariffs would hit international supply chains, including foreign companies in the world’s second-largest economy. “If the U.S. implements tariffs, they will actually be adding tariffs on companies from all countries, including Chinese and U.S. companies,” Gao said. “U.S. measures are essentially attacking global supply and value chains. To put it simply, the U.S. is opening fire on the entire world, including itself,” he said.
China has denied it will fire the opening salvo in an escalating trade dispute with the US, insisting that it would not bring in 25% tariffs on $34bn (£26bn) of American goods before a move from Washington. Both sides have threatened to impose similarly sized tariffs on 6 July, but because of the 12-hour time difference, it was thought the Chinese tariffs on US imports ranging from soybean to stainless steel pipes could take effect earlier. However, China’s finance ministry issued a statement on Wednesday saying that it would not be the first to levy tariffs.
“The Chinese government’s position has been stated many times. We absolutely will not fire the first shot, and will not implement tariff measures ahead of the United States doing so.” The US will implement a 25% tariff on $34bn of Chinese imports – 818 product lines ranging from cars to vaporisers and “smart home” devices – on Friday. There had been hopes the US and China might step away from the measures, but neither side has backed down. Economists have warned that the tariffs will damage economic growth and cost jobs, and could escalate into a full-blown trade war between the world’s two largest economies.
Publicizing its growing exasperation in dealing with president Donald Trump who refuses to halt the tit-for-tat retaliation in the growing trade war with China – which is set to officially begin on Friday when the US slaps $34 billion in Chinese exports with 25% tariffs – but has a habit of doubling down the threatened US reaction to every Chinese trade counteroffer (after all the US imports far more Chinese goods than vice versa)…China has proposed a novel idea: to form an alliance with the EU – the world’s largest trading block – against the US, while promising to open up more of China’s economy to European corporations.
The idea was reportedly floated in meetings in Brussels, Berlin and Beijing, between senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, according to Reuters. Willing to use either a carrot or a stick to achieve its goals, in these meetings China has been putting pressure on the European Union to issue a strong joint statement against President Donald Trump’s trade policies at a summit later this month. However, perhaps because China’s veneer of the leader of the free trade world is so laughably shallow – China was and remains a pure mercantilist power, whose grand total of protectionist policies put both the US and Europe to shame – the European Union has outright rejected any idea of allying with Beijing against Washington ahead of a Sino-European summit in Beijing on July 16-17.
Instead, in the tradition of every grand, if ultimately worthless meeting of the G-X nations, the summit is expected to produce a “modest communique”, which affirms the commitment of both sides to the multilateral trading system and promises to set up a working group on modernizing the WTO. Incidentally, the past two summits, in 2016 and 2017, ended without a statement due to disagreements over the South China Sea and trade. Then there is China’s “free-trade” reputation: a recent Rhodium Group report showed that Chinese restrictions on foreign investment are higher in every single sector save real estate, compared to the European Union, while many of the big Chinese takeovers in the bloc would not have been possible for EU companies in China. And while China has promised to open up, EU officials expect any moves to be more symbolic than substantive.
European officials are considering holding talks on a tariff-cutting deal between the world’s largest car exporters to prevent an all-out trade war with the U.S., according to the Financial Times who cited diplomats briefed on the matter. The proposal is being looked at by officials in Brussels, the administrative heartland of the European Union, ahead of a meeting between Jean-Claude Juncker, the president of the European Commission, and President Donald Trump in Washington later in July, the report published Wednesday said.
The FT reported that three diplomats, which it did not name, said the European Commission “is studying whether it would be feasible to negotiate a deal with other big car exporters such as the U.S., South Korea and Japan.” Such a move could address Trump’s complaint that the U.S. sector is unfairly treated, while reducing export costs for other participating countries’ auto sectors. “Under such a deal, participants would reduce tariffs to agreed levels for a specified set of products — a concept in international trade known as a ‘plurilateral agreement’ that lets countries strike deals on tariffs without including the entire membership of the WTO,” the FT said.
Germany exporting more than it imports is becoming a big problem for its economy, a director from the country’s closely-watched Ifo Institute said Wednesday. “(The trade surplus) is turning out to be an increasing issue, not just with the U.S. but with other trade partners as well, and also within the European Union,” Gabriel Felbermayr, the director of the Ifo Center for International Economics at the Munich-based institute, told CNBC’s “Squawk Box Europe. “The surplus is becoming toxic, and also within Germany many argue now that we need to do something about it with the purpose of lowering it. It turns out to be a liability rather than an asset.”
Germany’s export-orientated, manufacturing economy and its resulting trade surplus — the value of its exports exceeding that of its imports — has long been a subject of criticism and Berlin has been pressured to encourage more domestic spending and boost imports. Trade surpluses are viewed as encouraging trade protectionism and worsening the economic problems of other countries. Germany’s trade surplus fell in 2017 for the first time since 2009, shrinking to $300.9 billion, data published in February by the country’s Federal Statistics Office showed. Still, its trade surplus with the U.S. was $64 billion.
[..] Eric Lonergan, macro fund manager at M&G, told CNBC on Wednesday that Trump might be mollified by European countries promising to address their current account surpluses. A current account surplus is a broader measure of the trade surplus, plus earnings from foreign investments and transfer payments. “(Regarding the trade surplus) the truth is it’s not just Germany anymore — central and eastern Europe, if you look at Hungary, Poland, the Czech Republic and take them as an aggregate, were running a big current account deficit before, now they’re running a big current account surplus,” he said. “Italy’s running a big current account surplus, the periphery is — so it’s the ‘Germanification’ of the whole of greater Europe.”
Theresa May has been warned the Tories will be “toast” if they fail to deliver on their Brexit promises, as eurosceptic MPs maintain the pressure on the prime minister ahead of a crunch meeting of her top team. As the PM prepares to gather ministers at her country retreat of Chequers on Friday, she has been put on notice by the European Research Group (ERG) of Conservative backbenchers. Around 40 members of the ERG met with chief whip Julian Smith on Wednesday, reports Sky’s senior political correspondent Beth Rigby. Our correspondent said that they told Mr Smith the party will be “toast” if it “welches” on its previous Brexit promises, adding that the roughly £40bn “divorce bill” should only be paid to Brussels on condition of getting a deal.
After the meeting, Jacob Rees-Mogg, who chairs the ERG, told Sky News that Mr Smith “doesn’t determine policies” and so backbench Brexiteers remain in the dark over the government’s plans beyond media reports. Asked about suggestions the PM could propose a UK-EU deal that keeps regulatory alignment with Brussels for goods, as well as keeping the same level of tariffs as the EU, Mr Rees-Mogg warned such an agreement is “not Brexit”. He insisted continued regulatory alignment would mean the UK “cannot do trade deals with the rest of the world” and would mean “we haven’t really left the EU”. “Indeed, worse than that, we’re a vassal state because we take the EU’s rules and have no say over them,” the Leave supporter added.
The proverbial can has been kicked down the proverbial road ever since Britain voted to leave the European Union in 2016. Don’t get me wrong. Can-kicking has a necessary place in politics. Theresa May has often had little choice but to resort to it. But the road and the can-kicking must end at Chequers on Friday. That’s when the prime minister and her divided cabinet must finally decide what kind of relationship they seek with the EU after Brexit. In the end, May’s government faces the same two choices at Chequers that it has faced throughout all the twists and turns of the Brexit negotiations.
Either the government must embrace a form of soft Brexit that it can then persuade the rest of Europe to accept as a proper basis for good future relations – the option that May herself and the chancellor, Philip Hammond, both prefer and will put forward – or it must reject that option and prepare for a no-deal Brexit, in which all of Britain’s economic and political relations with Europe and the rest of the world become matters of pure conjecture. There are no other choices on the table. If Brexit is to go ahead, it is simply one or the other. This means, therefore, that only the first of the two choices is in fact a serious option.
If the cabinet rejects May’s and Hammond’s approach and adopts a no-deal option as government policy, there would be both a parliamentary and an extra-parliamentary revolt against it. Large businesses such as British Airways might relocate to Europe. Labour might even find an explicit anti-Brexit voice. One way or another, the no-deal approach would therefore explode on the launch pad. And Brexit might even not take place. Most ministers are neither idiots nor wreckers, so the no-deal option is not going to happen. It is even questionable as to whether any of the no-dealers will resign. The much more serious question, though, is whether the soft Brexit package that May wants to sell to the cabinet is much of a runner either.
The Home Office is separating scores of children from their parents as part of its immigration detention regime – in some cases forcing them into care in breach of government policy. Schools, the NHS and social services have written letters to the department begging them to release parents from detention because of the damaging impact it is having on their children. Bail for Immigration Detainees (Bid), a charity that supports people in detention, said they have seen 170 children separated from their parents by the Home Office in the past year – and believes there are likely to be many more.While usually the youngsters remain in the care of their other parent, the charity has seen a number of cases where children are taken into local authority care as a result of the detention.
Case workers highlight that this is in breach of Home Office guidelines, which state that a child “must not be separated from both adults if the consequence of that decision is that the child is taken into care”. In one case, three young children were taken into care for several days after their dad was detained earlier this year – an experience that left them traumatised and fearful that he will be “taken away” again. Kenneth Oranyendu, 46, was detained in March while his wife was abroad for her father’s funeral. Despite the Home Office being aware of this, they kept him in detention and his four young children were forced to go into care.
In June, total assets on the Bank of Japan’s balance sheet dropped by ¥3.79 trillion yen ($34 billion) from May, to ¥537 trillion ($4.87 trillion). It was the third month-over-month drop in seven months, and the first such drops since late 2012, when the Abenomics-designed blistering “QQE” (Qualitative and Quantitative Easing) kicked off. So has the “QQE Unwind” commenced? This chart shows the month-to-month changes of the total balance sheet. Note the trend over the past 16 months and the three “QQE unwind” episodes (red):
But this sporadic balance sheet reduction and the overall “tapering” of its growth contradict the official rhetoric. Bank of Japan Governor Haruhiko Kuroda along with most of his colleagues keep insisting that the BOJ would “patiently” maintain its ultra-easy monetary policy and that it would “keep expanding the monetary base until inflation is above 2%.” The blistering asset purchases would add about ¥80 trillion ($725 billion) to the balance sheet every year. And the BOJ has repeatedly affirmed its short-term interest-rate target of a negative -0.1%.
[..][ Under QQE, the BOJ has been buying mostly Japanese government securities (JGBs and short-term bills); it also purchased corporate bonds, Japanese REITs, and equity ETFs. But now, the party appears to be ending, despite the speeches to the contrary. From the distance, however, the flattening out (tapering) of the BOJ’s assets is barely noticeable, given the magnitude of the whole pile that amounts to about 96% of Japan’s GDP (the Fed’s balance sheet amounted to about 23% of US GDP at the peak):
While bad loans in the Italian banking system have received a ton of attention from investors who fear that the Italians could inadvertently blow up the European banking union, it’s not the only financial landmine lurking among the world’s ten largest economies. To wit, while Italy has the largest percentage of non-performing loans among the world’s largest economies, India isn’t far behind and India’s economic recovery is built on an even shakier foundation. According to Bloomberg, India’s $1.7 trillion formal banking sector is presently struggling with $210 billion in bad loans, most of which are concentrated within its state-owned banks. During the 2018 fiscal year, growth slowed to 6.7%, down from the previous year’s 7.1%, back to its levels from 2014, before Modi came to power.
The state banks have been so badly mismanaged that some analysts say the country’s banking crisis is an opportunity for private sector banks, as CNBC reported. “If you take a 10-year view, currently the private sector banks’ market share is 30 percent. Probably it will become 60 percent,” Sukumar Rajah, senior managing director at Franklin Templeton Emerging Markets Equity, told CNBC. As a result, he said, “the overall health of the banking system will improve because the better banks will be a bigger portion of the market and the weaker banks will become a smaller portion of the market.”
Some also see opportunities for investment bankers looking to underwrite corporate bond issuance in the country.. “My view is that, incrementally, a lot of long-term financing of corporate India can also be met by the corporate bond market, which has developed reasonably well,” he said. “Between the corporate bond market and the private banks, I think most of the requirements can be met as far as corporate India is concerned.” When it comes to lending directly to individuals, Prasad said that is mostly done by the private banks and non-banking financial companies.
Megaupload founder Kim Dotcom suffered a major setback in his epic legal battle against online piracy charges Thursday when New Zealand’s Court of Appeal ruled he was eligible for extradition to the United States. The German national, who is accused of netting millions from his file sharing Megaupload empire, faces charges of racketeering, fraud and money laundering in the US, carrying jail terms of up to 20 years. Dotcom had asked the court to overturn two previous rulings that the Internet mogul and his three co-accused be sent to America to face charges. Instead, a panel of three judges backed the FBI-led case, which began with a raid on Dotcom’s Auckland mansion in January 2012 and has dragged on for more than six years.
The court said US authorities had “a clear prima facie case to support the allegations that the appellants conspired to, and did, breach copyright wilfully and on a massive scale for commercial gain”. Dotcom is accused of industrial-scale online piracy via Megaupload, which US authorities shut down when the raid took place. They allege Megaupload netted more than US$175 million in criminal proceeds and cost copyright owners US$500 million-plus by offering pirated content including films and music. “We are disappointed with today’s judgment by the NZ Court of Appeal in the Kim Dotcom case,” his lawyer Ira Rothken tweeted, indicating there would be an appeal to the Supreme Court.
“We have now been to three courts each with a different legal analysis – one of which thought that there was no copyright infringement at all.” Dotcom and his co-accused – Finn Batato, Mathias Ortmann, Bram van der Kolk – have denied any wrongdoing and say Megaupload was simply a case of established interests being threatened by online innovation. The website was an early example of cloud computing, allowing users to upload large files onto a server so others could easily download them without clogging up their email systems. At its height in 2011, Megaupload claimed to have 50 million daily users and account for 4% of the world’s internet traffic.
When a baby is born, its parents teach it how to eat solid foods and walk and talk, which generally works out fine. Then they start teaching the baby all the lies their parents taught them, and things start to get messy. When the baby is old enough, they send it to school, where it spends twelve years being taught lies about how the world works so that one day it will be able to watch CNN and say “Yes, this makes perfect sense” instead of “This is ridiculous” or “Why does this whole entire thing seem completely fake?” or “I want to punch Chris Cuomo in the throat.” The baby is taught history, which is the study of the ancient, leftover propaganda from whichever civilization happened to win the wars in a given place at a given time.
The baby is taught geography, so that later on when its country begins bombing another country, the baby’s country won’t be embarrassed if its citizens cannot find that country on a globe. The baby is taught obedience, and the importance of performing meaningless tasks in a timely manner. This prepares the baby for the half century of pointless gear-turning it will be expected to undertake after graduation. The baby is taught that it lives in a free country, with a legitimate electoral system which facilitates meaningful elections of actual representatives in a real government. It is never taught that those elections, representatives and government are all owned and operated by the very rich, who use them to ensure policies which make them even richer while keeping everyone else as poor as possible so that they won’t have to share political power.
It is never taught that highly secretive intelligence and defense agencies form alliances with those rich people to advance murderous and exploitative agendas for profit and power. It is never taught that the things it sees on television are mostly lies. The baby is smoothly, seamlessly funneled from uterus to full-time employment through this system, often with a little religion mixed in to really drive home the importance of obedience and meekness and the nobility of poverty.
The flows into tech funds of late have been absolutely astounding if not totally surprising. The FAANNG stocks have been the market darlings for quite some time now so it’s understandable investors would chase this performance just as they do during every bull market.
It’s not just tech-focused funds overweighting the FAANNG stocks. There is a huge number of non-tech-focused funds that own these stocks, as well, and in a significant way further supporting their popularity in the marketplace. You can find them represented in size today in everything from consumer discretionary, retail, media and entertainment to momentum, cloud computing, internet and social media. In fact, without Amazon and Netflix, the consumer discretionary sector would be down on the year rather than up.
What’s more, in many cases, the ownership of these companies in many funds appear to be clear violations of their implicit if not explicit mandates. To demonstrate, let’s just run through the FAANNG stocks by market cap beginning with the biggest: Apple. There are fully 92 ETFs, according to ETFdb.com, that not only own the stock but also have an overweight (relative to the S&P 500) allocation to the shares. So not only are Apple fans and traditional passive investors buying tons of Apple stock, these other ETF investors are even more aggressively acquiring shares.
What I found notable in this case was that Apple was found in both value and growth-focused ETFs. I guess this isn’t really much of a stretch theoretically. A high-growth stock can become cheap just like any other. What is strange in Apple’s case, though, is that the stock now trades at its highest price-to-free cash flow in years. At the same time, the company’s 5-year average revenue growth is now the lowest in its history. Still, these systematic funds somehow find reason to not just own it but to overweight it as both a value stock and as a growth stock.
Britain’s chief financial watchdog has warned that contracts worth trillions of pounds between UK and European Union banks remain at risk of collapse following Brexit, after Brussels’ failure to implement protective legislation. In a warning to EU officials that time is running out before next March to devise rules for EU banks, the Bank of England’s financial policy committee (FPC) said £29tn worth of contracts could be declared void. Derivatives contracts, which provide banks and corporations with protection from interest rate rises, could come to an end without fresh legislation from the UK and EU, the committee said in its latest quarterly health check on Britain’s financial services industry.
The warning will be seen as a direct response to the European Banking Authority, which argued earlier this week that the UK was dragging its feet preparing for Brexit. In an increasingly bitter war of words, EBA officials said there was little preparation by the UK authorities and individual banks for life outside the EU. The FPC hit back, saying the Treasury was well advanced in its efforts to bridge the gap between banks in London and those on the continent, but Brussels had made little obvious effort to support its own financial institutions. “The biggest remaining risks of disruption are where action is needed by both UK and EU authorities, such as ensuring the continuity of existing derivatives contracts. As yet the EU has not indicated a solution analogous to a temporary permissions regime,” it said.
The European Union’s 27 leaders are to ratchet up the pressure on Theresa May by giving her a strong warning about the growing risk of a no-deal Brexit, as countries across Europe confirmed they were intensifying work on their contingency plans for Britain crashing out of the bloc. With a complete absence of progress on key issues, including that of avoiding a hard border on the island of Ireland, the prime minister will be pressed at a summit in Brussels to reassure her fellow leaders about her intentions. The Danish prime minister, Lars Løkke Rasmussen, told his parliament in Copenhagen on Wednesday: “It is the first time we are saying clearly to the British that we can end, in the worst scenario, [with] no deal.”
May has agreed to address the leaders at a dinner on Thursday night after discussions with Donald Tusk, the European council president, earlier this week in Downing Street. She is expected to sketch out her intentions for the coming few weeks before they come to their conclusions on the state of the negotiations the following morning. Asked whether Tusk was more confident about the future following his last meeting with May, a senior EU official laughed, adding: “Well, I don’t think he is less optimistic.” On the so-called backstop solution for the Irish border – a default state to be in place until a free trade deal or bespoke technological solution is agreed – the official said there had “frankly been no progress, and that’s reason to express concern”.
The last time we looked at how much of the stock market the Bank of Japan controls, we found that as of September, Kuroda’s central bank owned a stunning 75% of all Japanese ETFs as the central bank keeps buying stocks under its ultraloose monetary policy. Since December 2010 – when The Bank of Japan held no ETFs at all – the central bank has been buying ETFs (doubling its annual buying target to 6 trillion yen in July 2016) as part of unprecedented economic stimulus. Over this period, the Nikkei 225 Stock Average has risen 89% since December 2010. It is safe to say the two are correlated. Fast forward to today, when according to the latest BOJ holdings update following even more ETF purchases, the Japanese central bank has also become a major shareholder in nearly 40% of listed companies.
According to Nikkei calculations, the bank was one of the top 10 shareholders in 1,446 listed companies out of 3,735 at the end of March. This means that just over the past year, when the BOJ was a major owner of 833 stocks, the BOJ’s equity holdings have expanded by a staggering 70%. In addition, the Central Bank bank is now the top shareholder in Tokyo Dome, Sapporo Holdings, Unitika, Nippon Sheet Glass and Aeon. This means that the BOJ has amassed an estimated 25 trillion yen ($227 billion) of equities as a result of purchasing exchange-traded funds. Putting these holdings in context, the BOJ holdings are equal to nearly 4% of the roughly 652 trillion yen aggregate market value of stocks traded on the first section of the Tokyo Stock Exchange.
In justifying the BOJ’s relentless takeover of the stock market, Kuroda has said that buying up stocks is an integral part of the BOJ’s strategy to lift inflation to 2%, a program which “has fulfilled its role to a certain extent,” according to Kuroda. But, as the Nikkei adds, the size of the buying spree could complicate an eventual exit strategy from the monetary easing and also distort basic market mechanisms.
President Donald Trump on Tuesday endorsed U.S. Treasury Secretary Steven Mnuchin’s measured approach to restricting Chinese investments in U.S. technology companies, saying a strengthened merger security review committee could protect sensitive American technologies. Trump, in remarks to reporters at the White House, said the approach would target all countries, not just China, echoing comments from Mnuchin on Monday amid a fierce internal debate over the scope of investment restrictions due to be unveiled on Friday. “It’s not just Chinese” investment, Trump told reporters when asked about the administration’s plans. Mnuchin and White House trade adviser Peter Navarro sent mixed signals on Monday about the Chinese investment restrictions, ordered by Trump on May 29.
Mnuchin said they would apply to “all countries that are trying to steal our technology,” while Navarro said they would be focused specifically on China. The restrictions are being developed to help put pressure on China to address the administration’s complaints that it has misappropriated U.S. intellectual property through joint-venture requirements, unfair licensing policies and state-backed acquisitions of U.S. technology firms. Mnuchin would prefer to use new tools associated with pending legislation to enhance security reviews of transactions by the Committee on Foreign Investments in the United States (CFIUS), some administration officials have said.
China said on Thursday it would renew efforts to crack down on property irregularities in 30 major cities from July to end-December, mobilizing powers from seven major Chinese government agencies in a concerted effort to rein in rising prices. Property prices in China have soared since 2016, prompting the government to roll out tightening measures in more than 100 cities to dampen demand amid bubble fears. But new home prices in May posted their fastest growth in nearly a year even as prices cooled in big cities, suggesting buyers are shifting to smaller cities. Policymakers have been careful not to tap on the brakes too hard, as real estate remains a major driver of the economy.
Growth in the world’s second-largest economy is at risk of slowing as the authorities try to tame rapid domestic credit growth at a time when trade tensions are causing worries for the economic outlook. The crackdown would be carried out by government entities including the housing ministry and the Ministry of Public Security, and the banking and insurance regulators, according to a notice posted on the housing ministry’s website. They would focus on stemming speculation, cracking down on illegal agencies and developers, and fake advertisements.
Among the 30 cities that will be scrutinized are the country’s four largest or top tier cities, including Beijing and Shanghai, and tier 2 provincial capitals such as Wuhan and Chengdu, and also smaller cities, such as Yichang and Foshan. The notice said targeted irregularities include manipulating prices, deliberately holding off sales, illegally providing loans for downpayment and publishing false price information that mislead buyers.
Several Democratic pundits appeared on Fox Business Network to raise the alarm about the election. “The party is swinging left,” said Robin Biro, a former DNC delegate supporting Hillary Clinton. “It’s concerning for someone who is more moderate like myself.” Mark Penn, a strategist who owns several corporate lobbying and public relations firms and previously advised both Bill and Hillary Clinton’s presidential campaigns, attempted to downplay the significance of Ocasio-Cortez’s victory. Asked by Fox Business host Maria Bartiromo if Ocasio-Cortez’s win signified a drift toward socialism, Penn said no. “I just don’t think that’s where the Democratic Party is going. I think that’s where that district is going,” said Penn.
“I think the national implications are being overblown,” he added. Crowley was seen as the next Democratic House leader and had won support from business executives as a leading moderate. As The Intercept reported, Crowley helped spearhead efforts against bank regulations, and, as a longtime leader of the New Democrat Coalition, was widely viewed as a point person for lobbyists to influence that caucus of centrist Democrats. He also voted in support of the Iraq War and the Patriot Act. The Wall Street-friendly wing of the Democratic Party similarly attempted to diminish Ocasio-Cortez’s victory.
Matt Bennett, co-founder of Third Way, a business-friendly Democratic think tank governed by a council of finance industry executives, told Axios that Crowley lost because of his gender and the particular dynamics of the district. Ocasio-Cortez’s victory “had more to do with the nature of her very blue district than it does with national politics,” Bennett said.
It was less than three weeks until Primary Day and, on first blush, the poll that Representative Joseph Crowley had been shown by his team of advisers was encouraging: He led his upstart rival, Alexandria Ocasio-Cortez, by 36 percentage points. It was the last poll Mr. Crowley’s campaign would conduct. Despite his many reputed strengths — his financial might as one of the top fund-raisers in Congress, his supposed stranglehold on Queens politics as the party boss, his seeming deep roots in an area he had represented for decades — Mr. Crowley was unable to prevent his stunning and thorough defeat on Tuesday night. Ms. Ocasio-Cortez bested Mr. Crowley by 15 percentage points, delivering a victory expected to make her, at 28, the youngest woman ever elected to Congress.
If it takes a perfect storm to dislodge a congressional leader, then Ms. Ocasio-Cortez and her crusading campaign about class, race, gender, age, absenteeism and ideology proved to be just that. She and her supporters swept up Mr. Crowley in a redrawn and diversifying 14th Congressional District where the incumbent, despite two decades in Congress, had never run in a competitive primary. She flipped the levers of power he was supposed to have — his status as a local party boss and his money — against him, using that as ammunition in an insurgent bid that cut down a possible successor to Nancy Pelosi and the No. 4 Democrat in the House. No single factor led to Mr. Crowley’s defeat, more than a half-dozen officials inside and close to his campaign said in interviews, most on the condition of anonymity.
It was demographics and generational change, insider versus outsider, traditional tactics versus modern-age digital organizing. It was the cumulative weight of them all. [..] Ms. Ocasio-Cortez, in an interview on Wednesday, dismissed race as a driving factor in her win, though she had regularly highlighted her heritage on the campaign trail. “It would be a huge mistake to just say that this election happened because X demographics live here. That is to absolutely miss the entire point of what we just accomplished,” Ms. Ocasio-Cortez said. A former organizer for Bernie Sanders, Ms. Ocasio-Cortez won across the district, carrying Mr. Crowley’s home borough of Queens by a larger margin than she won the Bronx. “She won virtually everywhere,” said Steven Romalewski, a researcher at the Center for Urban Research [..], who mapped the results.
The reporters at Reuters have been providing crucial, unfliching coverage of the cruel treatment of would-be immigrants under policies pushed by President Donald Trump. Meanwhile, the news agency’s parent company, Thomson Reuters, has been supplying U.S. Immigration and Customs Enforcement with data from its vast stores as part of federal contracts worth close to $30 million. A letter from a Thomson Reuters executive shows that the company is ready to defend at least one of those contracts while remaining silent on the rest. Last week, advocacy and watchdog group Privacy International wrote to Thomson Reuters CEO James Smith to “express concern” over contracts between ICE and two of the company’s subsidiaries.
Thomson Reuters Special Services sells ICE “a continuous monitoring and alert service that provides real-time jail booking data to support the identification and location of aliens” as part of a $6.7 million contract, and West Publishing, another subsidiary, provides ICE’s “Detention Compliance and Removals” office with access to a vast license-plate scanning database, along with agency access to the Consolidated Lead Evaluation and Reporting, or CLEAR, system, which Thomson Reuters advertises as holding a “vast collection of public and proprietary records.” The two West contracts are together worth $26 million. The Privacy International letter cites the practice by U.S. authorities of separating children from their parents, as well as the Trump administration’s overall “zero tolerance” approach to immigration violations.
The children — thousands of them — are typically intercepted by U.S. Customs and Border Protection with their parents; the parents are then detained by ICE while the children, having been forcibly separated, are held in conditions that some have described in horrifying terms, under the supervision of Health and Human Services. (ICE agents have also been accused of sexual abusing hundreds of detainees, underhanded arrest tactics, and more.) Privacy International’s letter requested that Thomson Reuters “commit to not providing products or services to U.S. immigration agencies which may be used to enforce such cruel, arbitrary, and disproportionate measures.”
It is not a pleasant thing to see your industry subjected to criticism that is at once overheated, ill-informed and entirely justified. In 2012, the financial sector finally got the kind of enemies it deserved. The popular version of events might have been oversimplified and wrong in lots of technical detail, but in the broad sweep, it was right. The nuanced and technical version of events which the specialists obsessed over might have been right on the detail, but it missed one utterly crucial point: a massive crime of dishonesty had taken place. There was a word for what had happened, and that word was fraud. For a period of months, it seemed to me as if the more you knew about the Libor scandal, the less you understood it.
That’s how we got it so wrong. We were looking for incidental breaches of technical regulations, not systematic crime. And the thing is, that’s normal. The nature of fraud is that it works outside your field of vision, subverting the normal checks and balances so that the world changes while the picture stays the same. People in financial markets have been missing the wood for the trees for as long as there have been markets. Some places in the world are what they call “low-trust societies”. The political institutions are fragile and corrupt, business practices are dodgy, debts are rarely repaid and people rightly fear being ripped off on any transaction.
In the “high-trust societies”, conversely, businesses are honest, laws are fair and consistently enforced, and the majority of people can go about their day in the knowledge that the overall level of integrity in economic life is very high. With that in mind, and given what we know about the following two countries, why is it that the Canadian financial sector is so fraud-ridden that Joe Queenan, writing in Forbes magazine in 1989, nicknamed Vancouver the “Scam Capital of the World”, while shipowners in Greece will regularly do multimillion-dollar deals on a handshake? We might call this the “Canadian paradox”.
There are different kinds of dishonesty in the world. The most profitable kind is commercial fraud, and commercial fraud is parasitical on the overall health of the business sector on which it preys. It is much more difficult to be a fraudster in a society in which people only do business with relatives, or where commerce is based on family networks going back centuries. It is much easier to carry out a securities fraud in a market where dishonesty is the rare exception rather than the everyday rule.
Some of the more pessimistic commentators at the time of the credit crunch, myself included, said that the aftermath of the crash would dominate our economic and political lives for at least ten years. What I wasn’t expecting – what I don’t think anyone was expecting – was that ten years would go by quite so fast. At the start of 2008, Gordon Brown was prime minister of the United Kingdom, George W. Bush was president of the United States, and only politics wonks had ever heard of the junior senator from Illinois; Nicolas Sarkozy was president of France, Hu Jintao was general secretary of the Chinese Communist Party, Ken Livingstone was mayor of London, MySpace was the biggest social network, and the central bank interest rate in the UK was 5.5 per cent.
It is sometimes said that the odds you could get on Leicester winning the Premiership in 2016 was the single most mispriced bet in the history of bookmaking: 5000 to 1. To put that in perspective, the odds on the Loch Ness monster being found are a bizarrely low 500 to 1. (Another 5000 to 1 bet offered by William Hill is that Barack Obama will play cricket for England. I’d advise against that punt.) Nonetheless, 5000 to 1 pales in comparison with the odds you would have got in 2008 on a future world in which Donald Trump was president, Theresa May was prime minister, Britain had voted to leave the European Union, and Jeremy Corbyn was leader of the Labour Party – which to many close observers of Labour politics is actually the least likely thing on that list. The common factor explaining all these phenomena is, I would argue, the credit crunch and, especially, the Great Recession that followed.
On Thursday, ecologists at the University of California, Berkeley, released a study published in Science Magazine that indicates animals are adjusting their habits to avoid the stresses of human encroachment on their habitat. According to the research from Kaitlyn M. Gaynor, Cheryl E. Hojnowski, Neil H. Carter, and Justin S. Brashares, human population growth is having a profound influence on the way animals go about their business—specifically, when they choose to go about their business. It seems that a number of mammalian species have become nocturnal in an effort to avoid us. Scientists admit that this probably works for the animals, but could have potential “ecosystem-level consequences” we don’t yet fully understand.
It’s been acknowledged in the past that mammals have been adjusting to the presence of humans by moving less, retreating to remote areas, and spending less time looking for food, according to Phys.org, who spoke with Gaynor, the leader of the study. All these altered behaviors contribute to overall stress in the animals. Gaynor’s study indicates that even things like camping and hiking could be having a negative effect on wildlife. “It suggests that animals might be playing it safe around people,” said Gaynor. “We may think that we leave no trace when we’re just hiking in the woods, but our mere presence can have lasting consequences.”
It was a historic handshake that Koreans had waited more than a decade to see — and it sparked a completely unscripted dance with the two leaders hopping back and forth over the border that divides their nations. Everything about the inter-Korean summit had been minutely choreographed and rehearsed but the North’s Kim Jong Un went off-script when he invited his southern counterpart Moon Jae-in to join him over the border. After a prolonged clasp lasting almost half a minute over the Military Demarcation Line that acts as the border, a beaming Moon invited his guest over to South Korea. They posed for pictures as Kim became the first Northern leader to set foot in the country since Korean War hostilities ceased in 1953.
Kim then beckoned Moon over to the other side. Moon seemed initially hesitant but the North’s jovial young leader was not taking “no” for an answer, grabbing his hand and accompanying him across the border before they warmly shook hands again. Grinning broadly, the pair then crossed back to the South hand-in-hand, to be presented with flowers by children from a village in the buffer area next to the Demilitarized Zone. It all went to show that even for a moment as carefully planned as the first inter-Korean summit in more than a decade, where the North’s nuclear arsenal will be high on the agenda, the best-laid preparations rarely run completely to schedule. South Korean officials had carried out a full dress rehearsal on the eve of the summit, including stand-ins for the two leaders. “We examined every single detail including lighting and flower decorations,” a Moon spokesman said.
You put your left foot in: Kim Jong Un and Moon Jae-in were engaged in a metaphorical and literal diplomatic dance on Friday when they met at the frontier (AFP Photo/Korea Summit Press Pool)
[..] what appears to be emerging is very similar to a strategy cleverly developed by the North Korean leadership over a number of years. As Pyongyang needed to bring the United States to the negotiating table, while at the same time guaranteeing its survival, it pursued its nuclear-weapons program. Since Washington seems to have understood that a military solution is not practicable, especially given the pressure brought to bear by its allies all too cognizant of a nuclear-armed DPRK, Pyongyang is now willing to display its good will, deciding to surprise the world by embarking on negotiations, with the renunciation of its nuclear weapons as a major bargaining chip.
Under these conditions, Pyongyang is willing to cooperate, and South Korea welcomes the initiative with open arms, accelerating the meeting between the two leaders and paving the way for peace on the peninsula. The People’s Republic of China applauds the diplomatic efforts and encourages South Korea, and later America, in these diplomatic efforts. Seoul, Beijing and Pyongyang have every interest in reaching an all-encompassing deal, with or without Washington. The diplomatic ability of this trio has managed to leave the United States with its back against the wall, first of all obliging it to sit down at the negotiating table (something already revolutionary for reasons explained above), and then requiring it to ease sanctions considerably.
Otherwise, North Korea would be seen as the party that is willing to achieve peace, while Washington is left isolated and looking like the warmonger. North Korea finds itself in a win-win situation. If sanctions are eased and peace talks are managed in the right manner, then the process of socio-economic rebirth, which Kim Jong-un considers a priority, can begin. Should the rhetoric of war prevail in Washington, then Washington would find itself at odds with its main ally, Seoul. It is likely that China could even justifiably renounce its sanctions against the DPRK, blaming the US for not making any progress in the face of extraordinary offers by Kim Jong-un to renounce his nuclear weapons.
China is open to negotiating with the United States to resolve trade tensions, Premier Li Keqiang was quoted as saying by state media late on Thursday, noting that the countries should manage their conflicts through dialogue. Li made the remarks at a meeting with U.S. Secretary of Transportation Elaine Chao, state broadcaster China Central Television (CCTV) said. U.S. Treasury Secretary Steven Mnuchin is due to lead a delegation to China for talks intended to ease trade tensions. President Donald Trump has threatened a new round of tariffs on $100 billion worth of Chinese products that could target mobile phones, computers and other consumer goods. China retaliated against an initial round of U.S. tariffs on $50 billion in Chinese exports.
“There is no winner in trade conflict, which will not only affect the recovery of the world economy but also the global industrial chain,” Li said in comments reported by the official Xinhua news agency. “It is also what the international community expects from our two countries,” he said. Larry Kudlow, Trump’s top economic adviser, who will join Mnuchin’s delegation in Beijing, said on Thursday he hoped the talks with China would yield progress but that resolving U.S. complaints would be “a long process.” Xinhua cited Li as saying he hoped the two countries would be able to “manage and control” their differences. Li added China would “unswervingly open further to the outside world”, reiterating President Xi Jinping’s assurances over about the country opening more widely to trade.
The Bank of Japan left its stimulus program unchanged on Friday, while removing language from its statement declaring that it would reach 2% inflation around fiscal 2019. The decision to maintain the yield-curve control program and asset purchases was forecast by all analysts surveyed by Bloomberg. As he enters his sixth year at the helm, Governor Haruhiko Kuroda has the BOJ pushing forward with stimulus even as other major central banks move further toward policy normalization, if at a more moderate pace. Though it removed the language on reaching its 2% target, indicating that more time may be needed, the BOJ left its inflation forecasts largely unchanged. It still forecasts core inflation, which excludes fresh food prices, to reach 1.8% in fiscal 2019.
Still, seven of nine board members said risks to that forecast were weighted to the downside. “The momentum for achieving the inflation target as early as possible is fading,” said Masamichi Adachi, senior economist at JPMorgan Chase. “I take the change as a positive because you can say that their communication is becoming realistic.” Kuroda is expected to reiterate his intention to carry on with the stimulus during his news conference later on Friday. Doing so would likely provide a tailwind for the yen to continue falling, as rising U.S. bond yields widens the gap between returns in the U.S. and Japan.
Wolf Richter, the man behind the Wolf Street blog, had no trouble zeroing in on the theme for his pick for “chart of the century”: U.S. debt. He did have trouble choosing whether the chart should show ballooning student loans, or ballooning government debt. Either way, ballooning’s the key, as he predicts both narratives will continue to raise alarms. When push came to shove, he opted for the government debt chart.
[..] Spending and debt are also the theme of the chart selected by Lance Roberts, chief strategist for Clarity Financial. But his chart focuses on the consumer side of that picture. Visualized here is the widening gap between cost of living, and the income and credit Americans have at their disposal. Up until the late 1980s, disposable income, savings and debt funded the standard cost of living. Since then, however, this chart shows that hasn’t been the case — and the national personal savings rate has dropped from above 10% in the 1970s to below 4% today.
[..] While we’re on the topic of the dollar and rising rates, Tadas Viskanta of the Abnormal Returns blog says this chart tells “the most important story of the century”. “Central banks engineered 0% or in some cases negative yields on cash for the better part of the decade,” Tadas said. “We’re only now coming out of it. Investors may once again begin to think of cash as a viable investment option.”
The banking and finance royal commission has cast light on a new type of poverty to emerge in our society: middle class poverty. To understand it, we have to go back to an earlier government inquiry: the 1972 Commission of Inquiry into Poverty, conducted by Professor Ronald Henderson [which] gave prominence to the Henderson Poverty Index: a measure of consumption described by Henderson as so austere that it was unchallengeable. Updated versions of this index remain a standard benchmark of poverty. But more than 45 years on, the royal commission into finance is revealing that poverty is no longer just about low income.
The commission has heard that Australian banks have adopted actual lending practices (as distinct from their official lending policies) that claim so much household income for contract payments that borrowers are left without enough money to fund basic consumption levels: they are living in poverty. This isn’t an accident: it is a strategic policy by banks. How much do banks think households need for daily living? According to the Australian Prudential Regulation Authority’s submission to the royal commission, banks “typically use the Household Expenditure Measure [a relative poverty measure] or the Henderson Poverty Index in loan calculators to estimate a borrower’s living expenses”. So measures designed to capture the impacts of low incomes are now targeting financially-enmeshed middle-income households, and not as a statement of social shame, but as strategic objects of bank policy.
This has caused embarrassment to APRA, the regulator charged with overseeing those bank practices. In response, it was permitted to make a supplementary submission to the royal commission in March. A consequence of APRA neglect is that “poverty” now goes significantly up the income scale, well into what we generally call the middle class. Middle income people are the cohort in greatest financial risk. They are highly leveraged: they spend more of their income on loan repayments than do people with higher incomes. Second, their assets are undiversified: they own labour market skills, some home equity and some superannuation. Third, these assets are illiquid (not easily sold): you can’t transfer your skills to another, houses are costly to sell and superannuation is generally inaccessible..
Amazon’s cloud business exceeded analyst estimates, with revenue climbing 49% in the first quarter. Amazon Web Services reported sales on Thursday of $5.44 billion, compared to the $5.26 billion average estimate of analysts surveyed by FactSet. AWS contributed about 11% of Amazon’s total revenue for the period, up from 8.5% in the prior quarter. AWS continues to be a big revenue driver and even larger profit engine for its parent company, which dominates the low-margin e-commerce market.
In cloud-computing infrastructure, Amazon has a substantial market share lead over Microsoft Azure, Google’s Cloud platform and IBM, as well as other players like Alibaba and Oracle. While AWS has maintained growth above 40%, Microsoft and Google are currently expanding much faster and picking up share. In the first quarter Microsoft’s Azure cloud grew 93%. AWS produced $1.4 billion in operating income in the first quarter. That accounted for 73% of Amazon’s $1.93 billion in operating income.
Facebook profits soared 63% to $5bn (£3.6bn) in the first three months of the year despite the company being engulfed in a data privacy scandal that has angered millions of users. Allegations that up to 87 million Facebook users’ data was collected without their knowledge and then used by Cambridge Analytica to try to sway the US Presidential election and the Brexit vote, did little to slow the tech company’s rapid growth. Total revenues jumped 49% compared to the same three months last year, Facebook reported on Wednesday. Facebook has been scrambling to mollify angry politicians and reassure users that it will safeguard their personal information.
Amid the turmoil, observers were keenly watching the company’s user figures to assess the potential damage and see if the scandal would suppress Facebook’s growth. Despite high-profile social media campaigns calling users to boycott Facebook, user numbers kept in line with expectations. Those results again demonstrated the company’s ability to thrive amid controversy. It continued to grow over the last year despite a steady drumbeat of revelations that Russian-linked actors used the platform to try and fracture the electorate and promote Mr Trump ahead of the 2016 presidential election.
The EU does not need the City of London, and Theresa May’s “pleading” for a special deal for the UK’s financial services sector will not be rewarded, the EU’s chief negotiator, Michel Barnier, has said. In his toughest rebuff yet to the demands made by the British prime ministerin her landmark Mansion House speech, Barnier suggested the City would be granted nothing more generous than that enjoyed by Wall Street. “Some argue that the EU desperately needs the City of London, and that access to financing for EU27 business would be hampered – and economic growth undermined – without giving UK operators the same market access as today,” Barnier said at a meeting of finance ministers in Sofia, Bulgaria. “This is not what we hear from market participants, and it is not the analysis that we have made ourselves.”
May had argued in March, in a keynote speech spelling out her vision of a future UK-EU trading relationship, that failing to construct a special deal for the City would hurt economies on both sides. The City provided more than £1.1tn of cross-border lending to the rest of the EU in 2015 alone. May conceded in her speech that the current “passporting” regime, under which UK-based financial services would automatically have the right to operate across the EU, would not survive Brexit. However, she went on to suggest that a mutually agreed system would be necessary that would give the UK’s financial services sector greater assurances over future rules than the current “equivalence regime”.
The report reveals how few areas of Turkey’s once vibrant independent civil society have been left untouched by the ongoing state of emergency. A nationwide crackdown has resulted in mass arrests and dismissals, thehollowing out of the legal system and the silencing of human rights defenders through threats, harassment and imprisonment. “Whilst the jailing of journalists and activists may have hit the headlines, the profound impact that Turkey’s crackdown has had on wider society is harder to quantify but it is no less real,” said Amnesty International’s Europe Director, Gauri van Gulik. “Under the cloak of the state of emergency, Turkish authorities have deliberately and methodically set about dismantling civil society, locking up human rights defenders, shutting down organisations and creating a suffocating climate of fear.”
The state of emergency, declared in July 2016 as a temporary exceptional measure in the wake of the failed coup attempt, was renewed for a seventh time last week. Under its imposition, the rights to freedom of expression to liberty and security and to fair trials have been decimated. In so doing, the last line of defence for any healthy society – namely the work of human rights defenders – has been breached. Blanket bans on public gatherings in cities across Turkey have curtailed the right to assembly and association. Meanwhile more than 100,000 people have faced criminal investigations and at least 50,000 people have been imprisoned pending trial. More than 107,000 public sector employees have been summarily dismissed.
Many of the country’s most prominent journalists and human rights defenders, including Taner Kılıç, honorary chair of Amnesty International Turkey, have been jailed on baseless “terrorism” charges. But their arrests are merely the tip of the iceberg. Anti-terrorism laws and trumped-up coup related charges are used to target and silence peaceful, legitimate dissent. Prominent journalists, academics, human rights defenders and other civil society actors are subjected to arbitrary detention, prosecutions and, if found guilty in unfair trials, face long sentences.
Greece’s economic crisis is over only if you don’t live there. Everyone else, in other words, might have moved on because Greece isn’t threatening to knock over the other dominoes that are known as the global economy anymore, but its people are still stuck in what is the worst collapse a rich country has ever gone through. Indeed, if the International Monetary Fund’s latest projections are correct, it might be at least another 10 years before Greece is back to where it was in 2007. And that’s only if there isn’t another recession between now and then. Two lost decades, then, are something of a best-case scenario for Greece. The numbers are staggering. It’s not just that Greece’s economy shrank 26% in per capita terms between the middle of 2007 and the start of 2014.
That, as you can see below, might have put it on par with some of the biggest calamities in economic history — it was a little better than the United States had done in the 1930s, but a little worse than Argentina had done in the 2000s — but it didn’t distinguish it among them. No, it’s that Greece has grown only a total of 2.8% — again, adjusted for its population — in the first four years of what is supposedly a recovery. To give you an idea how miserable that is, 1930s America grew 30.2% and 2000s Argentina grew 26.9% during the first four years of theirs. The result is that, by this point of their recoveries, the United States was nearly all the way back to where it had been before its crash, and Argentina was actually 17.1% richer than it had been. Greece, meanwhile, is still 23.5% poorer than it was.
The IMF somewhat optimistically thinks that Greece will still be 12.8% poorer than it was in 2007 in 2023, which would put it on pace to get back to its pre-recession peak sometime around 2030 or so. They have made a desert, and called it a recovery.
In an extended interview in Lisbon, Greece’s former finance minister Yanis Varoufakis has given a very grim assessment of his country’s economic health. It came after European Commission President Jean-Claude Juncker said on Thursday, whilst on a visit to Athens, that Greece will become what he termed a “normal” country by the end of the summer. “Everyday is worse than the previous day. All talk of recovery, and of Greece having turned the corner, is to add insult on the injuries of the Greek people,” Varoufakis said. “We have a constant reduction in pensions, in wages. Do you know that 33% of Greeks now work for less than 380 euros a month? Gross, before tax.
“Already the government has committed, even legislated, to introduce pension cuts in January 2019, to introduce a further increase in taxation of the poorest families, after January 2019. They have comitted to escalate exponentially the evictions of poor families from their homes, repossessions. So, of course there will be no changes after the summer of 2018.” In 2016 Varoufakis formed the DiEM25, a pan-European left-wing party which is now asssembling a list of candidates for next’s year’s EU parliamentary elections.
In my last column I discussed an apparent paradox: why, if solar panels and wind turbines are so cheap, do they appear to be making electricity so expensive? One big reason seems to be their inherently unreliable nature, which requires expensive additions to the electrical grid in the form of natural gas plants, hydro-electric dams, batteries, or some other form of stand-by power. Several readers kindly pointed out that I had failed to mention a huge cost of adding renewables: new transmission lines. Transmission is much more expensive for solar and wind than other plants. This is true around the world — for physical reasons. Think of it this way. It would take 18 of California’s Ivanpah solar farms to produce the same amount of electricity that comes from our Diablo Canyon nuclear plant.
And where just one set of transmission lines are required to bring power from Diablo Canyon, 18 separate transmission lineswould be required to bring power from solar farms like Ivanpha. Moreover, these transmission lines are in most cases longer. That’s because our solar farms are far away in the desert, where it is sunny and land is cheap. By contrast, Diablo Canyon and San Onofre nuclear plants are on the coast right near where most Californians live. (The same is true for wind.) New transmission lines can make electricity cheaper, but not when they are used only part of the time and duplicate rather than replace current equipment. Other readers pointed to cases that appear to challenge the claim that increased solar and wind deployments increase electricity prices.
[..] What is most remarkable about U.S. states heavy in solar and wind is that electricity prices rose so much given the huge decline in natural gas prices. Had natural gas prices not plummeted at what was almost the exact same time as the beginning of the large-scale build-out of solar and wind in the United States, price increases in solar and wind heavy states would have been far larger. Around the world, from Germany and Denmark to Spain and South Australia, even modest penetrations of solar and wind, compared to what advocates claim we will need to decarbonize, lead to large price increases.
Member states will vote on Friday on an almost complete ban on the use of neonicotinoid insecticides across the EU. Scientific studies have linked their use to the decline of honeybees, wild bees and other pollinators. The move would represent a major extension of existing restrictions, in place since 2013. Manufacturers and some farming groups are opposed, saying the science remains uncertain. Neonicotinoids are the most widely used class of insecticides in the world, but concerns about their impact on bees have been reinforced by multiple research efforts, including so-called “real world” trial results published last year. Back in 2013 the European Union opted for a partial ban on the use of the three chemicals in this class: Imidacloprid, clothianidin and thiamethoxam.
The restrictions applied to crops including maize, wheat, barley, oats and oil seed rape. The new Commission proposal would go much further, meaning that almost all outdoor uses of the chemicals would be banned. The action has been driven by a recent report from the European Food Safety Authority (Efsa), which found that neonicotinoids posed a threat to many species of bees, no matter where or how they are used in the outdoor environment. Another key element that has pushed the Commission to hold a vote has been the UK’s change of heart on the use of these insecticides. Environment Secretary Michael Gove announced last November that the UK would now support further restrictions. “I think it has helped the dynamic,” Franziska Achterberg from Greenpeace told BBC News.
“It has helped sway Ireland definitely, and then lately, the Germans, the Austrians and the Dutch. I think the fact the UK had come around was a good signal for them as well, that they could not stay behind.” During the partial ban, some countries including the UK were given permission to use neonicotinoids for short periods. However, the EU Commission is now signalling that it is seemingly intent on pushing the proposal through as it stands. “Several countries have said they want exemptions on sugar beet for example,” said Sandra Bell from Friends of the Earth (FOE). “So far the Commission have been very strong on this, because they say the Efsa evidence backs the extension of the ban to sugar beet and therefore they are following the science and won’t put in an exemption for a compromise.”
Growers will be free to use neonicotinoids in greenhouses across the EU, despite some environmental groups having reservations about the chemicals leaching into water supplies. Other neonicotinoids including thiacloprid and sulfoxaflor will continue to be exempt from the ban.
According to a recent report by the Washington Examiner, President Trump will declassify the controversial four-page memo that reportedly details surveillance abuses by the Department of Justice and FBI, and send it back to House Intelligence for a Friday morning release. The news comes just days after President Trump’s State of the Union address, where he was overheard stating that he would “100%” release the memo. The Examiner further reports that FBI Director Wray continues to oppose the release of the memo to the American public, citing: “grave concerns about the memo’s accuracy.” However, as the Wall Street Journal reports, it is important to remember that the FBI knows and has known what is in the memo for a long time, as the Bureau had, “refused to provide access to those documents until director Christopher Wray and the Justice Department faced a contempt of Congress vote.”
The Journal further relates that: “The FBI’s public statement appears to be an act of insubordination after Mr. Wray and Deputy Attorney General Rod Rosenstein tried and failed to get the White House to block the memo’s release. Their public protest appears intended to tarnish in advance whatever information the memo contains. The public is getting to see amid this brawl how the FBI plays politics, and it isn’t a good look.” Members of the Democratic Party have also expressed their opposition to the release of the memo. For example, ranking member of the House Intelligence Committee, Rep. Adam Schiff (D-CA), has also come out against the release of the memo to the public.
Last week, Schiff and Sen. Diane Feinstein (D-CA), wrote a letter to Facebook and Twitter, in which they expressed their fears that the top trending hashtag “#ReleaseTheMemo” was being pushed by Russian bots as part of a propaganda effort seeking to “attack our democracy”. However, much to their dismay, it was revealed that the top trending hashtag was not the work of Russian bots, but originated organically by fellow Americans. This news did not deter a California duo from penning a second letter to Facebook and Twitter on Wednesday, in order to raise awareness about potential abuse of their platforms by “agents of foreign influence”.
Japanese government bond prices recovered from earlier losses after the Bank of Japan acted decisively on Friday to curb a rise in bond yields, offering “unlimited” buying in long-term Japanese government bonds. Heavy buying of JGBs raises the price of bonds to force down their yield, an essential element of the BOJ’s ultra-loose yield curve control (YCC) policy. It was the first time in more than six months that the BOJ has conducted special operations to buy bonds to achieve the yields it wants to see, rather than the auctions used in regular operations – a powerful show of force to direct the market. On top of that, the BOJ increased the amount of its planned buying in five- to 10-year JGBs to 450 billion yen from the 410 billion amount it has favored since late August.
Following the BOJ’s operations, the price of the 10-year JGB futures rose to as high as 150.31 from the day’s low of 150.09. It was up 0.11 on the day. The benchmark 10-year cash JGB yield edged down to 0.090%, the same level as its previous close, from 0.095% touched earlier. JGB yields have risen in recent weeks, in line with global peers, on rising expectations that the world’s central banks are increasingly leaning towards winding back stimulus as the global economy gains momentum. Investors have started to speculate that the BOJ could also be moving towards an exit from ultra-easy policy, although BOJ Governor Haruhiko Kuroda has denied that he was considering such a major policy adjustment in the near future.
Significant shift: “The country’s waning frenzy has been reflected in declining activity on domestic exchanges. Data compiled by CryptoCompare.com show that volumes have dropped by about 85% from December highs.”
Bitcoin’s brutal start to the year is proving especially painful in South Korea. While prices for the cryptocurrency are falling on major exchanges around the world, nowhere have the declines been faster than in Asia’s fourth-largest economy. The losses have erased a 51% premium for Bitcoin on Korean venues, sending prices back in line with those on international markets for the first time in seven weeks on Friday. The so-called kimchi premium had been so persistent – and so unusual for a large country – that traders named it after Korea’s staple side dish. While its disappearance is partly explained by selling pressure from arbitragers, it also reflects a dramatic reversal of investor sentiment in one of the world’s most frenzied markets for cryptocurrencies.
Bitcoin has tumbled more than 60% from its high in Korea after the nation’s regulators took several steps over the past two months to restrict trading and said they may ban cryptocurrency exchanges outright. Policy makers around the world have been moving to rein in the mania surrounding digital assets amid concerns over excessive speculation, money laundering, tax evasion and fraud. “The bubble in crytpocurrencies has burst” in Korea, said Yeol-mae Kim at Eugene Investment & Securities in Seoul. The kimchi premium began shrinking in mid-January as fears of a regulatory clampdown escalated. Selling by arbitragers – who have been buying Bitcoin on international venues to offload at a higher price in Korea – also played a role, although the country’s capital controls and anti-money-laundering rules made it difficult to execute such transactions in bulk.
Bitcoin traded at about 9.1 million won ($8,449) in Korea on Friday morning, according to a CryptoCompare index tracking the country’s major exchanges. That compared with the $8,601 composite price on Bloomberg, which is derived from venues including Bitstamp and Coinbase’s GDAX exchange. When the kimchi premium reached its peak in January, Bitcoin’s price was about $7,500 higher in Korea. The country’s waning frenzy has been reflected in declining activity on domestic exchanges. Data compiled by CryptoCompare.com show that volumes have dropped by about 85% from December highs.
Chinese stocks are down for the fifth day in a row (something that hasn’t happened since May 2017) with the tech-heavy Shenzhen Composite is now down 5% YTD and the Shanghai Composite is tumbling back towards unchanged. The decline is happening at the same time as Bitcoin is in freefall… And chatter about bankers using WeChat to ask for Deposits. In other words – a liquidity crisis. And that anxiety is only increased by the latest report from Reuters that cash withdrawals at Hong Kong ATMs have surged, prompting scrutiny from monetary authorities, the banking industry, and police amid media reports that mainland Chinese are withdrawing hundreds of thousands of dollars using up to 50 cards at a time. China has battled to curb capital outflows for years. A move that took effect on Jan. 1 caps overseas withdrawals using domestic Chinese bank cards.
The gambling hub of Macau last year introduced facial recognition technology at ATMs to target illicit outflows from mainland China, a move that Hong Kong’s central bank told Reuters could increase cash withdrawals in the financial center. “The HKMA is aware of media reports about people using multiple mainland cards to withdraw cash at ATMs in Hong Kong,” the central bank said in a statement, adding that it was “monitoring the situation and is in discussion with the banking industry and the police about this issue”. A local banker said some commercial banks have stepped up monitoring of cash withdrawals. Hong Kong police said they were working closely with the HKMA and banking industry to respond to any changes in financial crime trends. While this is as much to do with money-laundering and capital flight, the liquidation of stocks, cryptocurrencies, and now mass ATM withdrawals suggests more is going on that the usual pre-new-year liquidity hording.
UK house prices rose at the fastest annual pace in 10 months in January, bolstered by a lack of new homes coming on to the market, according to Nationwide. The average price of a home reached £211,756 last month, according to the building society’s monthly survey. Property values were up 0.6% from the month before, the same monthly gain as in December, but the annual growth rate picked up to 3.2% from 2.6%, the highest since March 2017, when it was 3.5%. Robert Gardner, Nationwide’s chief economist, said: “The acceleration in annual house price growth is a little surprising, given signs of softening in the household sector in recent months. Retail sales were relatively soft over the Christmas period, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll.”
But he added: “The flow of properties coming on to estate agents’ books has been more of a trickle than a torrent for some time now and the lack of supply is likely to be the key factor providing support to house prices.” Many forecasters predicted the housing market would continue to slow to about 1% this year. This would mean property values falling in real terms. Nationwide is still forecasting price growth of 1-1.5% this year.
Chris Scicluna, an economist at Daiwa, said: “With real wage growth remaining below zero and consumer confidence still subdued, house price growth appears unlikely to extend this upward trend over coming months and quarters. However, a similar pace could well be maintained on the back of very attractive mortgage rates, limited supply, record high employment, and the strong likelihood that consumer price inflation is likely to moderate.” Home ownership in England remained at a 30-year low last year. The government’s latest English housing survey showed that of an estimated 22.8m households, 14.4m – or 62.6% – were owner-occupiers in 2016-17, compared with 62.9% in 2016. This was similar to the rate seen in the mid-1980s and down from a peak of 71% in 2003. Of young adults aged 25 to 34, only 37% owned their home.
The typical cost of buying a home in a UK city has reached its least affordable levels in a decade, a report has found. The average house price across cities equated to seven times typical annual earnings in 2017, the Lloyds Bank Affordable Cities Review found. This is the highest house price-to-income multiple since the average city home cost seven and-a-half times earnings in 2007. In 2012, the average city home cost around 5.6 times wages. But over the past five years, the average house price across UK cities has surged by over a third (36%), reaching £232,945 in 2017.
Over the same period, average city earnings have risen by 9% to £33,420. Oxford was found to be the least affordable city in the study, with average property prices there equating to 11-and-a-half times average annual earnings. Stirling in Scotland was identified as the UK’s most affordable city for the fifth consecutive year, with average property prices at around four times annual earnings. Six cities in the study have house prices commanding at least 10 times the average earnings of residents.
Labour is considering forcing landowners to give up sites for a fraction of their current price in an effort to slash the cost of council house building. The proposal has been drawn up by John Healey, the shadow housing secretary, and would see a Jeremy Corbyn-led government change the law so landowners would have to sell sites to the state at knockdown prices. Landowners currently sell at a price that factors in the dramatic increase in value when planning consent is granted. It means a hectare of agricultural land worth around £20,000 can sell for closer to £2m if it is zoned for housing. Labour believes this is slowing down housebuilding by dramatically increasing costs. It is planning a new English Sovereign Land Trust with powers to buy sites at closer to the lower price.
This would be enabled by a change in the 1961 Land Compensation Act so the state could compulsorily purchase land at a price that excluded the potential for future planning consent. Healey’s analysis suggests that it would cut the cost of building 100,000 council houses a year by almost £10bn to around £16bn. With the “hope value” removed from the price of land, the cost of building a two-bed flat in Wandsworth, south-west London, would be cut from £380,000 to £250,000, in Chelmsford it would fall from £210,000 to £130,000 and in Tamworth in the West Midlands, where land values are lower, it would drop from £150,000 to £130,000. “Rather than letting private landowners benefit from this windfall gain – and making everyone else pay for it – enabling public acquisition of land at nearer pre-planning-permission value would mean cheaper land which could help fund cheaper housing,” said Healey.
A newly filed lawsuit against six major investment banks contends they worked together to prevent a startup company from competing in the vast and lucrative stock-lending market. The complaint, filed Tuesday in a New York federal court, follows a suit brought last summer against the same institutions by three pension funds who accused the banks of conspiring to keep their stranglehold on the roughly $1 trillion market. The litigation brings increased scrutiny on the stock-loan business, an opaque, over-the-counter market that is a crucial but behind-the-scenes cog in Wall Street’s trading machinery. At issue are stock-lending transactions, in which pension funds, insurance companies and other investors lend their shares to brokerage firms whose customers, such as hedge funds, borrow stock to offset other positions or make bets against companies in trades known as short sales.
Asset managers receive a fee for the stock they lend depending on borrower interest in it. The suit was filed by QS Holdings, the parent of Quadriserv, which was formed in 2001 and built an electronic trading platform. Called AQS, the platform gave stock-loan participants access to real-time prices on trades that reflected actual bids and offers. Transactions on AQS were executed anonymously and centrally settled; the system was registered with the Financial Industry Regulatory Authority and the Securities and Exchange Commission. But it never gained traction and was sold in a distressed sale in 2016. On Jan. 26, the six firms — Bank of America, Credit Suisse, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS— filed a motion to dismiss the lawsuit filed last summer by the pension funds.
In that filing, the firms said the allegations were meritless, noting that “none of the plaintiffs’ allegations identified ‘direct evidence’ of conspiracy.” In the stock-loan business, investors borrowing shares from brokerage firms also pay, sometimes steeply, for the service. When many traders want to borrow a company’s shares, its stock is known as “hard-to-borrow” and fees associated with the transaction are far higher. The middlemen in these trades often are Goldman, J.P. Morgan and Morgan Stanley. They make trades in an over-the-counter market where prices are typically given privately to customers. It thus is difficult for them to determine whether they are getting appropriate prices.
The middlemen typically keep most of the fees collected on the most lucrative trades, and critics say that amount would be far lower if borrowers and lenders met in a centralized market where pricing was transparent, like the AQS.
Thanks to the Senate confirmation of his selection for chairman of the board, Donald Trump now owns the Fed, too. The former number two man under Janet Yellen, Jerome Powell will be running the Fed, come Monday morning, February 5th. Established in 1913 during President Woodrow Wilson’s administration, the Fed’s official mission is to “promote a safe, sound, competitive, and accessible banking system.” In reality, it’s acted more like that system’s main drug dealer in recent years. In the wake of the 2007-2008 financial crisis, in addition to buying trillions of dollars in bonds (a strategy called “quantitative easing,” or QE), the Fed supplied four of the biggest Wall Street banks with an injection of $7.8 trillion in secret loans. The move was meant to stimulate the economy, but really, it coddled the banks.
Powell’s monetary policy undoubtedly won’t represent a startling change from that of previous head Janet Yellen, or her predecessor, Ben Bernanke. History shows that Powell has repeatedly voted for pumping financial markets with Federal Reserve funds and, despite displaying reservations about the practice of quantitative easing, he always voted in favor of it, too. What makes his nomination out of the ordinary, though, is that he’s a trained lawyer, not an economist. Powell is assuming the helm at a time when deregulation is central to the White House’s economic and financial strategy. Keep in mind that he will also have a role in choosing and guiding future Fed appointments. (At present, the Fed has the smallest number of sitting governors in its history.)
The first such appointee, private equity investor Randal Quarles, already approved as the Fed’s vice chairman for supervision, is another major deregulator. Powell will be able to steer banking system decisions in other ways. In recent Senate testimony, he confirmed his deregulatory predisposition. In that vein, the Fed has already announced that it seeks to loosen the capital requirements big banks need to put behind their riskier assets and activities. This will, it claims, allow them to more freely make loans to Main Street, in case a decade of cheap money wasn’t enough of an incentive.
As the United States approaches a record 10.04 million barrels of daily production, trading volumes of so-called “WTI” futures exceeded volumes of Brent crude in 2017 by the largest margin in at least seven years. A decade ago, falling domestic production and a U.S. ban on exports meant that WTI served mostly as a proxy for U.S. inventory levels. “There was a time when the U.S. was disconnected from the global market,” said Greg Sharenow, portfolio manager at PIMCO, who co-manages more than $15 billion in commodity assets. Two changes drove the resurgence of the U.S. benchmark. One was the boom in shale production, which spawned a multitude of small producers that sought to hedge profits by trading futures contracts.
Then two years ago, the United States ended its 40-year ban on crude exports, making WTI more useful to global traders and shippers. U.S. exports averaged 1.1 million barrels a day through November 2017, rising to an average 1.6 million bpd in the final three months. That compares to just 590,000 bpd in 2016. As U.S. production and exports grow, global firms that increasingly buy U.S. oil are offsetting their exposure by trading in U.S. financial markets. That also gives U.S. shale producers more opportunity to lock in profits on their own production.
Taxpayers’ total overdue debts to the state soared to a record 101.8 billion euros at the end of December, in a clear indication that society’s taxpaying capacity is at breaking point due to overtaxation. In December alone, when 2018 road tax and an installment of the Single Property Tax (ENFIA) came due, new expired debts amounted to 1.3 billion euros. According to data released on Thursday by the Independent Authority for Public Revenue, the new expired debts added last year came to 12.9 billion euros, concerning all tax obligations that went unpaid, from income tax and ENFIA to tax penalties and value-added tax. The phenomenon has major consequences for taxpayers. The figures also showed that confiscations and debt settlements brought 5.07 billion euros into the state coffers in 2017, of which 2.69 billion concerned old debts (dating before 2017). More than 1 million taxpayers have already had assets confiscated over debts to the tax authorities. Their number grew by 14,871 in December to reach 1,050,077 at the end of 2017.
The authority’s data reveal that 4,068,857 taxpayers – or more than half – have expired debts to the state, and that this figure would have been 138,260 higher had those people not settled their dues in December due to fears of repossessions. At the moment taxpayers can enter a tax payment program involving 12 to 24 monthly installments, even for dues that are not classified as expired. The online platform also allows them to add new debts to the fixed plan each month. Taxpayers who want to enter such a payment plan can visit the authority’s website and choose which of their debts that are not overdue they want to add to the 12-installment scheme. The picture regarding expired debts is set to change drastically once the bailout obligation for arrears clearance is completed, separating collectible dues from those that cannot be collected. It is estimated that just 20% of expired debts are collectible.
Fulminating against the 1923 Lausanne Treaty is easy populist fodder for Erdogan. His gamble is that Turkey’s bust-up with the US in Syria, and the threat to NATO because of it, will allow him to take Greek territory.
Chief advisor of Turkish President Erdogan, Yigit Bulut, has threatened Greece over the disputed islet of Imia in the Eastern Aegean Sea. “Athens will face the wrath of Turkey worse than that in Afrin,” Bulut said in a Television show of a private network. “We will break the arms and legs of officials, of the Prime Minister and any Minister, who dares to step on the Kardak/Imia islet in the Aegean,” he claimed. Bultu’s threats come just a couple of days after Defense Minister Panos Kammenos sailed to Imia and threw a wreath into the sea to honor the three fallen soldiers during the Imia conflict in 1996. Ankara does not miss a chance to challenge Greece’s sovereignty in the islets and islands of the Aegean Sea, escalate tension around Imia and risk an ugly incident that could bring the two neighboring countries at the verge of an armed conflict like two decades ago.
Polar bears could be sliding towards extinction faster than previously feared, with the animals facing an increasing struggle to find enough food to survive as climate change steadily transforms their environment. New research has unearthed fresh insights into polar bear habits, revealing that the Arctic predators have far higher metabolisms than previously thought. This means they need more prey, primarily seals, to meet their energy demands at a time when receding sea ice is making hunting increasingly difficult for the animals. A study of nine polar bears over a three-year period by the US Geological Survey and UC Santa Cruz found that the animals require at least one adult, or three juvenile, ringed seals every 10 days to sustain them.
Five of the nine bears were unable to achieve this during the research, resulting in plummeting body weight – as much as 20kg during a 10-day study period. “We found a feast and famine lifestyle – if they missed out on seals it had a pretty dramatic effect on them,” said Anthony Pagano, a USGS biologist who led the research, published in Science. “We were surprised to see such big changes in body masses, at a time when they should be putting on bulk to sustain them during the year. This and other studies suggest that polar bears aren’t able to meet their bodily demands like they once were.” Pagano’s team studied the bears in a period during April over the course of three years, from 2014 to 2016, in the Beaufort Sea off Alaska.
They fitted the bears with GPS collars with video cameras to measure activity levels. Blood chemistry was also taken from the bears. Previously, polar bears were thought to expend relatively little energy during days where they often wait for hours beside holes in the ice, which seals emerge from in order to breathe. But the researchers found that they actually have an average metabolism 50% higher than prior estimates. With previous studies showing recent drops in polar bear numbers, survival rates and body condition, scientists said the new research suggests the species is facing an even worse predicament than was feared.
A recent widely-shared video of an emaciated polar bear is a “horrible scene that we will see more of in the future and more quickly than we thought,” according to Dr Steven Amstrup, who led polar bear research for 30 years in Alaska. “This is an excellent paper that fills in a lot of missing information about polar bears,” said Amstrup, who was not involved in the USGS research. “Every piece of evidence shows that polar bears are dependent on sea ice and if we don’t change the trajectory of sea ice decline, polar bears will ultimately disappear. “They face the choice of coming on to land or floating off with the ice as it recedes, out to the deep ocean where there is little food. We will see more bears starving and more of them on land, where they will get into trouble by interacting with humans.”
The takeaway from this is not in the numbers. It’s in the certainty that we will not stop the process. All we have is a Paris agreement spearheaded by politicians who see their polls and businessmen who see a profit.
The UK’s meteorological agency has forecast the global temperature might flicker above 1.5C within the next five years. That would be within a decade of the Paris climate deal setting 1.5C as an aspirational limit on global warming. The Met Office’s decadal forecast said the global average temperature was “likely” to exceed 1C between 2018-2022 and could reach 1.5C. “There is also a small (around 10%) chance that at least one year in the period could exceed 1.5C above pre-industrial levels,” the office said in a statement on Wednesday. “It is the first time that such high values have been highlighted within these forecasts.” Met Office scientists were quick to point out that this would not actually breach the Paris Agreement, as that limit refers to a long term average, rather than a yearly reading.
The office’s chief scientist, professor Stephen Belcher, said: “Given we’ve seen global average temperatures around 1C above pre-industrial levels over the last three years, it is now possible that continued warming from greenhouse gases along with natural variability could combine so we temporarily exceed 1.5C in the next five years.” The Paris climate deal, agreed by 197 UN member states in 2015, set a global goal for keeping temperatures “well below 2C”, aiming for 1.5C. The lower goal is considered by many of the most vulnerable countries, especially low-lying island nations, to be the upper limit for their homelands to survive. Coral scientists also predict that more than 1.5C of warming would wipe out most coral reefs.
The Bank of Japan is seen as the last grown-up in the room actively filling the global liquidity punch bowl with both hands. That’s why a slight tweak to its bond-buying program caused a flurry across financial markets Tuesday, sparking speculation it was joining the Fed and ECB in cutting back on asset purchases, a move that could ultimately help drive up global interest rates. On Tuesday, the BOJ modestly trimmed its purchases of Japanese government bonds by about $10 billion in the 10- to 25-year maturities and another $10 billion in maturities of more than 25 years. The yen jumped about 0.5% to about 112.60 to the dollar, and bond yields rose. The U.S. 10-year yield also moved higher, breaking above the key 2.50% to as high as 2.55%. Meanwhile, the 10-year JGB yield moved in a range of about 0.16 and saw a high of 0.074%.
But some strategists say while the BOJ may have sent a powerful signal, it is just acting on a technicality that comes with changes it made to its bond purchase program back in 2016. Unlike the U.S. and Europe, where central banks have targeted the balance sheet size, the Japanese central bank is targeting interest rates and its purchases are based on prices. “I think it’s too early to proclaim the easy conditions in Japan are over. That said, I do think it’s constructive and it shows how sensitive the markets are to any potential change,” said Greg Peters, senior portfolio manager at PGIM Fixed Income. The Bank of Japan has been a poster child for central bank easing, taking its rates to negative levels and buying all types of assets, including stocks.
“They’re still buying ETFs, J-REITs, corporate paper. They changed how they’re easing, but they’re still easing,” said Marc Chandler, head of fixed-income strategy at Brown Brothers Harriman. “I think the market is overinterpreting this, partly because of their positions. They’re short yen. They’re long euros. They’re being squeezed on both legs today.” [..] While it’s last to leave the party, a change in BOJ policies would be the most symbolic move yet that the extreme policies adopted in the global financial crisis are finally coming to an end, and the juice that helped push risk assets higher is being slowly withdrawn. Chandler said the BOJ has made a point of saying it will continue to ease. “The BOJ says, ‘We’re going to be patient. We’re going to be the last one out.’ … [Prime Minister Shinzo] Abe told the Bank of Japan..
“If long rates continue to move higher, and the BOJ follows this with a continued reduction in the pace of the purchases, then we know we’re on to something. We’re on to a potential change in monetary policy in Japan,” said Peter Boockvar, chief investment officer at Bleakley Financial Group. “I think that is likely in 2018,” Boockvar said. “Whether this is the beginning of it, we’ll have to see. They have some cover too. They know what the Fed is going to do, and they know what the ECB is doing. Does the BOJ want to be the outlier of temporary insanity when every other central bank is pulling back? They are the epitome of extremity in terms of monetary policy.”
Federal Reserve officials puzzled by chronically-low US inflation seem to agree on at least one thing: They worry, almost universally, that they will lack the tools to fight the next recession, whenever it comes. Yet instead of focusing on tried and true policy measures like low interest rates and possibly bond buys, Fed officials current and former appear focused instead on broad shifts in the policy framework, including moving away from the current inflation targeting regime toward a potentially more aggressive approach. More importantly, the string of discordant ideas being offered up at a Brookings Institution conference by such high profile figures as former Fed Chairman Ben Bernanke, former White House economic advisor Lawrence Summers, and two current Fed members, does more to confuse the already muddled outlook for monetary policy than clarify it.
Boston Fed President Eric Rosengren suggested the Fed follow the model of the Bank of Canada, which periodically reviews its approach to maintaining price stability. He also called for the Fed to move toward an inflation target range, which he hinted might be from 1.5% to 3%, rather than the current 2% goal. John Williams, president of the San Francisco Fed, called for a system where the Fed would target the price level, meaning that it would compensate periods of undershooting the 2% inflation goal with periods of overshooting. US inflation has remained stubbornly below the Fed’s 2% target for much of the economic recovery, suggesting the labor market is not as healthy as the 17-year low unemployment rate of 4.1% suggests.
Shifting to a price-level target is “not nearly as scary as you might think” Williams told the audience of monetary economists, academics, and market participants. He worried about the “issue of credibility” that has resulted from persistently below-target inflation, which makes it look ” like the central bank is not committed to its goals.” Prolonged low inflation, which also reflects soft wage growth, can make monetary policy less effective because “it gets into inflation expectations and makes it harder to achieve 2% objective in good times.”
Worried about higher interest rates putting a dent on the stock market’s rip-roaring rally? Fear not, a rise in rates will actually help stocks, according to legendary investor Bill Miller. “Those 10-year yields go through 2.6% and head towards 3%, I think we could have the kind of melt-up we had in 2013, where we had the market go up 30%,” Miller, the founder of Miller Value Partners, told CNBC’s “Closing Bell” on Tuesday. “If we can get the 10-year towards that 3% level, you’ll see the same thing.” “In 2013, people finally began to lose money in bonds. They took money out of bond funds and put it into equity funds,” Miller said. Miller is considered one of the best investors ever, after beating the market for 15 years in a row while working at Legg Mason. Stocks have been on a rip-roaring rally for more than a year, as economic data and corporate earnings have improved.
On Tuesday, they closed at fresh record highs. But some experts fear the improvements in the economy could force the Federal Reserve to tighten monetary policy faster than they forecast, thus pushing interest rates higher. The 10-year U.S. Treasury yield rose to 2.55% on Tuesday and hit its highest level since March.The yield has not traded above 3% since early 2014. It last traded above 2.6% last March. But Miller thinks the stock market could get another boost from lower corporate tax rates. President Donald Trump signed a bill in December that slashed the corporate tax rate to 21% from 35%. “The tax cuts are probably partly in the market, but maybe not wholly in the market because we’re seeing things like companies raising the minimum wage, giving bonuses,” he said. “The people that are getting those $1,000 bonuses probably have a marginal propensity to consume of 99%.”
A calm complacency never before seen has fallen blanket-like over US equity markets. “The behavior of volatility has entirely changed since 2014,” noted BAML in a a recent note thanks to major central banks keeping interest rates near historic lows (and printed more money than ever before). As The Wall Street Journal points out, One sign of that: VIX closed below 10 more times last year than any others year in its history, and until today, closed below 10 for the first 5 days of 2018… And while correlation is not causation, there is a clear causal link between the conditioning now deeply embedded within investors’ minds and the endless expansion of central bank balance sheets…
As JPMorgan’s infamous quant guru Marko Kolanovic wrote, “the first four Fed hikes in a decade have failed to generate the revival of volatilities that many had expected at the end of last year,” and a wave of political uncertainty linked to U.S. tensions with North Korea and the new presidential administration also raised the prospect that market tumults could occur with greater frequency… but no… In fact worse still for The Fed, financial conditions eased as they tightened and vol collapsed to levels never seen before…
All of which has led, as The Wall Street Journal reports, to a number of investors abandoning defensive positions taken to protect against a market downturn, in the latest sign that many doubters are shedding caution as the long rally rolls on. “I haven’t seen hedging activity this light since the end of the financial crisis,” said Peter Cecchini, a New York-based chief market strategist at Cantor Fitzgerald. “It started in late 2016 and accelerated in the second half of the year.” But as Morgan Stanley warns in a recent note, what goes up (this fast) typically comes down… “Our team has observed a dramatic shift in sentiment since we initiated coverage in April. In April, it felt as if people were looking for a reason for the market to fail. Now, we have seen a total reversal with people having a hard time even imagining how the market could decline.”
Financial markets are complacent about the risks of sharply higher interest rates that could be triggered by better than expected growth in the global economy this year, the World Bank has warned. The Washington-based organisation said that much of the rich west was running at full capacity as a result of a broad-based upswing in activity, but were now vulnerable to a period of rising inflation that would prompt action from central banks. Launching the Bank’s global economic prospects, the lead author Franziska Ohnsorge said: “There could be faster than expected inflation that would mean faster than expected interest rate hikes.” Ohnsorge added that stock markets were at levels similar to those seen before the Wall Street Crash of 1929, while bond markets were assuming that low inflation would keep official borrowing costs down.
“Financial markets are vulnerable to unforeseen negative news. They appear to be complacent,” she said, while announcing that the Bank has revised up its 2018 forecast for the global economy following a better than expected performance in the US, China, the eurozone and Japan in 2017. In its half-yearly assessment, the Bank said a recovery in manufacturing, investment and trade would mean global growth of 3.1% this year, up from the 2.9% pencilled in last June. But it warned the acceleration in growth would be temporary unless governments implemented structural reforms to raise long-term growth potential. “The broad-based recovery in global growth is encouraging, but this is no time for complacency,” said Jim Yong Kim, the World Bank’s president.
“This is a great opportunity to invest in human and physical capital. If policy makers around the world focus on these key investments, they can increase their countries’ productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and boosting shared prosperity.”
South Korean President Moon Jae-in credited U.S. President Donald Trump on Wednesday for helping to spark the first inter-Korean talks in more than two years, and warned that Pyongyang would face stronger sanctions if provocations continued. The talks were held on Tuesday on the South Korean side of the demilitarized zone, which has divided the two Koreas since 1953, after a prolonged period of tension on the Korean peninsula over the North’s missile and nuclear programs. North Korea ramped up its missile launches last year and also conducted its sixth and most powerful nuclear test, resulting in some of the strongest international sanctions yet. The latest sanctions sought to drastically cut the North’s access to refined petroleum imports and earnings from workers abroad. Pyongyang called the steps an “act of war”.
Seoul and Pyongyang agreed at Tuesday’s talks, the first since December 2015, to resolve all problems between them through dialogue and also to revive military consultations so that accidental conflict could be averted. “I think President Trump deserves big credit for bringing about the inter-Korean talks, I want to show my gratitude,” Moon told reporters at his New Year’s news conference. “It could be a resulting work of the U.S.-led sanctions and pressure.” Trump and North Korean leader Kim Jong Un exchanged threats and insults over the past year, raising fears of a new war on the peninsula. South Korea and the United States are technically still at war with the North after the 1950-53 Korean conflict ended with a truce, not a peace treaty.
Internet advertising firms are losing hundreds of millions of dollars following the introduction of a new privacy feature from Apple that prevents users from being tracked around the web. Advertising technology firm Criteo, one of the largest in the industry, says that the Intelligent Tracking Prevention (ITP) feature for Safari, which holds 15% of the global browser market, is likely to cut its 2018 revenue by more than a fifth compared to projections made before ITP was announced. With annual revenue in 2016 topping $730m, the overall cost of the privacy feature on just one company is likely to be in the hundreds of millions of dollars. Dennis Buchheim, general manager of the Interactive Advertising Bureau’s Tech Lab, said that the feature would impact the industry widely.
“We expect a range of companies are facing similar negative impacts from Apple’s Safari tracking changes. Moreover, we anticipate that Apple will retain ITP and evolve it over time as they see fit,” Buchheim told the Guardian. “There will surely be some continued efforts to ‘outwit’ ITP, but we recommend more sustainable, responsible approaches in the short-term,” Buchheim added. “We also want to work across the industry (ideally including Apple) longer-term to address more robust, cross-device advertising targeting and measurement capabilities that are also consumer friendly.” ITP was announced in June 2017 and released for iPhones, iPads and Macs in September. The feature prevents Apple users from being tracked around the internet through careful management of “cookies”, small pieces of code that allow an advertising technology company to continually identify users as they browse.
Its launch sparked complaints from the advertising industry, which called ITP “sabotage”. An open letter signed by six advertising trade bodies called on Apple “to rethink its plan … [that risks] disrupting the valuable digital advertising ecosystem that funds much of today’s digital content and services.” It also accused the company of ignoring internet standards, which say that a cookie should remain on a computer until it expires naturally or is manually removed by a user. Instead, the industry said, Apple is replacing those standards “with an amorphous set of shifting rules that will hurt the user experience and sabotage the economic model for the internet”.
Microsoft’s workaround to protect Windows computers from the Intel processor security flaw dubbed Meltdown has revealed the rootkit-like nature of modern security tools. Some anti-malware packages are incompatible with Redmond’s Meltdown patch, released last week, because the tools make, according to Microsoft, “unsupported calls into Windows kernel memory,” crashing the system with a blue screen of death. In extreme cases, systems fail to boot up when antivirus packages clash with the patch. The problem arises because the Meltdown patch involves moving the kernel into its own private virtual memory address space. Usually, operating systems such as Windows and Linux map the kernel into the top region of every user process’s virtual memory space.
The kernel is marked invisible to the running programs, although due to the Meltdown design oversight in Intel’s modern chips, its memory can still be read by applications. This is bad because it means programs can siphon off passwords and other secrets held in protected kernel memory. Certain antivirus products drill deep into the kernel’s internals in order to keep tabs on the system and detect the presence of malware. These tools turn out to trash the computer if the kernel is moved out the way into a separate context. In other words, Microsoft went to shift its cookies out of its jar, and caught antivirus makers with their hands stuck in the pot. Thus, Microsoft asked anti-malware vendors to test whether or not their software is compatible with the security update, and set a specific Windows registry key to confirm all is well.
Only when the key is set will the operating system allow the Meltdown workaround to be installed and activated. Therefore, if an antivirus tool does not set the key, or the user does not set the key manually for some reason, the security fix is not applied. In fact, until this registry key is set, the user won’t be able to apply any Windows security updates – not just this month’s patches, but any of them in the future.
Ecuador’s foreign minister has said Julian Assange’s five-and-a-half-year stay in her country’s London embassy is “untenable” and should be ended through international mediation. The WikiLeaks founder has been holed up in Knightsbridge since the summer of 2012, when he faced the prospect of extradition to Sweden over claims that he sexually assaulted two women. He denies the accusations. Swedish prosecutors last year unexpectedly dropped their investigation into the allegations, which included a claim of rape. But Assange still faces arrest for breaching bail conditions if he steps outside the embassy and WikiLeaks has voiced fears that the US will seek his extradition and that there is a sealed indictment ordering his arrest. [..] Jeff Sessions, said last May that Assange’s arrest was now a “priority”.
Ecuador’s foreign minister, María Fernanda Espinosa, said her country was now seeking a “third country or a personality” to mediate a final settlement with the UK to resolve the impasse and said it was “considering and exploring the possibility of mediation”. “No solution will be achieved without international cooperation and the cooperation of the United Kingdom, which has also shown interest in seeking a way out,” she told foreign correspondents in Quito, according to Agence France-Presse. Assange, who has received numerous visitors to his modest quarters in the embassy, ranging from Nigel Farage to Lady Gaga, has described the period since his initial arrest as a “terrible injustice”. Not being able to see his children grow up was “not something I can forgive”, he said.
[..] On Tuesday evening, a lawyer for Assange appeared to welcome Ecuador’s proposal. He said his client had a right to asylum and argued that the risk of him being persecuted in the US had “escalated further in recent months under the Trump administration’s war on WikiLeaks” and that the investigation in Sweden had twice been discontinued. “If the UK wishes to show that it is a nation that respects its human rights obligations and commitments to the United Nations, it is time for Mr Assange to be allowed to enjoy his right to liberty, and fundamental right to protection against persecution in the United States,” he said. A spokesperson for the UK government said: “The government of Ecuador knows that the way to resolve this issue is for Julian Assange to leave the embassy to face justice.”
Private Manning was tortured. As sure as if they’d strapped her down and set upon her flesh with fire and steel, she was tortured. United Nations special rapporteur on torture Juan E. Mendez stated unequivocally in 2012 that Manning’s treatment at the hands of the US government during her imprisonment was “cruel, inhuman and degrading,” after 295 legal scholars had already signed a letter in 2011 declaring that she was being “detained under degrading and inhumane conditions that are illegal and immoral.” Humans, like all primates, are evolutionarily programmed to be social animals, which is why solitary confinement causes our systems to become saturated in distress signals as real as pain or fear. Studies have shown that fifteen days of this draconian practice causes permanent psychological damage. Manning was in solitary confinement for nearly a year.
Manning attempted suicide in July of 2016. To punish her for her attempt to end her misery, they tortured her some more. She attempted suicide again three months later. The same sadistic regime which inflicted these horrors upon Manning has during the current administration prioritized the arrest of WikiLeaks editor-in-chief Julian Assange, and the international arms of the US power establishment have been working to facilitate that aim. The Guardian reports that Ecuador’s foreign minister is now saying Assange’s continued stay in the nation’s London embassy has become “untenable” and is seeking international mediation, to which a spokesman for the UK government has responded that “The government of Ecuador knows that the way to resolve this issue is for Julian Assange to leave the embassy to face justice.”
Justice. A government whose international operations are uniformly indistinct from America’s wants Assange to leave political asylum and trust his life to an international power establishment that tortures whistleblowers in the name of “justice”. Julian Assange isn’t hiding from justice, he’s hiding from injustice. What sane human being wouldn’t? Time after time after time we are shown that whistleblowers, leakers, and those who facilitate them are not shown anything remotely resembling justice by this depraved Orwellian establishment. Which is why Australia must intervene and protect him.
More than 15,000 civilians were killed by explosive weapons in 2017, a 42 percent increase on last year, while deaths by airstrikes increased by 82 percent, a new study by Action on Armed Violence has found. The research shows that, while official stats on civilian casualties are on the rise, they’re still modest in comparison to the “true figures.” “The US has a habit of assuming all fighting-aged men are, in fact, fighters…This is the hammer that the US uses to establish the truth in war,” the organization’s Executive Director Iain Overton told RT. Much of the increase is due to the battles to retake Islamic State strongholds in Mosul, Iraq and Raqqa, Syria. The Syrian conflict and the Saudi-led coalition bombing Yemen also accounted for a large proportion of civilian deaths.
The survey, found 8,932 civilians were killed by air-launched explosives in the first 11 months of 2017, compared to 4,902 during the same period in 2016. “At least 60 countries around the world saw explosive weapons being used last year,” Action on Armed Violence’s Executive Director Iain Overton told RT. “We have always acknowledged that our data would likely represent a lower figure of total civilians killed or injured than might actually be the case,” Overton said. “This is particularly true when there is a single fatality or wounding, and particularly in under-reporting of those injured by a bomb blast.” “When the fog of war descends casualty figures often fall short – both because they become highly politicized and because accurate reporting is often a casualty of war itself,” he added.
Survivors from a boat that foundered off Libya’s coast on Tuesday said about 50 people who had embarked with them were feared dead, while the coastguard said the number of missing might be as high as 100. Libyan coastguard vessels picked up nearly 300 migrants from three boats off the coast of the North African country on Tuesday, but one rubber boat was punctured and the coastguard only found 16 survivors clinging to its wreckage. “We found the migrant boat at about 10 o’clock this morning. It had sunk and we found 16 migrants. The rest were all missing and, unfortunately, we didn’t find any bodies or [other] survivors,” said Nasr al-Qamoudi, a coastguard commander.
Several of the survivors, who were brought back to a naval base in Tripoli, said there were originally about 70 people on board the boat when it set off near the town of Khoms, east of the capital. A coastguard statement later said that “at least 90-100” migrants were missing. The two other migrant boats were found off Zawiya, west of Tripoli. [..] Libya is the most common departure point for migrants trying to reach Europe from Africa by sea. More than 600,000 have crossed the central Mediterranean in the past four years, generally travelling in flimsy inflatable craft provided by smugglers that often break down or puncture. Under heavy pressure from Italy, some Libyan armed factions have blocked smuggling since last summer. Libya’s Italian-backed coastguard has also stepped up interceptions, returning migrants to Libya, where they are detained and often re-enter smuggling networks.
It was always going to the Supreme Court. More interesting right now is how strongly this is dividing the White House team. Kelly refused to enact some of Bannon’s demands. Tillerson and Mattis are not sitting comfortable either. And the legal team has gained in standing, a lot. Trump cannot afford too many of these snags, even if they love the attention and controversy coming from it. All in all, a good thing that the legal system gets tested, never a thing to fall asleep on.
A U.S. appeal court late on Saturday denied an emergency appeal from the U.S. Department of Justice to restore an immigration order from President Donald Trump barring citizens from seven mainly Muslim countries and temporarily banning refugees. “Appellants’ request for an immediate administrative stay pending full consideration of the emergency motion for a stay pending appeal is denied,” the ruling by the U.S. Court of Appeals for the Ninth Circuit said. It said a reply from the Department in support of the emergency appeal was due on Monday. The Department filed the appeal a day after a federal judge in Seattle ordered Trump’s travel ban to be lifted. The president’s Jan. 27 order had barred admission of citizens from the seven nations for 90 days.
A Seattle federal judge on Friday put a nationwide block on U.S. President Donald Trump’s week-old executive order that had temporarily barred refugees and nationals from seven countries from entering the United States. The judge’s temporary restraining order represents a major setback for Trump’s action, though the White House said late Friday that it believed the ban to be “lawful and appropriate” and that the U.S. Department of Justice would file an emergency appeal. As a result of the ruling, the Department of Homeland Security suspended its enforcement of the ban, announcing on Saturday that “standard policy and procedures” were now in effect. “In accordance with the judge’s ruling, DHS has suspended any and all actions implementing the affected sections of the Executive Order entitled, “Protecting the Nation from Foreign Terrorist Entry into the United States,” DHS said in a statement.
“DHS personnel will resume inspection of travelers in accordance with standard policy and procedure,” it stated, adding that the Justice Department would file an emergency stay to “defend the president’s executive order, which is lawful and appropriate.” The move came on the heels of the State Department announcing it was reversing the revocation of visas that left countless travelers stranded at airports last weekend. The move all but ensures a protracted public and legal battle over one of Trump’s most controversial policies, barely two weeks after he was inaugurated. Early Saturday morning, Trump criticised the ruling as “ridiculous” and warned of big trouble if a country could not control its borders.
On Sunday, Bill O’Reilly will hold a special Super Bowl pre-game interview with President Trump at 4 p.m. ET on your local FOX broadcast station. In a special preview, Trump revealed his plans for dealing with Russian President Vladimir Putin. O’Reilly asked Trump whether he “respects” the former KGB agent: “I do respect him, but I respect a lot of people,” Trump said, “That doesn’t mean I’m going to get along with him.” Trump said he would appreciate any assistance from Russia in the fight against ISIS terrorists, adding that he would rather get along with the former Cold War-era foe than otherwise. “But, [Putin] is a killer,” O’Reilly said. “There are a lot of killers,” Trump responded, “We’ve got a lot of killers. What do you think? Our country’s so innocent?”
The European Union plans to renew asset freezes and travel bans against key allies of Russian President Vladimir Putin who are accused of destabilizing Ukraine, at a time when Donald Trump is weighing warmer ties with Moscow. Four EU officials said member governments intend by mid-March to prolong the sanctions for another six months on more than 100 Ukrainians and Russians. Among them: Arkady Rotenberg, co-owner of SMP Bank and InvestCapitalBank, and Yury Kovalchuk, the biggest shareholder in Bank Rossiya, the Brussels-based officials said. The officials spoke on condition of anonymity because the deliberations are confidential. Trump, who had a phone call with Putin on Jan. 28, has left open the possibility of easing the U.S.’s sanctions against Russia.
Former President Barack Obama drew up the American penalties in coordination with the 28-nation EU after Putin annexed the Ukrainian region of Crimea in 2014 and lent support to separatist rebels. “The Europeans are waiting to see what hand grenade Trump throws into the Russia-Ukraine pond,” Michael Emerson, a foreign-policy expert at the CEPS think tank in Brussels, said by phone. With the asset freezes and travel bans due to expire on March 15, “European politicians and diplomats will be cautious and stick to the status quo,” he said. The planned renewal of the blacklist highlights the EU’s political commitment to a policy that Angela Merkel and Francois Hollande guided in step with Obama. The European sanctions against Russia resemble the U.S. penalties and include a separate set of curbs – prolonged for another six months just before Trump took office on Jan. 20 – on Russia’s financial, energy and defense industries.
The policy halo effect that provided ballast to the stock market and fueled investor optimism is already being dimmed by political realities, according to Goldman Sachs, which may have negative implications for economic growth. In a note to clients on Friday, the investment bank noted President Donald Trump’s agenda was already running into bipartisan political resistance, with doubts growing about potential tax reform and a repeal of the Affordable Care Act, among other marquee Trump administration initiatives. Just two weeks into his tenure, “risks are less positively tilted than they appeared shortly after the election ,” Goldman wrote. Growing resistance to Trump’s executive orders on immigration and financial reform has galvanized opposition while dividing members of the president’s own Republican Party.
It has also curbed the enthusiasm of investors, who sent stocks on a roller-coaster ride this week as they struggled to reconcile the new restrictions on immigration with Trump’s professed pro-business bent. “While bipartisan cooperation looked possible on some issues following the election, the political environment appears to be as polarized as ever, suggesting that issues that require bipartisan support may be difficult to address,” the bank added. The balance of risks “are less positively tilted than they appeared shortly after the election,” Goldman said, which may blunt the force of future growth. Amid reports that top GOP members are reportedly becoming nervous about the impact of a full-fleged repeal of health care, that political pushback “does not bode well for reaching a quick agreement on tax reform or infrastructure funding, and reinforces our view that a fiscal boost, if it happens, is mostly a 2018 story.”
There is no consensus. Economists either believe it is vital that Australia becomes a low-carbon intensity economy, or that the issue is so unimportant – or perhaps that it is so politically divisive – that they choose not to volunteer an opinion. Asked about the importance of reducing the country’s carbon footprint and how best to do it, more than half of 27 economists from industry, consultancy, academia and finance questioned for the annual BusinessDay Scope survey agreed it was a must. Another 10 left the question blank. Whether this indicates a lack of interest or the contentious nature of climate change policy is unclear. But none of those who did answer made the case that cleaning up the economy did not matter. They overwhelmingly said action should be swift and include a market-based carbon pricing scheme.
[..] Steve Keen, of London’s Kingston University, made what – we think – was a similar point about the importance of climate action, albeit less conventionally. “Nah mate! Wassa matta, dontcha own a pair of budgie smugglers?” he wrote. “It’s all a conspiracy by Marxists anyway to undermine the Ostralyan way of life – you know, burning stuff and damn well enjoying it rather than whingeing. “A bit a coal never hurt anyone, matter of fact it tastes even better than a raw onion!”
I still shake my head at the stupidity. One of the most overindebted countries in the history of modern finance trading with a 0% thirty year bond. Professor Malkiel – stick that in your pipe and smoke it. But into that panic a crazy thing happened. Worried its bonds would trade at negative yields and pressure the financial system, the Bank of Japan pegged its 10 year yield at 0%. In doing so, the Bank of Japan moved from a set rate of balance sheet expansion to one that varies based on whether that peg is either too high, or too low. If the equilibrium level of 10 year rates was in fact below 0%, the Bank of Japan would be forced to sell bonds to keep rates stuck at 0%. If there was demand for credit and 10 year rates moved higher, then the BoJ would be forced to buy bonds to keep them from declining.
The BoJ program was a little more nuanced, and there were some caveats, but at its heart, the BoJ was giving up control of its balance sheet so it could peg a specific part of the yield curve. Of course Central Banks do this all the time. The difference is they usually operate at the front part of the curve, and when there is too much demand or supply, they change the rate. When the Bank of Japan took this unprecedented step, I walked away from my short JGB position. I figured there were better fixed income markets to short. Yet I highlighted that by pegging the 10 year rate, the Bank of Japan had not eliminated volatility, but merely postponed it. Eventually the Bank of Japan’s massive balance sheet expansion would kick in. At that point, inflation would pick up, credit would be demanded and the Bank of Japan would be forced to defend the 0% peg.
Yet this defending would be expansionary as they would be forced to buy bonds and expand the amount of base money, which if not offset with a decline in the velocity of money, would create more inflation, etc… All of this would be occurring with an already highly supercharged Japanese Central Bank balance sheet. I have been sitting and waiting for this expansionary feedback loop to kickstart. Until recently, the Bank of Japan had not been forced to buy any bonds to keep the rate pegged at 0%. When 10 year rates drifted far enough above 0%, the Bank of Japan made a bid to buy an unlimited number of bonds at a level below the market, which scared the market back to the pegged level. But this week the market decided to test the BoJ’s resolve.
The JGB 10 Year bond spiked through the previous high yield on news the Bank of Japan would not be expanding their balance sheet quite as aggressively as expected in their regular QE program. As yields popped through the previous 0.10% yield ceiling, the Bank of Japan came charging into the market. The BoJ bid 3-4 basis points through the market with unlimited size to push yields back down to the 0.10% level. What does this mean? The market is finally saying the demand for credit is enough to force the Bank of Japan to buy bonds to keep rates down. And that was the signal I was waiting for. I am shorting JGBs with both fists. It probably won’t happen tomorrow, nor the next day. Heck it probably won’t even happen next month, but we have reached the point where I need to be short JGBs.
The pressure will continue to build and when it finally bursts, the torrent will be overwhelming and quick. Although many traders think they will be able to climb on board, it will most likely be extremely difficult – like jumping on a raft bouncing down a raging river, it always seems way easier than it is. I hate German bunds, but I now have a fixed income instrument I hate even more. I expect bund yields to double or even triple in the coming quarters, but JGBs will eventually trade significantly though bunds. It would be just like the Market Gods to finally usher in the JGBs collapse once all the hedge fund guys had given up on it…
French far-right leader Marine Le Pen kicked off her presidential campaign on Saturday with a promise to shield voters from globalization and make their country “free”, hoping to profit from political turmoil to score a Donald Trump-style upset. Opinion polls see the 48-year old daughter of National Front (FN) founder Jean-Marie Le Pen topping the first round on April 23 but then losing the May 7 run-off to a mainstream candidate. But in the most unpredictable election race France has known in decades, the FN hopes the scandal hitting conservative candidate Francois Fillon and the rise of populism across the West will help convince voters to back Le Pen. “We were told Donald Trump would never win in the United States against the media, against the establishment, but he won… We were told Marine Le Pen would not win the presidential election, but on May 7 she will win!” Jean-Lin Lacapelle, a top FN official, told several hundred party officials and members.
In 144 “commitments” published at the start of a two-day rally in Lyon, Le Pen proposes leaving the euro zone, holding a referendum on EU membership, slapping taxes on imports and on the job contracts of foreigners, lowering the retirement age and increasing several welfare benefits while lowering income tax. The manifesto also foresees reserving certain rights now available to all residents, including free education, to French citizens only, hiring 15,000 police, curbing migration and leaving NATO’s integrated command. “The aim of this program is first of all to give France its freedom back and give the people a voice,” Le Pen said in the introduction to the manifesto.
[..] “This presidential election puts two opposite proposals,” Le Pen said in her manifesto. “The ‘globalist’ choice backed by all my opponents … and the ‘patriotic’ choice which I personify.” If elected, Le Pen says she would immediately seek an overhaul of the European Union that would reduce it to a very loose cooperative of nations with no single currency and no border-free area. If, as is likely, France’s EU partners refuse to agree to this, she would call a referendum to leave the bloc.
A major shift in Tory housing policy in favour of people who rent will be announced by ministers this week as Theresa May’s government admits that home ownership is now out of reach for millions of families. In a departure from her predecessor David Cameron, who focused on advancing Margaret Thatcher’s ambition for a “home-owning democracy”, a white paper will aim to deliver more affordable and secure rental deals, and threaten tougher action against rogue landlords, for the millions of families unable to buy because of sky-high property prices. Ministers will say they want to change planning and other rules to ensure developers provide a proportion of new homes for “affordable rent” instead of just insisting that they provide a quota of “affordable homes for sale”.
They will also announce incentives to encourage landlords to offer “family-friendly” guaranteed three-year tenancies, new action to ban unscrupulous landlords who offer sub-standard properties, and a further consultation on banning many of the fees that are charged by letting agents. A senior Whitehall source said: “We want to help renters get more choice, a better deal and more secure tenancies.” They added that the government did not want to scare people off from renting out homes, but offer incentives to encourage best practice and isolate the worst landlords. By emphasising the rights of renters, as well as trying to boost house building, the white paper will mark a turning point for a party that since the 1980s, and the first council house sales, has promoted home ownership as a badge of success, while neglecting the interests of renters.
The Tory manifesto for the 2015 general election spelt out plans for 200,000 new “starter homes” that could be bought by first-time buyers at 20% discounts, but said little about promoting the interests and improving the lot of so-called “generation rent”. Cameron also pushed the idea of getting people on the housing ladder through shared ownership schemes, an idea that is no longer such a priority. The white paper will be seen as part of May’s deliberate break with Cameron, and her drive to create a country “that works for everyone, not just the privileged few”.
The Trump administration appears intent on escalating the long-standing U.S. practice of attacking Germany’s current-account surplus. Good news for those on the receiving end: It has probably peaked. As officials like National Trade Council director Peter Navarro rail against the trade imbalance that dominates the balance of payments between the two countries, pensioners, home-buyers and immigrants are quietly working to bring that $297 billion current-account surplus down. According to research by Deutsche Bank, demographics and a housing boom are two factors that will drive the current account balance – the difference between what a country earns from abroad and what it spends – to its lowest level in seven years by 2020.
That may offer little consolation to the German delegation when it hosts a Group of 20 meeting of finance ministers in March, as they’ll likely face intensified criticism for allowing such an imbalance to continue. Germany has long faced flak, both within the euro area and outside it, for failing to encourage greater domestic spending and imports to balance out its external excess. Still, while the weaker euro will continue to make German exports attractive in the U.S. – think expensive sedans, high-tech machinery – there are countervailing factors at play on the other side of the equation. “In the medium term we expect the demographic development and the solid domestic economy, driven by a sustained positive development on the property market, to push the surplus down to 7 percent of GDP,” Deutsche Bank economist Heiko Peters said by phone.
A rising share of pensioners in the German population, who normally have less money to save than people in jobs, will crimp household savings rates, while an increasing number of immigrants such as refugees will contribute to boosting German imports, Peters wrote in a study first published last year. And with housing valuations outpacing income and rent growth since 2009, home owners feel richer, save less toward retirement and borrow against their property. That leads to rising imports of building materials to fuel the property boom and increased demand for foreign consumer goods on the back of the wealth effect. 7% of GDP is still a mighty big number for an economy as large as Germany’s. “That’s still a relatively high level until 2020,” Peters says. “But an even greater demographic effect is then expected for 2020-2025, and the surplus should then decline clearly further.”
I have dedicated my life to peace. As a member of Congress I led efforts to avert conflict and end wars in countries such as Afghanistan, Iraq, Lebanon, Libya, Syria and Iran. And yet those of us who work for peace are put under false scrutiny to protect Washington’s war machine. Those who undermine our national security by promoting military attacks and destroying other nations are held up as national leaders to admire. Recently Rep. Tulsi Gabbard and I took a Congressional Ethics-approved fact finding trip to Lebanon and Syria, where we visited Aleppo and refugee camps, and met with religious leaders, governmental leaders and people from all sides of the conflict, including political opposition to the Syrian government.
Since that time we have been under constant attack on false grounds. The media and the war establishment are desperate to keep hold of their false narrative for world-wide war, interventionism and regime change, which is a profitable business for Washington insiders and which impoverishes our own country. Today, Rep. Gabbard came under attack yet again by the Washington Post’s Josh Rogin who has been on a tear trying to ruin the reputations of the people and the organization who sponsored our humanitarian, fact-finding mission of peace to the Middle East. Rogin just claimed in a tweet that as community organization I have been associated with for twenty years does not exist. The organization is in my neighborhood. Here’s photos I took yesterday of AACCESS-Ohio’s marquee.
It clearly exists, despite the base, condescending assertions of Mr. Rogin. Enough of this dangerous pettiness. Let’s dig in to what is really going on, inside Syria, in the State Department, the CIA and the Pentagon. In the words of President Eisenhower, let’s beware (and scrutinize) the military-industrial-complex. It is time to be vigilant for our democracy.
These leaders of the Christian faith in Aleppo begged for the US to stop funding terrorists in #Syria. They expressed that before international interventions (covert and overt) Syrians lived in peace without concern as to whether they were Christian, Muslim or Jew.
British Defense Secretary speech on “Russian threat” is a desperate attempt to “save jobs and budgets” for the Cold War crowd, which is worried the new US leader will not consider Russia an enemy, broadcaster and former British MP George Galloway told RT. Addressing a group of university students, the UK’s defense secretary Michael Fallon warned of a resurgent Russia and said that it is becoming aggressive. RT: What did you make of Michael Fallon’s speech? George Galloway: Well, Michael Fallon puts the ‘squeak’ in the word ‘pipsqueak.’ He is of course the defense minister of a small and semi-detached European power with not much military prowess and which wants to feel big about itself.
And these people, and he’s not alone – the military industrial complex in the United States is up to the same game – they are desperately thrashing around to save their jobs, to save their budgets, to save their roles as muscle-men in the world. And Fallon got used to, as did other European powers, going around the world, threatening people with America’s army. Now America’s army is not quite so reliable, because America has a President who might not want to use the army in the way that these people want him to, at least one hopes not. And so they desperately seek to continually exacerbate the existing tensions with Russia to defend their own relevance. The people are asking, “What’s NATO for?”
The people are asking, “Why are we spending £160bn on renewing Trident when we now know its missiles are more likely to hit Australia if they were aimed at Russia? And in any case Russia has thousands of nuclear weapons, and we only a handful.” So it’s all pretty pitiful, actually. Right down to the audience of university students, hoping that none of them would challenge him. I’d like him to debate these matters with me, he knows me well, he comes from the same town in Scotland as me. I’d really love to get my metaphorical hands on him to have some of these matters out. The truth is that the European Union is having to come to terms with the fact that the US now has a President that doesn’t want war with Russia and they – who have built their entire 50-60 years of history on the possibility of war with Russia – are all at sea, except we don’t have that many battleships left either.
Yanis Varoufakis wrote in an op-ed in Efimerida ton Syntakton on Saturday. The former finance minister called on Prime Minister Alexis Tspiras to adopt a plan originally proposed by Varoufakis while he was still in office. The plan would unilaterally restructure the loans the ECB holds. In addition according to BitCoin Magazine and reiterated in the former FM’s op-ed a payment system that could operate in euros but which could be changed into drachmas “overnight” if necessary would be implemented along with a parallel payment system. “This two-pronged preparation is the only way to prevent another excruciating retreat by the prime minister in the short-term and [German Finance Minister Wolfgang] Schaeuble’s plan in the long-term,” Varoufakis wrote. Varoufakis has been a vocal protester to Greek bailout plans and restructuring as it stands now, hence his resignation. He firmly believes that the current plan could lead to Greece leaving the Eurozone of their own accord.
More on that. “In reality there was never a basis for hope that the toxic 3rd bailout would be gradually rationalized, in terms that the European Commission would support Athens so that the austerity and anti-social IMF measures would relax..”
Former finance minister Yanis Varoufakis strikes back and urges Prime Minister Alexis Tsipras to turn his back on Greece’s lenders, adopt a parallel payment system and to unilaterally restructure the loans held by the ECB. In an op-ed in Efimerida ton Syntakton, Varoufakis, Varoufakis calls on Tispras to prepare for rupture with creditors in order to avoid rupture. “This two-pronged preparation is the only way to prevent another excruciating retreat by the prime minister in the short term and [German Finance Minister Wolfgang] Schaeuble’s plan in the long term,” Varoufakis wrote. In his article, Varoufakis suggested that Schaeuble’s strategy is to lead Greeks to the point of exhaustion so they ask to leave the euro themselves.
Noting that the “parallel payment system was already designed in 2014”, Varoufakis stresses that Tsipras had “two delusions” that led the government to the current impasse: A) that on the night of the referendum, the dilemma was between Schaeuble’s Grexit Plan and the 3rd bailout, and B) that the obedience to the 3rd bailout could be politically manageable through a parallel, society-friendly program. Both of these “working assumptions” were based only on autosuggestion, the ex finance minister stresses adding that he tried to explained this to the Prime Minister on the night of the referendum
“In reality there was never a basis for hope that the toxic 3rd bailout would be gradually rationalized, in terms that the European Commission would support Athens so that the austerity and anti-social IMF measures would relax, the IMF would force Berlin to accept debt restructuring and lower primary surpluses, the ECB would include Greece in the bond purchase program (QE),” Varoufakis wrote. He accused leading European negotiators of lying. “That Moscovici [EU Monetary Affairs Commissioner], Coerer [ECB] and Sapen [French finance minister] might have given such promises was not an excuse. Since May 2015 we were fully aware that these gentlemen know how to lie and fail to deliver on their promises when they do not lie.”
Refugees heading to Europe will be urged to settle in Asia and Latin America instead, under a new £30m British aid package. Theresa May announced the scheme at an EU summit in Malta, arguing it showed the Government is “stepping up its support for the most vulnerable refugees”. The package will see Britain provide lifesaving supplies for people facing freezing conditions across Eastern Europe and Greece, including warm clothing, shelter and medical care. However, it will also pay for better infrastructure in far-flung countries willing to take refugees who had hoped to settle in Europe. The move builds on an existing scheme run by The UN Refugee Agency (UNHCR), but it is the first time Britain’s aid budget has been used to bolster it. It risks adding to criticism that the Prime Minister is unwilling for the UK to accept a reasonable share of the refugees and migrants fleeing Syria and other war zones.
Only a few thousand Syrian refugees have been resettled in Britain – and the Government has refused to take part in an EU-wide programme to co-ordinate the continent’s response to the crisis. Government sources stressed that people would only be diverted to countries in Asia and Latin America if they were willing to be resettled there. The Department for International Development is expected to release a list of interested countries later. In Malta the Prime Minister insisted the focus of the £30m programme was “helping migrants return home rather than risk their lives continuing perilous journeys to Europe”. It would provide assistance to refugees and migrants across Greece, the Balkans, Libya, Egypt, Tunisia, Morocco, Algeria and Sudan. Priti Patel, the International Development Secretary, said: “Conflict, drought and political upheaval have fuelled protracted crises and driven mass migration. We cannot ignore these challenges.
The package will be delivered by UNHCR, the International Organisation for Migration (IOM) and NGO collective Start Network. Its aim is to:
* provide 22,400 life-saving relief items including tents, blankets, winter clothes such as hats and gloves and hygiene kits including mother and baby products
* help more than 60,000 people with emergency medical care, legal support and frontline workers to identify those at risk of violence and trafficking
* allow up to 22,000 people to reunite with family members they have become separated from
* help countries in Asia and Latin America that “might be able to resettle refugees put the infrastructure and systems in place to do so”
* provide more than 1,500 refugees in Egypt, including those fleeing Syria and other conflicts, with urgent health assistance and educational grants for students to go back to school
* provide a migrant centre in Sudan to enable “voluntary returns home when safe”, replicating a successful scheme in Niger.
Jack Delano The Chicago & North Western between Chicago and Clinton, Iowa 1943
It looks like I owe you an update. Things move fast in the FBI vs Huma Abedin case. When only some 24 hours ago I started writing my article “Throw Huma Under the Bus?”, there was one thing I did not know at all, one thing I was guessing at as much as the reporters who brought it up, and one I couldn’t verify sufficiently to feel comfortable about including it in the piece.
First, what I did not know at all was the role of Department of Justice head and US Attorney General, Loretta Lynch. Nobody I had read wrote a single word about her role, and I said “Wait a minute! Anybody seen Loretta Lynch lately?”. 24 hours later we know that Lynch, and the DOJ, actively attempted to keep James Comey from writing his infamous letter to members of Congress.
These attempts were ostensibly based on a ‘longstanding’ tradition of the DOJ and FBI to minimalize any potential interference in (presidential) elections. Given that Comey didn’t have ‘enough’ solid evidence gathered from the emails, Lynch et al apparently told him he should not come forward. But it turns out there’s a dark flipside to this argument, please bear with me.
Second, there was the ‘rumor’, or whatever we may call it, that Comey faced pressure from agents (or ‘assets’) in the Bureau to either come forward or risk having details leaked into the press from within the FBI. This is still not verified, and maybe never will be, but it does fit a narrative that’s starting to take shape. Though perhaps not quite the way one might have suspected.
Third, something I couldn’t verify sufficiently, was the issue of a warrant the FBI would need to examine the emails on devices owned by, and in at least some cases shared by, Huma and husband Anthony Weiner. I had seen this, and wrote in yesterday’s Debt Rattle at the Automatic Earth that “The NY Post suggests that NBC suggests that the FBI needs a fresh warrant to study the new batch of emails..”. Nobody else mentioned it though.
But now there’s more on that aspect, and it changes the story, perhaps a lot. In an overall pretty good article, Yahoo’s Michael Isikoff has this:
When FBI Director James Comey wrote his bombshell letter to Congress on Friday about newly discovered emails that were potentially “pertinent” to the investigation into Hillary Clinton’s private email server, agents had not been able to review any of the material, because the bureau had not yet gotten a search warrant to read them, three government officials who have been briefed on the probe told Yahoo News.
At the time Comey wrote the letter, “he had no idea what was in the content of the emails,” one of the officials said, referring to recently discovered emails that were found on the laptop of disgraced ex-Rep. Anthony Weiner, the estranged husband of top Clinton aide Huma Abedin. Weiner is under investigation for allegedly sending illicit text messages to a 15-year-old girl.
As of Saturday night, the FBI was still in talks with the Justice Department about obtaining a warrant that would allow agency officials to read any of the newly discovered Abedin emails, and therefore was still in the dark about whether they include any classified material that the bureau has not already seen. “We do not have a warrant,” a senior law enforcement official said.
When I saw that confirmed, a whole new picture started emerging. You have on the one side James Comey who does something ‘unprecedented’, for which he knows he’ll face a lot of flack. On the other you have Loretta Lynch, a staunch Democrat not known to be nearly as impartial as Comey, trying to keep him from sending the letter.
And on top of that you have ‘negotiations’ between the DOJ and FBI about obtaining a warrant to get access to the emails. The DOJ can, and still may, refuse to grant the FBI that warrant. But that chance is a lot smaller now than if Comey had not sent his letter. By bringing the matter out into the open, he’s hugely increased the pressure on Lynch to issue the warrant.
What we have here in fact is a power struggle. And as I hinted before, this may not be Lynch vs Comey directly, but it may come from within the FBI. Where various ‘assets’ have become so frustrated with how the investigations have been conducted so far that they have put pressure on Comey that may even have taken the form of an ultimatum. “We’ll leak unless we get a warrant”.
But it’s quite possible that Comey himself is the one behind the pressure on the DOJ, it’s quite possible that he has grown as weary as his people of the ‘progress’ in the entire Hillary email proceedings.
There is no indication from the eight-page FBI report on the interview, however, that the agents ever pressed her on what has now turned into an explosive issue in the final days of the 2016 campaign: Did Weiner have access to any classified government documents on his laptop and iPhone — devices that, he apparently used to exchange sexually charged messages with women he met online, including in one alleged case, an underage teenager in North Carolina?
The fact that FBI agents failed to follow up on this shows that the original probe into the Clinton email server was “not thorough” and was “fatally flawed,” said Joseph DiGenova, a former U.S. attorney and independent counsel who has been a strong critic of Comey and the FBI probe. “The first thing they should have done was gotten a sworn affidavit about all her accounts and devices,” he said, adding that agents should have immediately attempted to obtain the devices, including Weiner’s.
We don’t know why the agents haven’t. The suggestion I referred to yesterday that Huma Abedin may have been granted a ‘secret immunity’ deal could have played a big part in that. After all, there must be some reason why no devices were seized in ‘part 1’ of the investigation; even if that reason is not exactly public knowledge. The ‘secret immunity’ and the lack of devices seized, of course remind us again of Lynch’s meeting with Bill Clinton on a tarmac in Phoenix back in June.
Agents may simply not have had the authority to ‘obtain’ the devices. Whether that was because the DOJ actively frustrated their investigation, or the orders came from Comey, we don’t know and we never may. But something’s changed since then. That’s what Comey’s letter, and its timing, strongly seems to suggest.
About the material found on Weiner’s devices, Hillary’s side of course has a good idea what’s in the emails. Huma has been thoroughly grilled by now, if she hadn’t been before. The FBI probably has at least a partial idea: it’s highly likely they have seen things when investigating Weiner that would now be a part of the Hillary email investigation if the warrant were issued.
Hillary and other Dems can now protest Comey’s actions all they want, and demand full openness, but they know full well that this openness depends on ‘their own Loretta Lynch’ granting the FBI that warrant. And every single second that the warrant is not issued is a dark cloud on Hillary’s campaign, and indeed on the whole of America.
Of course the Democrats would love to lift this whole thing over November 8, and that’s why they seek to play for time and focus -again- not on the content but on the process, the proceedings and the individuals involved. People inside the FBI -whether that includes Comey or not- appear to think that would not serve democracy. But they have tens of thousands of mails to dig through even if they get the warrant, and that takes time. Will they get that time?
There’s no way Comey is not smart enough to have seen coming what’s happening now. From the Democrats’ favorite son he’s become in their eyes so incompetent they even suggest he may be yet another of Putin’s assets in America.
Is he seeking to right a wrong? Did he think that no matter what he did he would be fed to either the Republican or the Democrat sharks anyway? Or was he pressured by his ‘assets’? Right now, it seems too soon to tell. But don’t be surprised if James Comey comes out of this looking like a true American Hero. Even if it costs him his job.