Aug 092017
 
 August 9, 2017  Posted by at 7:56 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
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Fred Stein Police car, New York 1942

 

The Only Thing Keeping Italy’s Debt Alive is the ECB (DQ)
Federal Bank Regulator Drops a Bombshell as Corporate Media Snoozes (Martens)
Officials Spend Big In The Run Up To China’s Communist Party Congress (BBG)
China Is Taking on the ‘Original Sin’ of Its Mountain of Debt (BBG)
Jeff Gundlach Predicts He Will Make 400% On Bet Against Stock Market (CNBC)
Our Broken Economy, in One Simple Chart (NYT)
The Economic Crash, Ten Years On (Pettifor)
Opioid Deaths In US Break New Record: 100 People A Day (RT)
New Hampshire Sues Purdue Pharma Over Opioid Marketing Practices (R.)
Americans Are Dying Younger, Saving Corporations Billions (BBG)
Unlearning The Myth Of American Innocence (G.)
EU Nations Start Process Of Returning Refugees, Migrants To Greece (AP)

 

 

As Trump sinks into opioids and nuke threats (talking to Kim in his own language, and no, Trump does not like the Korea thing), and Google sinks into its self-dug moral morass, let’s not forget this one thing: we would not have what poses as an economy if not for central banks buying anything not bolted down. And they cannot keep doing that. And what then?

“At current government debt net issuance rates and announced QE levels, the ECB will have been responsible for financing 100% of Italy’s deficits from 2014 to 2019”

The Only Thing Keeping Italy’s Debt Alive is the ECB (DQ)

New statistical data from the investment bank Jefferies LLC has revealed a startling new trend that could have major implications for Europe’s economic future: Italian banks have begun dumping unprecedented volumes of Italian sovereign debt. Holdings of government debt by Italian financial institutions slumped by a record €20 billion in June – almost 10% of the total – after €9.4 billion of sales in May. As the FT reports, the selling by Italian banks is the most emphatic example yet of a broader trend: banks sold €46 billion of government paper in June across Europe, taking the total reduction since the start of this year to €257 billion. The banks’ mass sell-off is probably being driven by two main factors: first, as an attempt to preempt a pending Basel III reform package that could eliminate the equity capital privilege for EU government bonds and second, to position themselves for an anticipated autumn announcement from the ECB that it will begin tightening monetary policy.

“Maybe we are seeing an indication of Italian banks catching up with what their counterparts in Spain have known for a long time – that sovereign debt is not the place to be in a world of rising interest rates, said Jefferies’ senior European economist, Marchel Alexandrovich. But then: who’s buying it? The answer, in the case of Italy, is the ECB and its Italian branch office, the Bank of Italy, where Italian bank deposits rose by €22 billion in June and €50 billion since the start of 2017. The ECB “overbought” Italian government debt in July with purchases of €9.6 billion — its highest monthly quota since quantitative easing began. As Italian banks offload their holdings, the ECB, with Italian native and former Bank of Italy governor Mario Draghi at the helm, is picking up the slack.

In doing so, the central bank surpassed its own capital key rules by which member state debt is bought in proportion to the size of each country’s economy. By contrast, the ECB’s German Bund purchases slipped below its capital key rules for the fourth month in a row, which further depressed the spread between Italian and German 10-year debt to 152 basis points, its lowest level of the year. This spread is artificial, derived from the ECB’s binge buying of European sovereign bonds, particularly those belonging to countries on the periphery. A report published in May by Astellon Capital revealed that since 2008, 88% of Italy’s government debt net issuance was acquired by the ECB and Italian Banks. At current government debt net issuance rates and announced QE levels, the ECB will have been responsible for financing 100% of Italy’s deficits from 2014 to 2019. That was before taking into account the current sell-down of Italian bonds by Italian banks.

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As central banks buy 100% of a country’s new debt, US banks pay out more than 100% of earnings, and “share buybacks represent 72% of the total payouts for the 10 largest bank holding companies”. What better way to characterize a non-functioning economy?

Federal Bank Regulator Drops a Bombshell as Corporate Media Snoozes (Martens)

Last Monday, Thomas Hoenig, the Vice Chairman of the Federal Deposit Insurance Corporation (FDIC), sent a stunning letter to the Chair and Ranking Member of the U.S. Senate Banking Committee. The letter contained information that should have become front page news at every business wire service and the leading business newspapers. But with the exception of Reuters, major corporate media like the Wall Street Journal, Bloomberg News, the Business section of the New York Times and Washington Post ignored the bombshell story, according to our search at Google News. What the fearless Hoenig told the Senate Banking Committee was effectively this: the biggest Wall Street banks have been lying to the American people that overly stringent capital rules by their regulators are constraining their ability to lend to consumers and businesses.

What’s really behind their inability to make more loans is the documented fact that the 10 largest banks in the country “will distribute, in aggregate, 99% of their net income on an annualized basis,” by paying out dividends to shareholders and buying back excessive amounts of their own stock. Hoenig writes that the banks are starving the U.S. economy through these practices and if “the 10 largest U.S. Bank Holding Companies were to retain a greater share of their earnings earmarked for dividends and share buybacks in 2017 they would be able to increase loans by more than $1 trillion, which is greater than 5% of annual U.S. GDP.” Backing up his assertions, Hoenig provided a chart showing payouts on a bank-by-bank basis. Highlighted in yellow on Hoenig’s chart is the fact that four of the big Wall Street banks are set to pay out more than 100% of earnings: Citigroup 127%; Bank of New York Mellon 108%; JPMorgan Chase 107% and Morgan Stanley 103%.

What’s motivating this payout binge at the banks? Hoenig doesn’t offer an opinion in his letter but he does state that share buybacks represent 72% of the total payouts for the 10 largest bank holding companies. What share buybacks do for top management at these banks is to make the share price of their bank’s stock look far better than it otherwise would while making themselves rich on their stock options. If just the share buybacks (forgetting about the dividend payouts) were retained by the banks instead of being paid out, the banks could “increase small business loans by three quarters of a trillion dollars or mortgage loans by almost one and a half trillion dollars.” Hoenig also urged in his letter that there be a “substantive public debate” on what the biggest banks are doing with their capital rather than allowing this “critical” issue to be “discussed in sound bites.” Most corporate media responded to this appeal by ignoring Hoenig’s letter altogether.

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They all want to show nice numbers at the Congress. Shadow banks lend them the money to do it. In exchange for power.

Officials Spend Big In The Run Up To China’s Communist Party Congress (BBG)

In the run up to China’s blockbuster Communist Party congress later this year, officials have spent big to ensure the economy is humming along nicely when the conclave begins. It’s after that that things get interesting. With the central government’s deficit limit capped at 3%, officials usually turn on the taps around November and December, once they know they’ll have raised enough to fund a late-year splurge. Not this time. A push to smooth out spending means the fiscal pump is unlikely to go into high gear at year end, which is when economists see growth moderating toward the government’s baseline of 6.5%. While policy makers have quasi-fiscal options up their sleeve – like accelerating infrastructure project approvals or ratcheting up lending via policy banks – efforts to curb profligate local governments and limit debt may restrain those channels too.

“It’s China’s political-business cycle: this year is very important for the political transition, so they front-loaded fiscal spending to ensure a stable economic backdrop,” Larry Hu, head of China economics at Macquarie in Hong Kong. “China’s economy has a fiscal system and a shadow fiscal system. If growth really slows to threaten the target, then we’re going to see spending.” The question is, how much. China ran a fiscal deficit of 918 billion yuan ($137 billion) in the first half, or more than 2% of economic output during the period, Bloomberg calculations show. That’s a record both by value and share. The spending fueled better-than-expected economic growth of 6.9% in the first six months, and infrastructure investment surging at over 20%.

China International Capital Corp. analysts led by Liu Liu say the budgeted deficit will be 1.46 trillion yuan in the second half, versus 2.46 trillion yuan in the same period last year. The world’s second-largest economy still depends on government spending at all levels, as construction of things like roads and railways can be a key buffer when private investors start pulling back or, as now, political sensitivities make robust growth especially important. But those priorities are now clashing with the need to clamp down on indebtedness at lower levels of government, and the desire to avoid a year-end spending glut. In the past, officials have been able to use off-balance sheet spending, such as policy bank loans and funds raised through local government financing vehicles, to keep their deep pockets open.

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It’s starting to feel increasingly like a big fat Ponzi.

China Is Taking on the ‘Original Sin’ of Its Mountain of Debt (BBG)

China’s much-vaunted campaign to tackle its leverage problem has captured headlines this year. But to understand why they’re taking on the challenge – and the threat it could pose to the world’s second-largest economy – you need to dig into the mountain. Characterized in state media as the “original sin” of China’s financial system, leverage has swelled over the past decade – partly because policy makers were trying to cushion a slowdown in growth from the old normal of 10% plus. What’s fueled the leverage has been a rapid expansion in household and corporate wealth looking for higher returns in a system where bank interest rates have been held down. The unprecedented stimulus unleashed since 2008 effectively brought to life the “monster” China’s leadership is now trying to tackle, says Andrew Collier at Orient Capital Research in Hong Kong and author of “Shadow Banking and the Rise of Capitalism in China.”

Implicit backing from the central government meant borrowers had free license to take on debt. “You basically have anybody selling anything they want as they think they can’t lose,” Collier said. Deleveraging – championed by President Xi Jinping and the Communist Party Politburo in April – hasn’t truly begun, as “they’re trying to forestall the pain as long as possible,” he said. The equivalent of trillions of dollars are now held in all manner of assets in China, from high-yielding wealth management products to so-called entrusted investments. Taking the heftiest piece of the leverage mountain first, wealth management products had a precipitous rise over the past several years.

A way for borrowers who have trouble getting traditional bank loans to win funding, WMPs have grown in popularity as they typically offer savers much higher yields than banks offer on deposits. WMPs are also a hit because they give lenders a way to keep loans off of their balance sheets, and to skirt regulatory requirements when channeling funds to borrowers, according to Raymond Yeung at Australia & New Zealand Banking in Hong Kong. The regulatory crackdown this year — mostly in the form of more stringent guidelines on use of financial products — has seen the amount of WMPs outstanding taper off from a peak in April, while yields on them have surged as providers competed for funds. In July, the bank watchdog is said to have told some lenders to cut the rates they offered on the products.

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“It’s not really a bear call on the S&P 500. It’s more of a bull call on volatility..”

Jeff Gundlach Predicts He Will Make 400% On Bet Against Stock Market (CNBC)

DoubleLine CEO Jeffery Gundlach expects his bet for a decline in the S&P 500 will return 400%. “I’ll be disappointed if we don’t make 400% on the puts, and we don’t even need a big market decline for that to happen,” Gundlach said Tuesday on CNBC’s “Halftime Report.” He said that in his firm’s analysis, volatility is so low that it can make a big return by buying put options — bets for a decline — on the S&P 500 for December. “It’s not really a bear call on the S&P 500. It’s more of a bull call on volatility,” he said. In its slow grind higher, the S&P 500 has only closed more than 1% higher or lower on four trading days this year.

As a result of the muted market performance, the CBOE Volatility Index (.VIX), widely considered the best gauge of fear in the market, has persistently held near historical lows around 10 or below this year and hit an all-time low of 8.84 on July 26. The VIX was near 10.1 midday Tuesday as the S&P 500 edged up to a record high. “I think going long the VIX is really sort of free money at a 9.80 VIX level today,” Gundlach said. “I believe the market will drop 3% at a minimum sometime between now and December. And when it does I don’t think the VIX will be at 10.” Gundlach reiterated his expectations for a snap higher in the VIX once volatility picks up, since hedge funds have piled heavily into bets that volatility will remain low.

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OK, got it. Now what?

Our Broken Economy, in One Simple Chart (NYT)

Many Americans can’t remember anything other than an economy with skyrocketing inequality, in which living standards for most Americans are stagnating and the rich are pulling away. It feels inevitable. But it’s not. A well-known team of inequality researchers — Thomas Piketty, Emmanuel Saez and Gabriel Zucman — has been getting some attention recently for a chart it produced. It shows the change in income between 1980 and 2014 for every point on the distribution, and it neatly summarizes the recent soaring of inequality.= The line on the chart (which we have recreated as the red line above) resembles a classic hockey-stick graph. It’s mostly flat and close to zero, before spiking upward at the end. That spike shows that the very affluent, and only the very affluent, have received significant raises in recent decades.

This line captures the rise in inequality better than any other chart or simple summary that I’ve seen. So I went to the economists with a request: Could they produce versions of their chart for years before 1980, to capture the income trends following World War II. You are looking at the result here. The message is straightforward. Only a few decades ago, the middle class and the poor weren’t just receiving healthy raises. Their take-home pay was rising even more rapidly, in%age terms, than the pay of the rich. The post-inflation, after-tax raises that were typical for the middle class during the pre-1980 period — about 2% a year — translate into rapid gains in living standards. At that rate, a household’s income almost doubles every 34 years. (The economists used 34-year windows to stay consistent with their original chart, which covered 1980 through 2014.)

In recent decades, by contrast, only very affluent families — those in roughly the top 1/40th of the income distribution — have received such large raises. Yes, the upper-middle class has done better than the middle class or the poor, but the huge gaps are between the super-rich and everyone else. The basic problem is that most families used to receive something approaching their fair share of economic growth, and they don’t anymore.

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Nice try, Ann. But people have no political power left. Just look at the mess that all parties are in, in both the UK and US. So are you going to break the power of finance?

The Economic Crash, Ten Years On (Pettifor)

Challenging and dismantling gargantuan financial markets that operate beyond democratic regulatory oversight will not be easy, but it is long overdue. Some believe that the management of financial markets by governments will never be restored. I do not agree. Because of global imbalances, economic and financial tensions could lead to the onset of wars. These could dismantle global financial markets just as the two world wars did. There is a more peaceful way of restoring finance to the role of servant to, and not master of, economies and regions. For that to happen the public must realise that citizens can exercise economic power over global financial markets. The global ‘House of Finance’ is almost entirely dependent, and indeed largely parasitic, on the public sector. In other words, private finance is largely dependent for its capital gains on taxpayers like you and me.

Commercial banks do not need savings or tax revenues to lend. All they need is to provide finance to viable projects that will generate employment and income in the future – which will repay the loans. The most viable projects today are those needed to protect Britain from climate change. Any government with political spine would have insisted that the banks lend, at low affordable rates, to transformative projects in the real, productive economy where jobs are created, income generated, and society protected. And if shareholders and executives object to such conditions, then politicians should withdraw access to the Bank of England’s QE and low interest rates, and to government guarantees for deposits.

Quantitative easing – the creation of liquidity currently directed only at the financial sector – is only possible because central banks, if not directly publicly owned, are dependent for their legitimacy and money-creation powers, on taxpayers. The Federal Reserve is ultimately backed by US taxpayers. The Bank of England is a nationalised bank, whose authority is derived from Britain’s 31 million-plus taxpayers.

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” ..in 2015, the amount of opioids prescribed in the US was enough for every American to be medicated around the clock for three weeks.”

Opioid Deaths In US Break New Record: 100 People A Day (RT)

The first nine months of 2016 saw a sharp increase in opioid drug overdoses in the US compared to the prior year, according to new data by the National Center for Health Statistics (NCHS). The government is struggling to respond to the crisis. Deaths due to drug overdose peaked in the third quarter of last year – 19.7 cases for every 100,000 people, compared to 16.7 in the same period the year before, according to newly released numbers from the NCHS, which is part of the US Centers for Disease Control and Prevention (CDC). The Centers attributed 33,000 deaths in 2015 to opioid drugs, including legal prescription painkillers as well as illicit drugs like heroin and street fentanyl. “Opioid prescribing continues to fuel the epidemic. Today, nearly half of all US opioid overdose deaths involve a prescription opioid,” according to the CDC.

A new study published in the American Journal of Preventive Medicine says actual opioid mortality rate changes are on average 22% higher than federal statistics indicate, due to information missing from CDC records. “Opioid mortality rate changes were considerably understated in Pennsylvania, Indiana, New Jersey and Arizona,” said the study’s author, Dr. Christopher Ruhm, a health economist at the University of Virginia. Top US officials have consistently raised the alarm about the addiction crisis in the US, but a solution is yet to be found. [..] Last week, the Trump-appointed commission on combating the drug addiction crisis in America called on the president to declare “a national emergency.”

After the meeting with Trump on Tuesday, Price said the administration will act without such a declaration. “Here is the grim reality,” the commission wrote in their letter to Trump. “Americans consume more opioids than any other country in the world. In fact, in 2015, the amount of opioids prescribed in the US was enough for every American to be medicated around the clock for three weeks.”

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And this is how the opioid disaster started, and still rolls on. Easy fix (pun intended), but who’s going to do it?

New Hampshire Sues Purdue Pharma Over Opioid Marketing Practices (R.)

New Hampshire sued OxyContin maker Purdue Pharma LP on Tuesday, joining several state and local governments in accusing the drugmaker of engaging in deceptive marketing practices that have helped fuel a national opioid addiction epidemic. The lawsuit filed in Merrimack County Superior Court claimed that Purdue Pharma significantly downplayed the risk of addiction posed by OxyContin and engaged in marketing practices that “opened the floodgates” to opioid use and abuse. The lawsuit came after the state’s top court in June overturned a ruling that barred the enforcement of subpoenas against Purdue and four other drugmakers because of the use of a private law firm by the office of the attorney general.

The complaint said the Stamford, Connecticut-based company had spent hundreds of millions of dollars since the 1990s on misleading marketing that overstated the benefits of opioids for treating chronic, rather than short-term, pain. Purdue and three executives in 2007 pleaded guilty to federal charges related to the misbranding of OxyContin, and agreed to pay a total of $634.5 million to resolve a U.S. Justice Department probe. That year, the privately held company reached a $19.5 million settlement with 26 states and the District of Columbia. It agreed in 2015 to pay $24 million to resolve a lawsuit by Kentucky. The lawsuit by New Hampshire, which was not among those settled, said Purdue has continued to benefit from its earlier misconduct and has since 2011 expanded the market for opioids in the state.

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No wonder with the opioid cases.

Americans Are Dying Younger, Saving Corporations Billions (BBG)

Steady improvements in American life expectancy have stalled, and more Americans are dying at younger ages. But for companies straining under the burden of their pension obligations, the distressing trend could have a grim upside: If people don’t end up living as long as they were projected to just a few years ago, their employers ultimately won’t have to pay them as much in pension and other lifelong retirement benefits. In 2015, the American death rate—the age-adjusted share of Americans dying—rose slightly for the first time since 1999. And over the last two years, at least 12 large companies, from Verizon to General Motors, have said recent slips in mortality improvement have led them to reduce their estimates for how much they could owe retirees by upward of a combined $9.7 billion, according to a Bloomberg analysis of company filings.

“Revised assumptions indicating a shortened longevity,” for instance, led Lockheed Martin to adjust its estimated retirement obligations downward by a total of about $1.6 billion for 2015 and 2016, it said in its most recent annual report. Mortality trends are only a small piece of the calculation companies make when estimating what they’ll owe retirees, and indeed, other factors actually led Lockheed’s pension obligations to rise last year. Variables such as asset returns, salary levels, and health care costs can cause big swings in what companies expect to pay retirees. The fact that people are dying slightly younger won’t cure corporate America’s pension woes—but the fact that companies are taking it into account shows just how serious the shift in America’s mortality trends is.

It’s not just corporate pensions, either; the shift also affects Social Security, the government’s program for retirees. The most recent data available “show continued mortality reductions that are generally smaller than those projected,” according to a July report from the program’s chief actuary. Longevity gains fell short of what was projected in last year’s report, leading to a slight improvement in the program’s financial outlook. [..] Absent a war or an epidemic, it’s unusual and alarming for life expectancies in developed countries to stop improving, let alone to worsen. “Mortality is sort of the tip of the iceberg,” says Laudan Aron, a demographer and senior fellow at the Urban Institute. “It really is a reflection of a lot of underlying conditions of life.” The falling trajectory of American life expectancies, especially when compared to those in some other wealthy countries, should be “as urgent a national issue as any other that’s on our national agenda,” she says.

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Not sure where this article aims to go, but Americans entering another dimension is a nice starting point.

Unlearning The Myth Of American Innocence (G.)

I grew up in Wall, a town located by the Jersey Shore, two hours’ drive from New York. Much of it was a landscape of concrete and parking lots, plastic signs and Dunkin’ Donuts. There was no centre, no Main Street, as there was in most of the pleasant beach towns nearby, no tiny old movie theatre or architecture suggesting some sort of history or memory. Most of my friends’ parents were teachers, nurses, cops or electricians, except for the rare father who worked in “the City”, and a handful of Italian families who did less legal things. My parents were descendants of working-class Danish, Italian and Irish immigrants who had little memory of their European origins, and my extended family ran an inexpensive public golf course, where I worked as a hot-dog girl in the summers. The politics I heard about as a kid had to do with taxes and immigrants, and not much else. Bill Clinton was not popular in my house. (In 2016, most of Wall voted Trump.)

We were all patriotic, but I can’t even conceive of what else we could have been, because our entire experience was domestic, interior, American. We went to church on Sundays, until church time was usurped by soccer games. I don’t remember a strong sense of civic engagement. Instead I had the feeling that people could take things from you if you didn’t stay vigilant. Our goals remained local: homecoming queen, state champs, a scholarship to Trenton State, barbecues in the backyard. The lone Asian kid in our class studied hard and went to Berkeley; the Indian went to Yale. Black people never came to Wall. The world was white, Christian; the world was us. We did not study world maps, because international geography, as a subject, had been phased out of many state curriculums long before. There was no sense of the US being one country on a planet of many countries. Even the Soviet Union seemed something more like the Death Star – flying overhead, ready to laser us to smithereens – than a country with people in it.

I have TV memories of world events. Even in my mind, they appear on a screen: Oliver North testifying in the Iran-Contra hearings; the scarred, evil-seeming face of Panama’s dictator Manuel Noriega; the movie-like footage, all flashes of light, of the bombing of Baghdad during the first Gulf war. Mostly what I remember of that war in Iraq was singing God Bless the USA on the school bus – I was 13 – wearing little yellow ribbons and becoming teary-eyed as I remembered the video of the song I had seen on MTV. “And I’m proud to be an American; Where at least I know I’m free”. That “at least” is funny. We were free – at the very least we were that. Everyone else was a chump, because they didn’t even have that obvious thing. Whatever it meant, it was the thing that we had, and no one else did. It was our God-given gift, our superpower.

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Because Greece has the absolutely worst accomodations for them.

EU Nations Start Process Of Returning Refugees, Migrants To Greece (AP)

European Union countries have begun the process of sending migrants who arrived in Europe via Greece over the last five months back to have their asylum applications assessed there. EU rules oblige migrants to apply for asylum in the country they first enter. But the rules were suspended as hundreds of thousands of people, many of them Syrian refugees, entered Greece in 2015. The European Commission recommended in December that EU countries gradually resume transfers to Greece of unauthorized migrants arriving from March 15 onwards. “Some member states have made requests but transfers have not begun. Greece has to give assurances that they have adequate reception conditions,” European Commission spokeswoman Tove Ernst said Tuesday.

“Reception conditions in Greece have significantly improved since last year, which is why the Commission recommended a gradual resumption of transfers,” she said. The recommendation is not binding on EU countries. Greece’s asylum service says requests have been made to return more than 400 migrants. Seven requests have been accepted so far. In Athens, Greece’s migration minister said the returns would involve “tiny numbers.” “We will accept a few dozen people in coming months,” Yiannis Mouzalas told private Skai TV Tuesday. “This will be done provided we have the proper conditions to receive them.” Mouzalas said it was a “symbolic move” dictated by Greece’s EU obligations.

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Oct 292016
 
 October 29, 2016  Posted by at 9:29 am Finance Tagged with: , , , , , , , , ,  Comments Off on Debt Rattle October 29 2016
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Unknown No Dog Biscuits Today

It’s A First: Hillary Wants FBI To Publish Everything About Emails (DM)
Bernstein: New Evidence “A Real Bombshell” Or FBI Would Not Reopen Case (RCP)
2006 Audio Emerges of Hillary Proposing Rigging Palestine Election (Obs.)
China Laughs, Says US Choosing Between ‘A Crazy Guy’ And ‘A Swindler’ (DC)
Inside The Invisible Government: War, Propaganda, Clinton, Trump (John Pilger)
Prof. Michael Hudson: The Criminals Control The US (Renegade)
Sorry, But The US Economy’s Growth Spurt Isn’t Going To Last (CNBC)
The Story Of The Self Destruction Of Deutsche Bank (Spiegel)
No 10 Must Have Made Nissan Big Promise, Say Ex-Business Minister (G.)
EU-Canada CETA Trade Deal To Be Signed On Sunday (BBC)
Iceland Voters To Choose Between Pirates And Establishment This Weekend (R.)
The Strange Tale Of A Dating Site’s Attacks On Wikileaks Founder Assange (McCl.)

 

 

Clinton says she’s confident the new mails will not change the FBI’s conclusion in July. Thing is, if that were so, they probably wouldn’t have announced the mails on Friday.

It’s A First: Hillary Wants FBI To Publish Everything About Emails (DM)

The FBI is investigating Weiner’s lewd texts with an underage girl, revealed in September by DailyMail.com. ‘We’ve heard these rumors,’ said Clinton – who sat near Abedin on her campaign on the flight to Des Moines. ‘We don’t know what to believe and I’m sure there will be even more rumors. That’s why it is incumbent upon the FBI to tell us what they’re talking about,’ she said. ‘Because right now your guess is as good as mine and I don’t think that’s good enough.’ [..] Meanwhile, it was also revealed on Friday that Comey reportedly told bureau staffers in separate memo that he broke custom in telling Congress about the reopening of the investigation because of its political sensitivity. In the internal memo obtained by Fox News, Comey said the bureau would not ordinarily communicate with the public about its ongoing investigations, but said he felt he needed to do so as amid the looming election.

He also notes he felt an ‘obligation’ to inform lawmakers about the investigation given he had testified repeatedly that their investigation into Clinton’s email was completed. ‘Of course we don’t ordinarily tell Congress about ongoing investigations, but here I feel an obligation to do so given that I testified repeatedly in recent months that our investigation was completed,’ Comey wrote in the memo. ‘I also think it would be misleading to the American people were we not to supplement the record. ‘At the same time, however, given that we do not know the significance of this newly discovered collection of emails, I don’t want to create a misleading impression. ‘In trying to strike that balance, in a brief letter, and in the middle of an election season, there is significant risk of being misunderstood, but I wanted you to hear directly from me about it.’

Read more …

The NY Post suggests that NBC suggests that the FBI needs a fresh warrant to study the new batch of emails they suggest is connected to their investigation of Hillary Clinton’s use of a private server, which in turn is linked to possible mishandling of classified informaton. The (1000?!) mails were found on a laptop (and/or phone?) used by both Huma Abedin and Anthony Weiner. The ‘new warrant’ issue may be why Comey says “..the FBI cannot yet assess whether or not this material may be significant..”. They’ve seen things that led to Comey’s letter yesterday that perhaps they had no legal position to investigate. But they’ll get that warrant of course. Question is how long it will take. The Hillary camp can in the meantime try and use the uncertainty to say again and again that they don’t think the new revelations will change the FBI’s position that there was no reason to charge her, but as I suggested late last night (European time), and as Carl Bernstein confirms, for Comey to speak up now means this can only be a bombshell. Which means NOT speaking out now would down the line be seen as more partisan than speaking.

Bernstein: New Evidence “A Real Bombshell” Or FBI Would Not Reopen Case (RCP)

CARL BERNSTEIN: Well, there’s no question that the e-mails have always been the greatest threat to her candidacy for president, that her conduct in regard to the e-mails is really indefensible and if there was going to be more information that came out, it was the one thing, as I said on the air last night, actually that could really perhaps affect this election. We don’t know what this means yet except that it’s a real bombshell. And it is unthinkable that the Director of the FBI would take this action lightly, that he would put this letter forth to the Congress of the United States saying there is more information out there about classified e-mails and call it to the attention of congress unless it was something requiring serious investigation. So that’s where we are… Is it a certainty that we won’t learn before the election? I’m not sure it’s a certainty we won’t learn before the election.

One thing is, it’s possible that Hillary Clinton might want to on her own initiative talk to the FBI and find out what she can, and if she chooses to let the American people know what she thinks or knows is going on. People need to hear from her… I think if she has information available to her from the FBI or any other source as to her knowledge of what these e-mails might be, hopefully she will let us know what they are and what is under discussion here. Right now we’re all talking in a vacuum but I want to add here that in the last, oh, 36, 48 hours, there has been an undercurrent of kind of speculative discussion among some national security people that something might surface in the next few days about e-mails, and I think the expectation in this chatter – and I took it as just chatter but informed chatter, to some extent – was that it would relate to another round of WikiLeaks e-mails, which our Justice Department people seem to be saying is not the case, but there has been some noise in the national security community the last day or two of this kind of possibility of some kind of revelation.

But this is her achilles heel and we have to remember that it also comes on the – back to the word heel – of the revelations about the Clinton Foundation. So the confluence of all of this is bad for her as it stands now but with some knowledge she might be able to stop, turn things around, and give us some idea of what’s going on in a way we might not otherwise know, and also it’s very possible that some members of congress very quickly are going to get an idea of what these e-mails are, and what this is all about, and for whatever purpose put some information out there.

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Everyone’s talking about the domestic effects of things like this, but the international ones may well be much more significant.

2006 Audio Emerges of Hillary Proposing Rigging Palestine Election (Obs.)

On September 5, 2006, Eli Chomsky was an editor and staff writer for the Jewish Press, and Hillary Clinton was running for a shoo-in re-election as a U.S. senator. Her trip making the rounds of editorial boards brought her to Brooklyn to meet the editorial board of the Jewish Press. The tape was never released and has only been heard by the small handful of Jewish Press staffers in the room. According to Chomsky, his old-school audiocassette is the only existent copy and no one has heard it since 2006, until today when he played it for the Observer. The tape is 45 minutes and contains much that is no longer relevant, such as analysis of the re-election battle that Sen. Joe Lieberman was then facing in Connecticut.

But a seemingly throwaway remark about elections in areas controlled by the Palestinian Authority has taken on new relevance amid persistent accusations in the presidential campaign by Clinton’s Republican opponent Donald Trump that the current election is “rigged.” Speaking to the Jewish Press about the January 25, 2006, election for the second Palestinian Legislative Council (the legislature of the Palestinian National Authority), Clinton weighed in about the result, which was a resounding victory for Hamas (74 seats) over the U.S.-preferred Fatah (45 seats). “I do not think we should have pushed for an election in the Palestinian territories. I think that was a big mistake,” said Sen. Clinton. “And if we were going to push for an election, then we should have made sure that we did something to determine who was going to win.”

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“In the US, political elites and media magnates have the freedom to say anything they want, while others can only choose to repeat their words or shut up..”

China Laughs, Says US Choosing Between ‘A Crazy Guy’ And ‘A Swindler’ (DC)

China is laughing at America’s election and the media’s coverage of the election, noting that both make a sad argument for Western democracy. “In the past, I thought the US had the best education and most developed democracy in the world, but now what do they have for president? Either a crazy guy or a swindler,” a Chinese business owner told the Global Times. “The race to the bottom will … make [people] rethink the value of democracy,” the Global Times previously said of the elections. The election, deemed one of the “dirtiest” since World War II, “reflects the decay of U.S. politics and a deeply divided society,” the Xinhua News Agency argued. “People forget serious issues. They talk about sex, locker room conversation, men and lousy behavior.”

“Debates are getting nasty and that undermines the strength of Western democracy,” Yang Rui, an anchor for China’s state television, told the BBC. He added that using a ballot box to make major decisions is a bad idea because “you have to suppose every voter is rational and reasonable.” “[China’s non-democratic system] has allowed China forty years of uninterrupted growth within a stable system. Quiet deliberation is a more effective form of policy than a public shouting match, because policy making is complicated,” Fang Xinghai, a senior Communist Party of China official and the vice chair of the China Securities Regulatory Commission, told reporters. China regularly uses American elections to attack the U.S. political system and justify its non-democratic, authoritarian system.

“For a long time, the United States has boasted about how its extremely lively election is a sign of the superiority of the system, and it has even used this to willfully criticize the vast majority of developing countries,” asserted the People’s Daily, “The extreme self-confidence and arrogance by the ‘preacher of democracy’ should be reined in.” Beyond attacking the democratic process, Chinese critics of the election also targeted the mainstream media and America’s treasured freedom of speech, pointing out that the media has undermined this tradition. “CNN and other mainstream media’s freedom of speech only serves Hillary Clinton,” said one netizen on Guancha.cn. “In the US, political elites and media magnates have the freedom to say anything they want, while others can only choose to repeat their words or shut up,” said another, according to the Global Times.

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Pilger’s never weak.

Inside The Invisible Government: War, Propaganda, Clinton, Trump (John Pilger)

Some may remember in 2003 a succession of BBC reporters turning to the camera and telling us that Blair was “vindicated” for what turned out to be the crime of the century. The US television networks produced the same validation for George W. Bush. Fox News brought on Henry Kissinger to effuse over Colin Powell’s fabrications. The same year, soon after the invasion, I filmed an interview in Washington with Charles Lewis, the renowned American investigative journalist. I asked him, “What would have happened if the freest media in the world had seriously challenged what turned out to be crude propaganda?” He replied that if journalists had done their job, “there is a very, very good chance we would not have gone to war in Iraq”.

It was a shocking statement, and one supported by other famous journalists to whom I put the same question – Dan Rather of CBS, David Rose of the Observer and journalists and producers in the BBC, who wished to remain anonymous. In other words, had journalists done their job, had they challenged and investigated the propaganda instead of amplifying it, hundreds of thousands of men, women and children would be alive today, and there would be no ISIS and no siege of Aleppo or Mosul. There would have been no atrocity on the London Underground on 7th July 2005. There would have been no flight of millions of refugees; there would be no miserable camps.

When the terrorist atrocity happened in Paris last November, President Francoise Hollande immediately sent planes to bomb Syria – and more terrorism followed, predictably, the product of Hollande’s bombast about France being “at war” and “showing no mercy”. That state violence and jihadist violence feed off each other is the truth that no national leader has the courage to speak. “When the truth is replaced by silence,” said the Soviet dissident Yevtushenko, “the silence is a lie.”

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The banks control it all. Hudson suggests Trump should have claimed he stiffed the banks by going bankrupt six times, and say “if I can do that for me, I can do it for all of us”.

Prof. Michael Hudson: The Criminals Control The US (Renegade)

Prof. Michael Hudson, economist and author of ‘Killing the Host- How Financial Parasites and Debt Destroy the Global Economy’, speaks to Ross Ashcroft about the difficult choice faced by Americans in the upcoming US elections.

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“Soybeans? Yes, there has been a record bumper crop this year in the U.S., and strong demand from China helped fuel an export bonanza.”

Sorry, But The US Economy’s Growth Spurt Isn’t Going To Last (CNBC)

The U.S. economy grew in the third quarter at its fastest pace in two years, due largely to factors that are unlikely to last. GDP increased at a 2.9% rate, above expectations and at the best rate since the 5% posted in the third quarter of 2014. The positive surprise comes as the Fed contemplates its second interest rate hike in more than 10 years, and Americans are set to elect a new president in less than two weeks. However, a look under the hood shows that the U.S. is likely stuck in the same growth trap in which it has found itself since the Great Recession ended in mid-2009. Many of the gains came due to a surge in soybean exports. Soybeans? Yes, there has been a record bumper crop this year in the U.S., and strong demand from China helped fuel an export bonanza.

However, that’s not expected to last, and the U.S. also is likely to face competition in the market. But there were other factors besides soybeans not to like in this report. Consumer spending cooled to 2.1% from 4.3% in the previous quarter, residential investment tumbled by 6.2%, equipment purchases declined by 2.7% and the growth rate of final sales to domestic purchasers increased by just 1.4%. “Accordingly, a reasonable case could be made that this is actually a disappointing GDP report,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a client note. In addition to the soybean-led export growth, the GDP report also was aided by a 0.6 %age point gain in inventories.

Excluding “transitory” effects, the actual growth rate would have been closer to the 1.5% rate of the past four quarters, even including Friday’s reading, according to David Rosenberg, chief economist and strategist at Gluskin Sheff. “In other words, nothing here to write home about,” he said in his morning note.

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A German view of a once German bank.

The Story Of The Self Destruction Of Deutsche Bank (Spiegel)

Greed, provincialism, cowardice, unfocused aggression, mania, egoism, immaturity, mendacity, incompetence, weakness, pride, blundering, decadence, arrogance, a need for admiration, naiveté: If you are looking for words that explain the fall of Deutsche Bank, you can choose freely and justifiably from among the above list. The bank, 146 years after its founding, has become the target for all manner of pejoratives, and not just from outside observers. All of the above terms were used in interviews held during months of reporting into the causes of the downfall of Germany’s largest financial institution. They popped up over the course of several hours of interviews with four Deutsche Bank CEOs, three former and one current.

And they were uttered in interviews with eight additional senior bank managers and board members conducted over the course of several years, from the 1990s until today, and in meetings with captains of industry who know the bank well and during encounters with major stakeholders. More than anything, the disparaging words come up frequently in interviews with those who have worked or still work at the bank as customer service advisors, as branch managers or in positions lower down on the food chain. What we have found in the course of these myriad interviews – combined with the hours spent analyzing bank balance sheets, thousands of pages of files, committee meeting minutes and archive material – is that the collapse of Deutsche Bank is the result of years, decades, of failed leadership, culminating in the complete loss of control of the company by top managers during the period between 1994 and 2012.

It is a story about how Hilmar Kopper, Rolf E. Breuer and Josef Ackermann, the leaders of Deutsche Bank during those fateful years, essentially turned over the bank to a hastily assembled group of Anglo-American investment bankers before Anshu Jain, the prince of these traders, rose to the top and spent three more years sailing the bank full-speed-ahead into the shoals. It is also a story of how these bank heads, along with numerous other members of the management and supervisory boards, stood aside as Jain and the many other new investment banking heroes modified the staid German financial institution to serve their own purposes – essentially looting it and robbing it of its very soul – without leaving behind a better, stronger bank.

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You bet.

No 10 Must Have Made Nissan Big Promise, Say Ex-Business Minister (G.)

A former business minister has said that Nissan had previously suggested it could move production to France if it was not protected from trade tariffs. Anna Soubry said that No 10 must have privately told Nissan that Britain was remaining in the EU customs union or promised mitigation against any future tariffs before the car firm announced plans to build two new models in the UK. Greg Clark, the current business secretary, has insisted that no financial compensation was offered during numerous discussions with Nissan, which allowed the Japanese carmaker to commit to building its new Qashqai and X-Trail vehicles at its Sunderland plant. It is understood that the government provided a “letter of comfort” to Nissan promising that the UK car industry would remain competitive after Brexit.

Ministers, however, would neither confirm nor deny whether such a letter had been sent. Sources said the letter was understood to give an undertaking that Nissan would not face “additional costs” after the UK leaves the EU, implying that the taxpayer could be liable for subsidising the car industry in the event of tariffs being imposed on automotive exports. Downing Street also declined to say if more specific informal promises had been offered to Nissan and by implication to other carmakers, but industry sources have said they have been reassured by the government that they would not suffer from tariffs after the UK leaves the EU. No 10 is under pressure to publish the letter and Clark is to be called before the Commons business committee to explain what he has offered in the way of support to Nissan.

Soubry, who was a senior minister in the business department until July, said the carmaker had privately suggested to her in the past it would move production to France if it did not have a guarantee that it would be protected from tariffs or if the government did not do “something to mitigate the damage of tariffs”. “They didn’t give the detail of what they wanted, they made it very clear that without a guarantee that they would not be subject to tariffs or if they were subject to tariffs the government would do something to mitigate the damage of tariffs … that without that, they told me, my understanding actually was that they would go to Renault because they clearly had the capacity there,” she said. The Japanese car company has a strategic partnership with the French manufacturer.

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One question: how many Europeans would vote for CETA if they had the opportunity to do so?

EU-Canada CETA Trade Deal To Be Signed On Sunday (BBC)

Canada and the European Union are to sign a long-delayed landmark trade deal at a summit in Brussels on Sunday. Canadian Prime Minister Justin Trudeau described it as “great news” and said he looked forward to attending. A signing ceremony planned for Thursday had to be cancelled after a Belgian region vetoed the agreement. But after marathon talks, a consensus was finally reached allowing all 28 EU states to formally approve the deal on Friday. “Mission accomplished!” European Council President Donald Tusk tweeted. Mr Trudeau tweeted back: “Great news and I’m looking forward to being there.”

The Comprehensive Economic and Trade Agreement with Canada, known as Ceta, required all EU member states to endorse it. But seven years of negotiations were left hanging in the balance after Belgium’s French-speaking region of Wallonia demanded stronger safeguards on labour, environmental and consumer standards. It also wanted more protection for Walloon farmers, who would face new competition from Canadian imports. On Thursday, Belgian Prime Minister Charles Michel said that after marathon talks they had agreed on an addendum to the deal which addressed regional concerns. Prime Minister Robert Fico of Slovakia, which currently holds the EU presidency, said the final approval of the deal was “a milestone in the EU’s trade policy”.

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Their numbers are not THAT strong: “..support for the Pirates has been steady at around 20% over the past months, well above the 5% it won in the 2013 election but below a 40% peak.”

Iceland Voters To Choose Between Pirates And Establishment This Weekend (R.)

Iceland holds parliamentary elections on Saturday, with polls showing the opposition led by the anti-establishment Pirate Party could topple the current center-right ruling coalition. Icelanders’ faith in their political and financial establishment was shaken after the 2008 financial crisis and further eroded this year when several senior government figures were named in the Panama Papers. The biggest protests in the country’s history ultimately led to the resignation of Prime Minister Sigmundur David Gunnlaugsson of the Progressive Party and the early election this weekend. Founded by internet activists and led by poet Birgitta Jonsdottir, the Pirates promise to clean up corruption, look at granting asylum to former U.S. spy contractor Edward Snowden and relax restrictions on the use of the bitcoin virtual currency.

Recent polls show the Independence and Progressive parties stand to lose their current majority in the Althing, often described as the world’s oldest parliament, which means they would have to find a third coalition partner to stay in power. The Pirates would be looking to form a majority with the current opposition parties: The Left-Green Movement, the Social Democratic Alliance and Bright Future. An Oct. 27 poll conducted by Visir and Stod 2 showed 37% support for the government parties, while the four opposition parties polled around 47% combined. In a tight race, newly-established Vidreisn, the Reform Party, could become king-maker. The pro-European, liberal Vidreisn has not taken sides yet, but some analysts predict it would favor the current government as its economic policy leans rightwards. While the Independence Party remains the biggest party, support for the Pirates has been steady at around 20% over the past months, well above the 5% it won in the 2013 election but below a 40% peak.

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This stinks ten ways to Sunday.

The Strange Tale Of A Dating Site’s Attacks On Wikileaks Founder Assange (McCl.)

For an online dating site, toddandclare.com seems really good at cloak-and-dagger stuff. Disconnected phones. Mystery websites. Actions that ricochet around the globe. But the attention grabber is the Houston-based company’s target: Julian Assange, the founder of WikiLeaks, whose steady dumps of leaked emails from Hillary Clinton’s presidential campaign have given supporters of Donald Trump the only cheering news of the last few weeks. In some ways, toddandclare.com’s campaign against Assange is as revelatory as the leaked emails themselves, illustrating the powerful, sometimes unseen, forces that oppose WikiLeaks.

Whoever is behind the dating site has marshaled significant resources to target Assange, enough to gain entry into a United Nations body, operate in countries in Europe, North America and the Caribbean, conduct surveillance on Assange’s lawyer in London, obtain the fax number of Canada’s prime minister and seek to prod a police inquiry in the Bahamas. And they’ve done it at a time when WikiLeaks has become a routine target of Democratic politicians who portray Assange as a stooge of Russian President Vladimir Putin and his reported efforts to disrupt the U.S. election. One part of toddandclare’s two-pronged campaign put a megaphone to unproven charges that Assange made contact with a young Canadian girl in the Bahamas through the internet with the intention of molesting her.

The second part sought to entangle him in a plan to receive $1 million from the Russian government. WikiLeaks claims the dating site is “a highly suspicious and likely fabricated” company. In turn, the company lashed out at Assange on Thursday and “his despicable activities against American national security,” and warned journalists to “check with your libel lawyers first before printing anything that could impact or endanger innocent people’s lives.” So why are the parties to the melee coming out with both barrels blazing? That remains a mystery of the kind that might take a WikiLeaks-style document dump to suss out.

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 March 1, 2016  Posted by at 9:20 am Finance Tagged with: , , , , , , , ,  5 Responses »
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NPC “.. the hearty cereal beverage with flavor and tang, Altemus-Hibble truck” 1920

China Faces $15 Trillion Bombshell As Shadow Banking Sector Collapses (ZH)
China’s Big Lending Push Comes Up Short (WSJ)
China Factory Activity Shrinks More Than Expected (Reuters)
China Attempts To Boost Economy With Cash Injection (Guardian)
Global Companies Face a $9.5 Trillion Debt Wall (BBG)
The Worst Market of All: One Without a Story (WSJ)
Barclays Shares Fall 7.5% In London After Profit Drops 56% (BBG)
UK Credit Card Bills a Problem Waiting to Bite (BBG)
Alchemy Should Be Squeezed Out Of The World’s Banking System (Mervyn King)
We Are Being Led By Imbeciles (Bill Mitchell)
EU’s Tower of Babel May Fall While Leaders Distracted (Reuters)
Canada Meets Target To Resettle 25,000 Syrian Refugees (AP)
Clashes As Authorities Demolish Homes In Calais ‘Jungle’ Camp (Guardian)
As Europe Bickers, Macedonia Police Fire Tear Gas On Migrants (Kath.)
Europe’s Crisis Worsens: Refugees Face Razor Wire, Tear Gas (AP)
Most Of The Refugees Stuck In Greece Are Now Women And Children (WaPo)

As I said a hundred times: it’s no use talking about China’s economy without including the shadow banks.

China Faces $15 Trillion Bombshell As Shadow Banking Sector Collapses (ZH)

We’ve spent more time than most documenting China’s wealth management product problem. WMPs are part and parcel of Beijing’s sprawling shadow banking complex which, until 2014 that is, helped pump trillions of yuan into China’s economy and shouldered the burden when it came to propping up the most important economy on the planet. But WMPs are dangerous. In fact, we flagged them as an 8 trillion black swan back in August on the way to asking what would happen if China’s shadow banking sector were to collapse altogether. This is space that’s running what amounts to an enormous maturity mismatched fraud. Of course this describes the entire fractional reserve banking system, but in the case of China’s WMPs, it’s all on the verge of implosion.

Don’t believe us? Just ask anyone who bought into products sold by Fanya Metals’ Shan Jiuliang. This is a very real threat to the Chinese banking sector. The multifarious nature of the space’s liabilities makes it virtually impossible for anyone to assess what the embedded risks are. As we first documented last summer, some 40% of credit risk is carried off balance sheet and that figure might well have grown recently, especially considering mid-tier bank’s propensity to extend new credit through new cateogries of channel loans that are classified as “investments” and “receivables” In any event, China is desperate to revive the credit impulse and that means keeping the shadow banking space alive. Here’s BofA with more on China’s ticking WMP time bomb:

• Growth rate accelerated. By the end of 2015, WMP balance reached Rmb23.5tr, up 56.46% YoY. Astonishingly, growth rate accelerated last year compared to the year before despite a high base – in 2014, the balance grew from Rmb10.2tr to Rmb15.0tr, up 47.25% YoY. The key drivers of this accelerated growth are joint stock banks whose WMP balance rose from Rmb5.67tr to Rmb9.91tr, up 74.8% YoY; city commercial banks, Rmb1.7tr to Rmb3.07tr, up 80.6% YoY. On the other hand, the big four state-owned enterprise (SOE) banks’ balance rose by a more moderate 53.2% YoY (from Rmb6.47tr to Rmb8.67tr) while foreign banks’ balance declined by 25.6% (from Rmb0.39tr to Rmb0.29tr).

• Liquidity risk is rising. The outstanding balance of open WMPs, of which buyers can subscribe or redeem largely at will, reached Rmb10.32tr, up 96.95% YoY. They accounted for 44% of bank-run WMPs balance as of Dec 2015, up from 35% a year earlier. The increased share of open WMPs adds to the duration mismatch in the shadow banking sector and makes the system more prone to liquidity shock in our view. In 2015, banks issued Rmb158.41tr worth of WMPs, i.e., Rmb13.2tr a month on average. If WMP buyers decide to ‘go on strike’ for whatever reason, a liquidity crunch in the shadow banking sector could quickly develop in our view.

• Implicit guarantee still largely in place. Only Rmb1.37tr worth of open WMPs, representing 13% of the total, are priced based on NAV. Also, the portion of closed WMPs that are priced similarly is tiny. This means that the vast majority of WMPs are still sold with the so-called “expected return”, which is largely viewed as promised return by WMP buyers by our assessment. In 2015, only 44 WMP products, or 0.03% of matured products during the year, caused investors to lose money. This loss ratio appears unusually low in our view. It is interesting to note that most of the 44 products were sold by foreign banks.

• Individual buyers still dominant. As of Dec 2015, individual investors, including high net-worth individual investors, accounted for Rmb13.34tr WMP balance, or 56.6% of the total (institutional investors, 30.6%; inter-banks, 12.8%). They subscribed to Rmb101.49tr of the newly issued WMPs during the year, representing 64.1% of the total. Mood of individual investors are more volatile than institutions in general.

The bottom line is this: if this implodes, it will not only tank the entire Chinese banking system but the global economy as well, as the amount of liabilities here is quite frankly enormous.

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Paying off old debt with new.

China’s Big Lending Push Comes Up Short (WSJ)

China still has room to cut, but it may not be having much effect other than hiding the economy’s pain. The People’s Bank of China waited until the Group of 20 financial bigwigs were safely out of Shanghai to resume its easing campaign Monday, cutting the reserves banks are required to hold with the central bank by half a percentage point. As moves go, it is pretty standard and expected given China’s sluggish economy. The cut follows up on what has looked like a strong start to lending this year, something that has provided a palpable sense of relief in some markets. In reality, more credit in China isn’t all that stimulative. A concerted lending boom in theory could jump-start growth as it did in 2009 in the aftermath of the global financial crisis. Iron ore prices, for instance, have rallied sharply on expectations of renewed Chinese demand.

The problem is that China has reached an inflection point. A substantial chunk of new debt is increasingly going to pay old debt, creating less activity in the real economy aside from bankers’ fees and commissions. Like a patient with a headache who has already taken aspirin, more medicine won’t dull the pain much, but it may lead to complications. A measurable effect is the so-called evergreening of credit, where lenders essentially roll loan maturities or provide credit simply to pay off old debt. Deutsche Bank measures this by estimating what’s owed each year by companies in terms of principal payments and interest expenses. It then assesses the resources to make those payments, namely operating cash flow, freshly raised equity and excess cash not earmarked for general expenses like salaries.

The result is a massive shortfall in the debt service compared with the sources of cash, to the tune of about 10% of corporate debt last year. That gap is filled with more borrowing. Five years ago, Chinese companies were generating excess cash to pay off debts, so new debt could be used to invest. The most egregious evergreeners are state-owned companies in industries with massive overcapacity issues. Coal mining and metals, for instance, account for 30% of evergreening, according to Deutsche. What could alleviate the evergreening problem? A positive step would be to allow companies in those problem sectors to enter painful restructuring. This would at least remove a source of demand for evergreening loans.

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Expected by economists, that is.

China Factory Activity Shrinks More Than Expected (Reuters)

Activity in China’s manufacturing sector shrank more sharply than expected in February, surveys showed on Tuesday, prompting smaller companies to shed workers at the fastest pace in seven years and suggesting Beijing will have to ramp up stimulus to avoid a deeper economic slowdown. Some investors had been bracing for weak readings after the central bank unexpectedly eased policy late on Monday, injecting an estimated $100 billion worth of cash into the banking system to cushion the pain of upcoming reforms such as restructuring bloated state enterprises. The official Purchasing Managers’ Index (PMI) fell to 49.0 in February from January’s reading of 49.4 and below the 50-point mark that separates growth from contraction. Economists polled by Reuters had expected only a slight dip to 49.3.

It was the lowest reading since November 2011. “The PMI came in much weaker than markets expected, hinting that recent easing measures have had limited impact in turning around the weakening manufacturing sector,” wrote senior emerging markets economist Zhou Hao at Commerzbank in Singapore. “We think PBoC will cut policy rates by 25 basis points in the first quarter and lower RRR (banks’ reserve requirement ratio) by another 100-150 basis points this year.” The private Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI), which focuses more on small to medium- sized, private firms, showed activity contracted for a 12th straight month. It fell to 48.0, below market expectations of 48.3 and January’s reading of 48.4. [..] The official PMI survey, which tends to focus on larger, state firms, has shown persistent declines in employment for the last 3-1/2 years.

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In a system packed with bad loans, you lower the reserve requirement. Sure.

China Attempts To Boost Economy With Cash Injection (Guardian)

China’s central bank has stepped up action to bolster its cooling economy by loosening the rules on banks’ cash reserves in the hope that they will offer cheaper loans. By cutting the reserve requirement ratio (RRR) – the amount of cash that banks must hold as reserves – the People’s Bank of China has in effect injected $100bn (£72bn) of long-term cash into the economy, experts said. The central bank hopes its cut, effective from 1 March, will boost liquidity in the financial sector, following signs that the world’s second-biggest economy is continuing to slow. The move, which came as a surprise to many investors, would stabilise the Chinese financial system, said Duncan Innes-Ker of the Economist Intelligence Unit. But it would not be enough on its own.

“The latest cut in the RRR shows the central bank straining to maintain loose monetary conditions in a difficult economic climate,” he said. “The move will partly offset the effects of capital outflows from China and the provisioning requirements that are forcing banks to lock up more funds as non-performing loans climb. “However, the surge in loans in January highlighted concerns that bank lending may be spiralling out of control. Ultimately, China’s economy cannot grow on credit alone. It needs further reforms to unlock productivity growth.”

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This gets ever harder to roll over.

Global Companies Face a $9.5 Trillion Debt Wall (BBG)

Companies still have a little time before they must pay down the bulk of $9.5 trillion of debt maturing in the next five years. That’s the good news. But it’s not getting any easier for these corporations to borrow, at least not in the U.S. In fact, many of these obligations are becoming harder and more expensive to repay at a time when companies face a historic pile of bonds and loans coming due. This wave of debt coming due through 2020 is bigger than previous five-year schedules of debt maturities in 2013, 2014 and 2015, according to Standard & Poor’s data. It includes about $2.3 trillion of junk-rated debt, with about $418 billion of that rated B- or lower. And it peaks in 2020, with $2.1 trillion of debt coming due, which is greater than the peaks of the most recent previous maturity walls.

U.S. companies account for $4.1 trillion of the debt coming due through 2020, while European issuers are responsible for $3.7 trillion, S&P data show. More than half of all the debt coming due belongs to nonfinancial corporations.

All this is potentially bad news for a global economy that already appears to be losing momentum, especially because central bankers seem to be running out of ways to push investors into riskier securities. The default rate has already started ticking up as the bust in commodity prices forces companies to restructure or file for bankruptcy.And it’s not just oil drillers and miners that are struggling. Solera Holdings, the subject of one of last year’s largest leveraged buyouts, is struggling to raise money in credit markets and has been forced to cut the amount of debt it plans to sell. Corus Entertainment pulled a C$300 million ($221.9 million) junk-bond offering backing a takeover because of difficult market conditions.

While the majority of debt that needs to be repaid is investment grade, it’s unclear whether it’ll remain so by the time it matures. In just eight weeks, credit investors have witnessed more fallen angels, or investment-grade companies getting downgraded to junk, than in any calendar year since 2009, Barclays analysts Jeffrey Meli and Bradley Rogoff wrote in a report on Friday.It’s not terribly surprising that companies have a bigger debt load to pay down. They borrowed trillions of dollars on the heels of unprecedented stimulus efforts started by the Federal Reserve at the end of 2008 during the worst financial crisis since the Depression. They kept piling on the leverage as central banks around the world doubled down on low-rate policies and kept purchasing assets to encourage investors to buy riskier securities.

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We’re all out of feel-good stories.

The Worst Market of All: One Without a Story (WSJ)

Markets don’t just love a good tale, they need a good tale. There are happy stories for bulls, sad endings to cheer bears or sci-fi horrors about algorithms running wild. Investors devour them all. This year has provided too many interlocking story lines, though. Yarns have been spun about China, negative rates, tightening dollar liquidity, tumbling U.S. profits, impending recession, oil, sovereign-wealth funds, geopolitics and the rise of populist politicians. The problem is that all these plots and subplots left investors without a clear narrative to follow. No one can say what’s going on, and investors have responded by reducing the risk they take. One response: The most popular trades went into sharp reverse, with some apparently perverse outcomes.

Perhaps the best measure of the reverse is the impact on stocks popular with hedge funds. A Goldman Sachs index of the 50 U.S. shares most widely held by hedge funds just had its worst six-month underperformance since the financial crisis of 2008-09. It figures: The stocks least liked by hedge funds, as measured by another Goldman index, just recorded their best six-month relative return. Hedge funds borrow to invest, and have been reducing their debts as their managers worry about the uncertainties ahead. That means selling some of their favorite positions and closing short trades by buying back those stocks they had bet against. Selling by mutual funds and oil-fueled sovereign-wealth funds added to the pressures.

The result was a violent shift: The big winners of 2015 became losers, and the most-hated stocks and sectors are now outperformers. Few stocks back up the story of lower leverage as much as the FANGs. The four stocks which led the U.S. market and were loved by hedge funds last year were Facebook, Amazon.com, Netflix and Google. This year only Facebook has beaten the broader market, with Amazon and Netflix both down more than 17% as of Friday. Biotechnology deserves a chapter to itself: After an extraordinary run-up in prices, U.S. biotech has just had its worst six-month performance since 2002 both in absolute and relative terms. The most-hated sector in 2015 was mining. MSCI data show that by mid-January of this year, the sector’s market value had declined to a smaller percentage of global stocks since the dot-com bubble, when old-economy miners were out of fashion.

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Every bank that publishes numbers loses big.

Barclays Shares Fall 7.5% In London After Profit Drops 56% (BBG)

Barclays Plc said it will sell down the stake in its Africa business and reorganize the company into two divisions, as fourth-quarter profit fell by more than half. The bank will sell down its 62% stake in Barclays Africa Group Ltd. over the next two to three years to a level that allows it to deconsolidate the business, according to a statement Tuesday. Adjusted pretax profit, including restructuring costs, fell 56% to £247 million ($344 million) in the quarter from £563 million in the year-earlier period, according to the filing. The moves are meant “to accelerate our strategy and simplify the group, as we prepare for regulatory ring-fencing requirements,” Chief Executive Officer Jes Staley, 59, said in the statement.

Staley is counting on his first results announcement and a revised strategy to reassure investors, who have been demanding bold moves to boost capital and returns as the bank languishes at its lowest valuation in more than three years. In addition to selling down the African stake, the CEO has moved to address the underperforming investment bank. He previously announced 1,200 job cuts, the exit from seven countries in Asia, a hiring freeze and cutting the bonus pool to trim costs. Barclays Africa Group Ltd. “is a well-diversified business and a high quality franchise,” Staley said in the statement. “However the stake in BAGL presents specific challenges to Barclays as owners, such as the level of capital held in respect of BAGL, the international reach of the U.K. bank levy” and other reasons.

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Splurging on debt.

UK Credit Card Bills a Problem Waiting to Bite (BBG)

The pace of consumer borrowing may raise a few eyebrows at the Bank of England if it keeps rising unchecked. Unsecured lending — such as on credit cards — jumped an annual 9.1% in January, the fastest in a decade, according to data on Monday. In total, consumers took out 1.6 billion pounds ($2.2 billion) more than they repaid, the second-highest since mid-2005. Back then, the country was in its 14th year of uninterrupted growth, and we’re nowhere near that now. While Mark Carney has said U.K. spending is being largely fueled by incomes, he and his fellow policy makers are still a little wary of where the borrowing numbers are going. Here’s the BOE governor earlier this month: “ They are still relatively indebted, and we want to make sure that, the collective, we do not repeat the mistakes of the past of getting too indebted and then getting shocked – shocked – by movements on rates.”

With record employment and cheap money encouraging borrowing — the average rate on a new unsecured loan is at a three-year low — that’s good for Britain’s economy at a time of deepening troubles in the world economy and questions over business investment in the run-up to the European Union referendum. But it means the foundations of the expansion are not as solid as they could be. “While the rapid growth in unsecured lending will support growth in the near term by propping up consumer spending, it could pose a risk to financial stability further down the line,” said Niraj Shah, an economist at Bloomberg Intelligence in London.

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Where was Lord King when it mattered?

Alchemy Should Be Squeezed Out Of The World’s Banking System (Mervyn King)

For centuries, alchemy has been the basis of our system of money and banking. Governments pretended that paper money could be turned into gold even when there was more of the former than the latter. Banks pretended that short-term riskless deposits could be used to finance long-term risky investments. In both cases, the alchemy is the apparent transformation of risk into safety. For much of the time the alchemy seemed to work. From time to time, however, people realised that the Emperor had far fewer clothes than the Masters of the Universe wanted us to believe. The pretence that the illiquid real assets of an economy – the factories, capital equipment, houses and offices – can suddenly be converted into money or liquidity is the essence of the alchemy of the present system.

Banks and other financial intermediaries will always try to finance illiquid assets by issuing liquid liabilities because they make profits by paying less on the latter than they earn on the former. The problem is that the liquidity promised to investors or depositors can be supplied only if at each moment a small number of people wish to convert their claim on the bank into cash. Liquidity simply disappears if everyone wishes to convert their claim into money at the same time. What may be possible for a small number of people is self-evidently impossible for the community as a whole. And the problem is made worse by the fact that if a depositor believes that others are likely to try to take their money out, it is rational for him or her to do the same and get to the front of the queue as soon as possible – a bank run.

Liquidity is, however, only one aspect of the alchemy of our present system. Risk, and its impact on the solvency of banks, is the other. And in the recent crisis, concern about solvency was the main driver of the liquidity problems facing banks. When creditors started to worry that bank equity was insufficient to absorb potential losses, they decided that it was better to get out while the going was good. Concerns about solvency, especially in a world of radical uncertainty, generate bank runs. To reduce or eliminate alchemy, we need a joint set of measures to deal with both solvency and liquidity problems.

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“The European Commission is, after all, a branch of corporate power.”

We Are Being Led By Imbeciles (Bill Mitchell)

I was reading John Maynard Keynes recently – circa 1928 – that is, 8 years before the publication of the General Theory with his Treatise on Money intervening. He was railing against the principles and practice of ‘sound finance’, which he noted had deliberately caused billions of pounds in lost income for the British economy. He urged the Treasury and the Bank of England to abandon their conservative (austerity) approach to the economy and, instead, embark on wide-scale fiscal stimulus to create jobs and prosperity. He concluded that with thousands of workers idling away in mass unemployment that it was “utterly imbecile to say that we cannot afford” to stimulate employment via large-scale public works – building infrastructure etc. He considered the policy makers who opposed such options were caught up in “the delirium of mental confusion”. The stark reality is that 88 years later, he could have written exactly the same article and would have been ‘right on the money’. We are being led (euphemism) by imbeciles.

Earlier this month (February 12, 2016), Eurostat told us that – Industrial production down by 1.0% in both euro area and EU28. The report said that: “…In December 2015 compared with November 2015, seasonally adjusted industrial production fell by 1.0% in both the euro area (EA19) and the EU28 … In November 2015 industrial production fell by 0.5% in both zones … Among Member States for which data are available, the largest decreases in industrial production were registered in the Netherlands (-9.4%), Estonia (-8.8%) and Germany (-2.3%) …” Which means that the overall monetary union is back in recession if industrial production is considered.

The other point to note is that the dominant neo-liberal narrative in Europe (and elsewhere) in relation to the ongoing consequences of the GFC focuses on individual nation failings – such as, lack of competitiveness, excessive wage rates, excessive regulation, etc – and the need for so-called ‘internal devaluation’ as a way of restoring ‘competitiveness’ and structural reform aimed at boosting productivity. The problem with this narrative is that it is hard to maintain when industrial production is falling across a number of nations including Germany and the Netherlands, which are meant to be competitive leaders in the Eurozone. The structural ‘reform’ agenda seems very transparent when confronted with this type of reality. Its aim is to redistribute national income in favour of capital and force workers to labour longer and harder for less reward. The European Commission is, after all, a branch of corporate power.

On July 31, 1928, John Maynard Keynes wrote a short article in the Evening Standard entitled – How to Organize a Wave of Prosperity. I have created a PDF version of the article because it is not easily assessable to those without expensive library subscriptions. The context was the slowdown in British industry in that year and the subsequent rise in mass unemployment. Keynes wrote: “…Moreover, the more successful the efforts which are being made to restore the margin of profits by ‘rationalisation’, the greater the likelihood – at first anyhow – of increasing unemployment. And the more successful the efforts of the Treasury, in the pursuit of so-called `Economy’, to damp down the forms of capital expansion which they control – telephones, roads, housing, etc., again the greater the certainty of increasing unemployment….” The resonance with contemporary events some 88 years later is frightening.

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They will never speak the same language. They just pretend to when it seems profitable.

EU’s Tower of Babel May Fall While Leaders Distracted (Reuters)

It’s little wonder the European Union can’t find common solutions to Europe’s urgent problems when its main members are having such different national conversations. Like the biblical Tower of Babel, Europe’s ambitious construction is in danger of toppling because its peoples are not speaking the same political language. Tune in to Germany and the fierce debate is all about how to cope with an influx of a million migrants, whether to limit the numbers and, in some quarters, how to stop them coming. Switch to France and you’re listening to a nation that thinks it is at war, still living under a state of emergency and in shock after last November’s attacks by Islamist militants that killed 130 people in Paris. Flip to Britain and the talk is all of national sovereignty and a possible Brexit in the build-up to a June referendum that might end the country’s schizophrenic membership of the EU.

Look east to Poland and people are arguing over the new government’s moves to curb the media and the constitutional court, over who may have been a Communist informer 40 years ago, and over the perceived Russian threat to eastern Europe today. Around central Europe the discussion is about how to resist German pressure to take in a share of refugees. Turn south and the Italians and Portuguese are engrossed in domestically focused debates about how to revive economic growth despite the EU’s budgetary corset while cleaning up legacy bank problems. Spain meanwhile is preoccupied by Catalan separatism, political paralysis and the risk of a breakup of the country. When those countries’ leaders come to Brussels, they often cannot even agree what they should be discussing.

For the last two EU summits, Britain wanted the focus to be on its demands for a renegotiation of its membership terms to give Prime Minister David Cameron a “new settlement” he can sell in a June 23 referendum on whether to stay in the bloc. He secured a deal on Feb. 19, but many fellow leaders were frustrated at having to spend time on what they see as side issues and rhetorical formulations when their house is on fire. “Everyone in the room and corridors was rather irritated that here we are dealing with some rather obscure issues of child benefits indexation, while we have real problems in Syria, member states closing borders, major issues we should really be on instead of this,” a diplomat involved in the talks said.

German Chancellor Angela Merkel, fighting for her political life against domestic critics of her open door for refugees, wanted the EU to concentrate on urgent measures to secure Europe’s external borders, register migrants, send home rejected asylum seekers and share out refugees among EU states. Desperate to find a common “European solution” to the migration crisis, she has forced yet another European summit on March 7 with Turkey, days before three German regional elections in which anti-immigration rightists could make big gains.

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Lone voice.

Canada Meets Target To Resettle 25,000 Syrian Refugees (AP)

Canada’s immigration minister said on Monday the country has reached a significant milestone with the arrival of 25,000 Syrian refugees. Immigration minister John McCallum said work continues to integrate the Syrians into the community. McCallum was at Toronto’s Pearson airport as the last two government-arranged refugee flights were arriving as part of the Liberals’ $678m (US$501m) settlement plan. The refugee resettlement program was launched in November, after prime minister Justin Trudeau came to power and promised to bring in 25,000 government-sponsored refugees by the end of 2015 amid an intense debate in the West over what to do with people fleeing violence in the Middle East. Trudeau later pushed back the date by two months.

In the United States, the Obama administration plans to take in 10,000 Syrian refugees. But several Republican governors have tried to stop the arrival of Syrian refugees in their states in the wake of the deadly attacks in Paris and California. Canada’s commitment reflects the change in government after October’s election. The previous Conservative government declined to resettle more Syrian refugees, despite the haunting image of a drowned three-year-old Syrian boy, Alan Kurdi, washed up on a Turkish beach. The boy had relatives in Canada, and the refugee crisis became a major campaign issue. McCallum previously said he hopes to bring in between 35,000 and 50,000 Syrian refuges by the end of the year.

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Insane.

Clashes As Authorities Demolish Homes In Calais ‘Jungle’ Camp (Guardian)

Clashes between police and migrants continued into Monday evening after authorities moved in earlier in the day to dismantle parts of the refugee camp known as the Jungle. The homes of up to 200 people of the approximately 3,500 people living in the camp had been demolished by the middle of the day, according to a British refugee aid group, as smoke went up from blazes engulfing makeshift shelters. Some homes appeared to have been set alight by the heat of teargas canisters fired at crowds by riot police, said a spokeswoman for the British volunteer group Help Refugees, while some residents seem to have set others on fire in protest. Video footage from a volunteer inside the camp showed residents running away from clouds of teargas.

Reuters said police fired teargas at about 150 people and activists who threw stones, and at least three shelters were on fire. The clashes continued into the evening near a motorway heading to the port of Calais, where vehicles were blocked by migrants on the stretch of road overlooking a piece of ground which had previously been part of the camp. Strewn with debris, the port road was eventually taken back by police, who arrested one person and three members of the No Borders activist group.The work began in the early morning, with orange-vested work crews dismantling several dozen makeshift wood-and-tarpaulin shacks by hand before two diggers loaded the debris into large trucks.

Police in riot gear shielded the work, and initially there were no reports of unrest beyond a report of one British activist being arrested. Volunteer groups said the work began with officials telling residents they had an hour to leave before their home was demolished. Reacting to the demolitions, Amnesty International said that both the French and UK governments had to live up to responsibilities in relation to those who were evicted, including facilitating access to asylum proceedings in France and visas to the UK for those with family members there. “Although it’s taking place across the Channel, this is not an issue that the UK can wash its hand of,” said Amnesty International’s Europe and central Asia director, John Dalhuisen.

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More insane.

As Europe Bickers, Macedonia Police Fire Tear Gas On Migrants (Kath.)

Police in Former Yugoslav Republic of Macedonia (FYROM) fired tear gas to disperse hundreds of migrants who stormed the border from Greece on Monday as a deeply divided Europe traded barbs over the biggest humanitarian crisis in decades. As frustrations boiled over at restrictions imposed on people moving through the Balkans, migrants trapped on the Greece-FYROM border tore down a metal gate in the barbed wire fence. A Reuters witness said FYROM police fired several rounds of tear gas into the crowd and onto a railway line where other migrants sat refusing to move, demanding to cross into the country. Greece raced to set up temporary accommodation for a build-up of thousands of migrants stranded in the country after Austria and countries along the Balkans migration route imposed restrictions on their borders, limiting the number of migrants able to cross.

Many of the migrants, fleeing war and poverty in the Middle East and North Africa, hope to reach Germany, which last year took in 1.1 million asylum seekers. There were an estimated 22,000 migrants and refugees trapped in Greece on Monday, some sleeping rough in central Athens, some in an abandoned airport and at the 2004 Olympic Games venues. Greece’s migration minister said without any outlet, that figure could rise as high as 70,000 in coming days. More than one million migrants passed through Greece last year, prompting criticism from other European nations that Athens simply waved people through. “These people do not want to stay here,” said Thodoris Dritsas, Greece’s shipping minister. “Even if we had a system in place for them to stay here permanently it wouldn’t work.”

German Chancellor Angela Merkel, facing the biggest test of her decade in power, on Sunday defended her open-door policy for migrants, rejecting any limit on the number of refugees allowed into her country despite divisions within her government over the issue. “There are many conflicting interests in Europe,” she told state broadcaster ARD. “But it is my damn duty to do everything I can so that Europe finds a collective way.” That was lacking on Monday, a week before European Union leaders were due to meet with Turkey on how it could help quell the flow of migrants from its shores. In an increasingly shrill debate, Austria’s defence minister suggested Merkel take in all those who were stranded in Greece. “The German chancellor … said that formally there is no upper limit in Germany. Then, I would invite her to take the people, who arrive in Greece now and whom she wants to take care of, directly to Germany,” Hans Peter Doskozil told Austrian’s Oe1 radio.

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Spraying tear gas on children.

Europe’s Crisis Worsens: Refugees Face Razor Wire, Tear Gas (AP)

Pressed against coils of razor wire and shouting “Help us!,” refugees and migrants at Greece’s northern border were pushed back by Macedonian police using tear gas and stun grenades, as authorities here raced to build more camps to shield the escalating number of stranded people from winter. A top European Union official prepared to visit the region Tuesday to try and ease the crisis that produced more scenes of chaos: Syrian and Iraqi refugees and others forced their way through part of a Macedonian border fence, some clutching infants or struggling to free duffel bags caught in the razor-wire. They were met by Macedonian riot police.

Volunteer doctors said at least 22 migrants, including 12 children, were treated for breathing difficulties and cuts. Authorities in Macedonia said one policeman was injured and that dozens of special forces officers were flown in by helicopter to help quell a refugee protest. “Tragically, there seems to be more willingness among European countries to coordinate blocking borders than to provide refugees and asylum-seekers with protection and basic services,” said Giorgos Kosmopoulos, head of Amnesty International in Greece. Some 7,000 migrants, mostly from Syria, Iraq and Afghanistan, are crammed into a tiny camp at the Greek border village of Idomeni, and hundreds more are arriving daily.

The Greek army completed more temporary shelters in northern Greece over the weekend, and at the government’s request, local authorities in central Greece, opened indoor stadiums, conference centers, and hotels that have gone out of business to house migrants, while the Education Ministry called on school children to join the effort with donation drives. “Of course Greece over the next one or two months will do what it can to help these people. But it must be made clear that the burden of this crisis must be distributed in Europe,” Greek Prime Minister Alexis Tsipras said in an interview with private Star television. [..] Wolf Piccoli of advisory firm Teneo Intelligence, said the EU was making a “risky bet” with its strategy on migration. “The EU is betting on incremental steps, hoping that the backlog will deter potential migrants before tensions in Greece raise concerns over the country’s institutions,” he said.

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“..You don’t understand. I don’t have any money left. I have four children. I don’t have any other plan.”

Most Of The Refugees Stuck In Greece Are Now Women And Children (WaPo)

In a cold drizzle, Aziza Hussein, a 30-year-old Syrian widow traveling with her four children, stood amid a surge of migrants trapped at the northern Greek border. Her way forward blocked by armed Macedonian troops, police dogs and a razor-wire fence, she stood in the middle of the chaotic scrum of refugees, clutching her 5-year-old son. “What are we going to do?” she said, shielding her eyes with a trembling hand as she cried. In recent days, European nations have moved more aggressively than ever to shut down the route used by more than a million migrants fleeing war and poverty in the Middle East and beyond. Yet even as they do, the region is confronting a new kind of migrant flow — waves of women and children.

Last year, most of the asylum seekers fleeing to Europe were men, many of them young and single. But in the past several weeks, the balance has shifted, with women and their children, as well as unaccompanied minors, now accounting for roughly 57% of asylum seekers. The surge of the vulnerable comes at the worst possible time — just as European nations are barring their doors and 25,000 refugees are suddenly trapped in near-bankrupt Greece, a country that was once merely an entry point. Refugees say the sudden exodus of women and children was sparked by a rising fear that the path to sanctuary will soon close completely. “My cousins, my neighbors, everyone told us, ‘Go now. There isn’t much time, because they will shut the door,’ ” said Hussein, who left the Syrian city of Hasakah three weeks ago in a desperate bid to make it to Germany.

“We crossed the sea,” she said, pausing to wipe away tears. “But they won’t let us through. You don’t understand. I don’t have any money left. I have four children. I don’t have any other plan.” Now, the EU’s most troubled member – Greece – is scrambling to cope with a mounting humanitarian crisis the rest of the continent has left on its doorstep. With 2,000 migrants a day still arriving in rickety boats in the Greek islands via Turkey, Greek officials are warning that the number of stranded migrants could surge to 70,000 within 30 days, turning pockets of this troubled country into sprawling refugee camps.

[..] In recent days, Macedonian authorities have begun sharply limiting the number and type of migrants allowed through — a response to the same action by Austria, Slovenia, Croatia, Serbia and other Balkan nations. Macedonian authorities on Monday resorted to tear gas, firing canisters at migrants as they tried to force their way through a section of border fence with a battering ram. Hours later, children could still be seen rubbing at irritated eyes. “We treated women and children today because of tear gas,” said Vicky Markolefa, a visibly frustrated official with Doctors Without Borders, which is running an overburdened clinic here. “Yes, that’s right. Women and children. They were choking. They had stinging eyes. They inhaled that smoke. Some of them were infants.”

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