brain damage Archives - The Automatic Earth

Not much good news on the COVID front. But the reported severe nerve- and brain damage is a new low. We still know very little about COVID19, though many people claim otherwise. Can’t be careful enough.

Yes we are testing more (bottom panel).

But of we were just stickling a swab in every nose that walked through the front door, the percent positive would fall. Instead it is rising (top panel).

This is bigger than more testing, the virus is also increasing/spreading. https://t.co/0aTFqshuM2 pic.twitter.com/ZVV6dX60CL

— Jim Bianco (@biancoresearch) July 8, 2020

Inflammation of nerves and brains. Psychosis, paralysis.

• Serious Brain Disorders In People With Mild Coronavirus Symptoms (G.)

Doctors may be missing signs of serious and potentially fatal brain disorders triggered by coronavirus, as they emerge in mildly affected or recovering patients, scientists have warned. Neurologists are on Wednesday publishing details of more than 40 UK Covid-19 patients whose complications ranged from brain inflammation and delirium to nerve damage and stroke. In some cases, the neurological problem was the patient’s first and main symptom. The cases, published in the journal Brain, revealed a rise in a life-threatening condition called acute disseminated encephalomyelitis (Adem), as the first wave of infections swept through Britain. At UCL’s Institute of Neurology, Adem cases rose from one a month before the pandemic to two or three per week in April and May. One woman, who was 59, died of the complication.

A dozen patients had inflammation of the central nervous system, 10 had brain disease with delirium or psychosis, eight had strokes and a further eight had peripheral nerve problems, mostly diagnosed as Guillain-Barré syndrome, an immune reaction that attacks the nerves and causes paralysis. It is fatal in 5% of cases. “We’re seeing things in the way Covid-19 affects the brain that we haven’t seen before with other viruses,” said Michael Zandi, a senior author on the study and a consultant at the institute and University College London Hospitals NHS foundation trust. “What we’ve seen with some of these Adem patients, and in other patients, is you can have severe neurology, you can be quite sick, but actually have trivial lung disease,” he added.

“Biologically, Adem has some similarities with multiple sclerosis, but it is more severe and usually happens as a one-off. Some patients are left with long-term disability, others can make a good recovery.” The cases add to concerns over the long-term health effects of Covid-19, which have left some patients breathless and fatigued long after they have cleared the virus, and others with numbness, weakness and memory problems. One coronavirus patient described in the paper, a 55-year-old woman with no history of psychiatric illness, began to behave oddly the day after she was discharged from hospital. She repeatedly put her coat on and took it off again and began to hallucinate, reporting that she saw monkeys and lions in her house. She was readmitted to hospital and gradually improved on antipsychotic medication.

Same topic, different take.

• Scientists Warn Of Potential Wave Of COVID-Linked Brain Damage (R.)

Scientists warned on Wednesday of a potential wave of coronavirus-related brain damage as new evidence suggested COVID-19 can lead to severe neurological complications, including inflammation, psychosis and delirium. A study by researchers at University College London (UCL) described 43 cases of patients with COVID-19 who suffered either temporary brain dysfunction, strokes, nerve damage or other serious brain effects. The research adds to recent studies which also found the disease can damage the brain. “Whether we will see an epidemic on a large scale of brain damage linked to the pandemic – perhaps similar to the encephalitis lethargica outbreak in the 1920s and 1930s after the 1918 influenza pandemic – remains to be seen,” said Michael Zandi, from UCL’s Institute of Neurology, who co-led the study.

COVID-19, the disease caused by the new coronavirus, is largely a respiratory illness that affects the lungs, but neuroscientists and specialist brain doctors say emerging evidence of its impact on the brain is concerning. “My worry is that we have millions of people with COVID-19 now. And if in a year’s time we have 10 million recovered people, and those people have cognitive deficits … then that’s going to affect their ability to work and their ability to go about activities of daily living,” Adrian Owen, a neuroscientist at Western University in Canada, told Reuters in an interview.

In the UCL study, published in the journal Brain, nine patients who had brain inflammation were diagnosed with a rare condition called acute disseminated encephalomyelitis (ADEM) which is more usually seen in children and can be triggered by viral infections. The team said it would normally see about one adult patient with ADEM per month at their specialist London clinic, but this had risen to at least one a week during the study period, something they described as “a concerning increase”. “Given that the disease has only been around for a matter of months, we might not yet know what long-term damage COVID-19 can cause,” said Ross Paterson, who co-led the study. “Doctors need to be aware of possible neurological effects, as early diagnosis can improve patient outcomes.”

10,000 new cases per day is a lot for one state.

• Dozens Of Florida Hospitals Out Of Available ICU Beds (R.)

More than four dozen hospitals in Florida reported that their intensive care units (ICUs) have reached full capacity on Tuesday as COVID-19 cases surge in the state and throughout the country. Hospital ICUs were full at 54 hospitals across 25 of Florida’s 67 counties, according to data published on Tuesday morning by the state’s Agency for Health Care Administration. More than 300 hospitals were included in the report, but not all had adult ICUs. Thirty hospitals reported that their ICUs were more than 90% full. Statewide, only 17% of the total 6,010 adult ICU beds were available on Tuesday, down from 20% three days ago, according to the agency’s website.

Florida’s coronavirus cases have soared in the last month, with the state’s daily count topping 10,000 three times in the last week. The death rate from COVID-19 rose nearly 19% in the last week from the week prior, bringing the state’s death toll to more than 3,800. All ICU beds are filled at the three hospitals in Clay County, where the population is around 220,000. Florida Governor Ron Desantis on Monday encouraged state residents to seek care at hospitals if needed, citing concerns that people with life-threatening conditions other than COVID-19 had avoided hospitals earlier in the pandemic to the detriment of their health.

New highs in COVID-19 hopitalizations today in Texas (9,286), California (7,499), Arizona (3,356), & Georgia (2,096). Florida still not reporting this data but expected to be at new highs as well.

Texas hospitalizations are now about half of New York’s April 13 Peak (18,825). pic.twitter.com/saT4wBOUE2

— Charlie Bilello (@charliebilello) July 8, 2020

Different takes on asymptomatic cases emerging.

• Majority Testing Positive Have No Symptoms (BBC)

Only 22% of people testing positive for coronavirus reported having symptoms on the day of their test, according to the Office for National Statistics. This hammers home the role of people who aren’t aware they’re carrying the virus in spreading it onwards. Health and social care staff appeared to be more likely to test positive. This comes as deaths from all causes in the UK fell to below the average for the second week in a row. Between the end of March and June, there were 59,000 more deaths than the five-year average. Meanwhile, the UK government’s daily figures released on Tuesday showed another 155 people have died after testing positive for the virus. This takes the total number of deaths to 44,391.

It comes after 16 new deaths were reported on Monday, but there are often reporting lags over the weekend. While the ONS survey includes relatively small numbers of positive swab tests (120 infections in all) making it hard to make any strong conclusions about who is most likely to be infected, there are some patterns coming through in the data: • Those in people-facing health or social care roles, and working outside their homes in general, were more likely to have a positive test. • People from ethnic minority backgrounds were more likely to have a positive antibody test, suggesting a past infection. • White people were the least likely proportionally to test positive for antibodies. • There was also some evidence that people living in larger households were more likely to test positive than those in smaller households.

Looks like Greece may very soon have to choose between closing its borders or locking down its own people again.

• Stanford’ Ioannidis Says Greece Needs More Aggressive COVID Testing (GR)

After Greece’s opening up to travelers from much of the rest of the world on July 1, the nation has seen a troubling trend in the increasing numbers of coronavirus infections. Currently, as of today, 27 new COVID cases were diagnosed in Greece in the past 24 hours — and 14 of these are tourists. Speaking to Greek Reporter, the noted medical professor Dr. John Ioannidis of Stanford University, an expert in the field of epidemiology, questions the somewhat lax attitude Greece has taken, with its use of an algorithm arrived at by answers on a questionnaire and random testing of arrivals.

“I think it would be useful to require more aggressive (perhaps universal) testing for tourists coming from countries that have low testing rates. Most of these countries make small contributions to the Greek tourism budget anyhow, so one is risking the emergence of an epidemic wave without much tangible financial benefit.” The epidemiologist states “I understand that Greece desperately needs tourism funds, since tourism is responsible for about 20% of the GDP. The Greek and the European COVID task forces include capable scientists and I trust they have put a lot of thought on how to reopen the country to tourism. It is not an easy situation.

“Determining which country is eligible for allowing tourists from is difficult and our knowledge base is incomplete. I just want to caution that it is potentially misleading to base this decision on the number of cases that continue being detected in each country. Countries that deal seriously with coronavirus do more testing and come up with more detected cases. Conversely, countries that do little testing will find few cases, but this does not mean that coronavirus does not exist there.”

“Serbia is one example worth discussing, since 20 of the 36 tourist cases today were from there. In that country, the number of cases looked pretty low, but this was simply because relatively little testing was done. With only 11,000 cases detected in Serbia until the end of May, it is likely that the true number exceeded 200,000. Moreover, apparently there were substantial residual foci of epidemic activity. However, I think this is a problem that may be pertinent to Balkan countries in general. Testing in other Balkan countries is even less frequent than Serbia on a population basis.

Keep your focus on Sidney Powell and Obama.

• Is Strzok Memo the Rosetta Stone of Obamagate? (RCP)

It doesn’t seem to matter to the mainstream media that evidence has mounted into the stratosphere that Trump has been right all along about his campaign being illegally surveilled by the Obama administration. It doesn’t matter that Trump survived a two-plus year investigation by a special counsel and was cleared of any kind of collusion with the Russians. The Democrats and their agents in the Deep State know that whatever they do to harass Trump will be treated as noble and patriotic by the corrupt media, and that whenever evidence surfaces of their criminal behavior it will be promptly buried again.

Which brings us to the infamous handwritten notes by disgraced FBI agent Peter Strzok about a White House meeting that surfaced in a recent filing in the Flynn case. Strzok had already earned a prominent place in the “Wish I Hadn’t Done That” Hall of Fame for his serial confession via text message of not just marital infidelity but also constitutional perfidy. But the half-page of notes released by Flynn’s defense team rises to the level of a history-altering “Oops!” Indeed, it could well be the Rosetta stone that allows us to penetrate the secrets of the anti-Trump conspiracy that stretched from the FBI to the CIA, the Justice Department and the White House.

What we know about the provenance of the notes comes from Flynn’s attorney Sidney Powell, who said they were written by Strzok about a meeting that took place on Jan. 4, 2017. The only problem is that the cast of characters in the memo duplicates those who were in attendance at the White House on Jan. 5, 2017, to discuss how the Obama administration should proceed in its dealings with Flynn, who was accused of playing footsie with Russian Ambassador Sergey Kislyak prior to assuming his official role as national security adviser. Attorney General William Barr has gone on the record (on the “Verdict With Ted Cruz” podcast) that the notes actually describe the Jan. 5 meeting.

If so, the notes strongly contradict Susan Rice’s CYA “memo to self” where the Obama national security adviser recounts the Jan. 5 meeting and stresses three times that President Obama and his team were handling the Flynn investigation “by the book.” Methinks the lady doth protest too much, especially now that we have Strzok’s contemporaneous notes to contradict her memo, which suspiciously was written in the final minutes of the Obama administration as Donald Trump was being sworn in at the Capitol.

From what we can tell, Strzok (unlike Rice) was not writing his memo to protect anyone. He seems to have merely jotted down some notes about what various participants in the meeting said, including President Obama, Vice President Joe Biden, Rice, Deputy Attorney General Sally Yates and Strzok’s boss — FBI Director James Comey. Chances are, at this point Strzok had no idea his dirty laundry was going to be aired or that his role as a master of the universe was going to be toppled.

That settlement makes me think of the one Epstein got, one of those “everything included” deals that make you wonder how legal they can be.

• US Judge Says “Tentatively Inclined” To Reject Bayer’s Monsanto Settlement (ZH)

As the EU’s antitrust regulator announces another round of sweeping antitrust investigations into the big US tech behemoths. an American judge is apparently making noises about throwing out a major settlement involving German multinational pharma conglomerate Bayer. According to the settlement, which we reported on a few weeks ago when it was first announced, Bayer had agreed to pay $10 billion to settle thousands of lawsuits brought against it over its purchase of Monsanto, the American agrichemical giant that’s best known for producing Roundup weed killer. The lawsuits stemmed from evidence that glyphosate, one of the primary ingredients of Monsanto’s Roundup, is actually carcinogenic.

Which means that by marketing Roundup into ubiquity, even pairing it with genetically modified crop seeds allowing farmers to spray the stuff then simply forget about it since it wouldn’t harm the crops. A landmark California Court ruling handed down in 2017 found Bayer liable for the plaintiffs’ cancers, since it now owned Monsanto. The mountain of litigation has weighed on Bayer’s share price ever since, making the Monsanto acquisition one of the biggest blunders in the history of the storied German firm. The two sides have been in negotiations virtually ever since, until two weeks ago, when a majority of the plaintiffs agreed to a $10 billion settlement.

BBG News: “U.S. District Judge Vince Chhabria wrote in a court filing Monday that a proposed system for dealing with future lawsuits over the herbicide is problematic. Shares of Bayer, which inherited the weedkiller through its purchase of Monsanto, fell as much as 6.9% in Frankfurt, the most intraday since March 23. The judge’s misgivings center on a plan to create a class of future claims as part of the nearly $11 billion settlement. Any change to that portion of the proposal wouldn’t necessarily affect the rest of the deal, in which the company agreed to resolve about 125,000 existing lawsuits. About 30,000 claims, contending that Roundup caused non-Hodgkin’s lymphoma, are not yet subject to deals between plaintiffs and Bayer. Some U.S. plaintiffs’ lawyers are vowing to file another wave of new suits that could add tens of thousands to that total.“

America at its ugliest.

• Purdue Pharma Made Political Contributions After Going Bankrupt (IC)

Last september, Purdue Pharma filed for bankruptcy after several cities sued the company for its role in creating the opioid crisis. By going bankrupt, it was able to get all litigation stayed; family members of the over 500,000 victims of the opioid crisis are now just creditors in the bankruptcy. The Sackler family — including Jonathan Sackler, a co-owner of Purdue who died Monday — made off with over $10 billion in company funds. Meanwhile, in December, the Democratic Attorneys General Association accepted $25,000 in donations from the company, according to data collected by Political MoneyLine. Several members of the Association are leading the litigation against Purdue.

In January, the Democratic Governors Association, headed by New Jersey Gov. Phil Murphy, accepted $50,000 from Purdue Pharma, as did the Republican Governors Association, headed by Texas Gov. Greg Abbott. Those donations come as states, including New Jersey, California, Delaware, Iowa, Kentucky, Maine, Massachusetts, Montana, Tennessee, and Vermont, are considering excise taxes on prescription opioids — which would be approved and implemented by governors. While Purdue is not publicly traded and as a result does not have to disclose risk factors to investors, close allies of Purdue, including the Healthcare Distribution Alliance and the lobbying group Pharmaceutical Research and Manufacturers of America, or PhRMA, have vocally opposed the taxes.

Fellow pharmaceutical companies Mallinckrodt and Endo International have raised concerns that the taxes could materially affect their bottom line in SEC disclosures. To date just five states — New York, Minnesota, Rhode Island, Maine, and Delaware — have implemented an opioid tax or fee. Adam Levitin, a bankruptcy law professor at Georgetown University, called the donations “astonishing.” “Given the politics of the case, there’s something incredibly brazen about this, such that I’m shocked that Purdue didn’t seek court approval,” Levitin said of the DAGA donation. “That they would give to the Dem AGs, but not the GOP AGs is really problematic given that the most aggressive AGs have been Dems.”

Simple solution: don’t use TikTok.

• Apple Suddenly Catches TikTok Secretly Spying On Millions Of iPhone Users (F.)

As I reported on June 23, Apple has fixed a serious problem in iOS 14, due in the fall, where apps can secretly access the clipboard on users’ devices. Once the new OS is released, users will be warned whenever an app reads the last thing copied to the clipboard. As I warned earlier this year, this is more than a theoretical risk for users, with countless apps already caught abusing their privacy in this way. Worryingly, one of the apps caught snooping by security researchers Talal Haj Bakry and Tommy Mysk was China’s TikTok. Given other security concerns raised about the app, as well as broader worries given its Chinese origins, this became a headline issue. At the time, TikTok owner Bytedance told me the problem related to the use of an outdated Google advertising SDK that was being replaced.

Well, maybe not. With the release of the new clipboard warning in the beta version of iOS 14, now with developers, TikTok seems to have been caught abusing the clipboard in a quite extraordinary way. So it seems that TikTok didn’t stop this invasive practice back in April as promised after all. According to TikTok, the issue is now “triggered by a feature designed to identify repetitive, spammy behavior,” and has told me that it has “already submitted an updated version of the app to the App Store removing the anti-spam feature to eliminate any potential confusion.” In other words: We’ve been caught doing something we shouldn’t, we’ve rushed out a fix. TikTok also told me that the platform “is committed to protecting users’ privacy and being transparent about how our app works.” No comment on that one. TikTok added that it “looks forward to welcoming outside experts to our Transparency Center later this year.”

All US sports teams need to be renamed.

• Madness of Political Correctness (Pelerin)

The madness of political correctness is mocked in this e-mail sent to Clarence Page of the Chicago Tribune after an article he published concerning a name change for the Washington Redskins. The author is unknown but perceptive, clever and sarcastic:. Dear Mr. Page: I agree with our Native American population. I am highly jilted by the racially charged name of the Washington Redskins. One might argue that to name a professional football team after Native Americans would exalt them as fine warriors, but nay, nay. We must be careful not to offend, and in the spirit of political correctness and courtesy, we must move forward. Let’s ditch the Kansas City Chiefs, the Atlanta Braves and the Cleveland Indians. If your shorts are in a wad because of the reference the name Redskins makes to skin color, then we need to get rid of the Cleveland Browns. The Carolina Panthers obviously were named to keep the memory of militant Blacks from the 60’s alive. Gone. It’s offensive to us white folk.

The New York Yankees offend the Southern population. Do you see a team named for the Confederacy? No! There is no room for any reference to that tragic war that cost this country so many young men’s lives. I am also offended by the blatant references to the Catholic religion among our sports team names. Totally inappropriate to have the New Orleans Saints, the Los Angeles Angels or the San Diego Padres. Then there are the team names that glorify criminals who raped and pillaged. We are talking about the horrible Oakland Raiders, the Minnesota Vikings, the Tampa Bay Buccaneers and the Pittsburgh Pirates! Now, let us address those teams that clearly send the wrong message to our children. The San Diego Chargers promote irresponsible fighting or even spending habits. Wrong message to our children.

The New York Giants and the San Francisco Giants promote obesity, a growing childhood epidemic. Wrong message to our children. The Cincinnati Reds promote downers/barbiturates. Wrong message to our children. The Milwaukee Brewers. Well that goes without saying. Wrong message to our children. So, there you go. We need to support any legislation that comes out to rectify this travesty, because the government will likely become involved with this issue, as they should. Just the kind of thing the do-nothing Congress loves. As a die-hard Oregon State fan, my wife and I, with all of this in mind, suggest it might also make some sense to change the name of the Oregon State women’s athletic teams to something other than “the Beavers” (especially when they play Southern California). Do we really want the Trojans sticking it to the Beavers? I always love your articles and I generally agree with them. As for the Redskins name, I would suggest they change the name to the “Foreskins” to better represent their community, paying tribute to the dick heads in Washington DC.

Apparently the prison in Brooklyn is a horror.

• Ghislaine Maxwell Arraignment Scheduled For July 14 (R.)

Ghislaine Maxwell, the former associate of Jeffrey Epstein, will be arraigned on July 14 on charges of luring underage girls so that the financier, now dead, could abuse them, according to a court order issued Tuesday evening. Judge Alison Nathan in Manhattan federal court said a bail hearing would be held at 1 pm EST that day via video conference. Maxwell, 58, arrived at the federal Metropolitan Detention Center (MDC) in Brooklyn on Monday. She was arrested on July 2 at a mansion in New Hampshire, where investigators said she had been lying low. Prosecutors said Maxwell groomed girls so Epstein abuse them at lavish homes in Palm Beach, Florida; New Mexico and Manhattan.

Epstein was awaiting trial on federal charges of trafficking minors between 2002 and 2005 when he was found hanged in a federal facility in Manhattan in August. Medical examiners concluded his death was a suicide. Nathan said on Tuesday that to optimize video quality, only the judge, Maxwell, her lawyer and a prosecutor would appear on video at the hearing. The judge said others could access audio of the hearing by telephone. Maxwell faces up to 35 years in prison.

It was always about blackmail. But how useful is that to her at this point?

• Ghislaine Maxwell ‘Has Secret Stash Of Epstein Sex Tapes’ (DM)

Ghislaine Maxwell has a secret stash of Jeffrey Epstein’s twisted sex tapes and will use the footage as an insurance policy to save herself, a former friend exclusively revealed to DailyMail.com. Maxwell, 58, was arrested at her hideout in Bradford, New Hampshire last Thursday. She was charged with six federal crimes, including enticement of minors, sex trafficking and perjury. The British socialite was arguably Epstein’s closest friend and she is alleged to have acted as his madam, accused of securing underage girls for the multi-millionaire, who reportedly kept evidence of his perverted sex acts against the minors. When officials raided Epstein’s Manhattan townhouse after his arrest last July, they found thousands of graphic photos that included images of underage girls and a safe filled with compact discs labeled ‘nude girls’, according to authorities.

Maxwell’s former friend explained: ‘Ghislaine has always been as cunning as they come. She wasn’t going to be with Epstein all those years and not have some insurance. ‘The secret stash of sex tapes I believe Ghislaine has squirreled away could end up being her get out of jail card if the authorities are willing to trade. She has copies of everything Epstein had. They could implicate some twisted movers and shakers.’ They added: ‘If Ghislaine goes down, she’s going to take the whole damn lot of them with her.’ The former friend continued: ‘Not only did Epstein like to capture himself with underage girls on camera – he wanted to make sure he had something to hold over the rich and powerful men who took advantage of his sick largesse.’

‘I’ll bet anything that once it comes out that Ghislaine has those tapes these men will be quaking in their Italian leather boots. ‘Ghislaine made sure that she socked away thumb drives of it all. She knows where all the bodies are buried and she’ll use whatever she had to save her own a**.’ The day after Epstein’s suicide last August, the New York Times published an account by journalist James B. Stewart who had interviewed Epstein in August 2018. In the course of their conversation, Epstein told Stewart he had filed away dirt on his famous house guests, ‘some of it potentially damaging or embarrassing, including details about their supposed sexual proclivities and recreational drug use’. Maxwell’s next court appearance is on Friday in New York. She is currently being held without bail.

We try to run the Automatic Earth on donations. Since their revenue has collapsed, ads no longer pay for all you read, and your support is now an integral part of the interaction.

Thank you.

Support the Automatic Earth in virustime.

Debt Rattle May 1 2017

May 012017

May 1, 2017 Posted by Raúl Ilargi Meijer at 9:29 am Finance Tagged with: brain damage, budget, Canada, debt slaves, default, EU, EV, Frexit, Greece, reflation, revolt 3 Responses »

Walker Evans Air 1930s

• 40% of Americans Spend Up To Half Of Their Income Servicing Debt (MW)

• Are American Debt Slaves Getting in Trouble Again? (WS)

• Congress Agrees $1 Trillion Budget Deal – But No Money For Border Wall (G.)

• Trump Tax Plan ‘Dead On Arrival’, Wall Street ‘Delusional’ – Stockman (CNBC)

• Economics Is A Form Of Brain Damage (RWE)

• Why The Reflation Trade Is About To Fizzle (ZH)

• If Rates Ever Rise Above 3.5% “It Would Spark Massive Defaults” (ZH)

• Toronto Is The King Of Risky Mortgage Debt (BD)

• Canada’s Home Capital Distress and the Contagion Odds (BBG)

• A Perspective on Electric Vehicles (Science Errors)

• For A Treaty Democratizing Euro Area Governance (SE)

• Macron Says EU Must Reform Or Face ‘Frexit’ (BBC)

• Europe’s Youth Don’t Care To Vote—But They’re Ready To Join A Mass Revolt (Qz)

• Schaeuble Says Greece Has Made Good Reform Progress (R.)

“..many consumers in the survey also said they’re spending up to 40% of their income on discretionary purchases such as entertainment, leisure, hobbies and travel. And a quarter said they are prone to “excessive” and “frivolous” spending.”

• 40% of Americans Spend Up To Half Of Their Income Servicing Debt (MW)

Americans are struggling to get out of the red. Some 40% of Americans with debt are spending up to half of their monthly income paying it back. And that may not even be enough to cover how much they owe. That’s according to a study on debt Thursday released by Northwestern Mutual, a life insurance and financial services company. The polling company Harris Poll surveyed more than 2,000 U.S. adults in February 2017 on behalf of Northwestern Mutual. The survey found that nearly half of Americans are carrying at least $25,000 in debt, with an average debt of $37,000, excluding mortgage payments. About one in 10 surveyed said their debt was more than $100,000. “It becomes an ongoing cycle and really hard to get out of, given that people are not prioritizing debt and saving for their future as the first part of their budget,” Rebekah Barsch at Northwestern Mutual said.

Debts that are investments in the future, including mortgages and student loans, can be beneficial in consumers’ long-term financial plans, Barsch added. But many consumers in the survey also said they’re spending up to 40% of their income on discretionary purchases such as entertainment, leisure, hobbies and travel. And a quarter said they are prone to “excessive” and “frivolous” spending. Previous studies have shown similar results. The Federal Reserve announced in early April that collective American credit-card debt had hit $1 trillion. And total household debt, including mortgages, auto loans, credit card debt and student loans, had hit nearly $12.6 trillion. Housing-related debt is down nearly $1 trillion since its 2008 peak, but auto loan balances are $367 billion higher since then and student loans are $671 billion higher, the Fed found.

Mortgages made up 67% of the debt total in 2016. As a result, about 21% of Americans aren’t saving any of their income, according to an April survey from personal finance site Bankrate.com. When asked why they aren’t saving more, 38% of people said they had too many expenses, about 16% said they simply “hadn’t gotten around to” saving, 16% said they didn’t have a good enough job and 13% said they were struggling with debt. The amount each individual or family should put toward their debt is different, Barsch said. She recommended automatically allocating the largest percentage of one’s paycheck possible to high-interest debt and putting discretionary spending at the bottom of the priority list.

Same study, slightly different angle.

• Are American Debt Slaves Getting in Trouble Again? (WS)

American consumers are holding $1 trillion in revolving credit, mostly in credit card debt. So how well is this segment of consumer debt holding up? Synchrony Financial – GE’s spin-off that issues credit cards for Walmart and Amazon – disclosed on Friday that, despite assurances to the contrary just three months ago, net charge-off would rise to at least 5% this year. Its shares plunged 16% and are down 27% year-to-date. Credit-card specialist Capital One disclosed in its Q1 earnings report last week that provisions for credit losses rose to $2 billion, with net charge-offs jumping 28% year-over-year to $1.5 billion.

Synchrony, Capital One, and Discover – a gauge of how well over-indebted consumers are managing to hang on – have together increased their Q1 provisions for bad loans by 36% year-over-year. So this is happening. Other worries about consumer debt in the US are piling up. The $1.4 trillion in student loans are already in crisis, though the government backs them, and they cannot be charged off in bankruptcy. Mortgage debt is still hanging in there, given the surge in home prices that make defaults unlikely. But of the $1.1 trillion in auto loans, subprime loans packaged into asset backed securities are getting crushed by net charge-off rates that are worse than during the Financial Crisis.

The US economy is fueled by credit. Americans turning themselves into debt slaves makes it tick. Take it away, and what little growth there is – nearly zero in the first quarter – will dissipate into ambient air altogether. So it’s time to take the pulse of our American debt slaves In a new study, life insurer and financial services provider Northwestern Mutual found that 45% of Americans that have debt spend “up to half of their monthly income on debt repayment.” Those are the true debt slaves. Excluding mortgage debt, American carry an average debt of $37,000. Of them, 47% carry $25,000 or more, and more than 10% carry $100,000 or more in debt, excluding mortgage debt. Most of them expect to get out of debt before they die, but 14% expect to be in debt “for the rest of their lives.”

This debt adds stress. About 40% said that debt has a “substantial” or “moderate” impact on their financial security; and about as many consider debt a “high” or “moderate” source of anxiety. Given the rising defaults, this is likely to get worse. And what changes would most positively affect their financial situations? The top two: earning more money (29%) and getting rid of debt (26%). Alas, those two, for many people, are precisely the most elusive factors in the current economy. But there is a lot of irony in how Americans look at debt. The study asked them what they would do with a $2,000 windfall: 40% said they’d pay down debt. And this is the irony: they’d pay down their maxed out credit cards, but a few months later, their credit cards would be maxed out again, and thus that $2,000 would be consumed. Because the money always has to get spent.

Just in time for recess?!

• Congress Agrees $1 Trillion Budget Deal – But No Money For Border Wall (G.)

Negotiators have reached a bipartisan agreement on a spending package to keep the US federal government funded until the end of September, according to congressional aides. The House of Representatives and Senate must approve the deal before the end of Friday and send it to the president, Donald Trump, for his signature to avoid the first government shutdown since 2013. Congress is expected to vote early this week on the agreement that is likely to include increases for defense spending and border security. No money will be allocated for Trump’s pet project of a border wall with Mexico after he bowed to Democratic resistance to the plan. However, the deal will allocate an additional $1.5bn for border security, which one congressional aide described as “the most robust border security increase in roughly a decade”, and there was no language in the bill preventing Mexico from paying for the wall if it so desired.

A senior congressional aide told the Guardian that the deal increased defense spending by $12.5bn, with the possibility of $2.5bn more contingent on the White House presenting an anti-Isis plan to Congress. Trump had requested $30bn in increased defense spending. Democrats were pushing to protect funding for women’s healthcare provider Planned Parenthood and sought additional Medicaid money to help the poor in Puerto Rico get healthcare. Both of those goals were achieved. According to a senior congressional aide, the deal also protects other important Democratic priorities. The EPA’s budget is at 99% of current levels and includes increased infrastructure spending as well.

Stockman won’t let go.

• Trump Tax Plan ‘Dead On Arrival’, Wall Street ‘Delusional’ – Stockman (CNBC)

David Stockman has a stern message for investors: They’re living in a fantasy land about Trump. In a recent interview on CNBC’s “Futures Now,” the former director of the Office of Management and Budget under President Reagan said that “Wall Street is totally misreading Washington,” and President Trump’s promises of tax reform will be “dead before arrival.” The president is “essentially a 70-year old kid in a candy store who wants one of everything: More for defense, veterans, border walls, law enforcement, infrastructure and ‘phenomenal’ tax cuts, too—without the inconvenience of paying for any of it,” said Stockman. Of the proposed tax bill announced this week, he said, “It’s a wonderful fantasy…but there’s no way to pay for the $7.5 trillion cost of the main features.”

The White House announced a one-page tax reform plan on Wednesday, and some of the points Stockman highlighted include: Three tax brackets, double standard deduction and the reduction of corporate and non-corporate business taxes down to 15%. In a research note this week, Goldman Sachs pegged the cost of the tax plan to just under $5 trillion, when factoring in key changes such as repealing of the state and local tax, and a 35% top marginal rate instead of 33%. Goldman analysts expect the tax bill is “fairly likely” to become law, but warned progress could be slow. “I like [the tax plan] but you have to pay for it either with a new tax like the border adjustment tax, which is dead, or spending cuts which Trump has ruled off the table,” Stockman explained.

“What you have down there is a total fiscal calamity that is going to basically dominate Washington.” Stockman expects a “constant fiscal crisis and stalemate” in D.C., which will ultimately delay the “good stuff,” like a tax cut, from ever happening. Of Trump’s first 100 days in office, Stockman again referred to the White House as a “pop up store giving out candy before the 100th day to say they’ve accomplished something.” Adding, “this isn’t a serious plan, it can’t be done. And I think it’s only indicative of the huge trouble that’s brewing down there in the beltway.” [..] “I don’t know what the stock market is thinking but if they have faith in a giant fiscal stimulus and tax cut then it’s a delusional faith that’s going to be badly disappointed and I think fairly soon,” he added.”

Suzuki -he’s 80 already?!- always got this.

• Economics Is A Form Of Brain Damage (RWE)

Environmentalist David Suzuki hits the nail on the head. The number of ways that economic theory systematically blinds you to the realities of the world we live in is almost uncountable. When Henry George’s land tax became widely popular, economists “disappeared” land as a factor of production from economic theories, merging it illegitimately with capital. Money is made to “disappear” by using the quantity theory of money to claim that money is veil. This makes it impossible to understand how the mechanisms of creation of money ensure that the wealthy can get rich at the expense of the rest of us.

The parasitical nature of the finance industry has been covered up by the idea of “wealth creation” — when wild speculation doubles the price of stocks, financiers have created wealth, which is a socially valuable activity, instead of a fraud and deception. The ideas of cut-throat competition, survival of fittest, and social darwinism have been used to justify a large number of free market activities which harm the masses to make profits for the wealthy. There is no doubt that believing all of the textbook economic theories leads to serious brain damage, as I myself have experienced — the process of unlearning has been slow and painful. Here is the 2 minute video by David Suzuki:

If you can’t properly define inflation, how could you possibly get this right? Inflation is a meaningless concept if you don’t take into account money velocity. And with falling money velocity because of maxed-out consumers, you will never get reflation.

• Why The Reflation Trade Is About To Fizzle (ZH)

As SocGen writes in previewing tomorrow’s Headline and Core PCE deflators numbers, after spending nearly five years missing to the downside on the inflation target, the Fed finally achieved its goal as the yoy headline PCE deflator hit 2.1% in February. Unfortunately, Fed officials cannot take a victory lap, because they will be right back to missing the target again when the March figures are released. The data in hand from the PPI and CPI suggest that the headline PCE deflator likely fell by 0.164% in March, which would result in the yoy rate falling from 2.1% to 1.9% (1.885% un-rounded).

Energy prices – now virtually unchanged from a year ago – in the CPI fell by 3.2% last month, and these likely flowed through into the PCE as well. However, given the smaller weight of energy in the PCE gauge, the drop in energy prices will result in a smaller drag on the headline PCE index (almost a tenth less than in the CPI). Meanwhile, the CPI’s food index increased by 0.34% in March (that being said, the PCE food index is broader, and the food indexes in the PCE not present in the CPI have been a bit volatile of late). So aside from anniversarying the unchanged Y/Y base effect, here is what else SocGen expects from tomorrow’s anti-reflationary PCE prints: the core PCE deflator looks to have declined by 0.1% in March (-0.072% un-rounded). A reading in line with our forecast would lead the yoy core rate to fall from 1.8% in February to 1.6% in March, which would be the weakest print in nine months.

It’s not just energy however: recall that one of the biggest drivers behind the CPI miss earlier this month was the sharp drop in wireless telecom services in the CPI, which will now flow into the PCE and subtract around 0.075 percentage points (pp) from the monthly change in the core PCE (which is less than the 0.15 pp drag in the core CPI given the lower weight of this index in the core PCE). In other words, the core PCE would have been flat if not for the wireless telecom services index. Offsetting some of this drag will be a positive contribution from health care. Data from the PPI suggests that the health care index may have advanced by around 0.2% last month, marking its biggest rise in five months. Data within the Q1 GDP report suggests that the gain may be closer to 0.3% in March. In any case, core services prices in March look to have been essentially unchanged, while core goods prices may have fallen by 0.3%.

The central banks have trapped themselves and will seek to make you pay for it. Expect a lot of “economic growth will fix it all” comments. But it won’t, we spend $10 to get $1 of growth already.

• If Rates Ever Rise Above 3.5% “It Would Spark Massive Defaults” (ZH)

Earlier today in his weekly note, One River CIO Eric Peters explained that in their attempt to overturn the natural order of the global economic “ecosystem”, what central banks have done is “stunning, unprecedented… and arrogant”, and as a result it is only a matter of time before another “peak instability” moment emerges as “it stands to reason that our volatility-selling machine will break one day. We saw a glimpse of this in 2008-09. And yet, as Peters concedes in a follow up note, those same central bankers don’t have any other option but to kick the can because as the CIO notes, any attempt to break the current ultra-low rate regime would “spark massive defaults.”

Incidentally, those are the same defaults that should have happened during the “near systemic reset” of 2008/2009 but the Fed, in all its wisdom, decided to kick the can at the cost of trillions in global excess liquidity, and while it bought itself some time – in the process unleashing a global deflation wave thanks to zombie companies that should not exist yet do, and every day try to undercut each other on pricing – nearly ten years later it has discovered that it has no way out, for one simple reason: there is now too much accumulated debt. Here is Peters “modelling” out why the Fed is stuck with no way out:

“When debt expands constantly relative to GDP, there’s a limit to how high interest rates can rise without causing massive defaults,” said the Model. “There’s nothing inherently wrong with defaults, they can cleanse a system, but a rise in US defaults from today’s 2.5% to 6.0% would boost unemployment by 3%.” America’s economy is leveraged to the financial system, which includes non-capitalized liabilities; entitlements, pensions, healthcare. “US total debt/GDP is 300%, but if you include these non-capitalized liabilities, it’s more like 800%.” “These non-capitalized liabilities rise as both interest rates and economic growth decline,” continued the same Model. “Low growth produces less income, and low rates supply less investment returns on pensions. Which means companies need to set aside more money to pay the liabilities.” It’s a slow-moving economic death spiral.

“The Neo-Fisher Model posits that we can escape this trap by increasing interest rates. Which will raise investment returns, while simultaneously lifting growth. Fisher’s Model may be right, but it will never be tested in reality.” “In reality the world operates on monthly payments,” explained the same Model. “So if we tested the Fisher Model by raising interest rates meaningfully, we’d spark massive defaults.” Unemployment would jump dramatically. “Our central banking and political reaction function ensures that each rise in unemployment is followed by monetary stimulus.” In the 30yrs since Greenspan became Fed Chairman, borrowers have learned this lesson and responded by leveraging up. “And that’s why US interest rates will never rise sustainably above 3.5%.”

Think Justin still sleeps at night? If so, he needs some wake-up lessons.

• Toronto Is The King Of Risky Mortgage Debt (BD)

Canadian real estate values continue to soar, and a record number of buyers are piling into risky loans. According to the Bank of Canada (BoC), and the Ministry of Finance (MoF), high ratio mortgage borrowers are extending themselves to the limit. While we covered how concerning this trend has become in Toronto, it’s not just isolated to that city. It’s a trend that’s growing across all Canadian urban centers. People taking out high-ratio mortgages combined with incomes too low for the property value, is spreading across Canada. A high-ratio mortgage is defined as a mortgage where the buyer leaves less than a 20% downpayment. The BoC and MoF have both expressed concern when high-ratio mortgages are paired with high income-to-loan ratios. The amount of high risk buyers is increasing as markets reach dizzying heights, especially in urban areas.

Vulnerability isn’t just the buyer’s ability to keep devoting a high percentage of their income to carrying payments. Since the number of these buyers are accelerating as prices get higher, they’re at a greater risk during a correction (not even a crash). Something as small as a 5% drop in value and many of these mortgages would be underwater. If this happens it would mean already broke homeowners would have to pay to get rid of their home. Combine that with a higher interest rate at renewal, and you can imagine the mayhem that can unfold. High-ratio mortgages with low income levels is a growing trend in Canada, but Toronto and Vancouver take it to the next level. Across Canada, 18% of high risk mortgages have extremely low incomes for the homes they’re in, an increase of 38% over two years.

Despite Vancouver’s insanely high prices, Toronto still tops the risky business of subprime borrowers. Toronto takes the top spot with a 53% increase during the same period, bringing their total to 49%. Coming in second is Vancouver which had a 25% increase over the past two years, bringing their total to 39%. These two cities are moving much faster than the average for the country, and they’re getting to dangerously high levels. Although Toronto and Vancouver take the cake, this trend is also growing across Canada, albeit with a lower impact. Over the past 2 years, Calgary saw a 23% increase of high ratio mortgages with at risk-income ratios, totalling 32%. Montreal saw a 30% increase over the past two years, bringing their total to 13%. Ottawa-Gatineau saw a massive 62.5% increase, bringing their total to 13%.

Complete delusion. Everywhere: “Canada’s financial system, deemed the world’s soundest by the World Economic Forum for eight straight years until 2016..” Over many of those years, this was already obviously happening.

• Canada’s Home Capital Distress and the Contagion Odds (BBG)

The escalation of Home Capital’s distress last week has led one of its largest former investors to rethink – if only slightly – the prospects of troubles spreading through the rest of Canada. After the alternative-mortgage lender set up a C$2 billion ($1.5 billion) credit line to offset a run on deposits, Mawer Investment Management’s Jim Hall is recalculating the odds of a contagion widening across one of the world’s strongest financial systems. “The probability has gone from infinitesimal to possible — unlikely, but possible,” said Hall, CIOmoney manager, in an interview Saturday. “If depositors or bondholders start to lose faith in their banks, well then that becomes systemic.”

Mawer, which oversees more than C$40 billion in assets, sold about 2.8 million shares, or a 4.3% stake, in Home Capital in the past week, joining another money manager, QV Investors, in exiting its investment amid the imbroglio consuming the Toronto-based lender. Home Capital has been struggling since April 19, when Ontario’s securities regulator accused management of misleading investors over how the firm handled a review of mortgage brokers who falsified documents about borrowers’ income. Home Capital shares plunged 65% the following day, and the lender has since disclosed an accelerating pace of declines of its high-interest savings balances – deposits used to help fund its mortgage business.

For its part, Home Capital secured a loan to compensate for a drop in deposits and said it’s weighing a sale, hiring RBC Capital Markets and BMO Capital Markets to advise on financing and “strategic options.” Even if withdrawals continue, as expected, the new funding should mitigate it, the company said April 26. Canada’s banking regulator says it’s closely monitoring the situation and surveying other financial firms to assess their condition. “The assets look, at this point, still reasonably good,” Hall said, adding that Home Capital’s problem is a matter of confidence. “Confidence was lost in this company and the business model breaks apart. That’s the problem with banks.”

Canada’s financial system has lots of fire breaks, as Hall describes it, to prevent problems from spreading. “Even if a bank gets itself into a confidence issue, it can be effectively bailed out by another bank or by another financial institution or by ultimately the regulator,” Hall said. Bank failures in Canada’s financial system, deemed the world’s soundest by the World Economic Forum for eight straight years until 2016, are rare. Canadian banks sidestepped the worst of the 2008 financial crisis, having only a fraction of the $1.95 trillion of writedowns and losses suffered by financial firms worldwide.

Posted by Tyler. No time stamp that I could see, but this is an eternal truth anyway.

• A Perspective on Electric Vehicles (Science Errors)

An electric auto will convert 5-10% of the energy in natural gas into motion. A normal vehicle will convert 20-30% of the energy in gasoline into motion. That’s 3 or 4 times more energy recovered with an internal combustion vehicle than an electric vehicle. Electricity is a specialty product. It’s not appropriate for transportation. It looks cheap at this time, but that’s because it was designed for toasters, not transportation. Increase the amount of wiring and infrastructure by a factor of a thousand, and it’s not cheap. Electricity does not scale up properly to the transportation level due to its miniscule nature. Sure, a whole lot can be used for something, but at extraordinary expense and materials. Using electricity as an energy source requires two energy transformation steps, while using petroleum requires only one.

With electricity, the original energy, usually chemical energy, must be transformed into electrical energy; and then the electrical energy is transformed into the kinetic energy of motion. With an internal combustion engine, the only transformation step is the conversion of chemical energy to kinetic energy in the combustion chamber. The difference matters, because there is a lot of energy lost every time it is transformed or used. Electrical energy is harder to handle and loses more in handling. The use of electrical energy requires it to move into and out of the space medium (aether) through induction. Induction through the aether medium should be referred to as another form of energy, but physicists sandwich it into the category of electrical energy. Going into and out of the aether through induction loses a lot of energy.

Another problem with electricity is that it loses energy to heat production due to resistance in the wires. A short transmission line will have 20% loss built in, and a long line will have 50% loss built in. These losses are designed in, because reducing the loss by half would require twice as much metal in the wires. Wires have to be optimized for diameter and strength, which means doubling the metal would be doubling the number of transmission lines. High voltage transformers can get 90% efficiency with expensive designs, but household level voltages get 50% efficiency. Electric motors can get up to 60% efficiency, but only at optimum rpms and load. For autos, they average 25% efficiency. Gasoline engines get 25% efficiency with old-style carburetors and 30% with fuel injection, though additional loses can occur.

Applying this brilliant engineering to the problem yields this result: A natural gas electric generating turbine gets 40% efficiency. A high voltage transformer gets 90% efficiency. A household level transformer gets 50% efficiency. A short transmission line gets 20% loss, which is 80% efficiency. The total is 40% x 90% x 50% x 80% = 14.4% of the electrical energy recovered (85.6% lost) before getting to the vehicle and doing something similar to the gasoline engine in the vehicle.

By Stéphanie Hennette, Thomas Piketty, Guillaume Sacriste and Antoine Vauchez. As I’ve said, I don’t believe the EU can be reformed, because no-one has the power to do it.

• For A Treaty Democratizing Euro Area Governance (SE)

Over the last ten years of economic and financial crisis, a new centre of European power has taken shape: the ‘government’ of the Euro Area. The expression may seem badly chosen as it remains hard to identify the democratically accountable ‘institution’ which today implements European economic policies. We are indeed aiming at a moving and blurred target. Characterized by its informality and opacity, the central institution of that government, the Eurogroup of Finance Ministers of the Euro Area, operates outside the framework of the European treaties and is in no way accountable to the European Parliament, nor to national parliaments. Worse, the institutions that form the backbone of that government – from the ECB and the Commission to the Eurogroup and the European Council – operate following combinations that constantly vary from one policy to the other (Troika Memoranda, European Semester ‘budgetary recommendations’ and bank ‘evaluations’ under the Banking Union).

However scattered they may be, these different policies are truly ‘governed’, as a hard core emerged from the ever closer union of national and European economic and financial bureaucracies – French and German national treasuries, ECB executive board, senior economic officials from the European Commission. As matters stand, this is where the Euro Area is supposedly governed and where the proper political tasks of coordination, mediation and balancing among the current economic and social interests are carried out. In 2012, as he gave up reforming the Treaty on Stability, Coordination and Governance, a cornerstone of this Euro Area governance, François Hollande contributed to consolidating this new power structure. From then onwards, this European executive pole has only seen its competences expand.

Over a decade, its scope for intervention has become significant, ranging from ‘budgetary consolidation’ (austerity) policies to far-reaching coordination of national economic policies (Six Pack and Two Pack), the set-up of rescue plans for member states facing financial distress (Memorandum and Troika), the supervision of all private banks. Both mighty and elusive, the government of the Euro Area evolved in a blind spot of political controls, in some sort of democratic black hole. Who indeed controls the drafting process of Memoranda of Understanding, which impose significant structural reforms in return for the financial assistance of the European Stability Mechanism? Who scrutinizes the executive operations of the institutions making up the Troika?

Who monitors the decisions taken within the European Council of the Heads of State or Government of the Euro Area? Who knows exactly what is negotiated within the two core committees of the Eurogroup, i.e. the Economic Policy Committee and the Economic and Financial Committee? Neither national parliaments, which at best simply control their own executive, nor the European Parliament, which has carefully been sidelined from Euro Area governance. In view of its opacity and isolation, the many criticisms voiced against that Euro Area government seem well deserved, starting with Jürgen Habermas’ denunciation of a “post-democratic autocracy”.

Pre-empting Le Pen.

• Macron Says EU Must Reform Or Face ‘Frexit’ (BBC)

The front-runner in the French presidential election has told the BBC that the EU must reform or face the prospect of “Frexit”. Pro-EU centrist Emmanuel Macron made the comments as he and his far-right rival Marine Le Pen entered the last week of campaigning. French voters go to the polls on Sunday to decide between the pair. Ms Le Pen has capitalised on anti-EU feeling, and has promised a referendum on France’s membership. She won support in rural and former industrial areas by promising to retake control of France’s borders from the EU and slash immigration. “I’m a pro-European, I defended constantly during this election the European idea and European policies because I believe it’s extremely important for French people and for the place of our country in globalisation,” Mr Macron, leader of the recently created En Marche! movement, told the BBC.

“But at the same time we have to face the situation, to listen to our people, and to listen to the fact that they are extremely angry today, impatient and the dysfunction of the EU is no more sustainable. “So I do consider that my mandate, the day after, will be at the same time to reform in depth the European Union and our European project.” Mr Macron added that if he were to allow the EU to continue to function as it was would be a “betrayal”. “And I don’t want to do so,” he said. “Because the day after, we will have a Frexit or we will have [Ms Le Pen’s] National Front (FN) again.”

What I would expect.

• Europe’s Youth Don’t Care To Vote—But They’re Ready To Join A Mass Revolt (Qz)

Young Europeans are sick of the status quo in Europe. And they’re ready to take to the streets to bring about change, according to a recent survey. Around 580,000 respondents in 35 countries were asked the question: Would you actively participate in large-scale uprising against the generation in power if it happened in the next days or months? More than half of 18- to 34-year-olds said yes. The question was part of a European Union-sponsored survey, titled “Generation What?” The report went on to focus on respondents from 13 countries to better understand what young people are optimistic and frustrated about in Europe. Among these spotlighted countries, young people in Greece were particularly interested in joining a large-scale uprising against their government, with 67% answering yes to the question. Respondents in Greece were also more likely to believe politicians were corrupt and to have negative perceptions of the country’s financial sector.

His ‘solution’ is self-defeating. More pension cuts and more taxes will cut more money velocity, hence more GDP. Which means Greece is less able to pay back anything at all.

• Schaeuble Says Greece Has Made Good Reform Progress (R.)

German Finance Minister Wolfgang Schaeuble was quoted in a newspaper interview on Sunday saying that Greece has made strong progress towards introducing reforms that could lead to the imminent release of further financial support. “If the Greek government upholds all the agreements, European finance ministers could complete the review on May 22 and then soon after that release the next tranche,” Schaeuble told the Funke media group newspapers. Greece and its international creditors reached a preliminary agreement at a meeting of eurozone finance ministers in April to set up the next transfer of some €7 billion in aid. But the finance ministers will not release the tranche until the audit is completed.

“The longer it takes, the more uncertainty will be in the financial markets and economy,” Schaeuble added. He said the Greek government had promised to make further adjustments in pensions as well as improve tax collection. Asked why he was optimistic the aid could soon be released, Schaeuble said, “Because we negotiated in a very determined fashion and the Greek government said it would adjust the pensions more strongly to the economic situation. “That’s not easy – I know that. And it wants to improve the tax collection system so that tax revenues will rise again from 2020.”