Oct 182018
 
 October 18, 2018  Posted by at 9:21 am Finance Tagged with: , , , , , , , , , ,  


Pablo Picasso Glass 1914

 

Bondholders Lost Nearly $1 Trillion Since September 26 (CR)
The US Housing Recovery Is Built On Quicksand (MW)
Fed Indicates It’s Staying The Course On Rate Hikes (CNBC)
Trump Is Completely Misguided On Interest Rates (Colombo)
China Not Manipulating Currency But Lacks Transparency – Mnuchin (AFP)
Bank of England Raises Alarm Over Surge In High-Risk Lending (G.)
Theresa May Opens Door To Longer Brexit Transition Period (Ind.)
Germany And France Start To Draw Up No-Deal Brexit Contingency Plans (G.)
Congress Members Pen Letter Demanding Ecuador Hand Over Julian Assange (GWP)
Stephen Hawking: Time Travel More Likely Than The Existence Of God (F.)
Largest, Oldest ‘Living Thing’ On Earth Is Dying (Ind.)

 

 

Interest rates.

Bondholders Lost Nearly $1 Trillion Since September 26 (CR)

At the Daily, we’ve been warning readers for months that rising interest rates will lead to an exodus of investors from the bond markets. Income Exodus (or Income Extermination) is when bond investors get “exterminated” by rising interest rates. As interest rates rise, bond prices drop. So when interest rates rise rapidly (like they are now), bond prices drop a lot. Now, we’re seeing this exodus play out in real time. Since September 26, bondholders lost nearly $1 trillion according to the Bloomberg Barclays Multiverse Index… This index tracks the market value of publicly traded bonds around the world. The reason it’s down is simple: The rate on the benchmark 10-year U.S. Treasury has risen from 2.8% to 3.2% since August 24.

Bloomberg says the bond rout could spark an even worse sell-off than in 1976, the worst year for bond returns over the last four decades. And there’s good reason for fear… The Federal Reserve has already hiked rates three times in 2018… with plans for one more rate hike before the end of the year. And Fed chair Jerome Powell has indicated at least three more rate hikes in 2019 and one more in 2020. We’ve warned you that higher rates were coming for more than a year now. Hopefully, you’ve followed our steps and prepared for Income Exodus… because it’s here.

Read more …

On debt.

The US Housing Recovery Is Built On Quicksand (MW)

Home price gains since 2013 have been much less impressive than you think. While reports show that home prices have recovered nationwide, the increase has been uneven and not as strong as you have been led to believe. Consider RealtyTrac’s latest report on 148 major U.S. metropolitan areas. The average gain on the sale of property was 30%. Not bad, except the average holding period was just over eight years. That comes to an annual price increase of 3.75%. High-yield corporate bonds would have earned you considerably more. Taken together, the average gain for all metros is deceptive. While the average price gain in booming Silicon Valley was a remarkable 116%, it was a pitiful 2% in El Paso, Texas, 10% in Cleveland, and 15% in Chicago. Even the price rise in the New York City metro area was just 25%. The table below shows the great disparity:

At the same time, I am greatly troubled by the consistently weak volume of home sales. During the insane bubble years, sales volume rocketed along with prices. In the hottest metros, desperate buyers dove into the market in record numbers. This has not happened since 2013. Statistics from brokerage Trulia.com show that sales volume has declined substantially in all major metros from the torrid pace of 2005-2006. Most analysts have attributed the weak sales, as well as rising prices, to a lack of available inventory. The number of homes listed for sale has indeed fallen dramatically over the past five years, but look closer: Trulia’s Inventory and Price Watch, first published in March 2016, divides homes for sale into three segments: (1) starter homes — the least-expensive homes for first-time buyers; (2) trade-up homes, and (3) premium homes.

Read more …

What will a normal economy look like?

Fed Indicates It’s Staying The Course On Rate Hikes (CNBC)

Federal Reserve officials remain convinced that continuing to gradually increase interest rates is the best formula to preserve a steady economy, according to minutes released Wednesday of the central bank’s most recent policy meeting. That may not please President Donald Trump, who has been vocal in his criticism of the central bank’s actions. A summary of the Sept. 25-26 Federal Open Market Committee session reflected both confidence in the rate of economic growth and some hesitancy over the impact that tariffs might have on the future path.

Ultimately, the committee unanimously voted to approve a quarter-point hike to its benchmark rate target, with members indicating that more increases are on the way. The increase took the Fed’s overnight target to a range of 2 percent to 2.25 percent. “With regard to the outlook for monetary policy beyond this meeting, participants generally anticipated that further gradual increases in the target range for the federal funds rate would most likely be consistent with a sustained economic expansion, strong labor market conditions, and inflation near 2 percent over the medium term,” the minutes read.

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“There is no means of avoiding the final collapse of a boom brought about by credit expansion.”

Trump Is Completely Misguided On Interest Rates (Colombo)

President Donald Trump has been making a big stink about the Federal Reserve’s rate hikes lately. Last week, after the Dow plunged nearly 2,000 points, he blamed the Fed for it, saying “I think the Fed is making a mistake. They’re so tight. I think the Fed has gone crazy…” On Tuesday, Trump said that the Federal Reserve is “my biggest threat.” Since he became president, Trump has been praising the soaring stock market (something I said was very dangerous to do), viewing it as evidence of the success of his administration’s policies. Trump is worried that rising interest rates will put an end to the stock market boom, which will make him look bad.

Unfortunately, the president is extremely misguided about how interest rates work and the role they play in creating booms in the stock market and economy. As I’ve explained in great detail, the U.S. stock market has been booming because the Fed held interest rates at record low levels for a record length of time after the Great Recession. This Fed-driven stock market boom is an unsustainable bubble instead of a genuine, organic boom. The fact that the Fed held rates at record low levels and inflated a credit and asset bubble meant that a crisis was already “baked into the cake” whether the Fed raised interest rates or not. Once a credit expansion or bubble is already in motion, the actions of the central bank from that point on can only determine what type of crisis occurs when the credit expansion ends – not whether a crisis will occur or not.

The Austrian School economist Ludwig von Mises said it best in his book Human Action: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

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Negotiating.

China Not Manipulating Currency But Lacks Transparency – Mnuchin (AFP)

Beijing is not a currency manipulator but China’s exchange rate practices and the yuan’s recent decline are of “particular concern,” US Treasury Steven Mnuchin said Wednesday. In putting Beijing and five other US trading partners on notice, the Treasury again refrained from escalating a fight over China’s currency as US President Donald Trump had once pledged to do on the campaign trail. “Of particular concern are China’s lack of currency transparency and the recent weakness in its currency,” Mnuchin said in releasing a twice-yearly report to Congress on how country’s manage exchange rates and trade.

“These pose major challenges to achieving fairer and more balanced trade and we will continue to monitor and review China’s currency practices, including through ongoing discussions with the People’s Bank of China.” Washington has long argued that China keeps its currency artificially low to make its exports more competitive but in recent years the yuan or renminbi (RMB) has strengthened and is viewed by economists as more in line with economic fundamentals. Still, as US interest rates have risen, the US dollar has strengthened further, which makes American exports more expensive.

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Yield.

Bank of England Raises Alarm Over Surge In High-Risk Lending (G.)

The Bank of England has issued a stark warning over the rapid growth in lending to indebted companies around the world, drawing parallels with the US sub-prime mortgage market that triggered the 2008 financial crisis. Threadneedle Street said Britain was not immune from a global boom in risky lending that had alarmed financial regulators around the world this year, with the US market for such loans more than doubling since 2010 to surpass $1tn (£763bn). “The global leveraged loan market was larger than – and was growing as quickly as – the US sub-prime mortgage market had been in 2006,” the central bank said of the rapid growth in leveraged loans, which are defined as loans to firms that already have debts worth more than four times their earnings.

The Bank’s financial policy committee (FPC), set up after the crisis to assess the risks to UK financial stability, noted that lending standards were falling and that it would more closely monitor the risks to Britain. Though far from the scale of the US market, which is the largest in the world, gross issuance of leveraged loans by UK companies reached a record £38bn in 2017, while a further £30bn has been issued so far this year. Taken together with high-yield bonds, which are debts of firms with weaker credit ratings, the Bank estimates the total stock of debt to riskier firms in Britain was worth about a fifth of all lending to UK companies.

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Which of course the Brexiteers don’t want. Ministers will leave her government.

Theresa May Opens Door To Longer Brexit Transition Period (Ind.)

Theresa May has opened the door to an even longer Brexit transition period, setting herself on yet another collision course with Tory Eurosceptics and potentially growing the EU divorce bill by billions. The prime minister brought up the possibility of an extension during meetings with EU leaders in Brussels on Wednesday as she sought to find a way to break the deadlock in negotiations. The period – during which the UK would stay completely tied to EU rules without any say on them – is hugely unpopular with Brexiteers, who believe it would make Britain a “vassal state” of the bloc. European Parliament president Antonio Tajani, who was in the room while Ms May spoke with leaders, said the prime minister had listed a longer transition as a possible solution to the current impasse.

“It was mentioned – both sides mentioned the idea of an extension of a transition period as one possibility that is on the table and would be looked into,” Mr Tajani told reporters after Ms May’s address. “Theresa May during her speech said it’s possible to achieve an agreement also on a transition period, but not with a clear position on the timing.” With a smile, he added: “This Council is the transition Council.” The prime minister is also understood to have brought up an extension to the period in a private bilateral meeting with Council president Donald Tusk earlier in the afternoon. One Brussels official told The Independent that the UK’s negotiators had been sounding out a possible extension to the transition “for months” in talks.

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“Britons would be “obliged to present a visa to enter French territory and to hold a residence permit to remain there..”

Germany And France Start To Draw Up No-Deal Brexit Contingency Plans (G.)

Germany and France are starting to step up their preparations for a no-deal Brexit even though both publicly insist an agreement with the UK over the terms of its departure from the EU can still be achieved. Angela Merkel revealed for the first time on Wednesday that Germany was drawing up contingency plans, saying the government had started making “suitable preparations” for the possibility of Britain leaving with no accord. While there was there was still a chance for a deal, it was “only fitting as a responsible and forward-thinking government leadership that we prepare for every scenario”, the German chancellor told MPs in Berlin. “That includes the possibility of Britain leaving the EU without an agreement.”

France has published a draft bill that would allow the government to introduce new legal measures to avoid or mitigate the consequences of a hard Brexit by emergency decree, as opposed to parliamentary vote, within 12 months of the law being passed. It said those consequences would include include Britons needing visas to visit and UK nationals resident in the country being in an “irregular” legal situation. Without emergency measures, British citizens living in France would become third-country nationals, the draft bill states, which would prevent them from holding jobs restricted to EU nationals and limit their access to healthcare and welfare.

Britons would be “obliged to present a visa to enter French territory and to hold a residence permit to remain there”, the bill’s preamble says. A no-deal Brexit would also mean “British citizens with a work contract under French law with a French employer could be asked for a document authorising them to work in France”.

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But Rand Paul still wants him to testify.

Congress Members Pen Letter Demanding Ecuador Hand Over Julian Assange (GWP)

Representatives Eliot L. Engel (D-NY), Ranking Member of the House Committee on Foreign Affairs, and Ileana Ros-Lehtinen (R-FL), Chair Emeritus of the Committee, have sent a letter to Ecuadorian President Lenín Moreno demanding that Julian Assange be handed over to authorities. The firm stance against press freedom comes as Ecuador is preparing to restore Assange’s communications — with strict limitations that will not allow him to properly continue his work as a publisher. The letter threatens that the United States will be unwilling to provide economic cooperation with Ecuador unless the WikiLeaks founder and political refugee is handed over.

“Many of us in the United States Congress are eager to move forward in collaborating with your government on a wide array of issues, from economic cooperation to counternarcotics assistance to the possible return of a United States Agency for International Development mission to Ecuador. However, in order to advance on these crucial matters, we must first resolve a significant challenge created by your predecessor, Rafael Correa – the status of Julian Assange,” the members wrote in their letter.

“Most recently, we were particularly disturbed to learn that your government restored Mr. Assange’s access to the Internet. On numerous occasions, Mr. Assange has compromised the national security of the United States. He has done so by publicly releasing classified government documents along with confidential materials from individuals connected to our country’s 2016 presidential election. As you yourself have noted, he has repeatedly used his standing in the international media to meddle in the affairs of foreign governments such as Spain and the United Kingdom. This has frayed Ecuador’s relations with like-minded governments. Mr. Assange also remains wanted by British authorities for a bail violation. It is clear that Mr. Assange remains a dangerous criminal and a threat to global security, and he should be brought to justice,” the letter states.

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“These laws may or may not have been decreed by God, but he cannot intervene to break the laws or they would not be laws.”

Stephen Hawking: Time Travel More Likely Than The Existence Of God (F.)

In Stephen Hawking’s universe there was no room for God, because the famous cosmologist came to believe that the entirety of existence was created out of, well… nothing. As he explains in his final book, “Brief Answers to the Big Questions,” before the Big Bang there was nothing, not even a God to create the universe. “I think the universe was spontaneously created out of nothing according to the laws of science,” Hawking writes. “There is no time for a creator to have existed in.” He goes on to explain that the only God who could be consistent with the laws of physics would be a deity who never directly influences the workings of the universe. “These laws may or may not have been decreed by God, but he cannot intervene to break the laws or they would not be laws.”

While the existence of God makes little sense to Hawking, he’s more open to the possibility of something that most people might consider much more far-fetched: time travel. Hawking famously held a party for time travelers but did not send out the invitations until after the party. No one showed up for the festivities. But the scientist writes that there is still some hope that traveling back in time could be possible according to the laws of the universe. He pegs this notion on the promise of something called “M theory” that suggests the universe may contain seven hidden dimensions in addition to the familiar four dimensions of space-time. “Rapid space travel and travel back in time can’t be ruled out according to our present understanding,” he writes. “Science fiction fans need not lose heart: there’s hope in M theory.”

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40,000 tree clones.

Largest, Oldest ‘Living Thing’ On Earth Is Dying (Ind.)

Scientists have warned that an ancient forest widely considered the largest single living thing in the world is dying, despite efforts to preserve it. The Pando aspen is an enormous expanse of 40,000 trees, all of which are clones with identical genetic compositions, meaning they are classified together as one individual. Thought to be up to 80,000 years old, the colony known as the “trembling giant” is a contender for the oldest organism as well as the heaviest and largest. In total the trees, which originate from a single underground parent clone, cover 43 hectares of Utah’s Fishlake National Forest. But in recent years a tragedy has been quietly unfurling. Despite their best efforts, scientists think this natural wonder that has lasted millennia may not survive a few decades of human interference.

“While Pando has likely existed for thousands of years – we have no method of firmly fixing its age – it is now collapsing on our watch,” said Professor Paul Rogers, an ecologist at Utah State University. After analysing Pando’s condition comprehensively, Professor Rogers and his colleague Professor Darren McAvoy examined a 72-year aerial photo sequence that revealed its steady decline. [..] As it has often proved difficult to measure the true extent of such enormous organisms, Pando has some contenders for the largest living thing – including massive fungi growing in Oregon and clonal colonies of underwater Neptune grass.

Read more …

Oct 162018
 
 October 16, 2018  Posted by at 9:15 am Finance Tagged with: , , , , , , , , , , ,  


M. C. Escher Doric columns 1945

 

Yemen On Brink Of ‘World’s Worst Famine In 100 Years’ (G.)
Humanity Is ‘Cutting Down The Tree Of Life’ (G.)
‘Hyperalarming’ Study Shows Massive Insect Loss (WaPo)
America’s Budget Deficit Jumps By 17% As Spending Surges (CNBC)
More Free Money: A Carry Trade in Liquidity (Mish)
Powell Has Lost His North Star, And The Fed Is Flying Blind (MW)
Facebook Paid £15.8 Million In UK Tax On £1.2 Billion In 2017 Revenues (BBC)
Ecuador To Assange: No Talking Politics, Pay Own Bills, Look After Cat (RT)
Brexit Deal Slipping To December Amid Deadlocked Talks (Ind.)
No-Deal Brexit Is ‘More Likely Than Ever Before’ – Tusk (Ind.)
Syria’s Chessboard (Hallinan)

 

 

As Stormy Daniels and Elizabeth Warren see their ‘cases’ blow up in their faces 3 weeks before the midterms, the best PR and legal teams that money can buy are framing a Khashoggi narrative nobody will be able to credibly deny. Or at least Erdogan is not showing his hand. But now that Pompeo’s in the region anyway, let’s put this on his agenda. 12 to 13 million at risk of starvation.

Yemen On Brink Of ‘World’s Worst Famine In 100 Years’ (G.)

Yemen could be facing the worst famine in 100 years if airstrikes by the Saudi-led coalition are not halted, the UN has warned. If war continues, famine could engulf the country in the next three months, with 12 to 13 million civilians at risk of starvation, according to Lise Grande, the agency’s humanitarian coordinator for Yemen. She told the BBC: “I think many of us felt as we went into the 21st century that it was unthinkable that we could see a famine like we saw in Ethiopia, that we saw in Bengal, that we saw in parts of the Soviet Union – that was just unacceptable. “Many of us had the confidence that would never happen again and yet the reality is that in Yemen that is precisely what we are looking at.”

Yemen has been in the grip of a bloody civil war for three years after Houthi rebels, backed by Iran, seized much of the country, including the capital, Sana’a. The Saudi-led coalition has been fighting the rebels since 2015 in support of the internationally recognised government. Thousands of civilians have been caught in the middle, trapped by minefields and barrages of mortars and airstrikes. The resulting humanitarian catastrophe has seen at least 10,000 people killed and millions displaced. Speaking on Sunday evening, Grande said: “There’s no question we should be ashamed, and we should, every day that we wake up, renew our commitment to do everything possible to help the people that are suffering and end the conflict.”

Read more …

And it’s not just people that we’re killing:

Humanity Is ‘Cutting Down The Tree Of Life’ (G.)

Humanity’s ongoing annihilation of wildlife is cutting down the tree of life, including the branch we are sitting on, according to a stark new analysis. More than 300 different mammal species have been eradicated by human activities. The new research calculates the total unique evolutionary history that has been lost as a result at a startling 2.5bn years. Furthermore, even if the destruction of wild areas, poaching and pollution were ended within 50 years and extinction rates fell back to natural levels, it would still take 5-7 million years for the natural world to recover. Many scientists think a sixth mass extinction of life on Earth has begun, propelled by human destruction of wildlife, and 83% of wild mammals have already gone.

The new work puts this in the context of the evolution and extinction of species that occurred for billions of years before modern humans arrived. “We are doing something that will last millions of years beyond us,” said Matt Davis at Aarhus University in Denmark, who led the new research. “It shows the severity of what we are in right now. We’re entering what could be an extinction on the scale of what killed the dinosaurs. “That is pretty scary. We are starting to cut down the whole tree [of life], including the branch we are sitting on right now.” Ecosystems around the world have already been significantly affected by the extermination of big animals such as mammoths, he said.

[..] Davis said each lost species had its own intrinsic value, but the loss of the most distinct creatures was most damaging: “Typically, if you have something that is off by itself, it does some job that no other species is doing.” The losses are already affecting ecosystems, he said, particularly the vanishing of “megafauna”. These huge creatures roamed much of Earth until humans arrived and included giant cats, deer, beavers and armadillos. “We are now living in a world without giants,” said Davis. “So the seeds of big fruit are not dispersed any more because we don’t have mammoths or gomphotheres or giant ground sloths eating those fruits.” Another example, he said, is the widespread loss of wolves. This means smaller predators like coyotes thrive and more birds are killed, radically changing food chains.

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“Between January 1977 and January 2013, the catch rate in the sticky ground traps fell 60-fold..”

“..our study indicates that climate warming is the driving force behind the collapse of the forest’s food web. ”

‘Hyperalarming’ Study Shows Massive Insect Loss (WaPo)

Insects around the world are in a crisis, according to a small but growing number of long-term studies showing dramatic declines in invertebrate populations. A new report suggests that the problem is more widespread than scientists realized. Huge numbers of bugs have been lost in a pristine national forest in Puerto Rico, the study found, and the forest’s insect-eating animals have gone missing, too. In 2014, an international team of biologists estimated that, in the past 35 years, the abundance of invertebrates such as beetles and bees had decreased by 45 percent. In places where long-term insect data are available, mainly in Europe, insect numbers are plummeting. A study last year showed a 76 percent decrease in flying insects in the past few decades in German nature preserves.

The latest report, published Monday in the Proceedings of the National Academy of Sciences, shows that this startling loss of insect abundance extends to the Americas. The study’s authors implicate climate change in the loss of tropical invertebrates. “This study in PNAS is a real wake-up call — a clarion call — that the phenomenon could be much, much bigger, and across many more ecosystems,” said David Wagner, an expert in invertebrate conservation at the University of Connecticut who was not involved with this research. He added: “This is one of the most disturbing articles I have ever read.”

[..] “We went down in ’76, ’77 expressly to measure the resources: the insects and the insectivores in the rain forest, the birds, the frogs, the lizards,” Lister said. He came back nearly 40 years later, with his colleague Andrés García, an ecologist at the National Autonomous University of Mexico. What the scientists did not see on their return troubled them. “Boy, it was immediately obvious when we went into that forest,” Lister said. Fewer birds flitted overhead. The butterflies, once abundant, had all but vanished. García and Lister once again measured the forest’s insects and other invertebrates, a group called arthropods that includes spiders and centipedes. The researchers trapped arthropods on the ground in plates covered in a sticky glue, and raised several more plates about three feet into the canopy.

The researchers also swept nets over the brush hundreds of times, collecting the critters that crawled through the vegetation. Each technique revealed the biomass (the dry weight of all the captured invertebrates) had significantly decreased from 1976 to the present day. The sweep sample biomass decreased to a fourth or an eighth of what it had been. Between January 1977 and January 2013, the catch rate in the sticky ground traps fell 60-fold. “Everything is dropping,” Lister said. The most common invertebrates in the rain forest — the moths, the butterflies, the grasshoppers, the spiders and others — are all far less abundant. “Holy crap,” Wagner said of the 60-fold loss.


Comparison of the average dry-weight biomass of arthropods caught per 12-h day in 10 ground (A) and canopy (B) traps within the same sampling area in the Luquillo rainforest.

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If there are no insects left, who cares about deficits? What’s the use?

America’s Budget Deficit Jumps By 17% As Spending Surges (CNBC)

The U.S. federal budget deficit rose in fiscal 2018 to the highest level in six years as spending climbed, the Trump administration said Monday. The deficit jumped to $779 billion, $113 billion or 17 percent higher than the previous fiscal period, according to a statement from Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Mick Mulvaney. It was larger than any year since 2012, when it topped $1 trillion. The budget shortfall rose to 3.9 percent of U.S. GDP. The deficit increased by $70 billion less than anticipated in a report published in July, according to the two officials.

Federal revenue rose only slightly, by $14 billion after Republicans chopped tax rates for corporations and most individuals. Outlays climbed by $127 billion, or 3.2 percent. A spike in defense spending, as well as increases for Medicaid, Social Security and disaster relief, contributed to the increase.

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“If the goal was to bail out the banks at public expense (and it was) it’s clear Bernanke had a far better plan than the ECB.”

More Free Money: A Carry Trade in Liquidity (Mish)

Not only do banks earn free money on excess reserves, they can borrow money and make guaranteed free money on that.

The Federal Reserve Bank of St. Louis discusses the Carry Trade in Liquidity: “The IOER [interest on excess reserves] has been the effective ceiling of other short-term interest rates. The figure above compares the IOER with overnight rates on deposits and repos. As we can see, the IOER has mostly remained above these two rates, implying that (at least some) banks have been able to borrow funds overnight, deposit them at the Fed and earn a spread, in essence engaging in carry trade in liquidity markets.”

How Much Free Money?

While the Fed has been busy giving banks free money by paying interest on excess reserves, banks in the EU have suffered with negative interest rates, essentially taking money from banks and making them more insolvent. If the goal was to bail out the banks at public expense (and it was), it’s clear Bernanke had a far better plan than the ECB.

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The Fed’s been flying blind at least since Bernanke talked about ‘entering uncharted territory’. That’s what that means.

Powell Has Lost His North Star, And The Fed Is Flying Blind (MW)

Federal Reserve Chairman Jerome Powell is in an unenviable position. Folks expect him to fine-tune interest rates to keep the economy going and inflation tame but he can’t make things much better — only worse. Growth is nearly 3% and unemployment is at its lowest level since 1969. What inflation we have above the Fed target of 2% is driven largely by oil prices and those by forces beyond the influence of U.S. economic conditions — OPEC politics, U.S. sanctions on Iran, and dystopian political forces in Venezuela and a few other garden spots. When the current turbulence in oil markets recedes, we are likely in for a period of headline inflation below 2%, just as those forces are now driving prices higher now.

Overall, long-term inflation has settled in at the Fed target of about 2%. The Fed should not obsess about it but keep a watchful eye. Amid all this, Powell’s inflation compass has gone missing. The Phillips curve, as he puts it, may not be dead but just resting. To my thinking, it’s in a coma if it was ever alive at all. That contraption is a shorthand equation sitting atop a pyramid of more fundamental behavioral relationships. Those include the supply and demand for domestic workers and in turn, an historically large contingent labor force of healthy prime-age adults sitting on the sidelines, the shifting skill requirements of a workplace transformed by artificial intelligence and robotics, import prices influenced by weak growth in Europe and China, and immigration.

Of course, Mariner Powell has his North Star — what economists affectionately call R* (R-Star), but it is no longer at a fixed position in Powell’s sky. R* is the federal funds rate that neither encourages the economy to speed up or slow down. However, with businesses needing much less capital to get started or grow these days and for decades China and Germany—the second and fourth largest economies globally—racking up current account surpluses and savings to invest abroad, it is no wonder the forces of supply and demand have been driving R* down to historically low levels.

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They use what they don’t pay in taxes, to spy on you.

Facebook Paid £15.8 Million In UK Tax On £1.2 Billion In 2017 Revenues (BBC)

Facebook’s UK tax bill has tripled to £15.8m – but the social media giant will see an immediate cut because of a tax credit. The final bill comes to £7.4m, since Facebook will see tax relief of £8.4m after awarding shares to employees. In 2016, Facebook’s tax bill rose to £5.1m, following a major overhaul of the social media firm’s tax structure. However, the company’s profits only climbed by £4m year-on-year from £58.4m to £62.7m in 2017. The company’s UK office provides marketing services and sales and engineering support to the company. Facebook’s revenue rose by a third year-on-year to £1.2bn in 2017, because of increased revenues from inter-company and advertising reseller services in 2017.

“We have changed the way we report tax so that revenue from customers supported by our UK teams is recorded in the UK and any taxable profit is subject to UK corporation tax,” said Facebook’s Northern Europe vice-president, Steve Hatch. [..] The publication of Facebook’s 2017 tax accounts follows extensive criticism from policymakers and the media over the last 12 months of how much tax tech giants typically pay in Europe. Large technology companies have been condemned for moving sales through other countries and paying modest amounts of tax in the UK.

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Hard to gauge what exactly this means, time must tell. Seems good that they talk of medical help. but will he be able to get it?

Ecuador To Assange: No Talking Politics, Pay Own Bills, Look After Cat (RT)

WikiLeaks supporters were thrilled to hear that Ecuador would restore Julian Assange’s internet connection. But his hosts – who have in some ways become his jailers – reportedly imposed a long list of restrictions on his behavior. While stating that he is allowed to exercise his “right of communication and freedom of expression,” a nine-page document already leaked online forbids the journalist from engaging in political activity or doing anything to interfere in the affairs of other states. The document expressly states that Ecuador cannot be held liable for the content of Assange’s communications, but nevertheless prohibits him from engaging in activities that might damage the relationship between Ecuador and other states.

Assange’s communications were cut seven months ago, after he criticized Spanish authorities’ treatment of voters during the Catalan independence referendum. Assange must pay for his own WiFi. He must use only his own devices, absent written government permission, and provide the embassy with serial number, model number, and brand name for those devices. He must also pay for his own medical evaluations, with the option of transferring to a hospital in case of an emergency – an option repeatedly denied him by UK authorities, who refused to guarantee safe passage without arrest in the event of such a transfer. Assange’s health has been the subject of much concern during his six-year confinement in the Embassy.

Visitors are also slapped with new restrictions. They must submit visit requests in writing to the embassy chief, giving their name, nationality, profession and place of work, reason for visiting, email and social media accounts, and even the serial numbers for phones and other devices they wish to bring inside. The new rules even mandate the collection of IMEIs, unique identification numbers specific to a phone handset. While repeat visitors receive a less restrictive screening process, they can have their access revoked at any time without an explanation. All visitor data will be turned over to the Ecuadorian Ministry of Foreign Affairs and other unspecified parties.

The restrictions include a threat to use UK police to arrest visitors or seize communications equipment should the journalist violate the lengthy list of rules. Adding insult to injury, the embassy threatened to remove Assange’s cat to a shelter should they decide he is not cleaning up after the animal properly.

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They lost two years doing nothing but fight amongst themselves. That time was always badly needed.

Brexit Deal Slipping To December Amid Deadlocked Talks (Ind.)

A Brexit deal now looks unlikely until just before Christmas after Theresa May admitted “weeks” may be needed to break the deadlock in talks with Brussels. The delay was also signalled by Ireland’s prime minister who warned of log-jammed negotiations dragging into December, increasing concern that stalled talks could simply collapse into a “disaster” no-deal situation. In a veiled swipe at Brexiteers, European Council President Donald Tusk said solving the vexed issue of the Irish border had proved “more complicated than some may have expected” and said no deal is now “more likely than ever”.

A further sign of slippage came when the EU confirmed it would take a decision this week on whether a special summit once proposed for November to publicly seal a Brexit deal, will be needed given the state of talks. But despite the deadlock, Ms May again came under intense pressure from Conservative Eurosceptics to refuse anything resembling the EU’s proposals, amid signs she is diluting her stance to secure a deal. The October summit was once supposed to be the moment a withdrawal deal was locked in, with expectations already having slipped to a potential specially arranged meeting in November – even under those circumstances the outline would have had to have been agreed at this week’s meeting.

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More likely by the day.

No-Deal Brexit Is ‘More Likely Than Ever Before’ – Tusk (Ind.)

A no-deal Brexit is “more likely than ever before”, the president of the European Council has warned, ahead of a make-or-break summit of EU leaders in Brussels. Donald Tusk, who has described this week’s top-level meeting as “the moment of truth”, said Brexit had “proven to be more complicated than some may have expected”. But he said that “that we are preparing for a no-deal scenario must not, under any circumstances, lead us away from making every effort to reach the best agreement possible”.

Mr Tusk’s warning, made in a letter to EU leaders formally inviting them to the summit, comes a day after negotiations between the European Commission and UK Government hit a a wall over the question of how to prevent a hard border in Northern Ireland. Over dinner on Wednesday night the heads of state or government of the 27 remaining EU member states will decide whether there is any pointing holding a special Brexit summit in November – or whether the horse has already bolted. It is now confirmed that Theresa May will address the 27 leaders before the dinner in a last-ditch bid to win them over; though she will not be allowed into the main discussion itself.

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Russia and Assad delayed their final offensive to offer the jihadists a way out. But now these are refusing to leave.

Syria’s Chessboard (Hallinan)

The Syrian civil war has always been devilishly complex, with multiple actors following different scripts, but in the past few months it appeared to be winding down. The Damascus government now controls 60 percent of the country and the major population centers, the Islamic State has been routed, and the rebels opposed to Syrian President Bashar al-Assad are largely cornered in Idilb Province in the country’s northwest. But suddenly the Americans moved the goal posts—maybe—the Russians have fallen out with the Israelis, the Iranians are digging in their heels, and the Turks are trying to multi-task with a home front in disarray. So the devil is still very much at work in a war that has lasted more than seven years, claimed up to 500,000 lives, displaced millions of people, destabilized an already fragile Middle East, and is far from over.

There are at least three theaters in the Syrian war, each with its own complexities: Idilb in the north, the territory east of the Euphrates River, and the region that abuts the southern section of the Golan Heights. Just sorting out the antagonists is daunting. Turks, Iranians, Americans and Kurds are the key actors in the east. Russians, Turks, Kurds and Assad are in a temporary standoff in the north. And Iran, Assad and Israel are in a faceoff near Golan, a conflict that has suddenly drawn in Moscow. Assad’s goals are straightforward: reunite the country under the rule of Damascus and begin re-building Syria’s shattered cities. The major roadblock to this is Idilb, the last large concentration of anti-Assad groups, Jihadists linked with al-Qaeda, and a modest Turkish occupation force representing Operation Olive Branch. The province, which borders Turkey in the north, is mountainous and re-taking it promises to be difficult.

For the time being there is a stand down. The Russians cut a deal with Turkey to demilitarize the area around Idilb city, neutralize the jihadist groups, and re-open major roads. The agreement holds off a joint Assad-Russian assault on Idilb, which would have driven hundreds of thousands of refugees into Turkey and likely have resulted in large numbers of civilian casualties. But the agreement is temporary—about a month—because Russia is impatient to end the fighting and begin the reconstruction. However, it is hard to see how the Turks are going to get a handle on the bewildering number of groups packed into the province, some of which they have actively aided for years. Ankara could bring in more soldiers, but Turkey already has troops east of the Euphrates and is teetering on the edge of a major economic crisis.

Read more …

Oct 152018
 
 October 15, 2018  Posted by at 9:17 am Finance Tagged with: , , , , , , , , , , , ,  


Paul Gauguin Haymaking in Brittany 1889

 

What’s The Point Of Growth If It Creates So Much Misery? (G.)
Don’t Rule Out $400 Oil If The US Sanctions Saudi Arabia (MW)
How Much Damage Can Saudi Arabia Do To The Global Economy? (G.)
Ecuador Partly Restores Assange’s Internet (AAP)
Pages Purged By Facebook Were On Blacklist Promoted By Washington Post (Wsws)
Sears Files For Bankruptcy (CNBC)
The Housing Crisis Will Not Be Solved By Building More Homes (FT)
Violence, Public Anger Erupts In China As Home Prices Slide (ZH)
‘Intense Effort’ Fails To Seal UK-EU Brexit Deal After Sunday Talks (AP)
The EU Wants Fiscal Austerity In A Sinking Economy (CNBC)
Merkel’s Conservative Allies Humiliated in Bavaria Election (G.)
Stephen Hawking Predicted Race Of ‘Superhumans’ (G.)

 

 

The essential discussion of our times.

What’s The Point Of Growth If It Creates So Much Misery? (G.)

The late Prof Mick Moran, who taught politics and government at Manchester University for most of his professional life, had, according to his colleagues, once had “a certain residual respect for our governing elites”. That all changed during the 2008 financial crisis, after which he experienced an epiphany “because it convinced him that the officer class in business and in politics did not know what it was doing”. After his epiphany, Moran formed a collective of academics dedicated to exposing the complacency of finance-worship and to replacing it with an idea of running modern economies focused on maximising social good. They called themselves the Foundational Economy Collective, based on the idea that it’s in the everyday economy where there is most potential for true social regeneration: not top-down cash-splashing, but renewal and replenishment from the ground upwards.

Foundational activities are the materials and services without which we cannot live a civilised life: clean, unrationed water; affordable electricity and gas without cuts to supply; collective transport on smooth roads and rails; quality health and social care provided free at the point of use; and reliable, sustainable food supply. Then there’s the “overlooked economy” – everyday services such as hairdressing, veterinary care, catering and hospitality and small-scale manufacturing – which employ far more people, across a wider geographical range, than the “high-skill, hi-tech” economy with which recent governments have been obsessed.

For the Foundational Economy authors, focusing on the fundamental value of invisible and unglamorous jobs “restores the importance of unappreciated and unacknowledged tacit skills of many citizens”. It’s a way of looking at economics from the point of view of people rather than figures, and doing something revolutionary (yet so blindingly obvious) in the process. What is the point of “growth” if the basic elements of a decent life are denied to a large and growing number?

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A license to kill, then?!

Don’t Rule Out $400 Oil If The US Sanctions Saudi Arabia (MW)

“The Kingdom affirms its total rejection of any threats and attempts to undermine it, whether by threatening to impose economic sanctions, using political pressures, or repeating false accusation,” a government source reportedly told the official Saudi Press Agency. “The Kingdom also affirms that if it receives any action, it will respond with greater action.” Hence, Saudi-owned Al Arabiya channel’s general manager Turki Aldakhil, in our call of the day, warned we could see an explosive move in oil prices. “If U.S. sanctions are imposed on Saudi Arabia, we will be facing an economic disaster that would rock the entire world,” he wrote in an op-ed.

“If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure.” This mess could ultimately throw the entire Muslim world “into the arms of Iran, which will become closer to Riyadh than Washington,” Aldakhil said. “The truth is that if Washington imposes sanctions on Riyadh, it will stab its own economy to death, even though it thinks that it is stabbing only Riyadh.”

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Or the end of OPEC?

How Much Damage Can Saudi Arabia Do To The Global Economy? (G.)

Saudi Arabia enjoys a privileged position both in geopolitical and economic terms. It will have a powerful hand to play if tensions with the US and the west escalate and it follows through with Sunday’s warning of retaliation. Its vast oil reserves – it claims to have about 260bn barrels still to extract – afford the most obvious advantage. The kingdom is the world’s largest oil exporter, pumping or shipping about 7m barrels a day, and giving Riyadh huge clout in the global economy because it wields power to push up prices. An editorial in Arab News by Turki Aldhakhil, the general manager of the official Saudi news channel, Al Arabiya, offers a hint of what could be in the offing.

He said Riyadh was weighing up 30 measures designed to put pressure on the US if it were to impose sanctions over the disappearance and presumed murder of Jamal Khashoggi inside the country’s Istanbul consulate. These would include an oil production cut that could drive prices from around $80 (£60) a barrel to more than $400, more than double the all-time high of $147.27 reached in 2008. This would have profound consequences globally, not just because motorists would pay more at the petrol pump, but because it would force up the cost of all goods that travel by road.

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Wonder why the UN has acted now. And did it do so after consulting with the US?

Ecuador Partly Restores Assange’s Internet (AAP)

The Ecuadorian government has decided to partly restore communications for WikiLeaks founder Julian Assange. They were cut in March, denying the Australian access to the internet or phones and limiting visitors to members of his legal team. He has been living inside Ecuador’s embassy in London for more than six years. The Ecuadorian government said in March it had acted because Assange had breached “a written commitment made to the government at the end of 2017 not to issue messages that might interfere with other states”.

WikiLeaks said in a statement: “Ecuador has told WikiLeaks publisher Julian Assange that it will remove the isolation regime imposed on him following meetings between two senior UN officials and Ecuador’s President Lenin Moreno on Friday.” Kristinn Hrafnsson, WikiLeaks’ editor-in-chief, added: “It is positive that through UN intervention Ecuador has partly ended the isolation of Mr Assange although it is of grave concern that his freedom to express his opinions is still limited. “The UN has already declared Mr Assange a victim of arbitrary detention. This unacceptable situation must end. “The UK government must abide by the UN’s ruling and guarantee that he can leave the Ecuadorian embassy without the threat of extradition to the United States.”

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Thought PropOrNot was done, but the Atlantic Council did not.

Pages Purged By Facebook Were On Blacklist Promoted By Washington Post (Wsws)

Media outlets removed by Facebook on Thursday, in a massive purge of 800 accounts and pages, had previously been targeted in a blacklist of oppositional sites promoted by the Washington Post in November 2016. The organizations censored by Facebook include The Anti-Media, with 2.1 million followers, The Free Thought Project, with 3.1 million followers, and Counter Current News, with 500,000 followers. All three of these groups had been on the blacklist. In November 2016, the Washington Post published a puff-piece on a shadowy and up to then largely unknown organization called PropOrNot, which had compiled a list of organizations it claimed were part of a “sophisticated Russian propaganda campaign.”

The Post said the report “identifies more than 200 websites as routine peddlers of Russian propaganda during the election season, with combined audiences of at least 15 million Americans.” The publication of the blacklist drew widespread media condemnation, including from journalists Matt Taibbi and Glenn Greenwald, forcing the Post to publish a partial retraction. The newspaper declared that it “does not itself vouch for the validity of PropOrNot’s findings regarding any individual media outlet.” While the individuals behind PropOrNot have not identified themselves, the Washington Post said the group was a “collection of researchers with foreign policy, military and technology backgrounds.”

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Long expected.

Sears Files For Bankruptcy (CNBC)

After years of Sears Holdings staying afloat through financial maneuvering and relying on billions of CEO Eddie Lampert’s own money, the 125-year-old retailer filed for bankruptcy. The filing comes more than a decade after Lampert merged Sears and Kmart, hoping that forging together the two struggling discounters would create a more formidable competitor. It comes after Lampert shed assets and spun out real estate, all to pay down the debt the retailer accumulated when that plan went askew. The company still has roughly 700 stores, which have at times been barren, unstocked by vendors who have lost their trust.

Many of the stores have never been visited by a generation of shoppers that can barely recall it was once the the country’s biggest retailer. Lampert, who has a controlling ownership stake in Sears, personally holds some 31 percent of the retailer’s shares outstanding, according to FactSet. His hedge fund ESL Investments owns about 19 percent. Ultimately, it was a $134 million payment that did the company in. The company had a payment due Monday it had not the money to pay.

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Why does this still need to be explained?

The Housing Crisis Will Not Be Solved By Building More Homes (FT)

With great flourish, Theresa May last week announced that she was lifting the borrowing cap which constrains local councils’ ability to finance new housebuilding. “We will only fix this broken market by building more homes,” the prime minister said. “Solving the housing crisis is the biggest domestic policy challenge of our generation. It doesn’t make sense to stop councils from playing their part in solving it. So today I can announce that we are scrapping that cap.” Nope. In reality, councils – or anyone else for that matter – building more homes will do very little to address the fundamental problem in the housing market, and if you want to understand why, there’s a new book which explains it.

‘Why Can’t You Afford To Buy A Home?’ by Josh Ryan-Collins – a researcher at University College London’s Institute for Innovation and Public Purpose – is about the phenomenon which he dubs ‘residential capitalism’. It follows on from his less snappily-titled volume ‘Rethinking The Economics of Land and Housing’, which was written jointly with fellow economist Laurie Macfarlane and policy wonk Toby Lloyd and published last year. Both books address the question of why a growing number of people are being priced out of the property market, with rising house prices accelerating away from household incomes. The answer is financialisation – and it is not an aberration, according to Ryan-Collins.

The ‘housing crisis’ needs to be understood primarily as a product of the banking system. For starters it’s not just a British problem; this is a trend which has gripped developed economies across the world over the past three decades. “Two of the key ingredients of contemporary capitalist societies, private home ownership and a lightly regulated commercial banking system, are not mutually compatible,” he writes. Instead they “create a self-reinforcing feedback cycle”. [..] In the early 1980s, business lending equated to around 40 per cent of GDP on average in advanced economies, while mortgage lending was around 25 per cent. By the time of the financial crisis, mortgage lending had grown to 75 per cent of GDP while business lending had only grown slightly, to 45 per cent.

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The Chinese will hold Beijing responsible when their housing bubble bursts.

Violence, Public Anger Erupts In China As Home Prices Slide (ZH)

Last March, we discussed why few things are as important for China’s wealth effect and economy, as its housing bubble market. Specifically, as Deutsche Bank calculated at the time, “in 2016 the rise of property prices boosted household wealth in 37 tier 1 and tier 2 cities by RMB24 trillion, almost twice their total disposable income of RMB12.9 trillion.” The German lender added that this (rather fleeting) wealth effect “may be helping to sustain consumption in China despite slowing income growth” warning that “a decline of property price would obviously have a large negative impact.” Naturally, as long as the housing bubble keeps inflating and prices keep rising, there is nothing to worry about as the population will keep spending money buoyed by illusory wealth appreciation.

It is when housing starts to drop that Beijing begins to panic. Fast forward to today, when Beijing may be starting to sweat because whereas Chinese property developers usually count on September and October to be their “gold and silver” months for sales, this year has turned out to be different. As the SCMP reports, not only were sales figures grim for September, but the seven-day national holiday last week also brought at least two “fangnao” incidents – when angry, and often violent, homeowners protest against price cuts offered by developers to new buyers.

These protests are often directed at sales offices, with varying levels of intensity – from throwing rocks to holding banners and putting up funeral wreaths. The risk, of course, is that as what has gone up (wealth effect) will come down, and as home ownership has remained the most important channel of investment for urban households in China in the past decade, price cuts have become increasingly unacceptable and a cause for social unrest. Just last week, angry homeowners who paid full price for units at the Xinzhou Mansion residential project in Shangrao attacked the Country Garden sales office in eastern Jiangxi province last week, after finding out it had offered discounts to new buyers of up to 30%.

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There is no solution that everyone can accept.

‘Intense Effort’ Fails To Seal UK-EU Brexit Deal After Sunday Talks (AP)

The European Union’s top Brexit negotiator says urgent talks with Britain’s point person did not result in their reaching agreement on outstanding issues. EU negotiator Michel Barnier said: “Despite intense efforts, some key issues are still open” in the divorce talks between the European Union and Britain. Barnier and his British counterpart, Dominic Raab, met in Brussels for surprise talks on Sunday. The discussion prompted rumors that a full agreement might be imminent, but Barnier says the future of the border on the island of Ireland remain a serious obstacle. He says the need “to avoid a hard border” between Ireland and the U.K’s Northern Ireland is among the unsettled issues. An EU official says no further negotiations are planned before an EU leaders summit on Wednesday.

The “Irish backstop” is the main hurdle to a deal that spells out the terms of Britain’s departure from the EU and future relationship with the bloc. After Brexit, the currently invisible frontier between Northern Ireland and Ireland will be the U.K.’s only land border with an EU nation. Britain and the EU agree there must be no customs checks or other infrastructure on the border, but do not agree on how that can be accomplished. The EU’s “backstop” solution — to keep Northern Ireland in a customs union with the bloc — has been rejected by Britain because it would require checks between Northern Ireland and the rest of the U.K.

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Budget was accepted by almost two thirds in Senate and Parliament.

The EU Wants Fiscal Austerity In A Sinking Economy (CNBC)

Over the last three years, net exports shaved 0.5 percent off Italy’s quasi stagnant 1.1 percent GDP growth. And while exports in the first seven months of this year increased 4 percent from the year earlier, that did absolutely nothing to revive the country’s manufacturing output. The industrial production during the January-to-July period dropped at an annual rate of 0.5 percent. That, of course, bodes ill for business investments because the weakness in the manufacturing sector indicates plenty of spare production capacity. In other words, Italian businesses need no new machines and bigger factory floors; they already have what they need to meet the current and expected sales demand.

So, what’s left to support Italy’s jobs and incomes? Nothing — emphatically nothing — keeps screaming the German-run EU: Italy has no independent monetary policy, and, according to the EU Commission, the fiscal stance should remain frozen in a restrictive mode of indefinite duration. Italy knows what that means. Before the onset of the last decade’s financial crisis, and the German-imposed fiscal austerity, Italy’s budget deficit in 2007 was whittled down to 1.5 percent of GDP (compared to nearly 3 percent of GDP in France), the primary budget surplus (budget before interest charges on public debt) was driven up to 1.7 percent of GDP, helping to bring down the public debt to 112 percent of GDP from an annual average of 117 percent in the previous six years.

But then all hell broke loose once the Germans — defiantly rejecting Washington’s call to reason — set out to teach a lesson to “fiscal miscreants” by imposing austerity policies on the euro area’s sinking economies. Italy should never allow that to happen again. What, then, should Italy do? The answer is simple: Exactly what it says it wants to do in the 2019 budget passed last Thursday by an overwhelming majority in the Senate (61 percent of the votes) and in the Parliament’s Lower House (63.4 percent of the votes).

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Not just conservatives, the SPD is going going gone as well.

Merkel’s Conservative Allies Humiliated in Bavaria Election (G.)

Angela Merkel’s conservative partners in Bavaria have had their worst election performance for more than six decades, in a humiliating state poll result that is likely to further weaken Germany’s embattled coalition government. The Christian Social Union secured 37.3% of the vote, preliminary results showed, losing the absolute majority in the prosperous southern state it had had almost consistently since the second world war. The party’s support fell below 40% for the first time since 1954. Markus Söder, the prime minister of Bavaria, called it a “difficult day” for the CSU, but said his party had a clear mandate to form a government.

Among the main victors was the environmental, pro-immigration Green party, which as predicted almost doubled its voter share to 17.8% at the expense of the Social Democratic party (SPD), which lost its position as the second-biggest party, with support halving to 9.5%. Annalena Baerbock, the co-leader of the Greens, said: “Today Bavaria voted to uphold human rights and humanity.” Andrea Nahles, the leader of the SPD, delivered the briefest of reactions at her party’s headquarters in Berlin, calling the results “bitter” and blaming them on the poor performance of the grand coalition in Berlin.

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But this suggests that gene editing would be very expensive.

Stephen Hawking Predicted Race Of ‘Superhumans’ (G.)

The late physicist and author Prof Stephen Hawking has caused controversy by suggesting a new race of superhumans could develop from wealthy people choosing to edit their and their children’s DNA. Hawking, the author of A Brief History of Time, who died in March, made the predictions in a collection of articles and essays. The scientist presented the possibility that genetic engineering could create a new species of superhuman that could destroy the rest of humanity. The essays, published in the Sunday Times, were written in preparation for a book that will be published on Tuesday. “I am sure that during this century, people will discover how to modify both intelligence and instincts such as aggression,” he wrote.

“Laws will probably be passed against genetic engineering with humans. But some people won’t be able to resist the temptation to improve human characteristics, such as memory, resistance to disease and length of life.” In Brief Answers to the Big Questions, Hawking’s final thoughts on the universe, the physicist suggested wealthy people would soon be able to choose to edit genetic makeup to create superhumans with enhanced memory, disease resistance, intelligence and longevity. Hawking raised the prospect that breakthroughs in genetics will make it attractive for people to try to improve themselves, with implications for “unimproved humans”. “Once such superhumans appear, there will be significant political problems with unimproved humans, who won’t be able to compete,” he wrote. “Presumably, they will die out, or become unimportant. Instead, there will be a race of self-designing beings who are improving at an ever-increasing rate.”

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Oct 142018
 
 October 14, 2018  Posted by at 9:14 am Finance Tagged with: , , , , , , , , , ,  


René Magritte The song of love 1948

 

Companies Buying Their Own Shares Could Fuel The Next Market Rally (CNBC)
Market Crash? Another ‘Red Card’ For The Economy (Lacalle)
4 Lessons From Iceland On Dealing With A Financial Crisis (WEF)
‘Crazy’ That Current Account Deficits Are ‘A Sin:’ Singapore Deputy PM (CNBC)
Draghi to Rome: Don’t Expect An ECB Rescue If Budget Talks Fail (CNBC)
Canada ‘Concerned’ About Khashoggi But Will Sell Arms To Saudis – Trudeau (RT)
David Davis Calls For Cabinet Rebellion Over Brexit Plan (BBC)
Brexit Negotiators Poised To Miss Deal Deadline As UK Hardliners Rebel (ZH)
Internet Censorship Just Took An Unprecedented Leap Forward (CJ)
Professor Exposes Rigged Markets One Academic Paper At A Time (ZH)
Hammer Time (Jim Kunstler)
Who The Hell Cares What Old People Think About Climate Change? (Ol.)
What’s Another Way to Say ‘We’re F-cked’? (Goodell)
‘Not Everything Was Looted’: British Museum To Fight Critics (G.)

 

 

“.. in the last 12 months, the companies in the S&P 500 have purchased $646 billion of their own stock, 29 percent more than the previous 12 months..”

“..at least $350 billion of buybacks that have been planned for the year and are just waiting to be put to work.”

Companies Buying Their Own Shares Could Fuel The Next Market Rally (CNBC)

With stocks down significantly, corporate buybacks could help stabilize the market. Buybacks have been one of the big stories supporting the market this year. DataTrek estimates that in the last 12 months, the companies in the S&P 500 have purchased $646 billion of their own stock, 29 percent more than the previous 12 months. And there’s plenty of “dry powder” left. One firm estimates at least $350 billion of buybacks that have been planned for the year and are just waiting to be put to work. And no, it is not just Apple that is buying its own stock. More than 300 large-cap companies have active buyback programs.

Unfortunately, some traders are resurrecting an old chestnut to help explain the current market weakness. They say we are entering a “blackout” period, when corporations cannot buy their stock because they are about to report quarterly earnings. It’s a neat explanation, except there’s not a lot to it. “Buybacks do occur during blackout periods,” Ben Silverman at InsiderScore told me. “Buyback volume does often decline in the first month of the quarter due to some buyback blackouts,” but companies can, and do, continue to buy back stock, he told me. Another trader (who declined to be identified) confirmed Silverman’s point. Corporate buybacks decline in the month before earnings, but only marginally. He estimated the decline is 30 percent or less.

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“..disproportionate valuations…”

$20 trillion worth of them.

Market Crash? Another ‘Red Card’ For The Economy (Lacalle)

The first thing we must understand is that we are not facing a panic created by a black swan, that is, an unexpected event, but by three factors that few could deny were evident: 1) Excessive valuations after $20 trillion of monetary expansion inflated most financial assets. 2) Bond yields rising as the US 10-year reaches 3.2%. 3) The evidence of the Yuan devaluation, which is on its way to surpass 7 Yuan per US dollar. 4) Global growth estimates trimmed for the sixth time in as many months. Therefore, the US rate hikes – announced repeatedly and incessantly for years – are not the cause, nor the alleged trade war. These are just symptoms, excuses to disguise a much more worrying illness.

What we are experiencing is the evidence of the saturation of excesses built around central banks’ loose policies and the famous “bubble of everything”. And therein lies the problem. After twenty trillion dollars of reckless monetary expansion, risk assets, from the safest to the most volatile, from the most liquid to the unquoted, have skyrocketed with disproportionate valuations.

The cracks in the building always appear first with currencies. Countries that have become accustomed to the idea that “this time is different” and that debt does not matter, started to multiply their indebtedness in foreign currency. Debt in dollars from emerging countries soared to 41% of their total debt. In the first three months of 2018, global debt rose 11% to a record of 247 trillion dollars (according to the IIF), and that of emerging markets soared by 2.5 trillion to an all-time high of 58.5 trillion. . When the lowest risk bond, the United States 10-year, went to 3.1%, the synchronized growth and complacent veil lifted, and many assets showed how risky they truly are.

Markets woke up to a reality that we had decided to ignore. That rates do rise. And if the safest bond gives a return of 3.2% … Am I willing to buy bonds from much riskier countries with negligible spreads? Add to that “sobriety” effect, another one. The inevitable devaluation of the yuan , which soared to almost 7 against the dollar. Am I willing to buy emerging markets and commodities when China exports its imbalances sending disinflationary pressure to the rest of the world?

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Iceland took it serious. No-one else did.

4 Lessons From Iceland On Dealing With A Financial Crisis (WEF)

Days after the collapse of 97% of its banking industry, Icelandic authorities designed a comprehensive policy of accountability, based on two overlapping objectives: establishing the truth and punishing those responsible. An independent truth commission was mandated to document the causes of the meltdown, and the newly established Office of the Special Prosecutor was tasked to thoroughly investigate and prosecute those responsible for any crimes committed in the run up to the crisis. Both mechanisms have been remarkably successful.

Published in 2010, the truth commission’s 2,200-page report not only documented the manifold failings of the financial system in Iceland but also offered specific recommendations to protect state institutions from a future crisis. The report instantly became a bestseller, with copies sold in supermarkets. It was a popular gift – parents even gave it to their children to help them avoid making the same mistakes. The Office of the Special Prosecutor successfully prosecuted 40 bank executives. This is remarkable, especially given the small population of the island and the comparative experience of other European countries affected by the recession, such as Ireland, Cyprus, or the UK (table below).

Read more …

Not many people see is that way.

‘Crazy’ That Current Account Deficits Are ‘A Sin:’ Singapore Deputy PM (CNBC)

For decades, developing countries have relied on outside investments to boost their growth despite trade imbalances. But running a current account deficit has come to be regarded as “a sin,” according to Singapore’s deputy prime minister. Such a development is just “crazy,” Tharman Shanmugaratnam told CNBC on Friday during the annual meeting of the Institute of International Finance on the Indonesian island of Bali. Shanmugaratnam was referring to the widely held outlook that nations should seek to avoid current account deficits — which indicate they’re operating on borrowed means because the value of incoming goods, services and investments exceeds the amount leaving the country.

“How did the Singapores and Koreas of the world grow?” he said. “We grew by running current account deficits at an early stage of development so we could invest ahead for growth while our savings were being built up.” Singapore was able to rely on financing through foreign direct investments and long-term investors during its early years of growth, as the international financial system at that time had capital flowing to developing economies, Shanmugaratnam said. “Today, it’s a sin to run a current account deficit and that’s crazy,” said the minister, who is also the chairman of the Monetary Authority of Singapore, the country’s central bank and financial regulator. “I mean, it’s bad in economics, it’s bad in policy sense, and the whole world is going to suffer.”

Read more …

But Draghi’s still an Italian.

Draghi to Rome: Don’t Expect An ECB Rescue If Budget Talks Fail (CNBC)

European Central Bank President Mario Draghi is sending a warning to Rome ahead of its formal budget submission: Don’t expect the ECB to save the day. In a Saturday press conference at the IMF and World Bank meetings in Bali, Indonesia, Draghi said he was confident that a budget agreement would be reached and urged all parties to “calm down with the tone.” He also voiced relief that there has not been evidence of a wider spillover effect in European bond markets, even as Italian yields hit multi-year highs. “Everything that happened today is local to Italy.”

When asked whether an eventual realization of contagion or a further rise in Italian yields would force the ECB to scrap tightening plans by year end, Draghi told CNBC: “I don’t want to speculate on this. I just don’t want to conceive such a hypothesis. I’m confident that the authorities — and by the way all parties, not only Italy — all parties will in the end find a compromise solution, an agreement.” He went on to suggest that the situation had been “dramatized,” and that was “not the first time there are deviations from established rules in Europe.” But investors are worried that the Italian government may seize on that precedent and take a gamble that running foul of EU budget rules won’t incur serious penalties, and that, if things do turn worse for Italian financial markets, they”ll be able to lean on the ECB for support. Draghi, for his part, told CNBC that would not be a possibility.

Read more …

“..Saudi Arabia expelled the Canadian envoy. It then froze trade talks, cut academic ties, and suspended flights to Canada.”

But arms sales trump everything.

Canada ‘Concerned’ About Khashoggi But Will Sell Arms To Saudis – Trudeau (RT)

Ottawa will keep its $15bn arms deal with Riyadh despite concerns over Saudi involvement in the disappearance of dissident journalist Jamal Khashoggi and the diplomatic row over human rights, Prime Minister Trudeau said. “We respected that contract,” Canadian Prime Minister Justin Trudeau told reporters on Friday, adding that his cabinet has put forward measures to make the arms sales more transparent. “We are making sure Canadians’ expectations and laws are always being followed,” he said. The contract was signed in 2014 by the previous conservative government, and has since been upheld by Trudeau. The specifics of the sales were originally not disclosed by the parties.

According to documents obtained by CBC News last month, a Canadian company is to ship 742 LAV-6 light armored vehicles to Riyadh. The same outlet revealed in March that hundreds of the LAV-6s will be outfitted as “heavy assault” and “anti-tank” types. [..] Human rights campaigners and journalists have criticized Canada’s approach to Saudi Arabia as inconsistent. They point out that the government doesn’t mince words when attacking the kingdom’s human rights record, but at the same time never waivers in its willingness to ship military hardware to Riyadh. Media reports have also strongly suggested that the Saudis might be using Canadian-made LAVs against civilians in Yemen.

[..] Canada stuck to the arms deal even after becoming embroiled in a diplomatic spat with Riyadh in August. Foreign Minister Chrystia Freeland called on the kingdom to release two high-profile dissidents. In response, Saudi Arabia expelled the Canadian envoy. It then froze trade talks, cut academic ties, and suspended flights to Canada.

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She won’t have a cabinet left soon.

David Davis Calls For Cabinet Rebellion Over Brexit Plan (BBC)

Cabinet ministers should “exert their collective authority” and rebel against Theresa May’s proposed Brexit deal, ex-Brexit Secretary David Davis has said. The PM has suggested a temporary customs arrangement for the whole UK to remain in the customs union while the Irish border issue is resolved. Brexiteers suspect this could turn into a permanent situation, restricting the freedom to strike trade deals. Writing in the Sunday Times, Mr Davis said the plan was unacceptable. “This is one of the most fundamental decisions that government has taken in modern times,” he added.

The issue of the border between Northern Ireland and the Republic Ireland is one of the last remaining obstacles to achieving a divorce deal with Brussels, with wrangling continuing over the nature of a “backstop” to keep the frontier open if a wider UK-EU trade arrangement cannot resolve it. The EU’s version, which would see just Northern Ireland remain aligned with Brussels’ rules, has been called unacceptable by Mrs May and the DUP. Mr Davis said the government’s negotiating strategy had “fundamental flaws”, arising from the “unwise decision in December to accept the EU’s language on dealing with the Northern Ireland border”.

On Saturday evening, German newspaper Suddeutsche Zeitung reported a deal had already been reached between Mrs May and the EU, and would be announced on Monday. But a No 10 source told the BBC the report was “100%, categorically untrue” and negotiations were ongoing. The paper said it had seen a leaked memo from EU negotiators to EU ambassadors stating: “Deal made.”

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Too many people want too many too different things.

Brexit Negotiators Poised To Miss Deal Deadline As UK Hardliners Rebel (ZH)

[..] early Sunday in London, the Brexiteer hardliners published an open letter signed by 63 Conservative MPs, including David Davis, the former Brexit secretary, Jacob Rees-Mogg, the chairman of the European Research Group of Eurosceptic backbenchers and former Brexit minister Steve Baker, the former Brexit minister. At the same time, Anne-Marie Trevelyan, a pro-leave MP, published an editorial in the Sunday Telegraph demanding that any possibility that the UK could remain in a “temporary customs arrangement” after the Brexit transition period ends in December 2020 be stricken from the final agreement – because leaving open the possibility would be tantamount to ignoring the political will of the 17.4 million Britons who voted for Brexit.

Meanwhile, Davis demanded in an editorial in the Sunday Times that Cabinet ministers should “exert their collective authority” and rebel against Theresa May’s proposed Brexit deal. All of this is happening amid even more conflicting reports, citing sources from the EU and sources from No. 10 Downing Street, affirming and denying that a deal had been reached. Underscoring the hostility to a deal, the leader of Northern Ireland’s Democratic Unionist Party said Sunday that she would prefer a “no deal” Brexit to a “backstop” transition agreement that would require any borders between Northern Ireland and the UK, arguing that this would amount to the “annexation” of Northern Ireland by the EU, per CNBC.

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The Atlantic Council got going. Social media have become too big a threat to the narrative.

Internet Censorship Just Took An Unprecedented Leap Forward (CJ)

While most indie media was focused on debating the way people talk about Kanye West and the disappearance of Saudi journalist Jamal Khashoggi, an unprecedented escalation in internet censorship took place which threatens everything we all care about. It received frighteningly little attention. After a massive purge of hundreds of politically oriented pages and personal accounts for “inauthentic behavior”, Facebook rightly received a fair amount of criticism for the nebulous and hotly disputed basis for that action. What received relatively little attention was the far more ominous step which was taken next: within hours of being purged from Facebook, multiple anti-establishment alternative media sites had their accounts completely removed from Twitter as well.

As of this writing I am aware of three large alternative media outlets which were expelled from both platforms at almost the same time: Anti-Media, the Free Thought Project, and Police the Police, all of whom had millions of followers on Facebook. Both the Editor-in-Chief of Anti-Media and its Chief Creative Officer were also banned by Twitter, and are being kept from having any new accounts on that site as well.

“I unfortunately always felt the day would come when alternative media would be scrubbed from major social media sites,” Anti-Media’s Chief Creative Officer S.M. Gibson said in a statement to me. “Because of that I prepared by having backup accounts years ago. The fact that those accounts, as well as 3 accounts from individuals associated with Anti-Media were banned without warning and without any reason offered by either platform makes me believe this purge was certainly orchestrated by someone. Who that is I have no idea, but this attack on information was much more concise and methodical in silencing truth than most realize or is being reported.”

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Interesting man.

Professor Exposes Rigged Markets One Academic Paper At A Time (ZH)

Finance professor John Griffin, along with his doctoral student companion, Amin Shams, were the two academics that drew market-moving conclusions about bitcoin last year, while the digital currency was trading around $20,000. After sifting through 2 terabytes of trading data, they alleged that bitcoin was being manipulated by someone using the cryptocurrency Tether to purchase it. Tether remains a relatively little-known crypto, which is pegged to one US dollar. Part of its appeal is that it can “stand in” for dollars when necessary, according to Bloomberg. Griffin and Shams authored a paper in June, with the results of their findings ultimately catalyzing many digital assets to move lower, despite the fact that the CEO of Tether publicly denied that its currency was used to prop up bitcoin.

Griffin works at the University of Texas at Austin, and has become quite an unpopular figure on Wall Street for similar work he has done in the past on ratings companies, the VIX and investment banks. In most of his findings, he claims that these well-known financial instruments and players are, in one way or another, rigged. And the professor seems to enjoy exposing precisely that: rigged, manipulated markets and shady players. “I not only want to understand the world, but make it better,” he told Bloomberg. Griffin’s work has become popular reading within the DOJ and the Commodity Futures Trading Commission, according to Bloomberg.

These regulators – many of them low on resources, time and staff – welcome any additional help they can get (the SEC’s budget has forced it into a hiring freeze and the CFTC budget was cut by Congress in March of this year). John Reed Stark, a former attorney in the SEC’s enforcement division, stated: “It’s incredibly helpful to have an expert of Griffin’s caliber.”

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“..the threat to order might be so great that an unprecedented “emergency” has to be declared, with soldiers in the streets of Washington..”

Hammer Time (Jim Kunstler)

If I were President, I’d declare Oct 12 Greater Fool Day. (Nobody likes Christopher Columbus anymore, that genocidal monster of dead white male privilege.) The futures are zooming as I write, a last roundup for suckers at the OD corral, begging the question: who will show up on Monday. Nobody, I predict. And then what? The great false front of the financial markets resumes falling over into the November election. The rubble from all that buries whatever is left of the automobile business and the housing market. The smoldering aftermath will be described as the start of a long-overdue recession — but it will actually be something a lot worse, with no end in sight.

The Democratic Party might not be nimble enough to capitalize on the sudden disappearance of capital. Their only hope to date has been to capture the vote of every female in America, to otherwise augment their constituency of inflamed and aggrieved victims of unsubstantiated injustices. It’s been fun playing those cards, and the Party might not even know how to play a different game at this point. Democratic politicians may also be among the one-percenters who watch their net worth go up in a vapor in a market collapse, leaving them too numb to act. The last time something like this happened, in the fall of 2008, candidate Barack Obama barely knew what to say about the fall of Lehman Brothers and the ensuing cascade of misery — though unbeknownst to the voters, he was already a hostage of Wall Street.

Complicating matters this time will be the chaos unleashed in politics and governing when the long-running “Russia collusion” melodrama boomerangs into a raft of indictments against the cast of characters in the Intel Community and Department of Justice AND the Democratic National Committee, and perhaps even including the Party’s last standard bearer, HRC, for ginning up the Russia Collusion matter in the first place as an exercise in sedition. The wheels of the law turn slowly, but they’ll turn even while financial markets tumble. And the threat to order might be so great that an unprecedented “emergency” has to be declared, with soldiers in the streets of Washington, as was sadly the case in 1861, the first time the country turned itself upside down.

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Good angle.

Who The Hell Cares What Old People Think About Climate Change? (Ol.)

The loudest and most powerful voices when it comes to the future of the planet — the ones with their hands on the levers of power — have a strong tactical advantage: they will be dead before the shit really hits the fan. This fact curiously goes unspoken, for the most part. Popular arguments tend to be framed around a rosy vision preserving the planet for future generations, which gives our boomer aristocracy the most effective cover story imaginable. They don’t need to care about that, as nice as it sounds. Why would they? It’s all completely hypothetical to them. You may as well be talking about climate patterns in Narnia. Make no mistake: older generations living in the developed world are part of history’s most under-appreciated death cult.

This isn’t abstract psychoanalysis. There is a brutal calculus going on in the minds of everyone from your skeptic uncle to the bankrollers of squillion dollar think tanks whenever they think or talk about climate change. They know that they will never have to really answer for their opinions on this matter, because they’ll be six feet under (and loving it!) when the world’s arable land is rendered infertile and its coastal cities flooded by rising oceans. In some dark and venal corner of their minds, they’re thinking about that fact all the damn time. Despite the frightening predictions of the new IPCC report, they’ve still got plenty of wiggle room to keep denying until they’re dead – which will be sooner rather than later. With any luck they’ll even avoid being held accountable in any concrete way, which for the conservative commentariat is an even worse fate than the Mad Max hellworld towards which we are hurtling.

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One scary dude.

What’s Another Way to Say ‘We’re F-cked’? (Goodell)

[..] a scientist named Richard Alley in a Skype discussion with students at Bard College, as well as with Eban Goodstein, director of the Graduate Programs in Sustainability at Bard. It would be just another nerdy Skype chat except Alley is talking frankly about something that few scientists have the courage to say in public: As bad as you think climate change might be in the coming decades, reality could be far worse. Within the lifetime of the students he’s talking with, Alley says, there’s some risk — small but not as small as you might hope — that the seas could rise as much as 15-to-20 feet.

[..] Richard Alley is not a fringe character in the world of climate change. In fact, he is widely viewed as one of the greatest climate scientists of our time. If there is anyone who understands the full complexity of the risks we face from climate change, it’s Alley. And far from being alarmist, Alley is known for his careful, rigorous science. He has spent most of his adult life deconstructing past Earth climates from the information in ice cores and rocks and ocean sediments. And what he has learned about the past, he has used to better understand the future. For a scientist of Alley’s stature to say that he can’t rule out 15 or 20 feet of sea-level rise in the coming decades is mind-blowing.

And it is one of the clearest statements I’ve ever heard of just how much trouble we are in on our rapidly warming planet (and I’ve heard a lot — I wrote a book about sea-level rise). To judge how radical this is, compare Alley’s numbers to the latest report from the Intergovernmental Panel on Climate Change, which was released on Monday. That report basically argued that if we don’t get to zero carbon emissions by 2050, we have very little chance of avoiding 1.5 Celsius of warming, the threshold that would allow us to maintain a stable climate. The report projected that with 2 Celsius of warming, which is the target of the Paris Climate Agreement, the range of sea level rise we might see by the end of the century is between about one and three feet.

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Sure. But start giving back what was. Problem is, so much of it WAS looted that the museum would become a pretty empty place.

‘Not Everything Was Looted’: British Museum To Fight Critics (G.)

The British Museum is launching an initiative intended to counter the perception that its collections derive only from looted treasures. The monthly Collected Histories talks, which begin on Friday, will provide information on how certain artefacts entered the collection, with the museum saying it will offer a more nuanced take on these stories than is available elsewhere. The museum has long faced criticism for displaying – and refusing to return – looted treasures, including the Parthenon Marbles, Rosetta Stone, and the Gweagal shield.

Earlier this year, the art historian Alice Procter’s Uncomfortable Art Tours around London institutions, including the British Museum, made headlines for their attempts to expose the role of colonialism, with those on the tour given “Display It Like You Stole It” badges. Dr Sushma Jansari, the curator of the Asian ethnographic and South Asia collections at the British Museum, said she had devised Collected Histories in response to Procter’s tours. “There are a lot of partial histories and they tend to focus on the colonial aspect of the collecting so you have a bunch of people who tend to be quite angry and upset,” she said. “We’re trying to reset the balance a little bit. A lot of our collections are not from a colonial context; not everything here was acquired by Europeans by looting.”

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Oct 132018
 
 October 13, 2018  Posted by at 9:24 am Finance Tagged with: , , , , , , , , , ,  


Pablo Picasso Two naked figures 1908

 

40% Of The American Middle Class Face Poverty In Retirement (CNBC)
One-Third Of Young Americans Too Overweight To Join The Military (AFP)
We Are All In….Again! (Roberts)
American Pastor Freed In Turkey Will Visit White House Saturday (AP/R.)
Saudi Isolation Grows Over Khashoggi Disappearance (G.)
UK ‘Gears Up’ To Target Saudis With Sanctions After Journalist Vanishes (Ind.)
‘Pressure Will Be On Turkey’ If Saudis Found Guilty Of Journalist’s Murder (RT)
Theresa May Faces Her Party As A Desperate Gambler In Hope Of A Break (G.)
UK Consumers Face ‘Catastrophic’ Consequences From No-Deal Brexit (Ind.)
Merkel Faces Poll Disaster As Coalition Support Collapses (Ind.)
The New Face of the Eurozone Bailout Fund (Spiegel)

 

 

There doesn’t seem to be any initiative to do something about this. Big mistake.

40% Of The American Middle Class Face Poverty In Retirement (CNBC)

Nearly half of middle-class Americans face a slide into poverty as they enter their retirement, a recent study by the Schwartz Center for Economic Policy Analysis at the New School has concluded. That risk has been driven by depressed earnings, depressed asset values and increased health-care costs — causing 74 percent of Americans planning to work past traditional retirement age. Additionally, both private and public pension plans have been allowed to become seriously underfunded. So what can be done? Fundamental changes in the structure of the U.S. economy, combined with increased health-care costs and lack of saving, have created a financial trap for millions of American workers heading into retirement.

Roughly 40 percent of Americans who are considered middle class (based on their income levels) will fall into poverty or near poverty by the time they reach age 65, according to the study. The study also concluded that if workers age 50 to 60 decide to retire at age 62, 8.5 million of them are projected to fall below twice the Federal Poverty Level, with retirement incomes below $23,340 for singles and $31,260 for couples. Further, 2.6 million of those 8.5 million downwardly mobile workers and their spouses will have incomes below the poverty level — $11,670 for an individual and $15,730 for a two-person household.

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In total, “71 percent of Americans aged 17-24 do not meet the military’s sign-up requirements..”

One-Third Of Young Americans Too Overweight To Join The Military (AFP)

Forget about the high-tech military challenges from China and Russia, the Pentagon is facing a fast-growing national security threat that could be even trickier to tackle: America’s obesity crisis. A study released this week has found that nearly one-third of young Americans are now too overweight to join up, a worrying statistic for military officials already facing recruitment challenges. “Obesity has long threatened our nation’s health. As the epidemic grows, obesity is posing a threat to our nation’s security as well,” the Council for a Strong America states in its new report. The Army last month announced it would miss its goal of attracting 76,500 new recruits in 2018. The shortfall is of about 6,500 soldiers — the first time since 2005 the service had missed its hiring targets.

A strong US economy and tight jobs market played a role, but the numbers highlight the dwindling pool of applicants the Pentagon has to draw from. According to the Defense Department, obesity is one of the top reasons why a stunning 71 percent of Americans aged 17-24 do not meet the military’s sign-up requirements. “Given the high percentage of American youth who are too overweight to serve, recruiting challenges will continue unless measures are taken to encourage a healthy lifestyle beginning at a young age,” states the study, entitled “Unhealthy and Unprepared.”

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Double or nothing.

We Are All In….Again! (Roberts)

Despite the recent angst in the market over increasing interest rates, there has been little evidence of concern by investors overall. A recent report showed that investors have the LEAST amount of cash in their investment accounts…EVER. “Individual investors drew down cash balances at brokerage accounts to record lows as the S&P 500 surged 7.2 percent in the three months ended Friday. Cash as a percentage of assets among Charles Schwab Corp. clients in August fell to 10.4 percent, matching the level in January that marked the lowest since at least 2004.” Of course, eight months ago the markets suffered a 10.4% decline just as investors scrambled to “get in.”

The monthly survey from the American Association of Individual Investors shows the same. Individuals are carrying some of the highest levels in history of equities, are reducing their exposure to bonds, and carrying very low levels of cash. As Dana Lyons recently noted: ” From the Federal Reserve’s Z.1 release, we find that U.S. Households had a reported 34.3% of their financial assets invested in the equity market as of the 2nd quarter. Outside of a slightly higher reading in the 4th quarter of 2017, that is the highest level of stock investment in the 70-plus year history of the series, other than the 1999-2000 bubble top.”

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What did Erdogan get?

American Pastor Freed In Turkey Will Visit White House Saturday (AP/R.)

The pastor who was at the center of a diplomatic spat between Turkey and the United States will land at a military base near Washington on Saturday and will likely visit the White House the same day, President Donald Trump said on Friday. “We’re very honored to have him back with us,” Trump told reporters, referring to the release of pastor Andrew Brunson by a Turkish court. “He suffered greatly but we’re very appreciative to a lot of people,” Trump added, saying no deal had been made with Turkey on lifting U.S. sanctions in exchange for Brunson’s release.

Earlier Friday, a Turkish court convicted Brunson of terror links but released him from house arrest and allowed him to leave the country, removing a major irritant in fraught ties between two NATO allies that still disagree on a host of other issues. The court near the western city of Izmir sentenced North Carolina native Brunson to just over three years in prison for allegedly helping terror groups, but let him go because the 50-year-old evangelical pastor had already spent nearly two years in detention. An earlier charge of espionage was dropped.

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“Khashoggi was wearing an Apple watch when he entered the consulate..”

Saudi Isolation Grows Over Khashoggi Disappearance (G.)

Saudi Arabia has found itself further isolated over the disappearance of Jamal Khashoggi after the business world turned its back on a high-profile investment conference in the kingdom and US officials claimed audio and video recordings had captured the moment the journalist was murdered in Istanbul. The Future Investment Initiative conference, to be held in Riyadh later this month, was rapidly turning into a fiasco on Friday after most media partners and several top business allies pulled out. More were expected to follow. All said they had been disturbed by the circumstances of Khashoggi’s disappearance from the Saudi consulate in Turkey and the lack of credible responses.

Saudi Arabia has been under pressure to explain what happened to Khashoggi after he entered the consulate building at 1.14pm on 2 October. Turkey has claimed the exiled journalist and critic of Crown Prince Mohammed bin Salman was murdered by a hit squad sent from Riyadh. Authorities in Istanbul have hinted they hold undisclosed evidence that proves what took place. On Friday, US officials revealed to Khashoggi’s employer, the Washington Post, that Turkish investigators had claimed audio and video tapes existed of conversations between the missing 59-year-old and his alleged killers. “You can hear his voice and the voices of men speaking Arabic,” an official said. “You can hear how he was interrogated, tortured and then murdered.”

The references to recordings could suggest that Turkish intelligence officers had bugged the consulate or some of the accused killers. Hatice Cengiz, Khashoggi’s Turkish fiancee, told the Associated Press on Friday that Khashoggi was wearing an Apple watch when he entered the consulate and investigators were examining his cellphones, which he had left with her. In written responses to questions by the AP, Cengiz said Turkish authorities had not told her about any recordings and that Khashoggi was officially “still missing”. Cengiz said Khashoggi was not nervous when he entered the Saudi consulate in Istanbul and did not suspect anything bad would happen to him. “He said ‘See you later my darling’ and went in,” Cengiz said, and they were his last words to her.

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As long as the arms sales can go on…

UK ‘Gears Up’ To Target Saudis With Sanctions After Journalist Vanishes (Ind.)

UK officials have begun drawing up a list of Saudi security and government officials who could potentially come under sanctions pending the outcome of investigations into the disappearance of dissident journalist Jamal Khashoggi, a source close to both Riyadh and London told The Independent. The list being drawn up by the Foreign and Commonwealth Office could be used in case the UK decides to invoke the “Magnitsky amendment,” passed this year, which allows Britain to impose sanctions on foreign officials accused of human rights violations, or to apply restrictions on Saudi trade and travel in coordination with the European Union.

Asked to confirm or deny the drawing up of the list, the Foreign Office said it “had nothing to add” to the Khashoggi matter other than comments the foreign secretary, Jeremy Hunt, made on Thursday. “Across the world, people who long thought themselves as Saudi’s friends are saying this is a very, very serious matter,” said Mr Hunt. “If these allegations are true there would be serious consequences.” The source, a former government advisor, told The Independent they were briefed by a UK intelligence official and others. “Initially this was a position-paper scenario,” the source said. “Now it is definitely being looked at as a real possibility.”

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“..the sudden attention “seems very strange” considering the “bloody murder that the Saudis have gotten away with for decades.”

‘Pressure Will Be On Turkey’ If Saudis Found Guilty Of Journalist’s Murder (RT)

Former US diplomat Jim Jatras and investigative journalist Rick Sterling tell RT what could happen if allegations that the Gulf monarchy, headed by Saudi crown prince Mohammed bin Salman, is behind the plot prove to be true. If Saudi Arabia is found to be complicit in Khashoggi’s disappearance, Sterling believes “the pressure will be on [Turkish president] Erdogan and Turkey to escalate.” “Saudi Arabia effectively abducted Lebanese Prime Minister [Saad] Hariri and he appeared in Riyadh, resigned – supposedly – and then it turned out he was coerced in some form or manner,” Sterling added. “The Saudi government is extreme, it’s bizarre and we’ll have to see how the facts develop in this case but it points towards the instability of that government that beheads hundreds of citizens a year.”

However, he adds, the Saudi regime has been “an extremely close ally of the US and Israel. This would be a huge earthquake in international relations if the calls for a serious reduction in relations continues.” Despite the years of brutality against their own people, Khashoggi’s disappearance seems to have ushered the Saudi regime’s reckless violence into the global spotlight, Jatras told RT. “Saudi Arabia is usually immune from criticism from the American establishment, They can destroy Yemen, they can cut people’s heads off… and suddenly over one journalist everyone is outraged; We discover that Saudi Arabia is an oppressive regime that kills people,” Jatras said, adding that the sudden attention “seems very strange” considering the “bloody murder that the Saudis have gotten away with for decades.”

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Can’t please everyone.

Theresa May Faces Her Party As A Desperate Gambler In Hope Of A Break (G.)

Brexit is unusual as a game of poker, in that one side folded long ago but has still not revealed its losing hand. For months, the EU has insisted that Theresa May’s only options for a deal would lead to either a soft Brexit for the whole UK, or a sea border between Great Britain and Northern Ireland. For months, critics have challenged the government to spell out which of these two ostensibly intolerable concessions it intends to make. Now it seems we know. The prime minister will concede both. Capitulating to Brussels will be the easy part. After that, May will have to lie to the hard Brexiters, bully the Tory remainers, and call the bluff of the Democratic Unionist party. As the Brexit circus enters its final month, here is its tightrope.

First, Brussels. The EU’s offer springs from its immutable and non-negotiable red lines: to preserve the single market, the Good Friday agreement, and Ireland’s invisible border. Only two outcomes can satisfy all those requirements: the whole UK remains in the whole single market and customs union, or Northern Ireland stays in the customs union and single market in goods while Great Britain diverges. May has decided to mix and match those outcomes. It appears the whole UK will remain in the customs union, so there are no tariff divergences or checks either on the island of Ireland or within the United Kingdom. And Great Britain will leave the single market, thus necessitating “de-dramatised” regulatory checks on goods crossing the Irish Sea.

May’s surrender is not in doubt. Neither is the resistance to this deal from all opposition parties. Consequently, the prime minister’s only task is to fool or blackmail her MPs into supporting it. Her most pressing duty will be to hoodwink the parliamentary hardliners in thrall to Boris Johnson and Jacob Rees-Mogg. May will attempt this ambitious deception principally by insisting that the permanent customs union will in fact be temporary. It will not.

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“..many people were shocked and questioned why they had not been made aware of the implications sooner.”

UK Consumers Face ‘Catastrophic’ Consequences From No-Deal Brexit (Ind.)

Millions of consumers could face “immediate” and “catastrophic” consequences in the event of a no-deal Brexit, the watchdog Which? has said. The consumer group said the government’s preparations for a no-deal exit suggested a reduction in consumer rights and choice as well as price hikes that would have a “direct and hard” impact in areas ranging from travel to food and energy. The watchdog, which based its conclusions on its assessment of the government’s technical notices in preparation for the event of a no-deal Brexit, online forums and surveys, said two in five people did not understand the potential implications of a no-deal scenario.

In its report – Brexit no deal: a consumer catastrophe? – Which? says: “Our latest consumer research shows that most people are unprepared for what ‘no deal’ would mean in practice – and many do not understand how it would have multiple impacts across so many aspects of their daily lives. “When the everyday repercussions and government’s plans on issues such as food and medical supplies were explained to people in our research, many people were shocked and questioned why they had not been made aware of the implications sooner.”

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Good to see support for the Greens.

Merkel Faces Poll Disaster As Coalition Support Collapses (Ind.)

Angela Merkel’s conservative allies in the German state of Bavaria are facing losses in regional elections as liberal-minded voters defect to the Greens. The Christian Social Union, which has enjoyed six decades of dominance in the state, is predicted to suffer heavy losses in the vote on 14 October. The party is part of Germany’s grand coalition with its sister party, Ms Merkel’s Christian Democrats (CD) and the centre-left Social Democrats (SDP). A Forschungsgruppe Wahlen poll predicted the CSU could lose up to 14 percentage points in the upcoming elections as voters flock to the pro-immigration Greens.

Support for the CSU stood at 34 per cent, compared to the 48 per cent it won in the last regional election in 2013. The Greens appear poised to overtake the Social Democrats (SPD) to become Bavaria’s second-largest party, with up to 19 per cent of the vote, an increase of 10 percentage points since the last elections. If the polls are correct, the Greens could become a potential coalition partner for the CSU in Bavaria. The polls also showed the anti-immigration Alternative for Germany (AfD) party on 11 per cent, which would be enough to enter the Bavarian state parliament for the first time.

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Europe’s IMF. Too much power.

The New Face of the Eurozone Bailout Fund (Spiegel)

The first step is that of transforming the ESM into a kind of European replacement for the IMF. The IMF played a central role in Greece during the crisis, but there were often clashes over the best way to help the country. In the future, the IMF does not intend to participate in state bankruptcies in Europe. For the ESM to function as a European IMF, the organization is to be granted oversight rights to look over the individual finances of eurozone member states. Should a new crisis crop up, the ESM would be armed with additional control and enforcement rights.

[..] One of the ESM’s new tasks is ringing the alarm bells early when there are signs of an approaching crisis. The ESM possess a deep knowledge of the financial situations of former crisis countries, in part because analysts tag along when donor state representatives visit those countries’ capitals. The organization also knows a lot about larger member states like Germany and France, Regling says. “But if, purely hypothetically, something were to happen in, say, Austria or Malta, we would currently be at a loss.” To fulfill its role as an early-warning system, the ESM must recruit experts on all member countries. A larger staff is also needed for the ESM’s second area of operation. In the future, the plan is for the ESM to provide financial backing for the European mechanism for the resolution of failing credit institutions. For this, Regling needs banking experts.

The ESM will also receive a set of new financial instruments geared toward helping ailing countries quickly. A precautionary line of credit is in discussion that could be extended to countries not yet in acute need but which require help to calm wary investors. In a paper for the Eurogroup, as the board of eurozone finance ministers is known, the ESM also proposes another instrument. It would provide short-term liquidity assistance to countries that have temporarily run out of money because they have unfairly landed in speculators’ crosshairs. “These funds would be paid out without a big fuss, and the country wouldn’t have to subject itself to a complete adjustment program,” the paper reads.

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Oct 112018
 
 October 11, 2018  Posted by at 9:19 am Finance Tagged with: , , , , , , , , , , , ,  


Pablo Picasso Bather 1908

 

Dow Tumbles 830 Points In One Day, Trump Says The Fed Has ‘Gone Crazy’ (MW)
World Stock Markets Dive As Trump Attacks ‘Crazy’ US Rate Hikes (G.)
Tech Stocks Have Their Worst Day Since August 2011 (CNBC)
“Rising Inequality” Could Impact America’s AAA Credit Rating (SH)
How Will 6% Mortgage Rates Deal with Housing Bubble 2? (WS)
Brexit Deal Within Reach If May Agrees On Customs Union, Says Barnier (G.)
Hysteria Over the Italian Budget Is Wrong-Headed (Costantini)
Trump Campaign Claims Wikileaks Not Liable For Releasing Hacked Emails (G.)
Acropolis To Close In One-Day Strike Over Privatisation Fears (G.)
Trump Will Be The Last ‘Pure Human’ Leader – Scott Adams (Y!)
Judge Moves To Allow Monsanto New Trial After $289m Cancer Verdict (G.)
HSBC Issues Dire Warning On Antibiotics Resistance (BI)
Historic Climate Litigation Result Stands After Dutch Court Victory (CE)

 

 

Low volatility anyone?

Dow Tumbles 830 Points In One Day, Trump Says The Fed Has ‘Gone Crazy’ (MW)

‘I think the Fed is making a mistake. It’s so tight, I think the Fed has gone crazy’. That is the view that President Donald Trump shared of the Federal Reserve on Wednesday in the wake of a virtual bloodbath on Wall Street that resulted in the worst daily decline for the Dow Jones Industrial Average and the S&P 500 since both U.S. equity benchmarks tumbled into correction territory back in early February. The Nasdaq, meanwhile, suffered its ugliest day since U.K. voters coalesced around a market-disrupting plan to exit from the European Union’s trade bloc back in June 2016.

In all, it was a withering session for an administration that has closely watched stock-market performance and views it, at least partly, as a gauge of the success of its economic policies, including corporate tax cuts and deregulation. However, those efforts, Trump says, are imperiled by the policies of the Fed, which has raised interest rates three times this year and has signaled its intention to do so a fourth time before year-end. IMF managing director Christine Lagarde dismissed Trump’s comments Thursday. “I would not associate Jay Powell with craziness,” she told CNBC at the IMF and World Bank annual meetings in Bali, Indonesia.

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Everything’s going down. ‘Investors’ are jittery.

World Stock Markets Dive As Trump Attacks ‘Crazy’ US Rate Hikes (G.)

A jittery, volatile week on global financial markets has burst into a frenzy of selling, triggered by heavy losses on Wall Street and comments by Donald Trump describing US interest rate hikes as “crazy”. The Nikkei index in Tokyo was down by 4.25% on Thursday afternoon, while in Hong Kong the index was down 3.9% and Shanghai was at its lowest mark for four years after a plunge of 4.15%. In Sydney the benchmark S&P/ASX200 index closed down 2.74%, slipping below the 6,000-point mark for the first time since early June. European markets were braced for more losses with the FTSE100 in London poised to fall almost 2% and close to dropping down below 7,000 points for the first time since March.

The rout was triggered by a fall of more than 800 points in the Dow Jones industrial average on Wall Street on Wednesday. It was the worst drop in eight months and was led by sharp declines in technology stocks. Despite a booming US economy, low inflation and low unemployment, investors are concerned about rising bond yields that have been drawing money out of the stock market, and rising US interest rates. “It’s a bit of a bloodbath,” said Ed Campbell, senior portfolio manager at QMA, the asset management branch of Prudential Financial in New York. “It’s primarily the cumulative effect of interest rate moves over the past five days and news reports about trade impacting companies.”

[..] The Chinese yuan slipped against the dollar again on Thursday as Beijing tries to mitigate the impact of US tariffs. But it was the only currency across the region that was feeling the pressure from higher bond yields as the Australian dollar slipped under US71c. “The yuan has already weakened significantly, to offset the tariffs announced so far,” said Alan Ruskin, Deutsche’s global head of G10 FX strategy in Sydney. “Further weakness could exacerbate concerns of a self-fulfilling flight of capital, and a loss of control.”

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Most overvalued sinks fastest.

Tech Stocks Have Their Worst Day Since August 2011 (CNBC)

Technology stocks got clobbered on Wednesday, suffering their worst day in more than seven years, as concerns over rising interest rates punished the overall market, particularly shares of companies that have been the best performers. The S&P 500 Information Technology Index closed at $1,220.62, down 4.8 percent, marking the biggest decline since August 18, 2011, when the index dropped 5.3 percent. All 65 members of the index fell. The broader S&P 500 dropped by 3.3 percent and the Dow Jones Industrial Average tumbled 3.2 percent. The tech sector includes the largest companies by market cap in the U.S. and those that have been the biggest contributors to the extended rally. Shares of Apple, Microsoft and Amazon are up sharply for the year as investors bet they will continue to deliver strong earnings growth and take market share.

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“The wider the income gap becomes, the more the government will have to spend in order to support lower-income households.”

“Rising Inequality” Could Impact America’s AAA Credit Rating (SH)

“Since 1995, the top 10% of US income earners have experienced an overall median net worth increase of close to 200%, while the bottom 40% of income earners have seen a decline. There has been a particularly sharp increase in wealth and income inequality ratios since the global financial crisis,” Moody’s noted in a report released on Monday. “The global financial crisis exacerbated the effects of these trends by disproportionately affecting poorer overleveraged households and by reducing the mobility of households with negative home equity and, oftentimes, negative net wealth as a result,” says Moody’s Vice President William Foster. “Wealthier households with a higher concentration of equity market holdings in retirement savings plans and personal portfolio investments have disproportionately benefited from the significant gains in the US and global stock markets since the global financial crisis.”

In turn, that rising inequality “will exacerbate already material fiscal challenges on the horizon,” Moody’s continued. “Should inequality go unaddressed, social tensions will continue to rise, leading to a more fractious political landscape that increases political risk, and with it a less predictable policy environment.” But it’s not just about taxes, either. Everything from globalization, automation, technological advancements requiring advanced job skills, elevated premium on education and the increasing costs associated with education have played a role in widening inequality. So what does it mean for the U.S.’ AAA rating? According to Moody’s Vice President William Foster, the widening gap between rich and poor is a threat, but the U.S. government, of course, has other aspects supporting the rating—at least in the medium term (2-5 years). Chief among them is the debt denominated in dollars.

Still, Moody’s cites rising inequality as the U.S.’ weakest rating factor. Why? It’s simple math: The wider the income gap becomes, the more the government will have to spend in order to support lower-income households. These costs, Moody’s notes, “are unlikely to be offset by revenue raising measures following recent tax cuts”. At the end of the day, even though the economy is chugging along nicely—nicely enough, in fact, for everyone to ignore rising inequality that will contribute to widening fiscal deficits and a growing debt burden.

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Timebomb.

How Will 6% Mortgage Rates Deal with Housing Bubble 2? (WS)

What many in 2016 thought would never happen again is now reality. It finally happened – a line in the sand has been breached. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment did what people had thought in 2016 we’d never see again: It breached 5%. It hit 5.05%, to be precise, for the week ending October 5, according to the Mortgage Bankers Association (MBA) this morning. This is the highest average rate since January 5, 2010 (chart via Investing.com):

This is likely not the pain-threshold for the housing market, though it is already putting pressure on it at the margin, with some potential buyers being scared off and other potential buyers finding the inflated home prices of today with the current mortgage rates outside their range of affordability. As interest rates have risen, some potential buyers have fallen by the wayside – though not a huge number just yet. But 6% will likely be the pain threshold, in my estimates. It will block a considerable number of potential buyers from buying at current prices. Home prices would have to fall first.

If the maximum a household can afford is a mortgage payment of $1,720 a month, they can finance $320,000 over 30 years with a 5% fixed rate mortgage. But if the mortgage rate rises to 6%, they’re maxed out at $287,000. In other words, the price they can afford would drop by about 10% if the rate rises by 1 percentage point. This principle goes for all budget-constrained buyers. And 6% has moved into view. This is still historically low. It would take rates back to December 2008, when the Fed was kicking off its first round of QE to repress long-term rates and inflate asset prices. Beyond that are the now unimaginably high rates of 7% and 8%:

Mortgage rates move more or less in tandem with the 10-year Treasury yield, but are higher. The spread between the MBA’s average 30-year fixed mortgage rate and the 10-year yield runs around 1.5 to 2.0 percentage points over time. With today’s 10-year yield at 3.22%, the spread is 1.83 percentage points.

[..] This new mortgage rate environment is meeting home prices across the US that have surged over the past years. Affordability issues, already tough to deal with at 4% and 4.5% and even tougher to deal with at 5%, are going to be much tougher at 6%.

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Barnier knows that the DUP and hardliners won’t accept.

Brexit Deal Within Reach If May Agrees On Customs Union, Says Barnier (G.)

Michel Barnier has claimed a Brexit deal could be within reach by next Wednesday but warned the prime minister that only by abandoning a key red line and agreeing to a customs union can impediments on trade between Northern Ireland and the rest of the UK be avoided. The British government would have to give up on its plans for free-trade deals with China and the US under such an agreement, the EU’s chief negotiator insisted, but otherwise a customs and regulatory border within the territory of the UK will have to be erected.

The EU’s contentious proposal for avoiding a hard border on the island of Ireland after Brexit is for Northern Ireland to, in effect, stay in the customs union and remain under single market regulations, while the rest of the UK withdraws. In a speech in Brussels, Barnier reiterated his rejection of the counter-proposals hammered out by the cabinet at Chequers, which Theresa May insists is the only deal that respects both the referendum result and the constitutional integrity of the UK by ensuring “frictionless” trade and no hard border.

The prime minister’s plan for a common rulebook on goods and a customs arrangement that meant the UK could avoid border checks, while allowing the country to sign its own bespoke trade deals, would give British companies “a huge competitive edge” and be “counter to our very foundations”, Barnier said. He instead encouraged Britain to make a final push in the talks, offering to launch “around 10 negotiations running in parallel” from April 2019 on an EU-UK trade deal, if agreement can be found now on the Irish border issue and the principles of a Canada-style free trade deal.

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Why the EU-Italy feud will be fierce.

Hysteria Over the Italian Budget Is Wrong-Headed (Costantini)

Even the moderate face of the coalition, the Italian Premier Giuseppe Conte, stepped up to question the priorities of the European Commission, the Bank of Italy, and the IMF: He assured that his government remains committed to containing the public debt and maintaining fiscal stability, but claimed that goal is impossible to achieve without economic development. The minister for European affairs, economist Paolo Savona, said that, in fact, a higher deficit-to-GDP ratio than 2.4% would be helpful. The heated reactions to the new fiscal plan are unjustified. In fact, the estimated targets that the new fiscal plan would (minimally) breach are unreliable and based on wrong macroeconomic principles.

Moreover, despite accusations of profligacy, Italy has in fact been running large primary surpluses (the budget balance minus interest payments), and will keep doing so even if the government confirms its plans. If anything should be of “serious concern,” it is the fact that the country continues down the road of austerity, which has proven to be contractionary; it has locked the country into stagnation and exposed its banking system to still more stress. With public investments at historically low levels, unemployment still above the 2008 rate in all regions, and a youth unemployment rate above 30%, it is hard not to see a strong case for fiscal stimulus.

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It’s all about Russiagate and Mueller’s indictment of ‘Russian hackers’. All nonsense. Free Assange and let him provide the evidence.

Trump Campaign Claims Wikileaks Not Liable For Releasing Hacked Emails (G.)

The Trump campaign argued in a legal filing that Wikileaks could not be held liable for publishing emails that were stolen by Russian hackers ahead of the 2016 US election because the website was simply serving as a passive publishing platform on behalf of a third party, in the same way as Google or Facebook. Questions about Wikileaks’ publication of thousands of hacked emails, which it allegedly obtained following a plot by Russian military intelligence to steal the emails from Hillary Clinton’s presidential campaign and the Democratic party, are at the heart of Robert Mueller’s criminal investigation into possible collusion between the Trump campaign and the Kremlin.

The campaign also said in a legal filing that any alleged agreement between the Trump campaign and Wikileaks to publish the emails could not have been a “conspiracy” because Wikileaks’ decision to release the stolen emails was not an illegal act. The court filing was written in response to a civil lawsuit brought against the Trump campaign by two of Hillary Clinton’s donors and a former employee of the Democratic party. The Trump campaign’s surprising defence of Wikileaks marks a stark departure from official US policy, which has condemned the website for frequently targeting the US government and for publishing thousands of classified documents about covert policies.

[..] Analysts say the legal filing is also significant because it hints at how officials in the Trump White House or individuals who served on the campaign may eventually seek to defend themselves against any criminal charges alleging that they conspired with Wikileaks to release the emails. The legal arguments suggest the Trump White House would argue Wikileaks was not criminally liable for the release of the emails and that it therefore would not be a criminal conspiracy to work with the website on their release. The filing also makes the case that, under the campaign’s first amendment right to free speech, it had the right to publish information – even if it was stolen – as long as it did not participate in the theft of the emails. The hacked materials were a matter of “significant public concern”, the filing said.

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They need to move well beyond one day to get attention. And whoever signed those secret deals (Tsipras, Troika!) needs their day in court.

Acropolis To Close In One-Day Strike Over Privatisation Fears (G.)

Striking trade unionists in Greece are forcing the shutdown of the country’s prime ancient sites, including the Acropolis, in a one-day protest over privatisation fears. The 24-hour walkout on Thursday is expected to close the majority of Greece’s 275 archaeological sites, monuments and museums, which generate about €100m in revenue, mostly from ticket sales, every year. “We are doing this to protest the prospect of any of these sites being exploited by foreign funds,” said Grigoris Vafiadis, the head of the association of culture ministry employees. “Every day we are discovering that monuments have been transferred to the privatisation fund set up at the request of [bailout] lenders. No country in the world, for whatever reason, has mortgaged its cultural heritage.”

The sites, which protestors say include Knossos on Crete, are believed to have been placed on a list of properties overseen by a superfund established in 2016 with the express purpose of managing state assets for the next 99 years. The body, which also handles state asset sales, was part of the price the debt-burdened country had to pay to keep default at bay and remain in the eurozone. Vafiadis, whose union represents more than 3,000 cultural ministry officials, mostly in the Greater Attica region surrounding Athens and central Greece, said sites were listed in the superfund by code. “It’s a long process to work out what the codes refer to on the land registry. For all we know, they might even include the Acropolis which is not just Greek but a world heritage site and should never be put in the hands of any foreign fund,” he said.

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Interesting assessment.

Trump Will Be The Last ‘Pure Human’ Leader – Scott Adams (Y!)

Scott Adams, the creator of the office-themed comic strip “Dilbert,” isn’t laughing about the future of American democracy. Having expressed his admiration for Donald Trump over the past few years, Adams believes the tech industry poses a threat to the president as well as to the country as a whole. “I think President Trump will be the last pure human leader,” Adams told Grant Burningham, host of the Yahoo News podcast “Bots & Ballots.” “Everything after this will be a human and he will be elected, he or she, but the decisions will really come from the algorithm after that.”

The algorithm, Adams said, was the one unleashed on the world by Silicon Valley tech companies that has the power to shape popular opinion that, in turn, will determine how politicians express themselves. “There are people making decisions at the tech companies — the Googles and Twitters and Facebooks. Those decisions get turned into algorithms, and once they’re turned into algorithms, the humans no longer really understand them,” Adams said. Adams has likened Trump’s off-the-cuff communications approach in the 2016 presidential election to a form of hypnosis that helped insulate him from the powers of the algorithm.

“President Trump is unique in that his persuasion skills are greater than the tech companies’. It’s probably the only reason he got elected,” Adams said. “I can imagine no one else who would have beat Hillary Clinton. So, after him, I think if you get in an ordinary politician, and it doesn’t matter which party they’re in, the algorithm will push the voters and the voters will push the politicians and everybody will think they have free will, they will think they made up their own minds. They will think they did their own research, they came up with independent decisions, but we’re no longer in that world.”

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Monsanto will appeal until the next century.

Judge Moves To Allow Monsanto New Trial After $289m Cancer Verdict (G.)

A California judge has moved to grant the agrochemical company Monsanto a new trial after a landmark jury verdict found its herbicide had caused a man’s terminal cancer. Dewayne “Lee” Johnson, a 46-year-old former groundskeeper, won a $289m award in August in a trial alleging that the popular Roundup weedkiller had made him sick and that Monsanto had failed to warn him of the risks. Monsanto, now owned by Bayer, the German pharmaceutical company, immediately appealed the verdict, which included punitive damages and economic losses and also found that Monsanto had “acted with malice or oppression”.

The San Francisco superior court judge Suzanne Bolanos cited the “insufficiency of the evidence to justify the award for punitive damages” in a tentative written ruling issued before a hearing on Wednesday. She is expected to make a final decision after attorneys submit additional arguments. Monsanto sought to overturn the verdict and has continued to argue that it is safe to use glyphosate, the world’s most widely used herbicide. Glyphosate-based products, including the Roundup and Ranger Pro brands, are now worth billions of dollars in revenues, approved for use on more than 100 crops, and registered in 130 countries. Timothy Litzenburg, one of the attorneys who represented Johnson in the trial, told the Guardian that regardless of the outcome, the original ruling would still have a long-term impact: “There’s been a loud and clear message.”

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Precautionary principle? Not for Monsanto, not for Big Pharma.

HSBC Issues Dire Warning On Antibiotics Resistance (BI)

According to the global research team at HSBC, the use of antibiotics in meat production could have “devastating” consequences for humanity. When farmers feed antibiotics to their animals, they create antibiotic-resistant bacteria, which can lead to antibiotic-resistant “superbugs” in humans. Over time, this could make it difficult to treat even common infections like strep throat. The report’s authors liken the impact of antibiotic resistance to climate change: The causation may not be immediately clear, but the evidence suggests a catastrophic future. Scientific experts now predict that antibiotic resistance could lead to 10 million deaths annually by 2050, exceeding cancer as one of the most common forms of death worldwide.

While some of this is related to the overprescribing of antibiotics by doctors, it also has to do with the antibiotics that are fed to key sources of produce, such as chickens, cows, and pigs. According to the report, more than half of global antibiotics are used in agriculture rather than medicine. Although China accounts for 60% of the world’s agricultural antibiotics, the US also uses antibiotics in around 70% of its agricultural products. Most of these antibiotics are used in meat production, which has risen by 90% per capita globally since the 1960s. In June, an analysis of more than 47,000 US government lab tests found an increase in the number of pork chops and ground beef that were contaminated with antibiotic-resistant bacteria.

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Court decides because of “a violation of the European Convention on Human Rights”. If that is true in Holland, it will also be in 26 other countries. Moreover, as Elliot Sherber said in his article in yesterday’s Debt Rattle:

“According to the legal maxim that “the health of the people should be the supreme law” (another type of emergency brake – one cited by jurists, and those contesting coercive power, since antiquity), there is a legal duty to pursue this as well (for, among other things, human health is contingent on the health of its general environment – and freedom from oppression). Indeed, if we are to take this maxim seriously, we must recognize that it implies that conditions that are inimical to health (harmful to the health of the people) must be corrected in order to comply with the “supreme law.”

Historic Climate Litigation Result Stands After Dutch Court Victory (CE)

Climate litigators are celebrating after a second landmark court victory that will hold the Netherlands government to account for greater action on climate change. The Hague Court of Appeal has upheld a historic win for the Urgenda Foundation on behalf of 886 Dutch citizens in their climate case, rejecting the Dutch government’s arguments. A day after the UN IPCC report outlined the urgent climate action needed to restrict global warming to 1.5 degrees, the Dutch court today affirmed that any less than a 25% reduction in carbon emissions by the Netherlands government before 2020 would be a violation of the European Convention on Human Rights. Dutch emissions are currently only 13% lower compared to 1990 levels and have stagnated during the last six years.

The original legal victory by Urgenda inspired a wave of climate lawsuits worldwide, brought by people determined to hold their governments accountable for a lack of climate action. ClientEarth CEO James Thornton said: “Today’s news shows just what a powerful tool climate litigation has become in holding decision-makers to account for their climate inaction. “For a second time now, a Dutch court has ruled that the country’s government has a constitutional duty to protect its citizens from the impacts of climate change and that anything less is a violation of their human rights. “This second victory shows that Dutch judges have been clear about what the government must do now: accept both decisions and refocus its efforts on reducing its carbon emissions by 25% by 2020.

“This is the climate case that started it all, inspiring similar lawsuits worldwide. It has completely changed the debate on climate policy and will inspire people everywhere to use the power of the courts to hold their leaders to account for greater action on climate change.”

Read more …

Oct 102018
 
 October 10, 2018  Posted by at 9:34 am Finance Tagged with: , , , , , , , , , , ,  


Paul Klee Angelus Novus 1920 (see last article)

 

Trump “Doesn’t Like What The Fed Is Doing” (ZH)
Chinese Yuan Could Reach A Record Low Against The Dollar (MW)
China’s (Non-Government) Business Survey Collapses As Trade War Strikes (ZH)
Chinese Firms Now Hold Stakes In Over A Dozen European Ports (NPR)
UK Public Finances Are Among Weakest In The World – IMF (G.)
IMF Warns Italy Not To Breach EU Spending Rules In Next Budget (G.)
Bank of England Warns EU Over Brexit Risk To Financial Stability (G.)
One Good Thing About Brexit: Leaving Disgraceful EU Farming System (Monbiot)
UK Fracking Rules On Earthquakes Could Be Relaxed (G.)
Shell CEO: Mass Reforestation Needed To Limit Temperature Rises To 1.5C (G.)
Florida Panhandle Bracing for Category 4 Hit from Michael (WU)
The Emergency Brake (Sperber)

 

 

Sorry, but I see nothing other than Trump reaffirming the Fed’s independence.

Trump “Doesn’t Like What The Fed Is Doing” (ZH)

With the dollar spiking and rates surging to 7 years highs, President Trump doubled down on his criticism of the Fed and on his way to a rally in Iowa, said the Federal Reserve is moving too fast with interest rates increases, dismissing concerns about inflation. “I don’t like what the Fed is doing”, Trump told reporters at the White House. “I think we don’t have to go as fast” on rate hikes. “I like low interest rates,” Trump said. Trump also said that rates are too high because there’s no inflation, but said that he has not talked to Chair Powell about it because he doesn’t want to get involved. Trump’s comments echoed prior criticisms of the Fed.

When the Fed announced its third increase of the year in September, Trump said he was “not happy” about it. Trump has publicly criticized the Fed’s interest-rate increases on several occasions, breaking with more than two decades of White House tradition of avoiding comments on “independent” monetary policy. Some commented that this is another sly move by the president to preemptively shift blame on the Fed chair ahead of what may be a turbulent 2019 when rates are expected to keep rising, potentially resulting in a sharp slowdown in the economy and/or a stock market crash.

Separately, hours after Nikki Haley announced her departure as US ambassador to the UN, Trump said he would consider Goldman’s Dina Powell for the post. “Dina is certainly a person I would consider,” Trump told reporters at the White House on the way to board the presidential helicopter as he embarked on a trip to Iowa. But he added there are others he would also consider. Earlier CNBC reported that Dina Powell, a Goldman Sachs exec and Trump’s former deputy national security advisor, has had discussions with senior members of the administration about possibly replacing Nikki Haley as U.S. ambassador to the United Nations.

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Manipulation?

Chinese Yuan Could Reach A Record Low Against The Dollar (MW)

The pressure on China’s currency continues to mount as the world’s second-largest economy shows more signs of slowing and traders bet that the dollar will soon buy a record amount of yuan in the offshore market. As the country returned to work on Monday after the Golden Week holiday, the People’s Bank of China cut the Reserve Ratio Requirement, the percent of deposit liabilities owed to its customers banks are required to hold, for the fourth time this year. While that may spur banks to lend more, it sent the Chinese yuan another leg lower, moving toward its August low against the greenback and in sight of the psychological 7.00 level. A move through 7.00 would be a record low in offshore trading.

The yuan has already posted six straight monthly declines against the dollar, including a drop of 0.6% in September. The slide in the yuan comes as the economy shows more signs of slowing. A closely watched economic activity indicator, the official Purchasers Manufacturing Index, fell to 52 in September, from 52.2 in August, according to Wei Yao, an economist at Société Générale. Magnifying concerns around the Chinese economy was a steeper-than-expected drop in China’s foreign-exchange holdings during September, to $3.087 trillion. A decline in the country’s reserves raises concerns that the PBOC could not defend the yuan in should a large amount of money flee the country.

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“For most, business has never been worse.”

China’s (Non-Government) Business Survey Collapses As Trade War Strikes (ZH)

As China returns from its Golden Week vacation, it is not just its currency and stock market that is collapsing… As Bloomberg reports, an indicator produced by a Beijing-based business school in the style of the closely-watched purchasing managers index plunged last month, adding to concerns about the slowing economy and raising the question of whether business conditions may be worse than official statistics show. The index is based on a survey of CKGSB students and graduates who are executives at companies operating in China. The respondents represent around 300 privately-owned small and mid-sized enterprises across several sectors of the economy.

“Most surveyed companies are now experiencing unprecedented difficulties and have become increasingly pessimistic about business prospects for the next six months,” Li Wei, the economics professor at CKGSB who oversees the survey, said in a commentary accompanying the September survey results. “For most, business has never been worse.”

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Next up: military presence?

Chinese Firms Now Hold Stakes In Over A Dozen European Ports (NPR)

In the past decade, Chinese companies have acquired stakes in 13 ports in Europe, including in Greece, Spain and, most recently, Belgium, according to a study by the OECD. Those ports handle about 10 percent of Europe’s shipping container capacity. It is part of China’s 21st Century Maritime Silk Road, which aims to better connect the country to commercial hubs in Africa, Asia, Europe and Oceania. China is the European Union’s biggest source of imports and its second-largest export market, adding up to more than $1 billion in trade per day. And sea shipping outweighs rail or air freight. But this is about more than just moving cargo, analysts say. President Xi Jinping’s new silk road, named after the ancient trade route, has sped up China’s advance toward becoming a superpower of the seas, spreading not just commercial ships but naval power and influence to more and more areas of the world.

For instance, Chinese investments in the ports of Djibouti, Sri Lanka and Pakistan have been followed by Chinese naval deployments. While there are no public plans to turn European ports into Beijing’s military bases, Chinese warships have already paid a friendly visit to Greece’s Piraeus port. This all raises a slew of questions about issues ranging from military defense to labor conditions. “The main issue is for Europe to decide how it wants to deal with China’s influence,” says Frans-Paul van der Putten, a China expert at the Netherlands Institute of International Relations. “What degree of China’s influence is unavoidable and acceptable especially in sectors such as ports?”

[..] COSCO, with the world’s fourth-largest container shipping fleet, is leading the charge in Europe, beginning with Piraeus. In 2016, after years of investment, the company bought a majority stake in the Piraeus Port Authority in a concession agreement that runs until at least 2052. It is now in charge of container terminals, cruise ship piers and ferry quays. “A few years ago, when COSCO first became involved in Greece, the European view was it was good because Greece was in a lot of financial difficulties and at least someone wanted to invest there,” van der Putten says. “Piraeus was not a top-ranking port. People in Brussels thought it wouldn’t have a lot of significance.”

Today, about 20 million passengers go through Piraeus each year. Since COSCO’s takeover, it has become the fastest-growing port in the world, according to the industry news outlet Seatrade Maritime. COSCO’S chief executive in Piraeus, Capt. Fu Cheng Qui, says he wants to make it the largest in the Mediterranean.

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“corporation liabilities from zero in 2007 to 189% of GDP in 2008..”

UK Public Finances Are Among Weakest In The World – IMF (G.)

Britain’s public finances are among the weakest in the world following the 2008 financial crash, according to a fresh assessment of government assets and liabilities by the IMF. The Washington-based lender said a health check on the wealth of 31 nations found almost £1tn had been wiped off the wealth of the UK’s public sector – equivalent to 50% of GDP – putting it in the second weakest position, with only Portugal in a worse state. In calculations that combine measures of wealth and stress tests that mimic those applied to the banking sector, the IMF said the bailout of UK banks and the growth of Britain’s public sector pension liabilities were significant factors in the UK’s low ranking.

The tests are an effort by the IMF to show the balance of assets and liabilities in relation to a nation’s overall income to judge how well governments are prepared for economic shocks. Norway ranked as the most secure nation with a war chest built on its publicly held oil wealth, in contrast to the UK, which allowed private sector companies to extract North Sea oil reserves and spent the tax revenues during the 1980s and 1990s. The Gambia, Uganda and Kenya rank above the UK because while they have smaller assets and liabilities than Britain, they have a higher net wealth relative to GDP.

Cruder measures taking a snapshot of a country’s assets and liabilities showed Italy and Greece, which were excluded from the broader tests, fared worse than the UK. Barbados was another country with a lower rating. But most other countries were in a better position relative to their national income, the IMF said. [..] The report said: “The United Kingdom balance sheet expanded massively during the crisis. Most of the expansion in the balance sheet was the result of large-scale financial sector rescue operations that resulted in reclassification of the rescued private banks into the public sector. [This] increased (non–central bank) public financial corporation liabilities from zero in 2007 to 189% of GDP in 2008, with similar [falls] in financial assets.”

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Austerity still rules. Sovereignty, not so much.

IMF Warns Italy Not To Breach EU Spending Rules In Next Budget (G.)

The International Monetary Fund has thrown its weight behind Brussels in its battle with Italy’s coalition government over plans to increase the indebted country’s borrowing in its next budget. The Washington-based lender of last resort, which is holding its annual conference in Bali this week, warned Rome to abide by the EU’s financial rulebook or risk a rebellion by investors that could trigger a debt default. Italy’s populist coalition is targeting a deficit of 2.4% of GDP next year, tripling the previous government’s target, as it pledges more spending despite a huge debt pile, which at about 130% of GDP is the biggest in the eurozone behind Greece.

Brussels has rejected the idea of Italy running a larger budget deficit – the gap between income from taxes and government spending – than previously planned over the next three years. Rome is due to submit its draft budget by 15 October to the EU commission, the bloc’s executive arm, which will check whether it is in line with EU rules. The government has said it wants to use a spending boost to kickstart investment and consumer spending to fuel growth. The IMF’s chief economist, Maurice Obstfeld, said it was important to maintain the confidence of international money markets, especially when the risks of an escalating trade war and a damaging no-deal Brexit were rising.

The IMF’s intervention could prove significant while both sides seek allies in the budget battle as it is considered an important ally by governments as they seek to persuade electorates that debt-fuelled spending could lead to a collapse in confidence and rising borrowing costs. Obstfeld said EU rules that prevented governments adding to already sky-high levels of debt to GDP should be maintained in the current unstable economic climate.

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Only £70 trillion in derivatives?!

Bank of England Warns EU Over Brexit Risk To Financial Stability (G.)

The Bank of England has issued its strongest warning yet to the EU that its lack of adequate planning for Brexit has created growing risks for almost £70tn of complex financial contracts. Threadneedle Street said the bloc had made only limited progress to protect the financial system and time was running out, with little more than six months before the UK is due to leave the EU. Stressing the urgency of the situation in a statement from its financial policy committee, the Bank said: “In the limited time remaining, it is not possible for companies on their own to mitigate fully the risks of disruption to cross-border financial services.”

Without action, the contracts governing the financial derivatives – currently sold across the UK-EU border by banks to companies looking to protect themselves from movements in interest rates and changes in global markets – could be rendered illegal the moment Britain leaves, it warned. EU firms have about £69tn of outstanding derivatives contracts that are handled through a process known as “clearing” in the UK, while as much as £41tn mature after Britain exits the EU in March 2019. In a corner of the finance industry worth more than three times the overall value of the EU economy, the process of clearing derivatives involves banks organising their trades through a central third-party organisation – known as a clearing house – which takes on the risk of either party defaulting.

Clearing has become increasingly important since the financial crisis as the EU introduced rules forcing banks to trade greater volumes via clearing houses, with the idea of improving transparency and to avoid the confusion of banks going bust with complex webs of contracts with multiple parties – as was the case in 2008. EU-authorised clearing houses must handle EU banks’ trades, but UK organisations such as the London Stock Exchange’s LCH handle the bulk of business and could fall outside the rules in the event of a hard Brexit. As much as 90% of EU firms’ interest rate swaps – one of the most common types of financial derivative – are cleared in the UK.

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Don’t think I’ve ever understood how this got so out of hand.

One Good Thing About Brexit: Leaving Disgraceful EU Farming System (Monbiot)

I’m a remainer, but there’s one result of Brexit I can’t wait to see: leaving the EU’s common agricultural policy. This is the farm subsidy system that spends €50bn (£44bn) a year on achieving none of its objectives. It is among the most powerful drivers of environmental destruction in the northern hemisphere. Because payments are made only for land that’s in “agricultural condition”, the system creates a perverse incentive to clear wildlife habitats, even in places unsuitable for farming, to produce the empty ground that qualifies for public money. These payments have led to the destruction of hundreds of thousands of hectares of magnificent wild places across Europe.

It is also arguably the most regressive transfer of public money in the modern world. Farmers are paid by the hectare for owning or using land; so the more you have, the more you get. While in the UK benefits for poor people are capped at £20,000 (outside London), these benefits for the rich are uncapped. Some landowners receive £1m or more. You don’t even have to live in the EU to take this money: you just have to own land here. Among the benefit tourists sucking up public funds in the age of austerity are Russian oligarchs, Saudi princes and Texas oil barons.

It is hard to discern any just principle behind an occupational qualification for receiving public money. Some farmers are poor, but seldom as poor as rural people who have no land, no buildings and no jobs. Why should one profession be supported when others aren’t? Yet even farmers have been hurt by these payments. European subsidies have helped turn farmland into a speculative honeypot, making it highly attractive to City financiers. The price of land has more than doubled since payments by the hectare were introduced, pushing it out of reach of most farmers. By reinforcing economies of scale, these subsidies have driven out small farmers and accelerated the consolidation of land ownership.

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Craziest headline in ages.

UK Fracking Rules On Earthquakes Could Be Relaxed (G.)

Rules designed to halt fracking operations if they trigger minor earthquakes could be relaxed as the shale industry begins to expand, the UK energy minister, Claire Perry, has said. A series of small tremors seven years ago prompted tough regulations that mean even very low levels of seismic activity now require companies to suspend fracking. The shale gas firm Cuadrilla plans to start fracking near Blackpool this week if it can see off a last-minute legal challenge on Thursday. If seismic sensors detect anything above 0.5 magnitude on the Richter scale – far below what people can feel at the surface – the company would have to stop and review its operations.

But Perry has told a fellow Conservative MP that the monitoring system was “set at an explicitly cautious level … as we gain experience in applying these measures, the trigger levels can be adjusted upwards without compromising the effectiveness of the controls”. The comments were made in a letter to Kevin Hollinrake, the MP for Thirsk and Malton, whose constituency has several prospective fracking sites. The letter was obtained by Greenpeace’s investigative unit, Unearthed. Hollinrake, who is pro-fracking if it can be done safely, told the Guardian: “We’d need to be very careful about any revision to the regulations put in place. I’d want to understand why we were doing that and take plenty of evidence. We certainly wouldn’t want to see those rules being relaxed now.”

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Or close down your business?

Shell CEO: Mass Reforestation Needed To Limit Temperature Rises To 1.5C (G.)

The boss of Shell has said a huge tree-planting project the size of the Amazon rainforest would be needed to meet a tougher global warming target, as he argued more renewable energy alone would not be enough. Ben van Beurden said it would be a major challenge to limit temperature rises to 1.5C (equivalent to a rise of 2.7F), which a landmark report from the UN’s climate science panel has said will be necessary to avoid dangerous warming. “You can get to 1.5C, but not by just by pulling the same levers a little bit harder, because they are being pulled roughly as fast and and as hard as we are currently imagining. What we think can be done is massive reforestation. Think of another Brazil in terms of rainforest: you can get to 1.5C,” he told an oil and gas industry audience in London.

“It’s not what some people sometimes think: we’ll just do a little bit more solar, a bit more wind and we’ll get there,” he added. Reforestation is seen as essential in the scenarios outlined this week by the UN’s intergovernmental panel on climate change, if the world is to restrict warming to 1.5C. But Van Beurden stressed that meeting the challenge would be an uphill battle, because while it was “technically about doable”, it would not be commercially viable without changes to government policies and regulation. “Already to get to less than 2C will be [a] quite unimaginable, unprecedented scale of collaboration. Getting to 1.5C is a major challenge on top of it,” he said.

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Florida Panhandle has never seen a Cat 4 storm make landfall since records began 167 years ago.

Florida Panhandle Bracing for Category 4 Hit from Michael (WU)

Just hours away from an expected Wednesday afternoon landfall, Hurricane Michael became ever stronger and more organized on Tuesday night over the eastern Gulf of Mexico. Michael’s high winds, torrential rain, and very large storm surge were pushing briskly toward the Florida Panhandle and the Big Bend region just to the east, the areas in line to experience the worst impacts. Update (2 am EDT Wednesday): Michael has been upgraded to Category 4 strength as of 2 am EDT, with top sustained winds of 130 mph. Some additional strengthening is possible before landfall.

Satellite images of Michael’s evolution on Tuesday night were, in a word, jaw-dropping. A massive blister of thunderstorms (convection) erupted and wrapped around the storm’s eye, which has taken taking a surprisingly long time to solidify. A layer of dry air several miles above the surface being pulled into Michael from the west may have been one of the factors that kept Michael from sustaining a classic, fully closed eyewall (see embedded tweet below). A closed eyewall is normally a prerequisite for a hurricane to intensify robustly, but somehow Michael managed to reach Category 3 status without one.

[..] If Michael reaches the coast with top winds of at least 130 mph (minimal Category 4 strength), it will be the strongest hurricane landfall ever recorded in the Florida Panhandle, as well as along most of Florida’s Gulf Coast—all the way from the Alabama border to Punta Gorda—in records going back to 1851.

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See the painting at the top of this Debt Rattle.

The Emergency Brake (Sperber)

Because we seem to be living through a stretch of history in which history is threatening to extinguish history itself, an examination of the 20th century philosopher and critic Walter Benjamin’s concept of the angel of history, and his interrelated notion of the emergency brake, may point to a way. Evoked by the Swiss artist Paul Klee’s watercolor Angelus Novus, Benjamin introduced the figure of the angel of history in his final essay, “Theses on the Philosophy of History.”Appearing with its face “turned toward the past,” hurtling backward through space by “a storm blowing from paradise,” the angel is unable to close its wings and determine its own movement. Overpowered by this storm, it can do little more than watch impotently as catastrophic wreckage (the manifestation of history and progress) piles up at its feet.

That is, caught in the storm blowing from paradise, the storm of history is preventing the angel from doing what it desires to do. But just what does it desire? As Benjamin writes: the angel “would like to stay, awaken the dead, and make whole what is smashed.” Although prevented from doing so by the storm of progress that determines (and undermines) its flight, the angel’s utopian desire is to repair the world – not in order to restore paradise (a longstanding tendency of utopian messianism), but, rather, to restore life and autonomy to a social world destroyed by the coercive and destructive forces of history and ideology. While the angel desires this, however, the ecocidal storm (the bulldozer of progress, as the Supreme Court Justice William O. Douglas phrased the world-ravaging forces of history and technology) is far too powerful.

This is where the messianic notion of the emergency brake enters the picture – rupturing history and releasing its utopian essence. As Benjamin famously put it in his essay’s paralipomena; “Marx said that revolutions are the locomotive of world history. But perhaps things are very different. It may be that revolutions are the act by which the human race traveling in the train applies the emergency brake.” That is, the emergency brake would stop the “bulldozer of progress,” would cut off the ecocidal storm of history, and thereby allow the revolutionary potential of the angel (and humanity) to realize itself.

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Oct 092018
 
 October 9, 2018  Posted by at 9:02 am Finance Tagged with: , , , , , , , , , , ,  


Ford Madox Brown Finding of Don Juan by Haidee 1873

 

 

World Leaders ‘Have Moral Obligation To Act’ After UN Climate Report (G.)
US Economists Win Nobel Memorial For Work On Climate And Growth (G.)
Nobel Prizes in Economics, Awarded and Withheld (NC)
The End Of The World Will Save Theresa May From Brexit (Ind.)
Stock Markets Stage Sharp Sell-Off Amid Fear Of Italy-EU Budget Fight (G.)
QE Party Is Drying Up, Even at the Bank of Japan (WS)
Higher Rates Will Hurt Stocks Far More Than You Think (SA)
Pakistan Seeks Bailout From IMF (WSJ)
IMF Not Concerned About China’s Ability To Defend The Yuan (R.)
Sharp Slowdown In Consumer Spending Cools UK Retail Sales (G.)
Google Drops Out Of Bidding For $10 Billion Pentagon Data Deal (R.)

 

 

Groundhog Day. They just want to get (re-)elected. Which won’t happen if they tell people to cut their driving and flying.

World Leaders ‘Have Moral Obligation To Act’ After UN Climate Report (G.)

World leaders have been told they have moral obligation to ramp up their action on the climate crisis in the wake of a new UN report that shows even half a degree of extra warming will affect hundreds of millions of people, decimate corals and intensify heat extremes. But the muted response by Britain, Australia and other governments highlights the immense political challenges facing adoption of pathways to the relatively safe limit of 1.5C above pre-industrial temperatures outlined on Monday by the IPCC. With the report set to be presented at a major climate summit in Poland in December, known as COP24, there is little time for squabbles. The report noted that emissions need to be cut by 45% by 2030 in order to keep warming within 1.5C.

That means decisions have to be taken in the next two years to decommission coal power plants and replace them with renewables, because major investments usually have a lifecycle of at least a decade. Mary Robinson, a UN special envoy on climate, said Europe should set an example by adopting a target of zero-carbon emissions by 2050. “Before this, people talked vaguely about staying at or below 2C – we now know that 2C is dangerous,” she said. “So it is really important that governments take the responsibility, but we must all do what we can.” The UK, which has gone further than most nations by cutting its annual emissions by 40% since 1990, will need to step up if the more ambitious goal is to be reached.

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Both think adapting to climate change is easy.

US Economists Win Nobel Memorial For Work On Climate And Growth (G.)

Two American economists at the forefront of work on climate change and the role of governments in boosting growth have been jointly awarded the prestigious Nobel Memorial prize for economics. The Royal Swedish Academy of Sciences said William Nordhaus and Paul Romer were being honoured for their research into two of the most “basic and pressing” economic issues of the age. Nordhaus made his name by warning policymakers during the first stirrings of concern about climate change in the 1970s that their economic models were not properly taking account of the impact of global warming and he is seen as one of the pioneers of environmental economics.

The Yale economist was honoured a day after the latest UN warning on global warming said that urgent and unprecedented changes were needed to keep climate change to a maximum of 1.5C (2.7F). The co-winner – Romer – is seen as the prime mover behind the endogenous growth theory, the notion that countries can improve their underlying performance if they concentrate on supply-side measures such as research and development, innovation and skills. [..] Responding to news of his award, Romer said it was perfectly possible for global warming to be kept to a maximum of 1.5C, in line with the latest recommendation of the UN Intergovernmental Panel on Climate Change. “Once we start to try to reduce carbon emissions, we’ll be surprised that it wasn’t as hard as we anticipated. The danger with very alarming forecasts is that it will make people feel apathetic and hopeless.

“One problem today is that people think protecting the environment will be so costly and so hard that they want to ignore the problem and pretend it doesn’t exist. Humans are capable of amazing accomplishments if we set our minds to it.” [..] Nordhaus has been a prominent advocate of the use of a uniformly applied carbon tax as the best way to put a true cost on the use of burning fossil fuels and so reducing greenhouse gas emissions. The committee that awarded the prize said he was the first person to design “simple but dynamic and quantitative models of the global economic-climate system, now called integrated assessment models (IAMs). “His tools allow us to simulate how the economy and climate would co-evolve in the future under alternative assumptions about the workings of nature and the market economy, including relevant policies.”

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This is useful h/t Yves. Peter Dorman on how Martin Weitzman, who has a far more aggressive take on economics and climate, was snubbed so Nordhaus’ light version would get the attention.

Nobel Prizes in Economics, Awarded and Withheld (NC)

Nordhaus was widely expected to be a winner for his work on the economics of climate change. For decades he has assembled and tweaked a model called DICE (Dynamic Integrated Climate-Economy), that melds computable general equilibrium theory from economics and equations from the various strands of climate science. His goal has been to estimate the “optimal” amount of climate change, where the marginal cost of abating it equals the marginal cost of undergoing it. From this comes an optimal carbon price, the “social cost of carbon”, which should be implemented now and allowed to rise over time at the rate of interest. In his first published work using DICE, from the early 1990s, he recommended a carbon tax of $5 a tonne of CO2, inching slowly upward until peaking at $20 in 2085. His “optimal” policy was expected to result in an atmospheric concentration of CO2 of over 1400 ppm (parts per million) at the end of this planning horizon, yielding global warming in excess of 3º C. (Nordhaus, 1992)

Over time Nordhaus has become slightly more concerned with the potential economic costs of climate change but also more sanguine about the prospects for decarbonized economic growth, even in the absence of policy. In his latest work he advocates a carbon tax of $31 per tonne in 2015, increasing at 3% per year over the following century. This too would result in more than 3º warming. To give a sense of how modest his suggestion is, consider that, in the same paper, Nordhaus calculates that the most efficient carbon tax to limit warming to 2.5º is between $107-184 per tonne depending on assumptions. The target of the Paris Accord is 2º, and most scientists consider this an upper bound for the amount of warming we should permit.

What do these “optimal” tax numbers mean? Based on the carbon content of gas, each $1 carbon tax translates into a one cent tax on a gallon of gas at the pump. If we adopted Nordhaus’ suggestion for carbon pricing, the result would be minuscule compared to the year-to-year fluctuations in energy prices due to other causes. In other words, while his prize is being trumpeted as a statement from the Swedish bankers on the importance of climate change, in fact he is a key spokesman for the position, rejected by nearly all climate scientists, that the problem is modest and can be solved by easy-to-digest, nearly imperceptible adjustments to energy prices. If we go down his road we face a significant risk of a climate apocalypse.

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The benefits of climate change.

The End Of The World Will Save Theresa May From Brexit (Ind.)

Brexit has been in its “something will turn up phase” for some time now and possibly, at last, something has. This is meant to be Theresa May’s “Hell Week”, with important post-Brexit proposals to be published in both Brussels and the UK, both of which will of course necessitate demented rows within her own party (current “strategies” include threatening to vote down the Budget), but Hell Week could hardly have got off to a better start. The most sensible reading of Hell Week is that it looks likely to end with May agreeing to keep the UK in the EU’s customs union until 2022. In the circumstances, the prime minister will not have failed to notice that, according to this morning’s report from the UN’s IPCC, that is a mere eight years before all of the planet’s inbuilt life preserving systems are currently scheduled to turn against humanity in act of vengeance that will be swift and total.

To borrow briefly from the probability-based lexicon of the climate science community, let’s take a look at the likelihood of Brexit being concluded by then in any meaningful way. Even in the unlikely event of Britain voting to leave the European Union, right up until around 8am on 24 June 2016, the latest point at which it was all meant to have been sorted out was 24 June 2018. But when David Cameron decided not to trigger the two-year Article 50 process “straight away” as he had consistently claimed he would, but resigned instead, that date was eventually pushed back by May to 29 March 2019, expanding Brexit by 37.5 per cent.

Then, in March 2018, the Brexit “transition period” was agreed to last until until 31 December 2020, and now, just seven months later, that deadline has been extended until the next general election in 2022, a further eighteen months. At the most conservative estimate, that gives Brexit a rate of expansion of around two hundred per cent, or four years for every two. If the depth to which it can be kicked into the long grass can be maintained on this exponential gradient, May has every reason to be optimistic that tornadoes of sulphuric gas will be moving freely over the Irish border long before she has to deliver any acceptable proposals for how to avoid the reintroduction of customs infrastructure across it.

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Not the only issue.

Stock Markets Stage Sharp Sell-Off Amid Fear Of Italy-EU Budget Fight (G.)

Global stock markets staged a sharp sell-off on Monday amid growing concerns over a budget showdown between Italy and the EU and the prospect of weaker growth in the Chinese economy. Italian borrowing costs jumped and the euro dropped on foreign exchanges as the war of words between Rome and Brussels escalated, while shares on Wall Street and other major international markets declined amid growing concerns over the US-China trade war. Italian bond yields jumped by as much as 30 basis points to the highest levels since early 2014 after the Italian deputy prime minister, Matteo Salvini, attacked the European commission president, Jean-Claude Juncker, and the economics commissioner, Pierre Moscovici, as enemies of Europe.

Speaking at a news conference with the French far-right leader Marine Le Pen, he said the country would not cave to pressure from the financial markets or retreat from its plan for government spending. “We are against the enemies of Europe — Juncker and Moscovici — shut away in the Brussels bunker,” he said. Brussels has told Italy it is concerned over the plan because it would mean the nation running a larger budget deficit – the gap between income from taxes and government spending – than previously planned for the next three years. Rome is to submit its draft budget to the commission, the EU’s executive arm, which will check whether it is in line with EU rules by 15 October.

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When the easy money goes, how do we keep the bubbles inflated?

QE Party Is Drying Up, Even at the Bank of Japan (WS)

As of September 30, total assets on the Bank of Japan’s elephantine balance sheet dropped by ¥5.4 trillion ($33 billion) from a month earlier, to ¥537 trillion ($4.87 trillion). It was the fourth month-over-month decline in a series that started in December. This chart shows the month-to-month changes of the balance sheet. Despite all the volatility, the trend since mid-2016 is becoming clear: Abenomics became the economic religion of Japan in later 2012, and “QQE” (Qualitative and Quantitative Easing) was an integral part of it. So has the “QQE Unwind” commenced? Are central bankers, even at the Bank of Japan, getting cold feet about the consequences?

At BOJ policy meetings, concerns have been voiced over the “sustainability” of the stimulus program, according to the minutes of the July meeting, released on September 25. So the BOJ staff “proposed measures to enhance the sustainability of the current monetary easing while taking into consideration, for example, their effects on financial markets.” And “flexibility” has been proposed as solution to those concerns. The minutes reiterated that the BOJ would continue to buy Japanese Government Bonds (JGBs) in “a flexible manner” so that its holdings would increase by about ¥80 trillion a year. But this is precisely what has not been happening, in line with this “flexibility.”

Over the past 12 months, the BOJ’s holdings of JGBs rose by “only” ¥26.2 trillion – not ¥80 trillion. And they declined in September from the prior month (more in a moment). Shortly after the minutes had been released, BOJ Governor Haruhiko Kuroda, once the most reckless among the money printers, changed his tune and said in a speech that, “in continuing with powerful monetary easing, we now need to consider both its positive effects and side-effects in a balanced manner.” The Fed has already whittled down its balance sheet by $285 billion since it started its QE unwind last October. The ECB has tapered its QE from a peak of buying €85 billion a month to buying €15 billion currently and will end it altogether in December. The discussion has switched to raising rates and unwinding QE.

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Like the graph.

Higher Rates Will Hurt Stocks Far More Than You Think (SA)

Federal Reserve Chair Jerome Powell thinks the economy is awesome. And he has no problem telling us so. What Powell will never discuss, however, is the “way-too-low-for-way-too-long” stimulus that the central bank engaged in to get here. In particular, the Fed has kept the neutral rate of interest far beneath the rate of inflation (CPI) for an entire decade. Consumers, corporations and Uncle Sam predictably borrowed as if there’d never be consequences. What consequences? Asset bubbles. Stocks, bonds, real estate, collectibles, cryptos, alternatives, everything. Straight across the Ouija board.

Perhaps ironically, we have seen this streaming video before. “Too-low-for-to-long” rate policy in the previous economic expansion (11/01-12/07) created an environment whereby the quality and the quantity of household mortgage debt became toxic. Granted, mortgage debt is less of an issue in the current credit cycle. Nevertheless, total household debt levels may not be sustainable at higher average interest costs. Meanwhile, the federal government is making households look downright responsible.

Long after the Great Recession ended, the country averaged $1.07 trillion in deficits (2010-2017). We’ve now hit $21.5 trillion in our national debt. Uncle Sammy’s bar tab won’t be getting smaller anytime soon. The new tax law, which has provided a near-term kick start for economic growth (GDP), will keep the trillion-dollar deficit train running for years to come. None of this would be so ominous were it not for the rapid-fire advance of interest expense. Interest expense alone accounts for 11% of the federal budget. Just interest. No debt repayment. Tack on higher interest rates to new borrowing needs? Pretty soon interest expense will surpass the money that goes to the Department of Defense (13.6%).

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Belt and Road. Silk Road.

Pakistan Seeks Bailout From IMF (WSJ)

Pakistan, the flagship country for China’s global infrastructure building initiative, said Monday that it needed a bailout from the International Monetary Fund, amid growing concerns that Beijing’s program is pushing recipient countries into financial crisis. The fiscal constraints of an IMF program would also undercut the promises made by Prime Minister Imran Khan’s new government, which include millions of new jobs and the establishment of a welfare state.

But a ballooning trade deficit and fast-depleting foreign exchange reserves left the Pakistani government no other choice, officials said, after markets were spooked by the government’s recent suggestions that it might try to make do without the fund. “Uncertainty was growing and the stock market was falling,” said Chaudhry Fawad Hussain, the Information Minister. “We decided to end the uncertainty.” The Pakistani request for an IMF loan could further test already-strained U.S.-China relations. In July, U.S. Secretary of State Mike Pompeo warned that the U.S. didn’t want to see any IMF lending to Pakistan “go to bail out Chinese bondholders or—or China itself.”

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Growing at 6.9%(?) and still in need of pretty extreme support. I’d be concerned.

IMF Not Concerned About China’s Ability To Defend The Yuan (R.)

IMF Chief Economist Maurice Obstfeld said on Tuesday that he was not concerned about the Chinese government’s ability to defend its currency despite the recent depreciation of the yuan. “No, I don’t think it’s a problem,” Obstfeld said when asked about the issue on the sidelines of a news conference at the IMF and World Bank annual meetings in Bali. But Obstfeld also told the news conference that Beijing would face a “balancing act” between actions to shore up growth and ensure financial stability. China’s yuan currency has faced strong selling pressure this year, losing over 8% between March and August at the height of market worries, though it has since pared losses as authorities stepped up support.

On Tuesday, China’s central bank fixed the yuan’s official mid-point for trading at 6.9019 per dollar, edging close to the psychologically important 7.0 barrier and helping to send Asian stocks to a 17-month low. A U.S. Treasury official on Monday repeated that the Trump administration was concerned about the yuan’s recent weakening as the department prepares a semi-annual report on currency manipulation due out next week. Obstfeld said financial markets have overly emphasized short-term movements in China’s currency, adding that the yuan has often quickly recovered from periods of volatility in recent years.

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Reading this, I kept thinking: what sharp slowdown? Where is it? Not in the numbers…

Sharp Slowdown In Consumer Spending Cools UK Retail Sales (G.)

Britain’s retailers experienced a sharp slowdown in consumer spending last month, bringing to a close the World Cup-inspired summer spree on the high street. According to the British Retail Consortium (BRC) and the accountancy firm KPMG, growth in total sales dropped to the weakest level in almost a year. Total sales grew at an annual rate of 0.7% in September, compared with 2.3% growth during the same month a year ago. The BRC said this was the lowest growth rate since October 2017. Excluding new store openings, like-for-like sales dropped by 0.2% in the year to September, compared with a 19.9% increase for the same period a year ago.

The latest snapshot for the retail sector comes before the important autumn and winter shopping periods, vital for industry profits, when sales of gifts and electrical goods are lifted by the Black Friday sales event in November and shoppers buying Christmas presents. Retailers have been hit hard by a combination of problems that have led to job cuts and store closures across Britain. The ongoing shift to online shopping has increased competition, while sluggish wage growth and high levels of inflation have damaged the spending power of British households. Sales of stationery, footwear and clothing fell last month, while retailers sold more computers, jewellery, furniture, home accessories and food.

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If this doesn’t scare you…

Google Drops Out Of Bidding For $10 Billion Pentagon Data Deal (R.)

Alphabet Inc’s Google said on Monday it was no longer vying for a $10 billion cloud computing contract with the U.S. Defense Department, in part because the company’s new ethical guidelines do not align with the project, without elaborating. Google said in a statement “we couldn’t be assured that [the JEDI deal] would align with our AI Principles and second, we determined that there were portions of the contract that were out of scope with our current government certifications.” The principles bar use of Google’s artificial intelligence (AI) software in weapons as well as services that violate international norms for surveillance and human rights.

Google was provisionally certified in March to handle U.S. government data with “moderate” security, but Amazon.com Inc and Microsoft Corp have higher clearances. Amazon was widely viewed among Pentagon officials and technology vendors as the front-runner for the contract, known as the Joint Enterprise Defense Infrastructure cloud, or JEDI. Google had been angling for the deal, hoping that the $10 billion annual contract could provide a giant boost to its nascent cloud business and catch up with Amazon and fellow JEDI competitor Microsoft. That the Pentagon could trust housing its digital data with Google would have been helpful to its marketing efforts with large companies. But thousands of Google employees this year protested use of Google’s technology in warfare or in ways that could lead to human rights violations.

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Oct 062018
 
 October 6, 2018  Posted by at 9:26 am Finance Tagged with: , , , , , , , , ,  


M. C. Escher Day and Night 1938

 

Collins, Manchin Vote “Yes”, Ensuring Kavanaugh Confirmation (ZH)
US Unemployment Rate Falls To Lowest Level Since 1969 (G.)
Mueller Moves For Forfeiture Order To Seize Manafort Assets (Hill)
Storm Clouds on Robert Mueller’s Horizon (LaRouche)
May Secretly Woos Labour MP’s To Back Her Brexit Deal (G.)
Juncker: Brexit Deal Could Be Reached Within Weeks (Sky)
UK House Prices Fall Sharply In September (G.)
Fishtailing into the Future (Jim Kunstler)
Russia Announces Plan To Disentangle Its Economy From US Dollar (RT)
Banksy Artwork Shreds Itself After £1m Sale At Sotheby’s (BBC)

 

 

This ain’t over.

Collins, Manchin Vote “Yes”, Ensuring Kavanaugh Confirmation (ZH)

Court nominee Brett Kavanaugh now has the 50 votes required to be confirmed to the Supreme Court, after both GOP Sen. Susan Collins of Maine and Democrat Joe Manchin of West Virginia announced that they would be voting yes. GOP holdout Jeff Flake of Arizona also said that he would vote to confirm Kavanaugh “unless something big changed.” Earlier in the day, the Senate completed a cloture vote to advance Kavanaugh to final confirmation, which Manchin broke ranks and voted in favor of.

“Most senators sat at their desk as the dramatic roll call unfolded, with major suspense over where Murkowski, Manchin and Flake would land. Collins was the first swing vote to support Kavanaugh on the procedural roll call, quickly followed by Flake. Murkowski then inaudibly voted no, a jarring defection that left Republicans with no room for error. After it was clear that Kavanaugh had the 50 votes needed to advance, Manchin became Kavanaugh’s only Democratic supporter. Manchin, who left the chamber when the clerk called his name, came back into the chamber and voted in favor of Kavanaugh. His phone could be seen ringing and Manchin stared at it as the vote continued.” -Politico

“This is a difficult decision for everybody,” Flake said to reporters, who added that he thinks Kavanaugh will be confirmed on Saturday. Meanwhile, Sen. Steve Daines (R-MT) is set to fly to Montana to attend his daughter’s Saturday wedding. If the vote is too close without Daines, he will be forced to fly back to Washington D.C. to cast the deciding vote. “We’ll wait and see how this all unfolds,” Daines said. “We have transportation arranged and we’ll wait and see what happens.” He added that Rep. Greg Gianforte (R-MT) offered him the use of his private plane. President Trump has taken a largely hands-off approach to Kavanaugh’s confirmation – instead communicating in private with his political allies, such as Sen. Lindsey Graham (R-SC), according to Politico, which adds that the White House is “cautiously opimistic” that Kavanaugh will be confirmed.

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How many Americans have multiple jobs?

US Unemployment Rate Falls To Lowest Level Since 1969 (G.)

US figures have shown the lowest jobless rate since the year of the first moon landings, keeping the world’s largest economy on course for further interest rate rises. Eagerly awaited figures for jobs and wages showed less inflationary pressure in the world’s biggest economy than had been feared, but still pointed to more hikes by the Federal Reserve. Financial markets had been braced for a sharp sell off had the latest monthly payroll numbers indicated faster employment growth and pay increases in September, which could have paved the way for faster-than-expected monetary tightening by the US central bank. As a result of the figures undershooting the most optimistic expectations, losses were smaller than feared in early trading in New York but all the major US markets ended down with the biggest losses on the tech heavy Nasdaq exchange.

Data from the Bureau for Labour Statistics (BLS) reported an increase in non-farm payrolls of 134,000 in September, well below the 180,000 predicted by Wall Street analysts. A 0.3% in pay left annual earnings 2.8% higher than a year earlier, a slightly weaker rate of increase than the 2.9% posted the previous month. Most economists said the jobs market remained strong, pointing to the drop in unemployment from 3.9% to 3.7% – its lowest since 1969 – and upward revisions to employment in July and August. Last month, the Fed raised short-term interest rates for the eighth time since 2015, to a range of 2%-2.25%, and indicated that there would be further increases “consistent with sustained expansion of economic activity”.

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Don’t have a collusion to investigate?

Mueller Moves For Forfeiture Order To Seize Manafort Assets (Hill)

Attorneys for special counsel Robert Mueller moved on Friday for an order to seize assets that former Trump campaign chairman Paul Manafort purchased with funds he hid from U.S. authorities in foreign bank accounts. Mueller’s attorneys submitted a court document as part of Manafort’s plea agreement asking Judge Amy Berman Jackson to grant a request to seize five properties in New York owned by Manafort as well as a life insurance policy and three bank accounts. Forfeiture of the assets identified as part of Manafort’s scheme to hide millions of dollars made lobbying for pro-Russia parties in Ukraine was agreed upon in a plea agreement Manafort signed with Mueller’s team last month.

Manafort signed the deal and agreed to cooperate with Mueller’s team to avoid a second trial in Washington, D.C., after a jury found him guilty on eight counts in a separate trial in northern Virginia in August. “[T]he defendant admitted to the forfeiture allegations in the Information and agreed that the following property constitutes or is derived from proceeds traceable to the offense alleged in Count One,” the court document states, while noting that two of the New York properties were substitutes for assets unable to be seized by the government.

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“..the entire Russiagate investigation was a ginned up operation research/information warfare campaign..”

Storm Clouds on Robert Mueller’s Horizon (LaRouche)

On October 3rd, the House Committees investigating the Department of Justice Russiagate insurrection against Donald Trump took testimony from behind closed doors from former FBI General Counsel James Baker, a close confidant of fired FBI Director James Comey. According to widespread leaks Thursday, October 4th, Baker’s testimony included the fact that he, Baker, met directly with Perkins, Coie, the lawyers for the DNC and Hillary Clinton, receiving directly materials which went into the FBI’s FISA warrant against Carter Page and characterized this process has “highly abnormal.” The Perkins, Coie, lawyer involved, Michael Sussman, is also the guy who orchestrated the fake information warfare story that the Russians hacked the DNC on behalf of Donald Trump.

Coming out of the testimony, one of the sources for the story spoke plainly: Baker’s testimony shows that the entire Russiagate investigation was a ginned up operation research/information warfare campaign, involving the FBI and Hillary’s Clinton’s campaign rather than any “conspiracy” involving the Trump Campaign and Russia. October 4th was the deadline for Andrew McCabe’s memos about meetings occurring in the wake of James Comey’s firing May, 2017, in which Deputy Attorney General Rod Rosenstein and others discussed wearing wires and recording the President and also invoking the 25th Amendment to remove the President.

In a discussion with Hill TV on Wednesday, Congressman Mark Meadows, who is leading this investigation, said that he has seen evidence that “confidential human sources” used by the FBI “actually taped members within the Trump campaign.” “There is strong suggestions in that some of the text messages, emails, and so forth who was involved, that extraordinary measures were used to surveil,” Meadows said. There is now a major national outcry for the President to declassify all of the relevant documents concerning Russiagate. Speculation on his failure, thus far, to do so, centers on both the Kavanaugh nomination fight and forcing his hand on Rosenstein before the Midterm elections.

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Looking for Blairite traitors.

May Secretly Woos Labour MP’s To Back Her Brexit Deal (G.)

Theresa May has drawn up plans for a secret charm offensive aimed at persuading dozens of Labour MPs to back her Brexit deal even if it costs Jeremy Corbyn the chance to be prime minister, the Guardian has learned. Senior Conservatives say they have already been in private contact with a number of Labour MPs over a period of several months, making the case that the national interest in avoiding a no-deal outcome is more important than forcing a general election by defeating the government on May’s Brexit deal. Now, with talks in Brussels entering their frantic final phase, the prime minister and her party whips are stepping up efforts to win backing for a compromise deal that one minister described as a “British blancmange”.

They are convinced they will need Labour votes to win, after a fractious Tory conference in Birmingham, at which determined opponents of the prime minister’s approach, including Jacob Rees-Mogg, won plaudits for saying they would vote against it. One Tory source compared the challenge of striking a deal with the EU27 that would satisfy both sides of his own party to “landing a jumbo jet on the penalty spot”. Labour MPs will thus be the focus of intense lobbying, in the period between May returning from Brussels with a Brexit deal and the meaningful vote, which is expected to come about a fortnight later.

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If May gives enough, yes…

Juncker: Brexit Deal Could Be Reached Within Weeks (Sky)

The president of the European Commission has said he is sure a Brexit agreement could be reached in November, if not sooner. Jean-Claude Juncker told three Austrian newspapers that Brexit without a deal “would not be good for the UK, as it is for the rest of the union”. He added: “I assume that we will reach agreement on the terms of the withdrawal agreement. “We also need to agree on a political statement that accompanies this withdrawal agreement – we are not that far yet.” He said: “I have reason to think that the rapprochement potential between both sides has increased in recent days, but it can not be foreseen whether we will finish in October. “If not, we’ll do it in November.”

Britain and the EU are trying to agree a divorce deal as well as one for a post-Brexit relationship in time for leaders’ summits scheduled for 17-18 October and 17-18 November. Mr Juncker insisted that the EU’s “will is unbroken to reach agreement” with Britain but spoke of his regret that the European Commission had not been involved in the 2016 referendum campaign. He said that the then-government of David Cameron had asked him “not to interfere”. “If the commission intervened, perhaps the right questions would have entered the debate,” he added. “Now you discover new problems almost daily, on both sides. “At that time it was already clear to us to what trials and tribulations this pitiful vote of the British would lead.”

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They’re bloated.

UK House Prices Fall Sharply In September (G.)

UK house prices unexpectedly dropped at the fastest pace for almost six months in September, according to Halifax, as the number of homes for sale in 2018 fell to a decade low. Britain’s biggest mortgage lender said the average price of a home in Britain dropped to £225,995 last month, down 1.4% from the level recorded in August. The price of a home remained 2.5% higher than a year ago. City economists had forecast month-on-month growth of 0.2% in September. The latest snapshot of the housing market a little more than six months before Britain leaves the EU suggests sluggish levels of demand for home buying amid the political uncertainty of Brexit.

Economists said the national picture painted by Halifax obscured some regional differences. London house prices are falling for the first time since 2009, yet prices elsewhere are rising. They also cautioned that the Halifax house price index can be more changeable than other industry barometers of residential property because it is on a monthly basis. Earlier this week Theresa May announced the government would lift a cap on the amount councils can borrow to build housing, potentially helping to increase the number of homes built by local authorities.

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“..I’ve never seen a political fiasco as demented as the Kavanaugh confirmation process..”

Fishtailing into the Future (Jim Kunstler)

[..] at the macro level, this system and its subsystems are out-of-control and shaking themselves loose. Government has attempted to prop them up by schemes that amount to racketeering of one kind or another — the dishonest manipulation and representation of money — and now money itself is in revolt, as can be seen in the sudden rise of interest rates, especially the ten-year US Treasury Bond above 3.2 percent just before today’s market open

The US government can’t handle interest rates at this level, after decades of debt accumulation. Other nations can’t pay back their dollar-denominated loans either, and that has produced havoc at the so-called margins of the global economy — as currencies crash, and companies go under, and sovereign debt instruments melt down. You can be sure that this disorder will eventually spread from the margins to the center, which is the USA. It’s already up-and-running in our politics, which might be considered the early warning system of the larger picture. In my long life of three-score and ten, I’ve never seen a political fiasco as demented as the Kavanaugh confirmation process, with its harking back to Medieval social hysterias and stunning exercises in bad faith.

This riveting horror show has also distracted the nation — and a media fully invested in compounding the psychodrama — from the momentous tectonic movements in the world’s money system, now shaking apart. Among other things, it will blow up the fantasy that Mr. Trump has magically orchestrated a new miracle economy. But it will also bring to an abrupt close the pornographic machinations of his adversaries in Swamptown. And then we will get on in earnest with the true business of the long emergency — making new arrangements, however difficult — to escape the deadly clutter of our own constructed hyper-complex hyper-reality.

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The US will fight back.

Russia Announces Plan To Disentangle Its Economy From US Dollar (RT)

The Russian Finance Ministry has announced a plan to wean the country of dollar dependence. It is expected to be a long and painful process. RT has asked analysts to explain how this could be done. According to the plan published this week, Russia seeks to de-dollarize the economy by 2024. The program is long and complicated, but its key point is that Russian exporters who use rubles instead of dollars would get huge taxation benefits including quicker VAT returns and other stimulus to ditch the greenback. But there are also other ways to strengthen the role of the ruble in Russia.

“It is necessary to gradually switch to such a system of international payments, which implies payment in rubles for Russia’s best and most popular goods on the world market like oil, gas and arms exclusively,” Andrey Perekalsky, analyst at insurance brokerage FinIst, told RT. Russia should also unite with China and the European Union in creating a payment channel that can’t be controlled by the United States. The alternative to the SWIFT interbank settlement network that could bypass Iranian sanctions could be seen as a first step in that direction, the analyst notes. Petr Pushkarev, chief analyst at TeleTrade, says that Russia with its almost $500 billion in foreign reserves, could keep the ruble stable despite US sanctions pressure. The current period of high oil prices could also help.

However, Russia should diversify not only into rubles, but also use the Chinese yuan, Vietnamese dong, Indian rupee, and even the euro, the analyst says. “The euro shouldn’t be feared. The dollar is pretty much overvalued against the euro; the IMF forecasts a gradual devaluation of the dollar by 10-15 percent,” Pushkarev said. “American policy is disliked not only in Russia. EU officials have already openly announced that they are starting to create their own system of settlements with Iran, in which transactions will not be transparent to the US authorities and therefore will not be subject to sanctions,” he added.

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Funny.

Banksy Artwork Shreds Itself After £1m Sale At Sotheby’s (BBC)

A stencil spray painting by elusive artist Banksy shredded itself after it was sold for more than £1m. Girl With Balloon, one of Banksy’s most widely recognised works, was auctioned by Sotheby’s in London. The framed piece shows a girl reaching towards a heart-shaped balloon and was the final work sold at the auction. However, in a twist to be expected from street art’s most subversive character, the canvas suddenly passed through a shredder installed in the frame. Posting a picture of the moment on Instagram, Banksy wrote: “Going, going, gone…”

The 2006 piece was shown dangling in pieces from the bottom of the frame, after it sold for £1.042m on Friday night. “It appears we just got Banksy-ed,” said Alex Branczik, Sotheby’s senior director and head of contemporary art in Europe. Banksy is a Bristol-born artist whose true identity – despite rampant speculation – has never been officially revealed. He came to prominence through a series of graffiti pieces that appeared on buildings across the country, marked by deeply satirical undertones. Friday’s self-destruction was the latest in a long history of anti-establishment statements by the street artist.

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Oct 012018
 
 October 1, 2018  Posted by at 9:15 am Finance Tagged with: , , , , , , , , ,  


Paul Gauguin Bathing, Dieppe 1885

 

White House Questioned Over Scope Of FBI Investigation Into Kavanaugh (WSJ)
Trump Helps Publishers Sell Millions Of Books – Both Pro And Con (AFP)
Canada, US Deal Saves NAFTA As Trilateral Pact (R.)
May Fights To Assert Authority At Tory Conference (G.)
Six Months Before Brexit, The UK Government Is Attacking The EU (CNBC)
China Manufacturing Activity Slows As Trade War Rages (AFP)
Tesla’s SEC Deal Provides Ammunition For US Probe, Investor Lawsuits (R.)
The Banks That Helped Danske Bank Estonia Launder Russian Money (Coppola)
The Distribution Of Wealth Has More To Do With Power Than Productivity (OD)
Tim Berners-Lees Aims To Radically Decentralize The Internet (ZH)
FYROM Leader Vows To Press On With Name Change Despite Referendum Failure (R.)
Treated Water At Fukushima Nuclear Plant Still Radioactive (AP)
Which Cities Will Sink Into The Sea First? (G.)

 

 

It is essential that they keep sighting each other. People love that.

White House Questioned Over Scope Of FBI Investigation Into Kavanaugh (WSJ)

A political cease-fire achieved by a further FBI investigation into allegations of sexual misconduct against Judge Brett Kavanaugh evaporated over the weekend, as the White House fended off accusations it had placed overly restrictive limitations on the probe of its Supreme Court nominee. The one-week-at-most inquiry by the Federal Bureau of Investigation, brokered as a last-minute deal Friday between Republican Sen. Jeff Flake and Democrats on the Senate Judiciary Committee, was intended to satisfy concerns that allegations against Kavanaugh weren’t being fully vetted before the full Senate took up his nomination.

But early signs that the FBI probe would be on a short leash inflamed Democratic criticism that President Donald Trump and fellow Republicans weren’t out to explore fully the allegations, while the White House, Senate and FBI all appeared to shift responsibility for the scope of the probe elsewhere. “The FBI’s hands must not be tied in this investigation,” Sen. Dianne Feinstein of California, the top Democrat on the Judiciary panel, wrote on Twitter. Later Sunday, Feinstein asked White House counsel Don McGahn and the director of the FBI to release a copy of the directive sent by the White House to the bureau outlining the scope of the investigation.

The contours of the FBI investigation weren’t clear and appeared at times to shift, as Trump and senior administration officials pushed back against reports that the White House directed who would be interviewed as part of a reopening of Kavanaugh’s background investigation. Administration officials said they were taking cues from the Senate. Leading the process for the West Wing is McGahn, who helped prepare Kavanaugh for the questions he would face in Judiciary Committee hearings. The lack of clarity extended to what investigators could ask witnesses, such as whether they would examine the accuracy of Kavanaugh’s testimony last week on his drinking habits as a teen.

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Most important article about US politics in a long time. The title says Pro and Con, but really, it’s all con. Because that sells. More books are coming. Because they will sell.

Trump Helps Publishers Sell Millions Of Books – Both Pro And Con (AFP)

“Fire and Fury,” “A Higher Loyalty,” “Fear”: three books about Donald Trump have each sold more than a million copies in the United States, a first that reflects Americans’ fascination with their ever-surprising president. The great majority of successful books on politics have been written by politicians themselves — or by ghostwriters working with them. Barack Obama set the standard in the genre, selling a combined 4.6 million copies of his autobiographical books “Dreams From My Father” and “The Audacity of Hope.” In their time, Bill Clinton, George W. Bush, Jimmy Carter, Hillary Clinton and even Sarah Palin all topped the best-seller lists at least for a few weeks, while not reaching Obama’s lofty level.

And in 1976, Washington Post journalist Bob Woodward sold 630,000 copies of his “The Final Days,” chronicling the dramatic unwinding of the Nixon presidency. After that, however, there have been no chart-toppers about a president. But in just nine months, “Fire and Fury” by journalist and author Michael Wolff, “A Higher Loyalty” by former FBI chief James Comey, and Woodward’s “Fear” have sold a combined total of more than five million copies, according to numbers reviewed by AFP. “I’m not surprised,” said David Corn, co-author of “Russian Roulette,” a book about Russian interference in the American presidential campaign. “There is deep desire on the part of many Americans for an understanding of what happened in this country” during the 2016 presidential campaign, he said, and also of “what’s going on now within the Trump White House.”

In the past, books about a presidency were generally published only after it was over, leaving sources freer to talk and allowing greater historical perspective. But, “as ever, Trump has sped everything up,” Jon Meacham, the author of several best-selling political and historical books, told MSNBC. “It’s almost as if we had a webcam” providing live coverage of events inside the White House. [..] “The Fifth Risk” by Michael Lewis (author of “Liar’s Poker” and “The Big Short”), “The Apprentice” by Washington Post journalist Greg Miller, and the Stormy Daniels book “Full Disclosure,” about the adult film star’s alleged sexual liaison with Trump, are all set to reach bookstores on Tuesday. “One potential problem is that people get too accustomed to the outrages of the Trump administration,” Corn said, “and therefore become less interested in books like these. “But I don’t see that happening any time soon.”

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Mere days after declaring the talks near dead, everybody’s happy again.

Canada, US Deal Saves NAFTA As Trilateral Pact (R.)

The United States and Canada forged a last-gasp deal on Sunday to salvage NAFTA as a trilateral pact with Mexico, rescuing a three-country, $1.2 trillion open-trade zone that had been about to collapse after nearly a quarter century. In a big victory for his agenda to shake-up an era of global free trade that many associate with the signing of NAFTA in 1994, President Donald Trump coerced Canada and Mexico to accept more restrictive commerce with their main export partner. Trump’s primary objective in reworking NAFTA was to bring down U.S. trade deficits, a goal he has also pursued with China, by imposing hundreds of billions of dollars in tariffs on imported goods from the Asian giant.

While the new United States-Mexico-Canada Agreement (USMCA) avoids tariffs, it will make it harder for global auto makers to build cars cheaply in Mexico and is aimed at bringing more jobs into the United States. Since talks began more than a year ago, it was clear Canada and Mexico would have to make concessions in the face of Trump’s threats to tear up NAFTA and relief was palpable in both countries on Sunday that the deal was largely intact and had not fractured supply chains between weaker bilateral agreements. “It’s a good day for Canada,” Prime Minister Justin Trudeau told reporters after a late-night cabinet meeting to discuss the deal, which triggered a jump in global financial markets.

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“Rees-Mogg said the plan was the “deadest of dying ducks”..”

May Fights To Assert Authority At Tory Conference (G.)

Deep divisions over Brexit overshadowed the opening day of the Conservative party conference on Sunday as Theresa May attempted to wrestle back the focus on to her domestic agenda. The bitter infighting that has crippled the Conservative party was laid bare as Boris Johnson and Jacob Rees-Mogg laid into the prime minister’s Brexit plans as thousands of delegates gathered in Birmingham. The chancellor, Philip Hammond, launched a scathing attack on Johnson, suggesting the former foreign secretary could not do “grown-up politics” and saying he did not expect him to become prime minister. May appealed to Tory MPs and the party’s grassroots to back her Chequers proposal as she was forced to hit back at Johnson, her former foreign secretary, who questioned her belief in leaving the European Union.

“I do believe in Brexit, but crucially I believe in delivering Brexit in a way that respects the vote and delivers on behalf of the British people, while also protecting our union, protecting jobs and ensuring we make a success of it,” she told the BBC’s Andrew Marr. However, May risked infuriating the party’s pro-Brexit grassroots by appearing to refuse to rule out further compromises to her Chequers plan in order to broker a final deal. It came after Johnson used a newspaper interview to launch a renewed attack on May’s entire Brexit plan, dismissing it as “deranged” while suggesting the proposal for Britain and the EU to collect each other’s tariffs was “entirely preposterous”. Rees-Mogg, the leader of the hard Brexiter European Research Group, said the plan was the “deadest of dying ducks” at a packed fringe meeting with hundreds of delegates..

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2 years of doing nothing, what else is there to do?

Six Months Before Brexit, The UK Government Is Attacking The EU (CNBC)

The U.K. government is demanding action from the European Union (EU) amid strong frustration over the lack of proposals from Brussels on a post-Brexit relationship. The U.K. is set to leave the EU in March 2019 and negotiators are working against the clock, trying to hammer a deal that will allow businesses to continue trading under relatively low tariffs. However, key differences, including the future of the Irish border with Northern Ireland, remain – leading many to believe that a no-deal is the more likely outcome. Speaking to CNBC over the weekend, several members of the U.K. government appeared frustrated about the lack of help coming from the European Union.

“At the moment, it is very much a question of the European Union responding with its proposals. At the moment, there is nothing on the table,” Chris Grayling, transport secretary told CNBC’s Steve Sedgwick at the Conservative Party conference currently taking place in Birmingham. Liam Fox, Trade secretary and an outspoken Brexit supporter, told CNBC on Sunday that it is the EU’s “duty” to help the U.K. and put forward their proposals. “They said they were not very happy with what the U.K. offered, in which case let them bring forward their own proposals,” he said. “Under Article 50 (the legislation that allows a EU country to leave the Union), we have the right to leave the European Union and they have a duty to help us in that future relationship. Let’s see them now deliver what they promised to do in that treaty,” Fox said.

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The trade war isn’t raging. Yet.

China Manufacturing Activity Slows As Trade War Rages (AFP)

Chinese factory activity slowed in September, official data showed Sunday, as the Asian giant’s trade war with the United States showed no sign of abating. The Purchasing Managers’ Index (PMI), a key gauge of factory conditions, came in at 50.8 for the month, down from 51.3 in August, the National Bureau of Statistics said. The figure was below the 51.2 reading tipped in a Bloomberg News survey of economists. Although the numbers indicated a slowdown, they remained above the 50-point mark that separates expansion from contraction. A separate manufacturing index, calculated independently by the Caixin media group, also showed a deceleration.

“Exports increasingly dragged down performance and continued softening demand began to have an impact on companies’ production,” said Caixin analyst Zhengsheng Zhong. “In addition, the employment situation worsened further. Downward pressure on China’s economy was significant.”

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Musk can pay big fines.

Tesla’s SEC Deal Provides Ammunition For US Probe, Investor Lawsuits (R.)

Tesla Inc’s settlement with U.S. regulators will help soothe investors calling for more oversight of Chief Executive Elon Musk, experts said, even as it gives ammunition to short-sellers pursing separate cases and to a probe by the Justice Department. Musk and Tesla will pay $20 million each, bring in two independent directors and have the billionaire step down as board chairman to settle U.S. Securities and Exchange Commission charges that Musk misled investors by tweeting he had financing for a go-private deal. That settlement must still be approved by a court, and does not end the Justice Department probe disclosed by Tesla into Musk’s tweets or lawsuits by short-sellers and other investors alleging losses and securities law violations.

“The real worry for the company is not the SEC but private actions that follow a settlement like this,” said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. “By paying that size fine, it bolsters investors’” claims over stock market losses, he said. [..] Musk settled with the SEC after advisers persuaded him the terms were favorable and a lengthy court fight would not be in the best interest of the company, a person familiar with the deal said. Musk had wanted to personally pay the fine for money-losing Tesla but the SEC rejected that proposal, the person said.

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That would be all of them. And all claim innocence.

The Banks That Helped Danske Bank Estonia Launder Russian Money (Coppola)

Money laundering is a multi-bank phenomenon. Danske Bank Estonia has been revealed as the hub of a $234bn money laundering scheme involving Russian and Eastern European customers. But Danske Bank Estonia couldn’t do this by itself. Much of the money was paid in U.S. dollars, and for that, it needed help from other banks. Banks that had access to Fedwire, the Federal Reserve’s electronic settlement system. Big banks, in other words. It appears that four big banks helped Danske Bank Estonia make its dodgy transactions. J.P. Morgan, Bank of America and Deutsche Bank AG all made dollar transfers on behalf of the Estonian branch’s non-resident customers. And according to the Wall Street Journal, Citigroup’s Moscow branch may have been involved in some financial transfers in and out of Danske Bank Estonia.

But how much responsibility do these banks bear for these transfers? Could they reasonably have been expected to know – or suspect – that the money was dirty? Banks that make transactions on behalf of customers of other banks are known as “correspondent banks”. In the past, correspondent banks often had little information about the originator or final recipient of the money they were transmitting. They simply trusted that their customer bank was acting legally and that its customers were above board. Old habits die very hard: in 2016, the correspondent banks involved in the FIFA corruption case, which include Citigroup, HSBC, Wells Fargo and Barclays, all claimed that they could not have known that the transfers were corrupt.

But these days, banks are expected to “know their customers’ customers”. They are supposed to conduct their own checks to make sure that they are not unwittingly being used to launder dirty money. In the case of Danske Bank Estonia, one of the correspondent banks did suspect something was wrong. In 2013, J.P. Morgan terminated its correspondent banking relationship with Danske Bank Estonia because it was concerned that it was being used as a conduit for dodgy funds. Deutsche Bank, however, blithely continued to make U.S. dollar wire transfers on behalf of the Estonia branch’s non-resident customers after J.P. Morgan’s departure. So did Bank of America, which replaced J.P. Morgan.

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The housing bubble has made Britian ‘rich’ while productivity falls behind.

The Distribution Of Wealth Has More To Do With Power Than Productivity (OD)

According to a new OECD working paper, Britain is one of the wealthiest countries in the world. Net wealth is estimated to stand at around $500,000 per household – more than double the equivalent figure in Germany, and triple that in the Netherlands. Only Luxembourg and the USA are wealthier among OECD countries. On one level, this isn’t too surprising – Britain has long been a wealthy country. But in recent decades Britain’s economic performance has been poor. Decades of economic mismanagement have left the UK lagging far behind other advanced economies. British workers are now 29% less productive than workers in France, and 35% less than in Germany. How can this discrepancy between high levels of wealth and low levels of productivity be explained?

[..] Let’s start with land: Germany has among the strongest tenant protection laws in Europe, and many German cities also impose rent controls. This, along with a banking sector that favours real economy lending over property lending, means that Germany has not experienced the rampant house price inflation that the UK has. Remarkably, the house price-to-income ratio is lower in Germany today than it was in 1995, while in the UK it has nearly tripled over the same time period. The fact that houses are not lucrative financial assets, and renting is more secure and affordable, means that the majority of people choose to rent rather than own a home in Germany – and therefore do not own any property wealth.

In Britain, the story couldn’t be more different. Over the past five decades Britain has become a property owners’ paradise, as successive governments have sought to encourage people onto the property ladder. Taxes on land and property have been removed, and subsidies for homeownership introduced. The deregulation of the mortgage credit market in the 1980s meant that banks quickly became hooked on mortgage lending – unleashing a flood of new credit into the housing market. Rent controls were abolished, and the private rental market was deregulated. Today tenant protection is weaker than almost anywhere else in Europe. Meanwhile, the London property market has served as a laundromat for the world’s dirty money. As Donald Toon, head of the National Crime Agency, has described: “Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK”.

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If one man can do it…

Tim Berners-Lees Aims To Radically Decentralize The Internet (ZH)

The man who created the world wide web by implementing the first ever successful communication between a Hypertext Transfer Protocol (HTTP) client and server via the internet in 1989 lamented that his creation has been abused by powerful entities for everything mass surveillance to fake news to psychological manipulation to corporations commodifying individuals’ information. But he’s long been at work on a new project to take the web back, described in depth by the business technology magazine Fast Company: This week, Berners-Lee will launch, Inrupt, a startup that he has been building, in stealth mode, for the past nine months.

Backed by Glasswing Ventures, its mission is to turbocharge a broader movement afoot, among developers around the world, to decentralize the web and take back power from the forces that have profited from centralizing it. In other words, it’s game on for Facebook, Google, Amazon. “We have to do it now,” Berners-Lee said of the newly launched project. “It’s a historical moment.” He identified the main impetus behind his recent announcement that he’ll be going on sabbatical from his research professor post at MIT to work full-time on the project as the recent revelation that Facebook allowed political operatives to gain access to some 50 million users’ private data.

At MIT Berners-Lee has for years led a team on designing and building a decentralized web platform called ‘Solid’ — which will underlie the Inrupt platform. The Inrupt venture will serve as users’ first access to the new Solid decentralized web: If all goes as planned, Inrupt will be to Solid what Netscape once was for many first-time users of the web: an easy way in. And like with Netscape, Berners-Lee hopes Inrupt will be just the first of many companies to emerge from Solid. “I have been imagining this for a very long time,” says Berners-Lee.

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Even the president told people not to vote.

FYROM Leader Vows To Press On With Name Change Despite Referendum Failure (R.)

Macedonia’s prime minister pledged on Sunday to press on with a vote in parliament to change the country’s name to resolve a decades-old dispute with Greece, despite failing to secure the 50 percent turnout at a referendum required to make it valid. The proposed name change is part of an agreement reached in June by pro-Western Prime Minister Zoran Zaev with Greece to resolve the dispute over the country’s name, which had prevented Macedonia from joining NATO or the EU. With 85 percent of votes counted, official turnout was just 36 percent, and election officials made clear there was no chance the threshold would be cleared. “On this referendum, it is clear that the decision has not been made,” election commission head Oliver Derkoski told reporters.

The people who did vote overwhelmingly backed the name change — more than 90 percent voted yes with 63 percent of polling stations reporting. But that had never been in doubt, since opponents of the change had urged followers not to vote, rather than vote no. “It is clear that the agreement with Greece has not received the green light from the people,” main nationalist opposition VMRO-DPMNE party leader Hristiajn Mickoski told journalists. The referendum was itself not legally binding, but lawmakers had pledged to abide by it, and the failure to reach the turnout threshold means opponents can now freely vote against the deal. The nationalist opposition holds 49 seats in the 120-seat parliament, enough to block the two-thirds majority required to change the constitution.

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Letting TEPCO police itself is a bad idea.

Treated Water At Fukushima Nuclear Plant Still Radioactive (AP)

The operator of the Fukushima No. 1 nuclear plant has said that much of the radioactive water stored at the plant isn’t clean enough and needs further treatment if it is to be released into the ocean. Tokyo Electric Power Company Holdings Inc. and the government had said that treatment of the water had removed all radioactive elements except tritium, which experts say is safe in small amounts. They called it “tritium water,” but it actually wasn’t. Tepco said Friday that studies found the water still contains other elements, including radioactive iodine, cesium and strontium. It said more than 80 percent of the 900,000 tons of water stored in large, densely packed tanks contains radioactivity exceeding limits for release into the environment.

Tepco general manager Junichi Matsumoto said radioactive elements remained, especially earlier in the crisis when plant workers had to deal with large amounts of contaminated water leaking from the wrecked reactors and could not afford time to stop the treatment machines to change filters frequently. “We had to prioritize processing large amounts of water as quickly as possible to reduce the overall risk,” Matsumoto said. About 161,000 tons of the treated water has 10 to 100 times the limit for release into the environment, and another 65,200 tons has up to nearly 20,000 times the limit, Tepco said.

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The earth as a complex system.

Which Cities Will Sink Into The Sea First? (G.)

[..] are sea levels going up or down? The answer seems clear when you consider that Antarctica has lost 3 trillion tonnes of ice in the last 25 years. Yet to understand what is going on we first have to recognise that the Earth isn’t solid. It started life as a ball of hot liquid about 4.5bn years ago and our planet has been cooling ever since. Right at the centre of the Earth is a solid core of metal made of iron and nickel at a temperature of approximately 5,000C. But this core is surrounded by an approximately 2,000km-thick ocean of molten metal, again mostly iron and nickel.

Surrounding this is a layer of rock called the mantle that is between 500C to 900C, and at these red-hot temperatures the rock behaves like a solid over short periods of time (seconds, hours, and days) but like a liquid over longer time periods (months to years) – so the rock flows, even though it is not molten. On top of the fluid mantle floats the crust, which is like the skin of the Earth. It is a relatively thin layer of cool rock that is between 30 to 100km thick and contains all the mountains, forests, rivers, seas, continents – our world.

Since the crust is floating on the fluid mantle, if you increase its weight by, for instance, building up kilometres of ice on top of it, then it sinks further into the mantle. This is what has happened to the landmasses of Antarctica and Greenland, which are both covered in 2km to 3km of thick ice. If global warming were to cause all that ice to melt, then the sea level of the oceans would rise by more than 50 metres, submerging all the coastal cities of the world and making hundreds of millions of people homeless. This seems obvious. What is less obvious is how it might unfold.

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