Apr 292019
 


Pablo Picasso Head and guitar 1927

 

Ron Chernow At Annual White House Correspondents’ Association Dinner (G.)
Aaron Maté Shreds Rachel Maddow (RT)
Why Did Mueller Let Trump Off the Hook? (Mike Whitney)
Did the Russians Really Interfere in Our Elections? (Unz)
Warren Buffett Thinks Most Newspapers Are “Toast” (ZH)
Iran Appeals Directly To Trump: Your Advisers Drag You Into War (ZH)
IMF Warns Of Slowing Growth, Rising Unrest Across Middle East (CNBC)
UK Tories To Lose 800-1000 Seats In This Week’s Local Elections (G.)
Spanish Socialists Win Most Seats, Far Right Resurgent (G.)
Yellow Vests Mutilated By ‘Sublethal’ Police Weapons Unite (RT)
Conservative Bavaria Forces Bold Action on Protecting Nature (Yale)
Up To A Million Species Face Extinction, Many Within Decades – UN (AFP)

 

 

An“erudite defence of the freedom of the press” in front of almost all Washington reporters. And it doesn’t mention Julian Assange and Chelsea Manning even once.

To me, there is nothing more upsetting in our world today. These people care about themselves only, about their petty little freedom. The truth be damned. But they have no freedom if Assange doesn’t, it’s all or nothing. Or one could say they have the freedom to lie. And that’s the one thing Assange never did.

Ron Chernow At Annual White House Correspondents’ Association Dinner (G.)

In Washington, Chernow, biographer of founding father Alexander Hamilton and former president Ulysses S Grant, delivered an eloquent and erudite defence of the freedom of the press with some subtle barbs, winning a standing ovation from an audience that quickly forgot any disappointment over the lack of a comedian this year. “We now have to fight hard for basic truths that we once took for granted,” said Chernow, who mentioned Trump by name only once in an address that framed the current presidency as just one chapter in America’s epic novel. He told how the first president, George Washington, often felt maligned and misunderstood by the press but never generalised that into a vendetta. “Relations between presidents and the press are inevitably tough, almost always adversarial, but they don’t need to be steeped in venom.”


The second president, John Adams, used laws to crack down on the media and lost his re-election campaign in 1800, Chernow continued. “Campaigns against the press don’t get your face carved into the rocks of Mount Rushmore, for when you chip away at the press, you chip away at our democracy. The tribunal of history does not deal leniently with presidents who punish the free press.” Chernow insisted that, while America has taken some wrong turns throughout history, democracy has endured. He told how, towards the end of the civil war, a chastened but hopeful Abraham Lincoln, sitting at a campfire with Grant, quoted his secretary of state William Seward as saying: “There was always just enough virtue in this republic to save it; sometimes none to spare, but still enough to meet the emergency.”

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Cute, nice, see the Twitter thread at the link, but I must wonder: why bother? You’re just giving her more to talk about.

Question should be: how can this nutcase still have a TV show? And why do people watch it? Is this what ‘freedom of the press’ has come to mean? The freedom to lie?!

Aaron Maté Shreds Rachel Maddow (RT)

Journalist Aaron Mate has eviscerated MSNBC’s Rachel Maddow for peddling “Trump-Russia conspiracy theories, falsehoods & innuendo,” after Maddow threw a tantrum when YouTube dared to recommend an RT video. Mate, a longtime skeptic of the mainstream media’s beloved ‘Russiagate’ narrative, was the subject of a recent interview with RT. When MSNBC’s Russiagater-in-chief Rachel Maddow found out that YouTube’s algorithm had actually suggested the interview to viewers, she saw more Russian meddling and proclaimed the recommendation “death by algorithm.” Mate unloaded on Maddow on Sunday, systematically destroying the MSNBC host for her two years as “the leading purveyor of now debunked Trump-Russia conspiracy theories, falsehoods & innuendo.”

Buckle up. “Just recently you were caught in real-time lying to your audience,” he began. “You claimed Barr was handling the redactions by himself. But the chyron — on screen right below — told viewers the truth, that Mueller was in fact ‘assisting’ w/ the redactions.” With Maddow seemingly content to lie on live television, it fell upon her show’s producers to flash the truth on viewers’ screens. Mate then recalled the time Maddow suggested that Russian President Vladimir Putin would use the ‘pee tape’ (the most far-fetched allegation in the Democrat-commissioned, internet-sourced Steele dossier) to force Trump into withdrawing US troops stationed near Russia. Of course, this never happened, and Trump recently announced plans to ramp up deployments to Poland. A swing and a miss for Maddow.

[..]Despite peddling baseless conspiracies and flagrant Russophobia every night, Maddow remains one of the US’ most popular news anchors, and one of the best paid. The MSNBC host regularly vies with Fox News’ Sean Hannity for the top spot on the cable news ratings, and earns a cool $7 million per year for her work. Although Maddow has been perhaps the most fervent promoter of Russiagate hysteria on television, her ratings have clumped after Special Counsel Robert Mueller’s report put most of her theories to bed last month. Maddow’s show slipped from its number one position after the report dropped, and lost half a million viewers in the space of a week. Mate, although reporting to a far smaller audience, has received an Izzy Award for his “meticulous reporting” that “challenged the way the public was being informed about the Mueller investigation.”

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Whitney back in conspiracy mode.

Why Did Mueller Let Trump Off the Hook? (Mike Whitney)

[Mueller’s] assignment was undermine Trump’s moral authority by brandishing the cudgel of criminal indictment over his head. This is how a D.O.J. appointee, who had never held public office in his life, became the most powerful man in Washington. My question is simply this: Why did Mueller give up all that power when he did? I think I can answer that, but first, we need a little more background. Check out this quote from candidate Trump in 2016: “We will pursue a new foreign policy that finally learns from the mistakes of the past…We will stop looking to topple regimes and overthrow governments…. Our goal is stability not chaos, because we want to rebuild our country [the United States]… We will partner with any nation that is willing to join us in the effort to defeat ISIS and radical Islamic terrorism …In our dealings with other countries, we will seek shared interests wherever possible and pursue a new era of peace, understanding, and good will.”

Imagine how terrified the foreign policy establishment must have been when they heard Trump utter these words. No more regime change wars? Are you kidding me? That’s what we do: Regime-Change-Is-Us., and now this upstart, New York real estate tycoon is promising to do a complete 180 and move in another direction altogether. No more destabilizing coups, no more bloody military interventions, instead, we’re going to work collaboratively with countries like Russia and China to see if we can settle regional disputes and fight terrorism together? Really? At the same time Trump was promising this new era of “peace, understanding, and good will,” Hillary Clinton was issuing her war whoop at every opportunity. Here’s candidate Hillary trying to drum up support for taking on the Russians in Syria:

“The situation in Syria is catastrophic. And every day that goes by, we see the results of the Assad regime in partnership with the Iranians on the ground, and the Russians in the air…When I was Secretary of State, I advocated and I advocate today a no-fly zone and safe zones.” Interesting, isn’t it? Here’s Hillary, the “liberal” Democrat, pushing for a no-fly zone in Syria even though the Chairman of the Joint Chiefs of Staff, General Joseph Dunford, stated clearly that “Right now… for us to control all of the airspace in Syria would require us to go to war against Syria and Russia.”

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If they did we have no evidence of it. We have the word of CIA and FBI for it, but that has no value.

Did the Russians Really Interfere in Our Elections? (Unz)

The one issue that both Democrats and most Republicans seem to agree on, the issue which both say is “proven conclusively” by Mueller is that the Russians “attempted to interfere and did interfere” in our 2016 election. Interesting, is it not, that the Republicans who zealously defend the president and attack the obviously political nature of the Mueller Report would accept, as if on faith and without question, the accusations of Russian interference, also contained in the report? Turn on Fox and watch, say, Martha MacCallum (e.g., “The Story,” April 24, 2019) declare “we all know now without doubt that the Russians tried to interfere” in our elections, or listen to most any GOP congressman repeat that same narrative with unquestioning certitude.

But that assertion—is it truly backed up factually? Where is the evidence, other than largely questionable information sourced from our largely discredited intelligence agencies which, as we know, had a determined goal of overthrowing the president by any means possible? Almost three years have passed from the first fake news that appeared in the media on the subject of “Russian collusion,” a concerted effort launched to discredit at first the Donald Trump candidacy and then sabotage his presidency, including his efforts to stabilize Russian-American relations. As proof of Russian actions, the Mueller Report cites the indictments against twenty-five Russian citizens who were indicted for attempted “interference” (those Russians are, let us add, quite conveniently out of the country and thus not prosecutable).

When those indictments were issued, Russia pointed out the flimsy, unsupported and transparently made-up nature of the charges, and demanded that American authorities provide conclusive proof. Such requests were rebuffed. In order to evaluate the evidence, the Russian government proposed reestablishing the bilateral expert group on information security that the Obama Administration had terminated, which could have served as a platform for conversation on these matters. The American side was also invited to send Justice Department officials to Russia to attend the proposed public questioning of the Russian citizens named by Mueller. Additionally, Russia offered to publicize the exchanges between the two countries following the publication of the accusations of cyberattacks, exchanges which were conducted through existing channels between October 2016 and January 2017.

Our government refused every offer.

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“Not all papers are doomed, though. The New York Times, the Washington Post and the Wall Street Journal will survive, he said.”

Did Buffet really completely miss the change in business model from reporting to manufacturing the news? Maybe at his age that’s to be expected?

Warren Buffett Thinks Most Newspapers Are “Toast” (ZH)

Buffett, who through his Berkshire Hathaway BH Media subsidiary owns a veritable print-media empire, said during an interview with Yahoo Finance (which will carry the live stream of Berkshire’s annual shareholder meeting on May 4) released on Tuesday that the newspaper industry is “toast”, and that most print papers (including, presumably, the 30 daily newspapers and 47 weeklies owned by BH) will soon cease to exist as they lose more vital advertising revenue to Internet powerhouses like Google and Facebook. Fortunately for Berkshire, the decline of the industry won’t have much of an impact on its bottom line because BH bought its newspapers at a “reasonable” price, Buffett said.


As Buffett sees it, the problem with trying to shift to a subscription-based model is two-fold: Consumers once sought out print newspapers not just for the news content, but for the ads. The classifieds included vital information about job opportunities and housing, while supermarkets ran fliers about what products were on special that week. That functionality has largely been subsumed by Craigslist. “It upsets the people in the newsroom to talk that way, but the ads were the most important editorial content from the standpoint of the reader,” Buffett said. Between 2006 and 2016, the newspaper industry’s advertising revenue had fallen to nearly a third of what it once was, with newspapers bringing in $18 billion in ad revenue, compared with $49 billion ten years prior.

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History is a lousy teacher.

Iran Appeals Directly To Trump: Your Advisers Drag You Into War (ZH)

Iranian Foreign Minister Mohammad Javad Zarif told Chris Walls on Fox News Sunday that he believes President Trump’s own advisers as well as Middle East allies like Saudi Arabia and Israel are “dragging the United States into a conflict” with Iran. It comes just days after Zarif made similar statements about the possibility of US and Iranian ships clashing in the Persian Gulf, warning that a false flag “accident” scenario could “lure” Trump into war — something which he thinks Trump himself doesn’t want to see happen. It appears Tehran’s new strategy as it reels from the sanctions squeeze on oil and Trump ending the crude export waiver program is to try and delicately peel Trump away from the American ‘deep state’.


Zarif specifically named National Security Advisor John Bolton, Israel, Saudi Arabia, along with close Saudi ally the United Arab Emirates, all as seeking to escalate tensions leading toward a regime change war on Iran. Wallace asked if they’re “all trying to exercise regime change?” according to Fox, and Zarif responded, “at least, at least.” Iran’s top diplomat explained: “They have all shown an interest in dragging the United States into a conflict. I do not believe that President Trump wants to do that, I believe President Trump ran on a campaign promise of not bringing the United States into another war. But I believe President Trump’s intention to put pressure, the policy of maximum pressure on Iran in order to bring Iran to its knees so that we would succumb to pressure, is doomed to failure.”

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Saudi Barbaria has the solutions.

IMF Warns Of Slowing Growth, Rising Unrest Across Middle East (CNBC)

Slowing global growth and elevated tensions in trade and geopolitics are posing economic challenges for countries in the Middle East, according to the IMF’s latest report. “Global developments are affecting the outlook for this year, namely the slowdown in growth especially on trade, the volatility in the oil price, as well as also the global financing conditions, in additional to a certain number of country specific issues,” Jihad Azour, the IMF’s director of the Middle East and Central Asia, told CNBC on Sunday. The Regional Economic Outlook report — published each spring by the IMF’s Middle East and Central Asia Department — also highlighted how volatile oil prices are negatively affecting some countries, while others are grappling with rising public debt.

“For oil-importing countries where debt is high, it’s very important to tackle it and to reduce the level of deficit. That will allow those countries to reduce their debt burden over GDP,” Azour added. Growth for oil exporters is projected to dip slightly in 2019 to 0.4 percent, from 0.6 percent the previous year, driven by an economic contraction in Iran following the renewal of sanctions. For oil-importing countries in the region, growth is expected to slow, declining from 4.2 percent in 2018 to a projected 3.6 percent this year. However, that figure is expected to rebound to 4.2 percent from 2020 to 2023. “Despite the current increase in prices, the medium-term price projections of oil remain in the corridor of the mid-$60s,” Azour said.

“Therefore it’s very important for countries to pursue and accelerate their diversification strategies and at the same time, maintain their pace of fiscal adjustment that will allow them to reduce their dependence, in terms of revenues on oil,” he added. [..] In the past 18 months, the IMF’s Reported Social Unrest Index — which calculates the share of articles in major news sources that include key terms relating to protests, demonstrations, and other forms of social unrest — has hit multi-year highs in some countries in the Middle East region. “Clearly, the inability of governments and countries to address the unemployment issue has led to the feelings, especially among the youth, of social unease and tension,” Azour said.

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Boris Johnson’s fortunes are rising. Imagine that.

UK Tories To Lose 800-1000 Seats In This Week’s Local Elections (G.)

The Conservatives can expect to lose 800 or more seats at the local elections this week, as voters punish Theresa May’s administration for failing to pass a Brexit deal, a leading Conservative analyst has said. In his latest projection for Thursday’s polls, in which more than 8,000 council seats in England are being contested, the Tory peer Robert Hayward suggested his party could lose about 500 to the Liberal Democrats, and 300 to Labour. He blamed his party’s failure to assemble a majority for the prime minister’s withdrawal agreement for his gloomy forecast, and predicted turnout would be unusually low because of “disenchantment” with all the major parties.


“I have heard of no canvasser of any party who has received a detailed dissertation re Brexit. It is therefore likely that had Mrs May’s deal, or anything like it, been approved the Tories would have fared markedly better than they are likely to,” he said, adding: “The elections might even have been about local issues.” A poor showing will be a fresh blow to May’s shattered authority, and increase the pressure on her to set out a timetable for her departure – and signal how she plans to break the impasse at Westminster. Cross-party talks are expected to resume on Monday, but Downing Street has been forced to delay a high-risk plan to table its key piece of Brexit legislation.

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Apparently, in Spain, too, democracy is a system for the not-too-smart. You know that if this is how your PM addresses you after winning, “We want a country that looks forwards and advances.”. As opposed to?

Spanish Socialists Win Most Seats, Far Right Resurgent (G.)

Spain’s ruling socialists won the most votes but fell short of a majority in Sunday’s snap general election, a contest marked by the breakthrough of the far-right Vox party and a disastrous performance by the country’s traditional conservative party. Pedro Sánchez’s Socialist Workers’ party (PSOE) won 123 seats, the conservative People’s party (PP) 66, the centre-right Citizens party 57, the anti-austerity Unidas Podemos and its allies 42, and Vox 24. Despite it being the country’s third general election in under four years, turnout was 75.8% – well up on the 66.5% two years ago. Sánchez hailed the result and the high turnout as proof of Spain’s desire to move forward and reject the reactionary policies of some of his rightwing opponents.


“We made it happen,” he told supporters in Madrid, echoing the PSOE’s campaign slogan. “We’ve sent out the message that we don’t want to regress or reverse. We want a country that looks forwards and advances.” However, the PSOE will still need to seek the support of other parties to reach the 176 seats necessary to form a government in Spain’s 350-seat congress of deputies. Even with the support of Unidas Podemos and related groups, it would still be 11 seats short of a majority and would need the help of smaller regional and nationalist parties. Podemos’s leader, Pablo Iglesias, has already shown enthusiasm for a deal with the PSOE. He said that while his party would have liked a better result – it dropped 29 seats on the last election – “it’s been enough to stop the right wing and build a leftwing coalition government”.

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“..at least 154 people have been seriously injured by police use of non-lethal weapons during protests. Of that number, 22 people have lost the use of an eye due to flash balls. A further five have had their hand torn off by gas canisters..”

Yellow Vests Mutilated By ‘Sublethal’ Police Weapons Unite (RT)

Yellow Vest protesters who have suffered life-changing injuries at the hands of French police have launched their own association, promising fresh actions against police brutality. Called “the Mutilated for the edification of others,” the collective aims to accurately calculate the number of people who have been injured nationally by police during Yellow Vest protests. It also called for an end to the use of the non-lethal weapons deployed by French police — namely tear gas canisters and flashballs — and a large national demonstration is scheduled in Paris on May 26. Among those attending was Jerome Rodrigues, a prominent Yellow Vest leader who was hit in the eye with a gas canister during a demonstration in January.


“You have 19 people in front of you and you have only 26 eyes that look back,” he told the press conference. “Count, there is a small problem,” he added. We demand the truth, justice and the ban on so-called sublethal weapons,” said Robin Pagès, another activist. He accused French Interior Minister Christophe Castaner of “lying” when the minister suggested that only “10 people have been hit in the head by LBD [flashball] shots.” According to statistics gathered by the activist group Desarmons-les (“Disarm Them”), at least 154 people have been seriously injured by police use of non-lethal weapons during protests. Of that number, 22 people have lost the use of an eye due to flash balls. A further five have had their hand torn off by gas canisters.

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“Voters were surprisingly moved by a landmark study showing steep declines in flying insects in Germany.”

Conservative Bavaria Forces Bold Action on Protecting Nature (Yale)

Bavaria is known around the world for its Munich Octoberfest, beautiful alpine panoramas, old castles, and cars from the Bavarian Motor Works (BMW). But within Germany, Bavaria is known for something else: It is by far the most conservative of the country’s 16 federal states. Bavaria’s staunchly traditionalist governing party, the Christian Social Union (CSU), has been in power continuously since 1946, pursuing a conservative agenda relating to family, bioethics, immigration — and the environment. Over the years, it has restricted the construction of wind farms, thwarted new environmental regulations for farmers, and blocked imposing a speed limit for cars on autobahns.

In recent months, however, Bavaria has taken a surprising detour from its traditional path. Responding to a grassroots citizens campaign and overwhelming support for a state referendum, the Bavarian government agreed earlier this month to implement one of Europe’s most progressive laws on protecting nature and restoring biodiversity, primarily through changing industrial farming practices. The about-face began in earnest in February when Bavarian citizens — increasingly concerned about the loss of natural areas, destructive farming techniques, and widely publicized reports that the populations of flying insects in Germany had plummeted — overwhelmingly supported a “referendum for biodiversity” that called for the state government to implement fundamental changes in nature conservation.

State law required that 10 percent of Bavaria’s 9 million registered voters support the referendum for it to become the basis for negotiations on a new nature conservation law. In fact, nearly double the required number of voters — 1.75 million Bavarians — showed up at their town halls to support what had become known as the “save the bees” initiative. [..] Now, Bavaria plans to implement a sweeping set of conservation measures, including setting aside 13 percent of the state in special ecological zones, committing to establishing organic agriculture on nearly a third of all Bavarian farmland, and taking steps to protect wetlands, waterways, and threatened insect populations. On May 8, the state parliament in Munich is slated to pass what Bavarian Prime Minister and CSU leader Markus Söder calls “the most sweeping nature protection law in the whole of Europe.”

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It’s not about nature anymore, it’s about our own survival. As if that will stop us.

Up To A Million Species Face Extinction, Many Within Decades – UN (AFP)

Diplomats from 130 nations gather in Paris from Monday to validate a grim UN assessment of the state of Nature and lay the groundwork for an 11th-hour rescue plan for life on Earth. A 44-page, draft “Summary for Policy Makers” obtained by AFP catalogues the 1001 ways in which our species has plundered the planet and damaged its capacity to renew the resources upon which we depend, starting with breathable air, drinkable water and productive soil. The impact of humanity’s expanding footprint and appetites has been devastating. Up to a million species face extinction, many within decades, according to the report, and three-quarters of Earth’s land surface has been “severely altered”.


A third of ocean fish stocks are in decline, and the rest, barring a few, are harvested at the very edge of sustainability. A dramatic die-off of pollinating insects, especially bees, threatens essential crops valued at half-a-trillion dollars annually. Twenty 10-year targets adopted in 2010 under the United Nation’s biodiversity treaty – to expand protected areas, slow species and forest loss, and reduce pollution – will, with one or two exceptions, fail badly. Based on an underlying report that draws from 400 experts and weighs in at 1,800 pages, the executive summary has to be vetted line-by-line by diplomats, with scientists at their elbow.

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“I hate the indifferents. Living means taking sides…Some whimper piously, others curse obscenely, but nobody, or very few ask themselves: If I had tried to impose my will, would this have happened?”
– Antonio Gramsci

 

 

May 062018
 
 May 6, 2018  Posted by at 9:46 am Finance Tagged with: , , , , , , , , , , ,  5 Responses »


Paul Klee In the Houses of Saint Germain 1932

 

The Rising Dollar Will Trigger Next “Systemic Banking Crisis” – Napier (ZH)
Warren Buffett Compares Bitcoin To ‘Rat Poison Squared’ (Ind.)
UK Rates Will Stay Low For A Very Long Time (G.)
Trump White House Accuses China Of ‘Orwellian Nonsense’ (G.)
US Prosecutors Allege Ex-CEO of VW Knew All About Diesel Cheating (BBC)
US Freezes Funding For Syria’s “White Helmets” (CBS)
The U.S Government Can Still Confiscate Gold (GT)
Shock Figures From Top Thinktank Reveal Extent Of NHS Crisis (G.)
Earthquakes, Lava Fissures Could Last For Months On Hawaii (R.)
CO2 Levels In Earth’s Atmosphere ‘Highest In 800,000 Years’ (Ind.)
Facing Extinction, The North Atlantic Right Whale Cannot Adapt. Can We? (G.)

 

 

Emerging markets are already hurting. Watch Turkey.

The Rising Dollar Will Trigger Next “Systemic Banking Crisis” – Napier (ZH)

Fresh off his successful call earlier this year that the US dollar would strengthen in the coming months, macroeconomic strategist and market historian Russell Napier joined MacroVoices host Erik Townsend to discuss why he favors deflation and why he has such a bullish view on the US dollar. Echoing David Tepper’s concerns that the equity highs for the year might already be in, and that a 10-year yield above 3.25% could lead to market chaos, Napier said he sees interest rates rising sharply in the coming months as the dollar strengthens – a phenomenon that will push the US back into deflation.

Napier’s thesis relies on one simple fact: With the Fed and foreign buyers pulling back, who will step into the breach and buy Treasurys? The answer is – unfortunately for anybody who borrows in dollars – nobody. In fact, the Fed is expected to allow $228 billion in Treasury debt to roll off its balance sheet this year. This “net sell” will inevitably lead to higher interest rates in the US, as well as a stronger dollar. And once the 10-year yield reaches the 4% area, signs of stress that could be a lead up to a global “credit crisis” could start to appear.

“We know what the Federal Reserve plans to sell this calendar year, $228 billion. We know what the rise in global foreign reserves is, and about 64% of that will flow into the United States’ assets. Slightly less of that will flow into Treasuries. $228 billion, at the current rate at which foreign reserves are accumulating, we are not going to see foreign central bankers offsetting the sales from the Fed. So that’s a net sell. We don’t know what that net sale will be, but it’s a net sale from central bankers at a time when the Congressional Budget Office forecasts a roughly $1 trillion fiscal deficit. This is the first time in my investment career that savers will have to fund the whole lot. And it’s perfectly normal that real rates of interest have to go higher to attract those savings.

$1 trillion is still a large amount of money. It can come from anywhere in the world. It can come from outside the United States. It can come from inside the United States. But it’s a liquidation of other assets or a rise in the savings rate, which is necessary to fund this. Either of these things is positive for the dollar.”

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“It essentially will not deliver anything other than supposed scarcity..”

Warren Buffett Compares Bitcoin To ‘Rat Poison Squared’ (Ind.)

Mega-investor Warren Buffett still is not buying into the crypto-currency craze, likening Bitcoin to “rat poison squared”. “Cryptocurrencies will come to a bad ending”, Mr Buffett told shareholders at a retreat in Omaha, Nebraska, according to the Associated Press, adding that crypto currencies have no intrinsic value. “It essentially will not deliver anything other than supposed scarcity”, added Mr Buffett, who has earned the nickname the “Oracle of Omaha” for his prescient investment decisions. The Berkshire Hathaway CEO maintained his sceptical stance even as the alternate currency’s soaring value set off a scramble last year.

In an interview with CNBC last year, he said his company did not own any cryptocurrency and was avoiding taking a position in them. “What’s going on definitely will come to a bad ending,” Mr Buffett said at the time. Other prominent economists and investors have echoed those warnings, cautioning that the frenzied speculation around crypto-currencies had the makings of a bubble. Turning to politics, Mr Buffett downplayed the risks of a trade war breaking out as a result of Donald Trump imposing tariffs on steel and aluminum, which sparked Chinese retaliation. He said it was unlikely that the two countries would “dig themselves into” a “real trade war”, suggesting the broad appeal of trade would prevent conflict.

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If the Fed raises rates, can BoE remain behind?

UK Rates Will Stay Low For A Very Long Time (G.)

Bank of England governor Mark Carney has already faced accusations of behaving like the Grand old Duke of York and he will probably do so again should Britain’s central bank opt to keep interest rates on hold. Since he joined the Bank in 2013, he has marched borrowers and savers up the hill with heavy hints about the imminent prospect of a rate rise, only to march them back down again. Last November’s restoration of 2016’s emergency rate cut hardly qualified as a major move, whatever the Bank said about its significance. Until an interview with the BBC during the IMF spring meetings a fortnight ago, it seemed to be a racing cert that the Bank was finally ready to begin the long journey back to 3% and push the base rate from 0.5% to 0.75%.

The markets were guided to expect action at a meeting of the monetary policy committee on Thursday. And it wasn’t just Carney dropping hints. Almost every member of the committee who had previously blocked a rise had gone on the record arguing that the time for a rate increase was near at hand. Speeches by external member Jan Vlieghe constituted the most startling intervention. During 2016 and much of 2017, the former hedge fund economist turned interest-rate setter was one of the most vociferous opponents of a rise. His former brethren in the Square Mile considered him an arch dove who might never vote to increase rates, such was his downbeat view of the economy’s growth potential.

Yet, towards the end of last year, he was one of the most optimistic proponents of the economy’s resilience and the likelihood of a rate rise. Just as before, a moment of central bank exuberance looks like becoming a non-event – which is strange given Vlieghe’s reasoning for backing an increase last year. Then, he said that ultra-low unemployment, steady growth and the probable end to a long period of declining real wages was enough to justify tighter monetary policy.

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Ha!

Trump White House Accuses China Of ‘Orwellian Nonsense’ (G.)

The White House on Saturday condemned Chinese efforts to control how US airlines refer to Taiwan, Hong Kong and Macao as “Orwellian nonsense”. The harshly worded statement came as a high-level trade delegation led by the Treasury secretary Steven Mnuchin returned from negotiations in China. The carriers were told to remove references on their websites or in other material that suggests Taiwan, Hong Kong and Macau are part of countries independent from China, US and airline officials said. Taiwan is China’s most sensitive territorial issue. Beijing considers the self-ruled, democratic island a wayward province. Hong Kong and Macau are former European colonies that are now part of China but run largely autonomously.

A spokesman for Airlines for America, a trade group representing United Airlines, American Airlines and other major carriers, said the group was “continuing to work with US government officials as we determine next steps”. In January, Delta Air Lines, following a demand from China over listing Taiwan and Tibet as countries on its website, apologized for making “an inadvertent error with no business or political intention” and said it had taken steps to resolve the issue. Also in January, China suspended Marriott International’s Chinese website for a week, punishing the world’s biggest hotel chain for listing Tibet, Taiwan, Hong Kong and Macau as separate countries in a customer questionnaire.

On Saturday, White House press secretary Sarah Sanders said in a statement that Donald Trump “ran against political correctness in the United States” and as president would “stand up for Americans resisting efforts by the Chinese Communist Party to impose Chinese political correctness on American companies and citizens”.

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What will Germany do?

US Prosecutors Allege Ex-CEO of VW Knew All About Diesel Cheating (BBC)

It was an “appalling” fraud that went to the very top of the company. That is the striking allegation made by US prosecutors looking into the emissions-cheating scandal at the Volkswagen Group. The indictment unsealed on Thursday claims that former CEO Martin Winterkorn was not only fully briefed about what his engineers were up to, he also authorised a continuing cover-up. These allegations have yet to be tested in a court of law. But if true, they paint a picture of extraordinary executive wrongdoing at one of the titans of German industry. Dr Winterkorn himself is unlikely ever to face trial in the US. But he remains under investigation in Germany on suspicion of deceiving investors.

The Volkswagen scandal erupted in September 2015, when the company admitted that nearly 600,000 cars sold in the US were fitted with “defeat devices” designed to circumvent emissions tests. Shortly afterwards the then head of its US operations, Michael Horn, told a congressional committee that the deception was the work of “a couple of software engineers”. We know that was far from the truth. Volkswagen has already admitted as much in an agreed “statement of facts” published last year as part of a settlement with the US Department of Justice. That document set out how Volkswagen engineers struggled to make a diesel engine which would both perform well and be capable of meeting stringent US emissions standards.

It explained how instead they designed a system to switch on emissions controls when the cars were being tested, and turn them off during normal driving. It also described how managers repeatedly sanctioned the use of this system despite objections from some employees, and encouraged engineers to hide what they were up to. The indictment against Dr Winterkorn goes considerably further – suggesting that the CEO himself was made well aware of what the engineers were doing and authorised a continued cover-up. It claims that in early 2014, engineers heard about a study commissioned by the International Council on Clean Transport, which showed that VW diesels were producing far higher emissions on the road than in official lab tests.

It says that senior managers were informed, and warned that the study might result in VW’s deception being uncovered. A memorandum was written for Dr Winterkorn explaining that the company would be unable to explain the test results to the authorities.

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No, CBS, you can’t sing the praises of these people without looking behind them.

US Freezes Funding For Syria’s “White Helmets” (CBS)

Less than two months ago the State Department hosted members of the White Helmets at Foggy Bottom. At the time, the humanitarian group was showered with praise for saving lives in Syria. “Our meetings in March were very positive. There were even remarks from senior officials about long-term commitments even into 2020. There were no suggestions whatsoever about stopping support,” Raed Saleh, the group’s leader, told CBS News. Now they are not getting any U.S funding as the State Department says the support is “under active review.” The U.S had accounted for about a third of the group’s overall funding. “This is a very worrisome development,” said an official from the White Helmets. “Ultimately, this will negatively impact the humanitarian workers ability to save lives.”

The White Helmets, formally known as the Syrian Civil Defense, are a group of 3,000 volunteer rescuers that have saved thousands of lives since the Syrian civil war began in 2011. A makeshift 911, they have run into the collapsing buildings to pull children, men and women out of danger’s way. They say they have saved more than 70,000 lives. Having not received U.S. funding in recent weeks, White Helmets are questioning what this means for the future. They have received no formal declaration from the U.S. government that the monetary assistance has come to a full halt, but the group’s people on the ground in Syria report that their funds have been cut off.

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“..gold is actually what kept the Federal Reserve solvent in 2008.”

The U.S Government Can Still Confiscate Gold (GT)

By the 1930s, the US government was facing its most severe financial crisis, and it needed gold (something of value), to stimulate the economy that was running on the fumes of fiat currency. So, it took people’s gold. It was as simple as that. Non-compliance was threatened with severe punishment. We may be facing another financial crisis, and it might be best to avoid the role of fugitive “gold hoarder.” At this point, it doesn’t make sense for the government to confiscate private gold, as a cashless society will indirectly control peoples finances. Why would the government seize gold? In 1933, under the 1913 Federal Reserve Act, the dollar had to be backed by 40 percent gold.

This would give the Federal Reserve room to print new money when needed. What’s a government to do when it needs to print money, but doesn’t have the gold reserves needed to back it up? It passes an Executive Order making gold ownership illegal but buys up the illegal gold itself. That’s what Roosevelt did. When the government continued to print more money, it declared ownership of silver illegal a year later. Soon after the government confiscated all gold, the price rose by 40 percent. As if by magic, the US government had a lot more funds than it had before. What happens is that the government buys your gold with cash, then devalues the cash and raises the value of the gold. It wins, you lose.

While the government attributes artificial value to money, it can do and does the same to the value of gold. The government currently holds 261 million ounces of gold in reserve at marked on its book at $42.22 per ounce. That’s a total value of $11 billion. Or is it? The fair market value of gold today is around $1,300 per ounce. As Jim Rickards pointed out in the New Case For Gold, gold is actually what kept the Federal Reserve solvent in 2008.

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Third world.

Shock Figures From Top Thinktank Reveal Extent Of NHS Crisis (G.)

The NHS has among the lowest per capita numbers of doctors, nurses and hospital beds in the western world, a new study of international health spending has revealed. The stark findings come from a new King’s Fund analysis of health data from 21 countries, collected by the Organisation for Economic Cooperation and Development. They reveal that only Poland has fewer doctors and nurses than the UK, while only Canada, Denmark and Sweden have fewer hospital beds, and that Britain also falls short when it comes to scanners. “If the 21 countries were a football league then the UK would be in the relegation zone in terms of the resources we put into our healthcare system, as measured by staff, equipment and beds in which to care for patients,” said Siva Anandaciva, the King’s Fund’s chief analyst.

“If you look across all these indicators – beds, staffing, scanners – the UK is consistently below the average in the resources we give the NHS relative to countries such as France and Germany. Overall, the NHS does not have the level of resources it needs to do the job we all expect it to do, given our ageing and growing population, and the OECD data confirms that,” he added. The report concludes that, given the dramatic differences between Britain and other countries: “A general picture emerges that suggests the NHS is under-resourced.”

The thinktank’s research found that the UK has the third-lowest number of doctors among the 21 nations, with just 2.8 per 1,000 people, barely half the number in Austria, which has 5.1 doctors per 1,000 of population. Similarly, the UK has the sixth-smallest number of nurses for its population: just 7.9 per 1,000 people – way behind Switzerland, which has the most: 18 nurses, more than twice as many. With hospital beds, the UK has just 2.6 for every 1,000 people, just over a third of the number in Germany, which has the most – 8.1 beds – and which places the UK 18th overall out of the 21 countries which the OECD gathered figures for. The number of hospital beds in England has halved over the last 30 years and now stands at about 100,000 ..

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How wrong can this go?

Earthquakes, Lava Fissures Could Last For Months On Hawaii (R.)

More homes on Hawaii’s Big Island were destroyed on Saturday as eruptions linked to the Kilauea volcano increased, spewing lava into residential areas and forcing nearly 2,000 people to evacuate, officials said. Scientists forecast more eruptions and more earthquakes, perhaps for months to come, after the southeast corner of the island was rocked by a 6.9 tremor on Friday, the strongest on the island since 1975. The U.S. Geological Survey (USGS) said on Saturday that several new lava fissures had opened in the Leilani Estates subdivision of Puna District, about a dozen miles (19 km) from the volcano. Not all the fissures were still active, it added.

The Hawaiian Volcano Observatory said at midday local time on Saturday that “eruptive activity is increasing and is expected to continue.” Janet Babb, a spokeswoman for the observatory, said by telephone that the eruptions could carry on “for weeks or months.” Babb said the activity since Thursday is beginning to show similarities to another event in the area in 1955 that lasted for 88 days, when far fewer people lived near the volcano.

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Rebalancing carbon: there’s too much inside the planet.

CO2 Levels In Earth’s Atmosphere ‘Highest In 800,000 Years’ (Ind.)

The concentration of carbon dioxide in the atmosphere has reached its highest level in at least 800,000 years, according to scientists. In April, CO2 concentration in the atmosphere exceeded an average of 410 parts per million (ppm) across the entire month, according to readings from the Mauna Loa Observatory in Hawaii. This is the first time in the history of the observatory’s readings that a monthly average has exceeded that level. The Scripps Institution of Oceanography said that before the Industrial Revolution, carbon dioxide levels did not exceed 300ppm in the last 800,000 years.

The Keeling Curve, which plots the concentration of carbon dioxide in the atmosphere, shows a steady rise in CO2 levels in the atmosphere for decades. Scientists have warned levels of carbon dioxide are crossing a threshold which could lead to global warming beyond the “safe” level identified by the international community, fuelling a rise in sea levels. The latest reading shows a 30 per cent increase in carbon dioxide concentration in the global atmosphere since recording began in 1958. The first measurement was recorded as 315ppm. Carbon dioxide concentration exceeded 400ppm for the first time in 2013. Prior to 1800, atmospheric CO2 averaged about 280ppm, which demonstrates the effect of manmade emissions since the industrial revolution.

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“By 1935, with as few as 60 breeding individuals left, the situation was so dire that the right whale became the first cetacean to be protected by law.”

Facing Extinction, The North Atlantic Right Whale Cannot Adapt. Can We? (G.)

As if to confound everyone, this past week Dr Charles “Stormy” Mayo and his team from the Provincetown Center for Coastal Studies reported seeing up to 150 right whales in Cape Cod Bay. Dr Mayo – who has been studying these animals for 40 years and has a scientist’s aversion to exaggeration – is stunned. “It is amazing for such a rare and utterly odd creature,” he tells me. All the more amazing since he knows this great gathering could be a final flourish. By 2040, the North Atlantic right whale may be gone. He hesitates, then uses the e-word: extinction. How can such a huge mammal simply disappear within reach of the richest and most powerful nation on earth?

Shifting food sources – due to climate change – are leading whales to areas where maritime industries are unused to them. In the past 12 months, 18 rights have died after ship strikes or entanglement in fishing gear. With as few as 430 animals left, 100 of them breeding females in a reduced gene pool, the species is unsustainable. The right whale may be the strangest beast in the ocean. Vast and rotund, its gigantic mouth is fringed with two-metre strips of baleen, once “harvested” by humans to furnish Venetian blinds and corset stays but used by the whale to strain its diet of rice-sized zooplankton from the sea.

These bizarre animals are not easily known or imagined. They live far longer than us – like its Arctic cousin, the bowhead, the right whale may reach 200, perhaps more. Individuals could be older than constitutional America. They exist beyond us in time, dimension and experience. If we lose the right whale, we lose part of our planet’s biological history. [..] By 1935, with as few as 60 breeding individuals left, the situation was so dire that the right whale became the first cetacean to be protected by law. But by the start of this century, the numbers seemed to recover. Shipping lanes were shifted and fishing industries took on board the whale’s protected status. It even got its own air exclusion zone. “Like a Hollywood star,” as John Waters quipped to me.


Eubalaena glacialis with calf

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Feb 162018
 


Paul Gauguin Yellow haystacks (Golden harvest) 1889

 

US Market Gurus Who Predicted Selloff Say Current Calm An Illusion (R.)
There Will Be No Economic Boom (Roberts)
T-Bills Flood Set to Put Upward Pressure on Short-Term Funding Costs (BBG)
“Financial Stress” Spikes – Just As The Fed Intends (WS)
Hedge Fund King Dalio Bets Big Against Europe (BBG)
Everybody’s Already Invested, So Who’s The Buyer? (ZH)
Donald Trump’s Dangerous Currency Game (Spiegel)
US Dollar Spirals Down, Hits Lowest Point Since 2014 (WS)
Home Ownership Among Britain’s Young Adults Has ‘Collapsed’ (G.)
Warren Buffett, Prime Example Of The Failure Of American Capitalism (Dayen)
Monopolies Game the System (Nation)
Greece Warns Turkey Of Non-Peaceful Response Next Time (K.)
Borneo Has Lost Half Its Orangutans This Century (Ind.)

 

 

Short is hip again.

US Market Gurus Who Predicted Selloff Say Current Calm An Illusion (R.)

You ain’t seen nothing yet. Some veteran investors who were vindicated in calling for a pullback in shares and a spike in volatility could now be cheering. Actually, they’re looking at the risks that still lie ahead in the current relative calm. The last week’s wild market swings confirmed that the market was in correction territory – falling more than 10% from its high. The falls were triggered by higher bond yields and fears of inflation but came against a backdrop of a stretched market that had taken price/earnings levels to as high as 18.9. Adding to downwards pressure was the unwinding of bets that volatility would stay low. The fall had come after a growing number of strategists and investors said a pullback was in the offing – although the consensus opinion was that the market would then start rising again. The big question is: what comes now?

“Do you honestly believe today is the bottom?” said Jeffrey Gundlach, known as Wall Street’s Bond King, last week, who had been warning for more than a year that markets were too calm. Gundlach had been particularly vocal in his warnings about the VIX, Wall Street’s “fear gauge,” which tracks the volatility implied by options on the S&P 500. The sell-off in U.S. stocks derailed some popular short volatility exchange-traded products, which contributed to more downwards pressure on the market. Gundlach in May last year warned that the VIX was “insanely low.” Hedge fund manager Douglas Kass was short SPDR S&P 500 ETF and said he “took a lot of small losses” last year but says he still sees more stress ahead. He said he is now re-shorting that ETF. Investors who bet low volatility would continue will need time to unwind their strategies, Kass said.

[..] Veteran short-seller Bill Fleckenstein, who ran a short fund but closed it in 2009, said that “last week’s action was an early indication that the end of bull market is upon us.” Fleckenstein said there was a lot of money in the market with no conviction behind it, for example, buying index funds and ETFs just “to be part of the party” which was an element of “hot money.” “Last week was just the preview to the bigger event that we’ll see this year probably,” Fleckenstein said. Fleckenstein said he is not short at the moment – although he did make “a couple of bucks” last week shorting Nasdaq futures. He said he is looking for an opportunity to get short again. He said he has “flirted with the idea of restarting a short fund”.

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The US is betting big. But don’t let that blind you to the fact that so is everyone else.

There Will Be No Economic Boom (Roberts)

Last week, Congress passed a 2-year “continuing resolution, or C.R.,” to keep the Government funded through the 2018 elections. While “fiscal conservatism” was just placed on the sacrificial alter to satisfy the “Re-election” Gods,” the bigger issue is the impact to the economy and, ultimately, the financial markets. The passage of the $400 billion C.R. has an impact that few people understand. When a C.R. is passed it keeps Government spending at the same previous baseline PLUS an 8% increase. The recent C.R. just added $200 billion per year to that baseline. This means over the next decade, the C.R. will add $2 Trillion in spending to the Federal budget. Then add to that any other spending approved such as the proposed $200 billion for an infrastructure spending bill, money for DACA/Immigration reform, or a whole host of other social welfare programs that will require additional funding.

But that is only half the problem. The recent passage of tax reform will trim roughly $2 Trillion from revenues over the next decade as well. This is easy math. Cut $2 trillion in revenue, add $2 trillion in spending, and you create a $4 trillion dollar gap in the budget. Of course, that is $4 Trillion in addition to the current run rate in spending which continues the current acceleration of the “debt problem.”

But it gets worse. As Oxford Economics reported via Zerohedge: “The tax cuts passed late last year, combined with the spending bill Congress passed last week, will push deficits sharply higher. Furthermore, Trump’s own budget anticipates that US debt will hit $30 trillion by 2028: an increase of $10 trillion.” Oxford is right. In order to “pay for” all of the proposed spending, at a time when the government will receive less revenue in the form of tax collections, the difference will be funded through debt issuance.

Simon Black recently penned an interesting note on this: “Less than two weeks ago, the United States Department of Treasury very quietly released its own internal projections for the federal government’s budget deficits over the next several years. And the numbers are pretty gruesome. In order to plug the gaps from its soaring deficits, the Treasury Department expects to borrow nearly $1 trillion this fiscal year. Then nearly $1.1 trillion next fiscal year. And up to $1.3 trillion the year after that. This means that the national debt will exceed $25 trillion by September 30, 2020.”

Of course, “fiscal responsibility” left Washington a long time ago, so, what’s another $10 Trillion at this point? While this issue is not lost on a vast majority of Americans that “choose” to pay attention, it has been quickly dismissed by much of the mainstream media, and Congressman running for re-election, by suggesting tax reform will significantly boost economic growth over the next decade. The general statement has been: “By passing much-needed tax reform, we will finally unleash the economic growth engine which will more than pay for these tax cuts in the future.”

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Nobody expects the bond vigilantes?!

T-Bills Flood Set to Put Upward Pressure on Short-Term Funding Costs (BBG)

Get ready for the deluge of Treasury bills, and the increase in short-term funding costs that’s likely to accompany it. Investors are bracing for an onslaught of T-bill supply following last week’s U.S. debt ceiling suspension. That’s already prompting them to demand higher rates from borrowers across money markets. And that’s just a result of the government replenishing its cash hoard to normal levels. The ballooning budget deficit means there’s even more to come later, and that deluge of supply could further buoy funding costs down the line, making life more expensive both for the government and companies that borrow in the short-term market. Concerns about the U.S. borrowing cap had forced the Treasury to trim the total amount of bills it had outstanding, but that’s no longer a problem and the government is now busy ramping up issuance.

Financing estimates from January show that the Treasury expects to issue $441 billion in net marketable debt in the current quarter and the bulk of that is likely to be in the short-term market. “Supply will come in waves and we’re in a very heavy wave right now,” said Mark Cabana at Bank of America. “If you take Treasury at their word that they want to issue $300 billion in bills, that’s a lot of net supply that needs to come to market.” Next week’s three- and six-month bill auctions will be the largest on record at $51 billion and $45 billion respectively, Treasury said Thursday. The four-week auction will be boosted to $55 billion next week, having already been lifted to $50 billion for the Feb. 13 sale. Auction volume at the tenor had earlier been shrunk to just $15 billion.

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Spikes but is still negative. Wait till that changes.

“Financial Stress” Spikes – Just As The Fed Intends (WS)

The weekly St. Louis Fed Financial Stress index, released today, just spiked beautifully. It had been at historic lows back in November, an expression of ultra-loose financial conditions in the US economy, dominated by risk-blind investors chasing any kind of yield with a passion, which resulted in minuscule risk premiums for investors and ultra-low borrowing costs even for even junk-rated borrows. The index ticked since then, but in the latest week, ended February 9, something happened. The index, which is made up of 18 components (seven interest rate measures, six yield spreads, and five other indices) had hit a historic low of -1.6 on November 3, 2017, even as the Fed had been raising its target range for the federal funds rate and had started the QE Unwind. It began ticking up late last year, hit -1.35 a week ago, and now spiked to -1.06.

The chart above shows the spike of the latest week in relationship to the two-year Oil Bust that saw credit freeze up for junk-rated energy companies, with the average yield of CCC-or-below-rated junk bonds soaring to over 20%. Given the size of oil-and-gas sector debt, energy credits had a large impact on the overall average. The chart also compares today’s spike to the “Taper Tantrum” in the bond market in 2014 after the Fed suggested that it might actually taper “QE Infinity,” as it had come to be called, out of existence. This caused yields and risk premiums to spike, as shown by the Financial Stress index. This time, it’s the other way around: The Fed has been raising rates like clockwork, and its QE Unwind is accelerating, but for months markets blithely ignored it. Until suddenly they didn’t.

This reaction is visible in the 10-year Treasury yield, which had been declining for much of last year, despite the Fed’s rate hikes, only to surge late in the year and so far this year. It’s also visible in the stock market, which suddenly experienced a dramatic bout of volatility and a breathless drop from record highs. And it is now visible in other measures, including junk-bond yields that suddenly began surging from historic low levels. The chart of the ICE BofAML US High Yield BB Effective Yield Index, via the St. Louis Fed, shows how the average yield of BB-rated junk bonds surged from around 4.05% last September to 4.98% now, the highest since November 20, 2016:

But a longer-term chart shows just how low the BB-yield still is compared to where it had been in the years after the Financial Crisis, and how much more of a trajectory it might have ahead:

The Financial Stress Index is designed to show a level of zero for “normal” financial conditions. When these conditions are easy and when there is less financial stress than normal, the index is negative. The index turns positive when financial conditions are tighter than normal. But at -1.06, it remains below zero. In other words, financial conditions remain extraordinarily easy. This is clear in a long-term chart of the index that barely shows the recent spike, given the magnitude of prior moves. This is precisely what the Fed wants to accomplish.

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Feels a bit like Soros vs Britain in 1992.

Hedge Fund King Dalio Bets Big Against Europe (BBG)

Ray Dalio, billionaire philosopher-king of the world’s biggest hedge fund, has a checklist to identify the best time to sell stocks: a strong economy, close to full employment and rising interest rates. That may explain why the firm he created, Bridgewater Associates, has caused a to-do the past two weeks by quickly amassing an $21.65 billion bet against Europe’s biggest companies. The firm’s total asset pool is $150 billion, according to its website. Economic conditions in Europe appear to fit Dalio’s requirements. Last year, the continent’s economy grew at the fastest pace in a decade, and ECB President Mario Draghi has indicated he’s on a slow path toward boosting rates as economic slack narrows. Factories around the world are finding it increasingly hard to keep up with demand, potentially forcing them to raise prices.

But Dalio is leading his firm down a path that few other funds care to tread. Renaissance Technologies, most recently famous for its association with Breitbart donor Robert Mercer, is only $42 million short in Europe. Two Sigma Investments is betting even less than that. Kenneth Griffin’s Citadel has less than $2 billion in European company shorts. So Dalio will rise or fall virtually on his own. “It is not unusual to see strong economies accompanied by falling stock and other asset prices, which is curious to people who wonder why stocks go down when the economy is strong and don’t understand how this dynamic works,” Dalio wrote in a LinkedIn post this week. Bridgewater’s shorting spree started last fall in Italy. With the country’s big banks accumulating billions in bad debt, Bridgewater mounted a $770 million wager against Italian financial stocks.

Saddled with non-performing loans and under constant regulatory scrutiny, they made for a juicy target. Throughout the fall and into winter the bet against Italy represented the majority of Bridgewater’s publicly disclosed short positions. The initial bet was eventually raised to encompass 18 firms and nearly $3 billion. Bridgewater had flipped its portfolio in January to turn bearish on Western Europe stocks and also started shorting Japanese equities, according to a person with knowledge of the matter. The hedge fund significantly raised its long U.S. equities exposure last month, the person added.

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“This market is nuts.”

Everybody’s Already Invested, So Who’s The Buyer? (ZH)

With stocks erasing their early-day losses and the VIX tumbling once again, CNBC – the go-to resource for retirees and other retail investors – was back to reassuring investors that this month’s explosion of volatility was just another dip deserving to be bought. But Embark Capital CIO Peter Toogood offered an important counterpoint during an appearance this morning where he warned his audience against exactly this kind of credulousness by ignoring the fundamental growth global growth story that seemingly every other portfolio manager has been relying on and instead pointing to one simple fact: “Everybody is already invested”.

But even with positioning stretched to such an exaggerated degree, that doesn’t necessarily mean a crash is right around the corner. Instead, Toogood foresees a “step bear market” that will continue until the PPT, newly reconstituted under the leadership of Jerome Powell, realizes that they must once again intervene…because with so much systemic debt and myriad other risks – like the dangerously underfunded pensions that we’ve highlighted again and again – a sustained selloff would be far too risky to countenance. “I noticed Dudley the other day say ‘this is small potatoes’ and warning investors not to worry about it. And I would accept that’s all true, if everybody wasn’t already invested. And I want to know who the marginal buyer of this story is. Everyone is in. Look at consumer sentiment surveys, loo at professional money managers, everyone is in. So who’s the buyer? It’s very 2007-2008.”

He added that hedge fund managers are now “sitting around scratching their heads” because even European high yield bonds – the debt of some of the worst companies on Earth – are yielding a staggeringly low 2%. Toogood also pointed out that stocks are breaking through important technical levels… “You’re breaking some very major levels in most markets outside of the US still, and that is very, very significant. That is the test of where you’d think a bear market is coming; I still do, just on valuation alone. I think this market is nuts,” Toogood said. Which is leaving asset managers in a bind… “It’s one of those extremely unpleasant moments when people need income but income is expensive and that’s the other problem we see … We are forced into high yield (bonds) and we don’t want to be there,” Toogood said.’

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“..our currency, but your problem..”

Donald Trump’s Dangerous Currency Game (Spiegel)

“There is no longer any doubt that the U.S. government is not only waging a currency war, but is also in the process of winning it,” Joachim Fels, chief economist at Pimco, says. Trump’s policies represent a threat to Europe’s recovery, a situation that has displeased the ECB. But there isn’t much the ECB can do about it. By pursuing economic policies that ignore the needs of America’s trading partners – an approach economists refer to as “beggar-thy-neighbor” – Trump has revisited an old American tradition. In the early 1970s, it was Treasury Secretary John Connally who raised the prospect of a budget deficit of $40 billion – a massive sum at the time – and justified it as “fiscal stimulus.” In response to concerns voiced by his European counterparts, worried as they were about the weak dollar, he responded with his legendary line that the dollar “is our currency, but your problem.”

Lloyd Bentsen, treasury secretary under Bill Clinton, informed the Japanese in 1993 that he urgently desired a stronger yen in order to stem the Asian trading partner’s high export surpluses. With “America First,” Trump has now elevated “beggar thy neighbor” to the status of administration doctrine. The first part of Trump’s economic policy agenda envisions stimulating the economy through tax cuts and public infrastructure investments. That would help American companies, and the rest of the world could also profit initially if the U.S. economy were to grow more rapidly and companies in Europe or Asia were to receive more orders. But it’s the second part of the Trump program that reveals the real strategic thrust.

During the same weak that the treasury secretary could be heard preaching the virtues of a weak dollar, the U.S. government imposed steep import tariffs on washing machines and solar cells. The combination of a weak dollar and protectionist measures are aimed at creating a competitive advantage for American companies versus their competitors from around the world. “The government clearly wants a weak dollar right now because inflation is moderate and a weaker dollar will make it easier for the manufacturing sector to grow,” says Barry Eichengreen, a professor for economics at the University of California at Berkeley.

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Europe will have to act. Simple as that.

US Dollar Spirals Down, Hits Lowest Point Since 2014 (WS)

The US dollar has dropped 2.0% in the past five days, 2.4% over the past month, 4.1% year-to-date, 5.3% over the past three months, and 9.4 % over the past 12 months, according to the WSJ Dollar Index. At 82.47, the index is at the lowest level since December 25, 2014: The index weighs the US dollar against a basket of 16 other currencies that account for about 80% of the global currency trading volume: Euro, Japanese Yen, Chinese Yuan, British Pound, Canadian Dollar, Mexican Peso, Australian Dollar, New Zealand Dollar, Hong Kong Dollar, South Korean Won, Swiss Franc, Swedish Krona, Singapore Dollar, Indian Rupee, Turkish Lira, and Russian Ruble. The currencies are weighted based on their foreign exchange trading volume.

Whatever the reasons may be for the decline of the dollar against this basket of currencies — everyone has their own theory, ranging from the much prophesied death of the dollar to Treasury Secretary Steve Mnuchin’s actively dissing the dollar at every opportunity he gets — one thing we know: The decline started in late December 2016, after the index had peaked at 93.50. And it has not abated since. With the index currently at 82.47, it has fallen nearly 12% over those 14 months. The dominant factor in the decline of the dollar index is the strength of the euro, the second largest currency. Over those 14 months, the euro, which had been given up for dead not too long ago, has surged 20% against the dollar. The decline of the dollar is another indication that markets have blown off the Fed, similar to the 10-year Treasury yield falling for much of last year, even as the Fed was raising its target range for the federal funds rate.

The Fed keeps an eye on the dollar. A weak dollar makes imports more expensive and, given the huge trade deficit of the US, adds to inflationary pressures in the US. Over the past few years, the Fed has practically been begging for more inflation. So for the Fed, which is chomping at the bit to raise rates further, the weak dollar is a welcome sight. Conversely, a surging dollar would worry the Fed. At some point it would get nervous and chime in with the chorus emanating from the Treasury Department and the White House trying to talk down the dollar. If the dollar were to surge past certain levels, and jawboning isn’t enough to knock it down, the Fed might alter its monetary policies and might back off its rate-hike strategies or it might slow down the QE Unwind.

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“For 25- to 34-year-olds earning between £22,200 and £30,600 per year, home ownership fell to just 27% in 2016 from 65% two decades ago Good luck trying to find buyers.

Home Ownership Among Britain’s Young Adults Has ‘Collapsed’ (G.)

The chances of a young adult on a middle income owning a home have more than halved in the past two decades. New research from the Institute for Fiscal Studies shows how an explosion in house prices above income growth has increasingly robbed the younger generation of the ability to buy their own home. For 25- to 34-year-olds earning between £22,200 and £30,600 per year, home ownership fell to just 27% in 2016 from 65% two decades ago. Middle income young adults born in the late 1980s are now no more likely than those lower down the pay scale to own their own home. Those born in the 1970s were almost as likely as their peers on higher wages to have bought their own home during young adulthood.

Andrew Hood, a senior research economist at the IFS, said: “Home ownership among young adults has collapsed over the past 20 years, particularly for those on middle incomes.” The IFS said young adults from wealthy backgrounds are now significantly more likely than others to own their own home. Between 2014 and 2017 roughly 30% of 25- to 34-year-olds whose parents were in lower-skilled jobs such as delivery drivers or sales assistants owned their own home, versus 43% for the children of those in higher-skilled jobs such as lawyers and teachers. The study shows the growing disparities between rich and poor, as well as young and old, across the country. It also illustrates the drop in home ownership over the past decade. While those on middle incomes have seen the largest fall in ownership rates, those in the top income bracket have been least affected.

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Who needs capitalism when you can worship the golden calf?

Long article in a new series at the Nation.

Warren Buffett, Prime Example Of The Failure Of American Capitalism (Dayen)

Warren Buffett should not be celebrated as an avatar of American capitalism; he should be decried as a prime example of its failure, a false prophet leading the nation toward more monopoly and inequality. You probably didn’t realize that the same avuncular billionaire controls such diverse companies and products as See’s Candies, Duracell batteries, Justin Boots, Benjamin Moore Paints, and World Book encyclopedias. But Buffett has transformed Berkshire Hathaway, initially a relatively small textile manufacturer, into the world’s largest non-technology company by market value. Berkshire Hathaway owns over 60 different brands outright. And through Berkshire, Buffett also invests in scores of public corporations. The conglomerate closed 2016 with over $620 billion in assets.

The money mainly comes from Berkshire’s massive insurance business, composed of the auto insurer GEICO, the global underwriter General Reinsurance Corporation, and 10 other subsidiaries. Insurance premiums don’t get immediately paid out in claims; while the cash sits, Buffett can invest it. This is known as “float,” and Berkshire Hathaway’s float has ballooned from $39 million in 1970 to approximately $113 billion as of last September. It’s a huge advantage over rival investors—effectively the world’s largest interest-free loan, helping to finance Buffett’s pursuit of monopoly. “[W]e enjoy the use of free money—and, better yet, get paid for holding it,” Buffett said in his most recent investor letter. Indeed, as a 2017 Fortune article noted, with almost $100 billion in cash at the end of that year’s second fiscal quarter, Buffett’s Berkshire Hathaway literally has more money than it knows what to do with.

The dominant narrative around Buffett is that he invests in big, blue-chip companies whose products he enjoys, like Coca-Cola or Heinz ketchup. But Buffett’s taste for junk food cannot match his hunger for monopoly, and he scours the investment landscape to satisfy it.

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Monopoly contradicts capitalism. Well, in theory, that is.

Monopolies Game the System (Nation)

More than a century ago, Elizabeth Magie developed two sets of rules for a board game that would become known as Monopoly. There’s the one we know today: You play an aspiring real-estate tycoon, buying up properties to extract ever-larger sums from your opponents; you win when everyone else is destitute. But in Magie’s version, players could agree to switch midgame to a second rule book. Instead of paying rent to a landowner, they’d send funds to a common pot. The game would be over when the poorest player doubled their capital. Magie’s goal was to show the cruelty of monopoly power and the moral superiority of progressive taxation. Her board game was a rebuke to the slumlords and corporate giants of the Gilded Age.

Today, a few corporations once again dominate sectors of our economy. In an interview with The Nation’s George Zornick, Senator Elizabeth Warren points out that two companies sell 70% of the beer in the country; four companies produce 85% of American beef; and four airlines account for 80% of domestic seats. With monopolies squeezing out the competition and underpaying workers, profits are funneled to a tiny elite. It’s no coincidence that the three richest Americans—Amazon’s Jeff Bezos, Microsoft’s Bill Gates, and Berkshire Hathaway’s Warren Buffett—are together worth slightly more than the bottom half of the entire US population.

Just as railroad monopolies once controlled the crucial infrastructure of 19th-century commerce, tech companies are trying to own the infrastructure of the 21st. As Stacy Mitchell explains in “The Empire of Everything,” Amazon is not only the leading retail platform, but it has developed a vast distribution network to handle package delivery. Amazon announced in February that it would begin testing its own delivery service, which could soon rival UPS and FedEx. It also runs more than a third of the world’s cloud-computing capacity, handling data for the likes of Netflix, Nordstrom, and The Nation. Unlike past monopolies, however, Amazon doesn’t want to dictate to the market; it seeks to replace the market entirely.

Under these conditions, small businesses and start-ups are struggling to compete. In 2017, there were approximately 7,000 store closings—more than triple the number in the prior year. And the percentage of companies in the United States that are new businesses has dropped by nearly half since 1978. In many industries, starting a new business is like playing Monopoly when all the squares have already been purchased: Everywhere you land, there’s a monopolist making demands, everything from fees to sell items on its website to the release of data with which to undercut you later.

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EU and US better act. Greece will start shooting soon. They have a formidable army.

Greece Warns Turkey Of Non-Peaceful Response Next Time (K.)

Athens toughened up its stance on Turkish action in the eastern Aegean, with the foreign minister and the government spokesman making it clear to Ankara that Greece’s response to another incident will not be peaceful. Foreign Minister Nikos Kotzias said in an interview on Alpha TV late on Thursday that the incident on Monday, when a Turkish vessel rammed a Greek one off Imia island, “touched on the red line and in some sense it overstepped it.” He went on to add that there will not be another such peaceful behavior by the Greek side should such an incident recur.

Kotzias also clarified that “Imia is Greek” and warned Ankara “you should not open a gray-zone issue, because if we do, based on international law, not only are you wrong but you will also incur losses.” Government spokesman Dimitris Tzanakopoulos echoed Kotzias on Friday morning, warning that aggression will be met with an equal response. “If there is another act of Turkish aggression on Greek territory, there will be a response and there is no other way for us,” he told Skai TV. Greece’s verbal toughening comes as the Turkish armed forces conducted an extensive war game near the Greek-Turkish land border by Evros river in Thrace, including the scenario of crossing a river to invade a neighboring country.

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Words cannot express the sadness. Once we’ve eradicated the man of the woods, man is next.

Borneo Has Lost Half Its Orangutans This Century (Ind.)

Borneo has lost more than 100,000 orangutans in the space of just 16 years as a result of hunting and habitat loss, according to a new report. Logging, mining, oil palm, paper, and linked deforestation have been blamed for the the diminishing numbers. However, researchers also found many orangutans have vanished from more intact, forested regions, suggesting that hunting and other direct conflict between orangutans and humans continues to be a chief threat to the species. The report published in the Current Biology Journal found more than 100,000 of the island’s orangutans vanished in the period of 1999 to 2015. “Orangutans are disappearing at an alarming rate,” said Emma Keller, agricultural commodities manager at the Worldwide Fund for Nature (WWF).

“Their forests homes have been lost and degraded, and hunting threatens the existence of this magnificent great ape. “Immediate action is needed to reform industries that have pushed orangutans to the brink of extinction. UK consumers can make a difference through only supporting brands and retailers that buy sustainable palm oil.” Around half of the orangutans living on the island of Borneo, the largest island in Asia, were lost as a result of changes in land cover. [..] The report comes after an orangutan was shot at least 130 times with an air gun before it died earlier in the month, according to police in Borneo.

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Jun 232017
 
 June 23, 2017  Posted by at 9:55 am Finance Tagged with: , , , , , , , , ,  3 Responses »


Fred Lyon Embarcadero lunch San Francisco 1948

 

Americans Are Dying With An Average Of $61,500 In Debt (ZH)
34 Biggest Banks in US Clear First Hurdle In Fed’s Annual Stress Tests (R.)
Credit-Card Debt Slaves Move to Top of Fed’s Bank Worries (WS)
Citizens Will Soon Turn Their Rage Towards Central Bankers (Albert Edwards)
UK Homelessness Surges 34% Under Tories Since 2010 (Ind.)
UK High Court Judges Tory Policy Causes ‘Real Misery For No Purpose’ (Ind.) /span>
Buy-to-Let Uk Property Sales Fall By Almost 50% In A Year (G.)
Canada’s Private Sector Debt Growing Faster Than Any Advanced Economy (PA)
Warren Buffett Becomes Lender Of Last Resort For Canada’s Home Capital (BBG)
EU Political Class Rides Roughshod over Citizens’ Concerns & Frustrations (DQ)
Dear Oliver: About Those Putin Interviews (RM)
Arab States Send Qatar 13 Demands To End Crisis (R.)
In Yemen’s Secret Prisons, UAE Tortures and US Interrogates

 

 

Double or nothing?!

Americans Are Dying With An Average Of $61,500 In Debt (ZH)

According to a recent study, the average total household debt in America is just over $132,500, broken down as per the chart below… and thanks to the Fed’s recent and ongoing rate increases, the repayment of said debt will become increasingly more difficult. So difficult, in fact, that most Americans will be saddled with a sizable chunk of it at the time of their death. Actually, most already are. According to December 2016 data from credit bureau Experian provided to credit.com, 73% of American consumers had outstanding debt when they were reported as dead. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875. As credit.com reports, the data is based on Experian’s FileOne database, which includes 220 million consumers.

To determine the average debt people have when they die, Experian looked at consumers who, as of October 2016, were not deceased, but then showed as deceased as of December 2016. Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by auto loans (25%), personal loans (12%) and student loans (6%). The breakdown of unpaid balances was as follows: credit cards, $4,531; auto loans, $17,111; personal loans, $14,793; and student loans, $25,391. And, as a reminder, debt doesn’t just disappear when someone dies.

What happens to that debt when you die, aside from it continuing to accrue interest until someone remembers to inform the creditors? “Debt belongs to the deceased person or that person’s estate,” said Darra L. Rayndon, an estate planning attorney with Clark Hill in Scottsdale, Arizona. If someone has enough assets to cover their debts, the creditors get paid, and beneficiaries receive whatever remains. But if there aren’t enough assets to satisfy debts, creditors lose out (they may get some, but not all, of what they’re owed). Family members do not then become responsible for the debt, as some people worry they might. That’s the general idea, but things are not always that straightforward. The type of debt you have, where you live and the value of your estate significantly affects the complexity of the situation. For example, federal student loan debt is eligible for cancellation upon a borrower’s death, but private student loan companies tend not to offer the same benefit. They can go after the borrower’s estate for payment.

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Let’s do a stress test that assumes the Fed is no longer around, see what happens.

34 Biggest Banks in US Clear First Hurdle In Fed’s Annual Stress Tests (R.)

The 34 largest U.S. banks have all cleared the first stage of an annual stress test, showing they would be able to maintain enough capital in an extreme recession to meet regulatory requirements, the Federal Reserve said on Thursday. Although the banks, including household names like JPMorgan Chase and Bank of America, would suffer $383 billion in loan losses in the Fed’s most severe scenario, their level of high-quality capital would be substantially higher than the threshold that regulators demand, and an improvement over last year’s level. “This year’s results show that, even during a severe recession, our large banks would remain well capitalized,” said Fed Governor Jerome Powell, who leads banking regulation for the central bank. “This would allow them to lend throughout the economic cycle, and support households and businesses when times are tough.”

The Fed introduced the stress tests in the wake of the financial crisis to ensure the health of the banking industry, whose ability to lend is considered crucial to the health of the economy. Since the first test was conducted in 2009, big banks have seen losses abate, loan portfolios improve and profits grow. The banks that now undergo the exam have also strengthened their balance sheets by adding more than $750 billion in top-notch capital, the Fed said. Banks and their investors have been hoping the improvements would prompt the Fed to allow them to use more capital for stock buybacks and dividends, especially as the Trump administration is seeking to relax financial regulations. Wall Street analysts and trade groups quickly cheered the results on Thursday, saying regulators should feel comfortable easing tough rules put in place since the financial crisis. “We see today’s…stress test results as a positive for Trump administration efforts to deregulate the banks,” said Jaret Seiberg, a policy analyst with Cowen & Co.

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The biggest debts are still in mortgages. Falling home prices will hurt most.

Credit-Card Debt Slaves Move to Top of Fed’s Bank Worries (WS)

The comforting news in the results from the Federal Reserve’s annual stress test is that the largest 34 bank holding companies would all survive a recession. Based on this glorious accomplishment, the clamoring has already started for regulators to allow these banks to pay bigger dividends and to blow more money on share buybacks, and for these regulators to slash regulation on these banks and make their life easier and riskier in general. We don’t want these banks to survive a recession in too good a condition apparently. And it would likely be better for Wall Street anyway if banks could lever up with risks so that a few of them would get bailed out during the next recession. Let’s remember, for the Fed’s no-holds-barred bailout-year 2009, Wall Street executives and employees were doused with record bonuses.

The Fed’s bailouts were good for them. And it has been good for them ever since. The less comforting news in the stress test is that credit card debt – generally the most expensive and risky debt for consumers – has now moved to the top of the Fed’s worry list in the “severely adverse scenario” of the stress test. The projected losses for the 34 largest banks – not counting the losses at the 4,997 smaller banks – are expected to hit $100 billion, up nearly 9% from the stress test a year ago. The projected losses rose for several reasons, including that credit card balances have grown by 5.6% from a year ago to over $1 trillion. The delinquency rate has risen to 2.4%. The Fed is also blaming looser lending standards. Sharing the top spot on the Fed’s worry list in the “severely adverse scenario” are Commercial & Industrial loans, whose balances are over twice as large, at $2.1 trillion, but whose projected losses are also pegged at $100 billion. In total, the “severely adverse scenario” sees $493 billion in losses for these 34 banks:

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“..investors, drunk with the liquor of loose money..”

Citizens Will Soon Turn Their Rage Towards Central Bankers (Albert Edwards)

Albert Edwards pwrites “Theft redux: the citizens will soon turn their rage towards Central Bankers.” The core of his argument is familiar: “While politics in the West reels from a decade of economic crisis and stagnation, asset prices continue to surge on the back of continued rapid growth in G3 QE. In an age of “radical uncertainty” how long will it be before angry citizens tire of blaming an impotent political system for their ills and turn on the main culprits for their poverty – unelected and virtually unaccountable central bankers? I expect central bank independence will be (and should be) the next casualty of the current political turmoil.” That’s just the beginning from Edwards, who appears to be getting increasingly angrier and more frustrated with a market that makes increasingly less sense: his fiery sermon continue with the following preview of the “inevitable catastrophe that lies ahead.”

“Evidence of the impact of monetary madness on assets prices is all around if we care to look. I read that a parking spot in Hong Kong was just sold for record HK$5.18 million ($664,200). What about the 3.5x oversubscribed 100 year Argentine government bond? Sure, everything has a market clearing price, even one of the most regular defaulters in history. But what concerned me most about the story was it was demand from investors (“reverse enquires”) that prompted the issue. Is it just me or can I hear echoes of the mechanics of the CDO crisis? But no one cares when the party is still raging and investors, drunk with the liquor of loose money, are blind to the inevitable catastrophe that lies ahead. There is a lot of anger out on the streets, as demonstrated most visibly in recent elections.

Even in France where investors feel comforted that a “moderate” has gained (absolute?) power, it is salutary to remember that the two establishment parties have just been decimated by a man who had never before stood for public office! This is perhaps even more radical than Trump’s anti-establishment victory under the Republican umbrella. The global political situation is incredibly fluid and unpredictable. While a furious electorate has turned its pent up anger on the establishment political parties, the target for their rage is misguided. I am not completely alone in thinking it is the unelected and virtually unaccountable central bankers who are primarily responsible for the poverty of working people and who will be ultimately held to account in the next crisis.

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In other news: ” Government-funded new social housing has fallen 97% since 2010″.

UK Homelessness Surges 34% Under Tories Since 2010 (Ind.)

The number of families being declared homeless has rocketed by more a third since the Conservatives took power in 2010, analysis of new official statistics by The Independent has revealed. Between April 2016 and March 2017, 59,100 families were declared homeless by local authorities in England – a rise of 34% on the same period in 2010-11. The statistics paint a bleak picture of the UK housing crisis and the impact a lack of decent, affordable homes is having on thousands of families. There has been a 60% increase in the number of families being housed in insecure temporary accommodation. In particular, bed and breakfast-type hotels are increasingly being used to house families for long periods of time as local councils struggle to find them proper homes to live in.

There are now 77,240 families in England currently living in temporary accommodation – up from 48,240 just six years ago. Of these, almost fourth-fifths (78%) are families with children, meaning there are currently 120,500 children living in insecure, temporary homes. Of those being housed temporarily, 6,590 households are living in B&Bs, including 3,010 families with children. Almost half have been living in this type of accommodation, which often sees families crammed into one room and forced to share limited bathroom and cooking facilities with strangers, for more than six weeks. This is illegal under the Homelessness (Suitability of Accommodation) Order 2003, which banned local authorities from housing families with children in B&Bs for more than a six-week period.

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The Tories are done. Someone should tell them.

UK High Court Judges Tory Policy Causes ‘Real Misery For No Purpose’ (Ind.)

Today, the High Court ruled that the benefits cap, one of the Tories’ flagship welfare policies, is unlawful, because it amounts to illegal discrimination against single parents with small children. It’s likely that the Government will be forced to alter or completely scrap their benefits cap, a policy that limits the total amount a household can receive in benefits to £23,000 in London and £20,000 elsewhere in the UK. High Court judge Justice Collins described the benefit cap as causing “real damage” to single parent families and said “real misery is being caused to no good purpose”. This is the fundamental truth at the heart of Tory welfare policy – misery without progress or reason.

Welfare reform as part of the coalition government’s austerity measures has driven thousands more people into poverty and in many tragic cases, some deaths occurred after individuals were declared fit to work. Austerity was not inevitable. It was an ideologically-motivated programme designed to force the poorest and most vulnerable in our society to shoulder the burden of a financial crisis that they had less than nothing to do with creating. Four claimants brought this case to court. Two of them had been made homeless as a result of domestic violence, and were trying to work as many hours as possible while taking care of children under the age of two. Imagine fleeing an abusive partner, seeking support from a domestic violence service that’s had its funding brutally slashed by the Tory government, trying to work and look after a small child, then having your benefits cut, again by the Tory government.

The claimants are not alone. The benefits cap has inflicted a massive amount of suffering, with 200,000 children from the very lowest income families affected, as their parents’ income has fallen drastically. In real terms, this means that these children’s lives have become even more difficult, and they weren’t easy to begin with. This means a colder house, less food to eat, more shame at school due to unwashed clothes, uniforms that are too small, worn-through shoes. It means stressed, unhappy and increasingly desperate parents, and in family, children can’t fail to pick up on this mood of misery. [..] In this wealthy, highly developed country, poverty is the single biggest threat to the wellbeing of children and families. Poverty affects a quarter of all children in Britain, a massive, disgraceful, inexcusable proportion. one in five parents are struggling to feed their children, and 50% of all parents living in food poverty have gone without meals in order to give their children more to eat.

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There goes the bubble. Look out below.

Buy-to-Let Uk Property Sales Fall By Almost 50% In A Year (G.)

The number of properties bought by landlords has almost halved in a year after a tax and regulatory clampdown, prompting a leading banking body to downgrade its forecasts for buy-to-let lending in 2017 and 2018. The Council of Mortgage Lenders said buy to let had had a weak start to 2017, with lending falling faster than expected as landlords withdrew from the market in response to major tax changes and tighter lending rules. The data follows a series of recent surveys and indices suggesting the housing market is running out of steam. However, the crackdown on buy to let may have helped young people trying to get a foot on the property ladder. CML said house purchase activity was being driven predominantly by first-time buyers, with their numbers up 8% in the 12 months to April.

Buy-to-let homebuying activity was “nearly half what it was a year ago” and had averaged around 6,000 purchases a month over the last 12 months, said the body, which represents banks and building societies. The number of landlord purchases involving a mortgage was 5,300 in April this year. This compared with 10,300 in February 2016 and 11,800 in July 2015. As a result, the CML has cut its forecast for buy-to-let lending from £38bn being lent in both 2017 and 2018 to £35bn in 2017 and £33bn in 2018. The organisation warned against hitting landlords with any further changes to taxation and lending rules, saying the figures “re-emphasise the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed”.

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Download report here: Addicted to Debt – Tracking Canada’s rapid accumulation of private sector debt .

Canada’s Private Sector Debt Growing Faster Than Any Advanced Economy (PA)

For the first time ever, Canada’s private sector is racking up debt faster than any other of the world’s 22 advanced economies, putting the country at risk of serious economic consequences, according to new research by the Canadian Centre for Policy Alternatives. A new report authored by CCPA Senior Economist David Macdonald reveals that Canada added $1 trillion in private sector debt over the past five years ($2016), with the corporate sector responsible for the majority of it. Economies can become dependent on debt in order to fuel economic and asset price growth. With both rapid private debt accumulation and a high private debt-to-GDP ratio, even a small change in debt growth rates, brought on by changes in interest rates for instance, could have a devastating impact on the larger economy.

“Private sector debt growth is one of the best predictors of economic crisis, and Canada is now the only advanced economy squarely in the debt ‘danger zone’ of having high private sector debt that continues to rise rapidly,” Macdonald says. The report identifies several areas of concern:
• Canada has never before led the advanced economies in private debt growth;
• The last time Canada was close to leading the world in private debt growth was the early 1990s, just as housing prices plummeted and then stagnated for a decade;
• The country’s private debt-to-GDP ratio has risen by a fifth since 2011, from 182% to 218%. The US ratio currently stands at 152%;
• The $315 billion increase in household debt since 2011 ($2016) is almost entirely attributable to the rise in mortgage debt related to rapid home prices increases;
• Corporate debt is less well studied, and rose $671 billion since 2011 ($2016), accounting for two thirds of private debt accumulation over that time;
• Corporate debt was largely spent on mergers and acquisitions as well as real estate purchases, neither of which make the country more productive.

“Canada’s economy has become addicted to binging on ever more private sector debt, and weaning us off it should be our primary public policy concern,” adds Macdonald, who recommends further study of corporate debt and consideration of a housing speculators’ tax to further reign in mortgage debt increases.

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Well, it can’t be because Buffett see a bright future in Canada’s housing market. So draw your own conclusion.

Warren Buffett Becomes Lender Of Last Resort For Canada’s Home Capital (BBG)

Warren Buffett has become the lender of last resort for Home Capital. The billionaire investor agreed to buy shares at a deep discount and provide a fresh credit line for the Canadian mortgage company, tapping a formula he used to prop up lenders from Goldman Sachs to Bank of America. Buffett’s Berkshire Hathaway Inc. will buy a 38% stake for about C$400 million ($300 million) and provide a C$2 billion credit line with an interest rate of 9% to backstop the embattled Toronto-based lender, Home Capital said late Wednesday in a statement. The interest on the one-year loan would net Berkshire at least C$180 million if it’s fully tapped.

“While the terms of the new credit line with Berkshire Hathaway remain harsh, we believe the purpose of this loan is to motivate Home Capital’s management to bolster their own funding sources,” said Hugo Chan at Kingsferry Capital in Shanghai, which owns shares in Home Capital. “This again shows Mr. Buffett’s masterful capital allocation skills,” said Chan, citing his investment motto: “be greedy when others are fearful.” The financial backing from Buffett sent the stock higher Thursday, though it comes at a cost, in keeping with his past bailouts of financial firms. Buffett has buoyed some of the biggest U.S. corporations in times of trouble, including a combined $8 billion injection to prop up Goldman Sachs and General Electric when credit markets froze during the 2008 financial crisis.

In the Home Capital deal, Buffett’s firm agreed to pay an average price of C$10 a share, a 33% discount to Wednesday’s closing price of C$14.94. Berkshire would become the largest shareholder in Home Capital, which has a market value of about C$1 billion. Home Capital surged 27% to C$19 in Toronto on Thursday. That gives Buffett a 90% return on paper for the equity investment, assuming the deal goes through.

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They always have, it’s an MO.

EU Political Class Rides Roughshod over Citizens’ Concerns & Frustrations (DQ)

Merkel has expressed a willingness to go along with two central French demands — the appointment of a Eurozone finance minister and the creation of a common budget — as long as certain conditions are met. “We can of course think about a Eurozone budget as long as it’s clear that this is really strengthening structures and achieving sensible results,” she said. [..] Back on the table is a proposal to upgrade the grossly unaccountable Luxembourg-based European Stability Mechanism (ESM) into a full-fledged European Monetary Fund. As we’ve noted before, creating a European Monetary Fund (EMF) would be an important statement of intent. If Europe’s core countries are truly set on taking the EU project to a whole new level, such as by pursuing the creation of an EU army, an EU border force (with full powers), fiscal union, and ultimately political union, some form of burden sharing will ultimately be necessary.

The establishment of a fully operational EMF could be an important move in that direction. The EMF would essentially act as a fiscal backdrop to the banking system, something the Eurozone has desperately needed ever since its creation. As Bruegel proposes, it would serve as a fiscal counterpart of the ECB to guarantee the financial stability of the euro area in the event of a sovereign or banking crisis, or a threat thereof — of which there are plenty these days, in particular emanating from Italy’s broken banking system. Naturally, the creation of an EMF would deal a further blow to the fading remnants of national sovereignty in Europe. But that’s a price that many (but certainly not all) of Europe’s elite is more than happy to pay; some would say that destroying national sovereignty was the ultimate goal of the EU all along.

In a survey of more than 10,000 EU citizens and 1,800 EU elites carried out by Chatham House, of the elites, 37% believe the EU should get more powers, 28% want to keep the status quo and 31% would prefer to return more powers to individual member countries. This enthusiasm for a more centralized, more powerful EU is not shared with equal enthusiasm by European citizens: 48% want powers returned to the individual member countries. Citizens, overall, do not feel they have benefited from European integration in the same way Europe’s elite does. Whereas 71% of elites report feeling they have gained something from the EU, the figure among the public is only 34%. Even more worrisome for national leaders, a clear majority of the public — 54% — feel that their country was a better place to live 20 years ago, before the euro existed.

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I’ve seen a few parts. Liked them quite a bit.

Dear Oliver: About Those Putin Interviews (RM)

Dear Mr. Stone: I have just finished watching all four episodes of The Putin Interviews. May I give you my critique? Overall, I felt that the series is Very Good but felt just short of Great. I will explain below what I feel could have made it Great. First, I want to tell you what I really loved about it. 1. You have an easy style. I felt as if Mr. Putin was at ease with you, and you with him. You have a warm command of the English language and can transmit your ideas into language in a very personable way — an art that is missing among so many American media people these days. I felt that you drew out a candid side of Putin, well, that is, as far as a man of his intellectual prowess and disciplined self-control will allow. 2. Best moment of the show: Sitting next to Vlad and watching Dr. Strangelove! Oh my goodness, most people would not even dream of adding such a thing to their bucket list.

3. I loved the walking tour of the President’s offices and the general background of the Kremlin architecture and decor. I pay attention to the daily, tweeted photos from the Kremlin’s official account. I have seen those desks and tables a million times in the photos. But now I have them all within a mental frame, thanks to your film. Question: I was burning to know why Vlad had a pair of scissors and multi-colored construction paper in the middle of his desk, did you happen to ask him, off-camera?

Where It Fell Short Mr. Stone, I hated that so much time was wasted talking about the contrived “Russia hacked the election” meme. Hillary might not know why she lost the election, but the rest of the nation does. When my father would get on a roll with his bad jokes, Mom would tell us kids: “Don’t encourage him.” Well, you too need to stop encouraging the MSM to keep breathing life into a dead meme.

You also wasted time re-hashing Crimea. “Read My Lips,” Vlad said, “the Crimeans ASKED, BEGGED, AND VOTED to rejoin Russia.” Good grief, when McCain’s and Nuland’s beloved neo-Nazi Svoboda party took illegal control of Ukraine, their first move was to try and make it illegal to speak Russian. Geez, half the people in Ukraine ARE Russian! Mr. Putin has exercised considerable restraint towards Ukraine.

Mr. Stone, I have been following the development of BRICS, the “Silk Road Project,” and the EEU (European Economic Union) for a half-decade now. I can’t have a conversation with my neighbors and friends about all of that here in America because not one of them has heard anything about it! You had a great opportunity to ask Mr. Putin to school us on the Sino-Russian version of a multi-polar world without war, but you totally blew it. I don’t think you ever asked Vlad about China, did you?

 

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Saudi Arabia accuses Qatar of supporting terrorism. Rich.

Arab States Send Qatar 13 Demands To End Crisis (R.)

Four Arab states boycotting Qatar over alleged support for terrorism have sent Doha a list of 13 demands including closing Al Jazeera television and reducing ties to their regional adversary Iran, an official of one of the four countries said. The demands aimed at ending the worst Gulf Arab crisis in years appear designed to quash a two decade-old foreign policy in which Qatar has punched well above its weight, striding the stage as a peace broker, often in conflicts in Muslim lands. Doha’s independent-minded approach, including a dovish line on Iran and support for Islamist groups, in particular the Muslim Brotherhood, has incensed some of its neighbors who see political Islamism as a threat to their dynastic rule.

The list, compiled by Saudi Arabia, the United Arab Emirates (UAE), Egypt and Bahrain, which cut economic, diplomatic and travel ties to Doha on June 5, also demands the closing of a Turkish military base in Qatar, the official told Reuters. Qatar must also announce it is severing ties with terrorist, ideological and sectarian organizations including the Muslim Brotherhood, Islamic State, al Qaeda, Hezbollah, and Jabhat Fateh al Sham, formerly al Qaeda’s branch in Syria, he said, and surrender all designated terrorists on its territory, The four Arab countries accuse Qatar of funding terrorism, fomenting regional instability and cozying up to revolutionary theocracy Iran. Qatar has denied the accusations.

[..] on Monday, Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said Qatar would not negotiate with the four states unless they lifted their measures against Doha. The countries give Doha 10 days to comply, failing which the list becomes “void”, the official said without elaborating, suggesting the offer to end the dispute in return for the 13 steps would no longer be on the table.

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Bunch of sicko’s.

Edward Snowden on Twitter: “Biggest @AP scoop in a long time: US government behind UAE torture in Yemen, with some reportedly grilled alive.

In Yemen’s Secret Prisons, UAE Tortures and US Interrogates

Hundreds of men swept up in the hunt for al-Qaida militants have disappeared into a secret network of prisons in southern Yemen where abuse is routine and torture extreme — including the “grill,” in which the victim is tied to a spit like a roast and spun in a circle of fire, an Associated Press investigation has found. Senior American defense officials acknowledged Wednesday that U.S. forces have been involved in interrogations of detainees in Yemen but denied any participation in or knowledge of human rights abuses. Interrogating detainees who have been abused could violate international law, which prohibits complicity in torture. The AP documented at least 18 clandestine lockups across southern Yemen run by the United Arab Emirates or by Yemeni forces created and trained by the Gulf nation, drawing on accounts from former detainees, families of prisoners, civil rights lawyers and Yemeni military officials.

All are either hidden or off limits to Yemen’s government, which has been getting Emirati help in its civil war with rebels over the last two years. The secret prisons are inside military bases, ports, an airport, private villas and even a nightclub. Some detainees have been flown to an Emirati base across the Red Sea in Eritrea, according to Yemen Interior Minister Hussein Arab and others. Several U.S. defense officials, speaking on condition of anonymity to discuss the topic, told AP that American forces do participate in interrogations of detainees at locations in Yemen, provide questions for others to ask, and receive transcripts of interrogations from Emirati allies. They said U.S. senior military leaders were aware of allegations of torture at the prisons in Yemen, looked into them, but were satisfied that there had not been any abuse when U.S. forces were present.

“We always adhere to the highest standards of personal and professional conduct,” said chief Defense Department spokeswoman Dana White when presented with AP’s findings. “We would not turn a blind eye, because we are obligated to report any violations of human rights.” In a statement to the AP, the UAE’s government denied the allegations. “There are no secret detention centers and no torture of prisoners is done during interrogations.” Inside war-torn Yemen, however, lawyers and families say nearly 2,000 men have disappeared into the clandestine prisons, a number so high that it has triggered near-weekly protests among families seeking information about missing sons, brothers and fathers.

None of the dozens of people interviewed by AP contended that American interrogators were involved in the actual abuses. Nevertheless, obtaining intelligence that may have been extracted by torture inflicted by another party would violate the International Convention Against Torture and could qualify as war crimes, said Ryan Goodman, a law professor at New York University who served as special counsel to the Defense Department until last year

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Apr 042015
 
 April 4, 2015  Posted by at 8:15 am Finance Tagged with: , , , , , , , , ,  4 Responses »


DPC Coaches at Holland House Hotel on Fifth Avenue, NY 1905

Huge Miss: +126,000 Jobs, Labor Force -631,000 in Two Months (Mish)
US Jobs Data: Winter of Discontent, Summer of Discomfort (WSJ)
Americans Not In The Labor Force Soar To Record 93.2 Million (Zero Hedge)
Michael Lewis: ‘I Knew Flash Boys Would Be A Bombshell’ (Guardian)
German Bank Files Lawsuit To Challenge ECB Supervision (WSJ)
Fannie Mae to Begin Auctioning Defaulted Home Loans to Investors (Bloomberg)
Russia Said to Plan No Aid to Greece, May Ease Curbs on Food (Bloomberg)
Saudi Arabia and Iran Vie for Regional Supremacy (Spiegel)
Russia Calls UN Security Council Session On Yemen Crisis (RT)
Donbass: ‘The War Has Not Started Yet’ (Pepe Escobar)
Warren Buffett’s Mobile Home Empire Preys On The Poor (Public Integrity)
Mediterranean Sea ‘Accumulating Zone Of Plastic Debris’ (BBC)
As Quakes Rattle Oklahoma, Fingers Point to Oil and Gas Industry (NY Times)
Half Of Urban California’s Water Is Used To Water The Grass (MarketWatch)

Not much recovery left.

Huge Miss: +126,000 Jobs, Labor Force -631,000 in Two Months (Mish)

For a huge change we see the existing pattern of a strong establishment survey but a poor household survey has been replaced by weakness all around. Last month I stated “The household survey varies more widely, and the tendency is for one to catch up to the other, over time. The question, as always, is which way?” It is still difficult to say if this is the start of a new trend, but it could be. Last month the household survey showed a gain in employment of a meager 96,000 and much of that was teen employment. This month the household survey came in at an anemic 34,000.

The labor force declined in each of the last two months. Those “not in the labor force” rose by a whopping 631,000 in the last two months. The Bloomberg Consensus jobs estimate was for 247,000 jobs, missing by a mile. In fact, the number came in lower than any estimate. The estimate range was 200,000 to 271,000. Not only that, January and February were both revised lower. The net was 69,000 lower. Economists blame the weather. Bad weather in March? And not in January and February?

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“Whichever way the economic data break in the months ahead, somebody is going to get caught badly offside.”

US Jobs Data: Winter of Discontent, Summer of Discomfort (WSJ)

Friday’s jobs numbers made the Federal Reserve’s path over the next several months clearer. Just not in a good way. The Labor Department reported that the economy added just 126,000 jobs in March, far fewer than the 247,000 economists were looking for and the smallest gain in more than a year. Worse, downward revisions to January and February reduced America’s job count by 69,000. If there was any question that the Fed would pass up on raising rates at its June meeting, it has been resolved. Indeed, amid signs that global economic weakness has begun to weigh on the U.S. job market, even the September liftoff on rates that most economists have been forecasting is looking iffy. The labor market’s weakness last month was concentrated in what are known as the goods-producing sectors: manufacturing , construction and mining and logging.

These saw a loss of 13,000 jobs, marking the worst month since July 2013. Some of that may be attributable to the cold: The number of people who said they had jobs but didn’t work because of the weather was elevated, and the goods-producing sectors are prone to such effects. But the more worrisome exposure is to weakness abroad. Struggling economies overseas have helped send oil and other commodity prices lower and the dollar higher. These are things that hurt the mining sector (which includes oil extraction) and manufacturers (which compete globally) in particular. Chances are the labor market will be able to handle these challenges. Low oil prices help America more than they hurt it and over time should add more jobs than they take away.

In the absence of the factors that weighed on it over the winter—including not just the weather but also the West Coast port dispute and companies working down inventories—the economy should improve in the spring. And that should give more impetus to hiring. But the Fed will want to be sure. That is particularly the case when, partly as a result of those same overseas factors, inflation is running well below its 2% target. The big question now is whether the Fed will gain such confidence, and raise rates, by September. Fed funds futures contracts now put nearly even odds of it foregoing an increase at that meeting. Even if a June rate rise is off the table, the market’s chronic state of uncertainty ahead of the Fed’s next move lingers. Whichever way the economic data break in the months ahead, somebody is going to get caught badly offside.

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WIth 93 million people not counted, it’s not hard to get low jobless numbers.

Americans Not In The Labor Force Soar To Record 93.2 Million (Zero Hedge)

So much for yet another “above consensus” recovery, and what’s worse it is, well, about to get even worse, because while the Fed keeps baning some illusory drum that slack in the economy is almost non-existent, the reality is that in March the number of people who dropped out of the labor force rose by yet another 277K, up 2.1 million in the past year, and has reached a record 93.175 million. Indicatively, this means that the labor force participation rate dropped once more, from 62.8% to 62.7%, a level seen back in February 1978, even as the BLS reported that the entire labor force actually declined for the second consecutive month, down almost 100K in March to 156,906.

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“People are so cynical about Wall Street they don’t believe any of it.”

Michael Lewis: ‘I Knew Flash Boys Would Be A Bombshell’ (Guardian)

Katsuyama noticed that large stock orders were being “scalped”. Moments after an order was placed, high-speed traders (our titular Flash Boys) were snapping up shares before the order could be fulfilled, using powerful algorithms and super-charged computers to force buyers to pay a higher price. The difference in cost can be counted in fractions of a penny – but on massive orders the numbers add up and the losers are the pension funds of millions of Americans. Katsuyama set up IEX, the Investors Exchange, as a market free from scalpers. While he had alerted many big investors about his concerns, he had not spoken to the media about his findings. “They were afraid that if there was a huge controversy, it would hurt their business as opposed to just quietly informing investors how badly they were getting screwed,” Lewis said.

Instead they decided to work with the author of Moneyball and Liar’s Poker to tell their story. They didn’t escape controversy. Trading floors came to a standstill in New York when Lewis and Katsuyama were confronted on CNBC, the financial news channel, by William O’Brien, president of Bats Global Markets, the second-largest stock exchange operator in the US. “Shame on both of you for falsely accusing literally thousands of people and possibly scaring millions of investors in an effort to promote a business model,” O’Brien said, accusing the pair of dishonesty and Lewis of writing a 300-page commercial for IEX. Days later, O’Brien was being hauled over the coals by regulators for claims he made on the show. Months later, he was gone. Wall Street’s fightback, however, has not stopped.

The opposition has launched what Lewis describes as “essentially a political campaign” to minimise the impact of his book and the work of IEX. Last month, the former commodities trading regulator Bart Chilton called Lewis’s assertions that the market was rigged “a big lie”. Chilton, again on CNBC, asserted high-frequency trading had contributed to making markets cheaper, faster and safer than ever before. The former boss of the Commodities Futures Trading Commission now works with the high-frequency trade association Modern Markets Initiative. He said Lewis’s claims were irresponsible and had been debunked by academic research. Visibly irritated by what he sees as a campaign to halt reform and serious discussion, Lewis said Chilton was “essentially a flack”. “He’s deceiving the public in order to make the markets less fair,” he said. “People are so cynical about Wall Street they don’t believe any of it.”

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Interesting power struggle.

German Bank Files Lawsuit To Challenge ECB Supervision (WSJ)

A small German lender has filed a lawsuit against the ECB in a bid to avoid coming under its supervision, marking the first legal challenge to the ECB’s new monitoring role. In November the ECB took over direct supervision of Europe’s 120 largest banks, assuming that responsibility from national supervisors such as Germany’s financial watchdog BaFin and the German Central Bank, or Bundesbank. The move has raised objections from some politicians and smaller banks that are concerned about the additional regulatory costs, among other issues. Development bank Landeskreditbank Baden-Württemberg filed a lawsuit with the European Court of Justice—the European Union’s highest court—to “legally challenge that it was put under direct supervision of the ECB,” the bank told the WSJ.

L-Bank, as it is known, claims ECB oversight entails significantly higher bureaucratic expenses. An ECB spokeswoman confirmed the central bank had received notice of the court case but declined to comment further. The lawsuit, filed March 12, is the most radical step by a European bank against ECB supervision, a cornerstone of the eurozone’s integration project. It highlights the headwinds the ECB is facing from some politicians and smaller lenders in Germany, Europe’s biggest economy. L-Bank said that higher costs tied to ECB supervision would undermine its ability to support local families and businesses. Instead it wants to be supervised by BaFin and the Bundesbank, which L-Bank says would be more appropriate, given its local focus.

L-Bank argues that its business model is simple and clear, while the ECB has been tasked with regulating more complex banks through a structure known as the single supervisory mechanism. Being under ECB scrutiny “goes against the guidelines of the single supervisory mechanism,” L-Bank said. The ECB is supposed to take direct responsibility for all banks whose assets either exceed €30 billion and/or make up more than 20% of their home country’s gross domestic product. In countries where banks don’t hit that threshold at least three banks will come under ECB oversight unless their assets are below €5 billion, as will any bank that has received help from one of the eurozone’s bailout funds. In addition, the ECB can claim supervisory powers over any bank that has significant operations in at least two countries.

L-Bank is one of 21 German banks under the ECB’s direct watch. It had around €70 billion in assets at the end of 2013, the most recent figures available, and recorded slightly more than €100 million in profit. In 2013, it supplied €7.4 billion in low-cost credit to support local projects, businesses and families.

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“Freddie Mac has auctioned about $2 billion in defaulted debt in three separate sales since last year.”

Fannie Mae to Begin Auctioning Defaulted Home Loans to Investors (Bloomberg)

Fannie Mae will begin bulk auctions of mortgages, including some sales targeted for non-profit groups and small investors, as the company moves to cut the number of non-performing loans on its books. “These transactions are intended to reduce the number of seriously delinquent loans that Fannie Mae owns, to help stabilize neighborhoods and to offer borrowers access to additional foreclosure prevention options,” Fannie Mae Senior Vice President Joy Cianci said in a statement Thursday. “Our goal is to market these loans to a diverse range of buyers”. The Federal Housing Finance Agency, which has overseen U.S. conservatorship of Freddie Mac and Fannie Mae since 2008, is requiring the companies to reduce the number of severely delinquent loans on their books this year.

In March, the agency released a set of new rules for the sale of troubled mortgages. Freddie Mac has auctioned about $2 billion in defaulted debt in three separate sales since last year. Fannie Mae’s first sale will happen “in the near future,” the company said. FHFA will require prospective investors to prove they’ve retained a loan servicer with a track record of handling delinquent debt, the agency said in a March 2 statement. Servicers also will have to offer aid to avoid foreclosures as a condition of sale. Demand for soured mortgages has been increasing as Wall Street firms compete to buy loans at a discount after a real-estate market rebound. Investment firms including Lone Star Funds, Bayview Asset Management and Selene Finance have been some of the biggest buyers of delinquent home loans.

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“Russia-EU relations will be discussed in light of the sanctions policy applied by the EU and the rather cold attitude toward this sanctions policy from Athens..”

Russia Said to Plan No Aid to Greece, May Ease Curbs on Food (Bloomberg)

Russia isn’t considering any financial assistance for Greece as Prime Minister Alexis Tsipras plans to visit Moscow next week, according to three Russian government officials with knowledge of the discussions. Even so, Russia is ready to discuss easing restrictions on Greek food products, which were imposed as as part of the retaliation for EU sanctions levied over the conflict in Ukraine, said two of the three officials. Russia has been building ties with European countries that may help it scuttle the sanctions. The 28-member bloc will need unanimous approval to prolong curbs targeting Russia’s financial and energy industries that expire in July. President Vladimir Putin will discuss the measures against Russia at the talks with Tsipras, according to the Kremlin.

The EU’s most-indebted state is locked in negotiations with euro-area countries and the IMF over the terms of its €240 billion rescue. The standoff, which has left Greece dependent on ECB loans, risks leading to a default within weeks and the nation’s potential exit from the euro area. “Russia-EU relations will be discussed in light of the sanctions policy applied by the EU and the rather cold attitude toward this sanctions policy from Athens,” Putin’s spokesman, Dmitry Peskov, told reporters Friday on a conference call. Putin and Tsipras will also hold talks on the economic situation in the Balkan country, Peskov said. Greece hasn’t yet asked Russia for any financial aid, he said.

Russia would consider a request from Greece if it’s made, Finance Minister Anton Siluanov said in an interview in February. Greece this week failed to win support from creditors for proposals to cut spending and receive €7 billion in bailout funds in return. Greece needs the money as government coffers empty and bills come due, such as a debt payment to the International Monetary Fund on April 9, the day after Tsipras visits Putin in Moscow. Greece is asking for money and a discount on natural gas supplies from Russia, neither of which is possible right now, one official said.

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More US induced mess.

Saudi Arabia and Iran Vie for Regional Supremacy (Spiegel)

The Saudi military coalition began its intervention in Yemen in the name of security. But after just a week, it has become clear that the top priority of the alliance is not that of creating a balance of power between the two adversarial camps in the Yemen conflict – which pits Shiite Houthi rebels, who have joined together with former Yemeni President Ali Abdullah Saleh (who was ousted in a 2011 “Arab Spring” uprising), against Saudi-backed government troops. Indeed, the conflict is more of a complicated domestic struggle than a purely sectarian fight. Still, the Saudi monarchy’s intervention is primarily aimed at its ideological rival: Iran.

At the same time, the military operation is a chance for Saudi King Salman bin Abdulaziz Al Saud to demonstrate his independence from the US – as well as to perhaps prove his country’s military leadership in the region as a complement to its longstanding economic strength. What is clear, however, is that the brewing Sunni-Shiite struggle in the Middle East is extremely dangerous. And the most recent escalation has the potential for not just destroying Yemen, but also for turning into a disaster for Saudi Arabia. It was only last fall that Riyadh badly miscalculated in Yemen by cutting off financial aid to Hadi, who has since fled his country for the Saudi capital. The Saudi monarchy believed that Hadi, a Sunni, was being far too lenient with the Shiite Houthis, which make up a third of the population of Yemen.

But Hadi had only been striving for political survival between the various fronts – a task made all the more difficult by the return of his Shiite predecessor Saleh, who was trying to regain power at the forefront of his own militia. Without support from Riyadh, Hadi didn’t have a chance. Even if the Iranians are confessional brothers to the Houthis and have allegedly supplied them with weapons, it is ex-president Saleh who has been the primary reason for their triumphant march through the country. It is an ironic development, given that Saleh, while in power, waged a campaign of his own against Houthi insurgents. Now, however, he has placed his own elite troops – which he once equipped with the help of hundreds of millions of dollars from the US – at their disposal. The troops are akin to a private army, and Saleh has a fortune of billions he can use to finance them.

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And they’re right.

Russia Calls UN Security Council Session On Yemen Crisis (RT)

As fighting in Yemen intensifies Russia has called up an emergency UN Security Council session to put on pause Saudi-led coalition airstrikes for humanitarian purposes in an effort to quell the violence that is impacting civilians. Russia insists it is necessary for the international community to discuss the establishment of regular and mandatory “humanitarian pauses” in the ongoing coalition air strikes on Yemen, Russian UN mission’s spokesman Aleksey Zaytsev told Sputnik. An extraordinary meeting is scheduled for Saturday, at 3pm GMT at the UN headquarters in NYC. A coalition of Arab states, led by Saudi Arabia, has been engaging Houthi militias from the air for over a week now, after the Yemeni President Abd Rabbuh Mansur Hadi was forced to flee the country and asked for an international intervention to reinstate his rule.

Moscow is calling for a diplomatic solution to the conflict emphasizing that foreign military intervention would only lead to more civilian deaths. On Friday, Russia’s Deputy Foreign Minister Mikhail Bogdanov met with the newly appointed Saudi ambassador, conveying the “necessity of a ceasefire” to create favorable conditions for a peaceful national dialogue. Russia has already taken steps to evacuate all of its personnel from its Yemeni consulate, which was damaged in the conflict. It has also taken an active role evacuating Russian nationals and other civilians from the country.

On Thursday Russia proposed amendments to a UN Security Council draft resolution on Yemen. The world security body “should speak in a principled manner for ending any violence…in the Yemen crisis,” Russian Foreign Minister Sergey Lavrov said, adding that a draft resolution on the crisis has already been submitted to the UNSC. Echoing Lavrov’s words, Foreign Ministry spokesman Aleksandr Lukashevich also called on immediate cessation of hostilities, adding that Russia will continue active diplomatic efforts in dealing with all Yemeni factions and Middle Eastern partners in order to restart political process. Lukashevich also called on the UN special envoy to Yemen, Jamal Benomar, to play a bigger role in the settlement of the crisis.

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“Kiev’s army, after the recent IMF loan, was allocated no less than $3.8 billion for weapons…”

Donbass: ‘The War Has Not Started Yet’ (Pepe Escobar)

Two top Cossack commanders in the People’s Republic of Donetsk and a seasoned Serbian volunteer fighter are adamant: the real war in Donbass has not even started. It’s a spectacular sunset in the People’s Republic of Donetsk and I’m standing in the Cossack ‘holy land’ – an open field in a horse-breeding farm – talking to Nikolai Korsunov, captain of the Ivan Sirko Cossack Brigade, and Roman Ivlev, founder of the Donbass Berkut Veterans Union group. Why is this Cossack ‘holy land’? They take no time to remind me of the legendary 17th century Cossack military hero Ivan Sirko, a.k.a. “The Wizard”, credited with extra-sensory powers, who won 55 battles mostly against Poles and Tatars.

Only three kilometers from where we stand a key battle at a crossroads on the ancient Silk Road called Matsapulovska Krinitsa took place, involving 3,000 Cossacks and 15,000 Tatars. Now, at the dawn of the Chinese-driven 21st century New Silk Road – which will also traverse Russia – here we are discussing the proxy war in Ukraine between the US and Russia whose ultimate objective is to disrupt the New Silk Road. Commander Korsunov leads one of the 18 Cossack brigades in Makeevka; 240 of his soldiers are now involved in the Ukrainian civil war – some of them freshly returned from the cauldron in Debaltsevo. Some were formerly part of the Ukrainian Army, some worked in the security business. Korsunov and Ivlev insist all their fighters have jobs, even if unpaid – and have joined the Donetsk People’s Republic army as volunteers. “Somehow, they manage to survive.”

What’s so special about Cossack fighters? “It’s historical – we’ve always fought to defend our lands.”Commander Korsunov was a miner, now he’s on a pension – although for obvious reasons he’s receiving nothing from Poroshenko’s Kiev set up; only support from the Berkut group, the Ministry for Youth and Sports of the People’s Republic, and humanitarian food convoys from Russia. Korsunov and Ivlev are convinced Minsk 2 will not hold; fierce fighting should resume “in a matter of weeks.” According to their best military intelligence, Kiev’s army, after the recent IMF loan, was allocated no less than $3.8 billion for weapons.

“After Odessa”, they say – a reference to the massacre of civilians in May last year – Ukraine as we know it “is finished”. So what would be the best political solution for Donbass? Their priority is “to free all Ukraine from fascism.” And after victory, referenda should be held in all regions of the country.“People should vote for what they want; whether to remain in Ukraine, whether to align with Europe, or with Russia.” This implies advancing towards Western Ukraine across hostile territory; “We’re ready for five, seven years of war, it doesn’t matter.” So even if a political solution might be possible on a distant horizon, they are preparing for a long war. The EU is “mistaken” to treat them as separatists and even terrorists. As for those elusive Russian tanks and soldiers relentlessly denounced by NATO, where are they? Hiding in the bushes? They laugh heartily – and we’re off to a countryside Cossack banquet.

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“.. loan terms that changed abruptly after they paid deposits or prepared land for their new homes; surprise fees tacked on to loans; and pressure to take on excessive payments based on false promises that they could later refinance.”

Warren Buffett’s Mobile Home Empire Preys On The Poor (Public Integrity)

The families’ dealers and lenders went by different names – Luv Homes, Clayton Homes, Vanderbilt, 21st Mortgage. Yet the disastrous loans that threaten them with homelessness or the loss of family land stem from a single company: Clayton Homes, the nation’s biggest homebuilder, which is controlled by its second-richest man – Warren Buffett. Buffett’s mobile home empire promises low-income Americans the dream of homeownership. But Clayton relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance, an investigation by The Center for Public Integrity and The Seattle Times has found.

Berkshire Hathaway, the investment conglomerate Buffett leads, bought Clayton in 2003 and spent billions building it into the mobile home industry’s biggest manufacturer and lender. Today, Clayton is a many-headed hydra with companies operating under at least 18 names, constructing nearly half of the industry’s new homes and selling them through its own retailers. It finances more mobile home purchases than any other lender by a factor of six. It also sells property insurance on them and repossesses them when borrowers fail to pay. Berkshire extracts value at every stage of the process. Clayton even builds the homes with materials — such as paint and carpeting — supplied by other Berkshire subsidiaries.

And Clayton borrows from Berkshire to make mobile home loans, paying up to an extra percentage point on top of Berkshire’s borrowing costs, money that flows directly from borrowers’ pockets. More than a dozen Clayton customers described a consistent array of deceptive practices that locked them into ruinous deals: loan terms that changed abruptly after they paid deposits or prepared land for their new homes; surprise fees tacked on to loans; and pressure to take on excessive payments based on false promises that they could later refinance. Former dealers said the company encouraged them to steer buyers to finance with Clayton’s own high-interest lenders.

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“The Mediterranean Sea represents less than 1% of the global ocean area, but is important in economic and ecological terms. It contains between 4% and 18% of all marine species..”

Mediterranean Sea ‘Accumulating Zone Of Plastic Debris’ (BBC)

Large quantities of plastic debris are building up in the Mediterranean Sea, say scientists. A survey found around one thousand tonnes of plastic floating on the surface, mainly fragments of bottles, bags and wrappings. The Mediterranean Sea’s biological richness and economic importance means plastic pollution is particularly hazardous, say Spanish researchers. Plastic has been found in the stomachs of fish, birds, turtles and whales. Very tiny pieces of plastic have also been found in oysters and mussels grown on the coasts of northern Europe. “We identify the Mediterranean Sea as a great accumulation zone of plastic debris,” said Andres Cozar of the University of Cadiz in Puerto Real, Spain, and colleagues.

“Marine plastic pollution has spread to become a problem of planetary scale after only half a century of widespread use of plastic materials, calling for urgent management strategies to address this problem.” Plastic is accumulating in the Mediterranean Sea at a similar scale to that in oceanic gyres, the rotating ocean currents in the Indian Ocean, North Atlantic, North Pacific, South Atlantic and South Pacific, the study found. A high abundance of plastic has also been found in other seas, including the Bay of Bengal, South China Sea and Barents Sea in the Arctic Ocean. Commenting on the study, published in the journal PLOS ONE, Dr David Morritt of Royal Holloway, University of London, said scientists were particularly concerned about very small pieces of plastic (less than 5mm in length), known as microplastics.

The study found more than 80% of plastic items in the Mediterranean Sea fell into this category. “These very small plastic fragments lend themselves to being swallowed by marine species, potentially releasing chemicals into the gut from the plastics,” Dr Morritt, of the School of Biological Sciences, told BBC News. “Plastic doesn’t degrade in the environment – we need to think much more carefully about how we dispose of it, recycle it, and reduce our use of it.” The Mediterranean Sea represents less than 1% of the global ocean area, but is important in economic and ecological terms. It contains between 4% and 18% of all marine species, and provides tourism and fishing income for Mediterranean countries. “Given the biological wealth and concentration of economic activities in the Mediterranean Sea, the effects of plastic pollution on marine and human life could be particularly relevant in this plastic accumulation zone,” said Dr Cozar.

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“Shutting down disposal wells and the industry they serve, he added, “will make ‘The Grapes of Wrath’ look like a cheery movie.”

As Quakes Rattle Oklahoma, Fingers Point to Oil and Gas Industry (NY Times)

From 2010 to 2013, Oklahoma oil production jumped by two-thirds and gas production rose by more than one-sixth, federal figures show. The amount of wastewater buried annually rose one-fifth, to nearly 1.1 billion barrels. And Oklahoma went from three earthquakes of magnitude 3.0 or greater to 109 — and to 585 in 2014, and to 750-plus this year, should the current pace continue. In the United States, only Alaska is shaken more. The Corporation Commission lacks explicit authority to regulate earthquake risks. So it is trying to contain the risks posed by roughly 3,200 active wastewater disposal wells using laws written to control water pollution. Last spring, the commission began trying to weed out quake risks by scrutinizing wells near larger quakes for operational problems and permit violations.

A few dozen wells made modifications; four shut down. It is now difficult to win approval for new wells near stressed faults, active seismic areas or the epicenters of previous quakes above 4.0 magnitude. Regulators significantly expanded the areas under scrutiny last month. Yet the quakes continue. Privately, some companies are cooperating with regulators and scientists by offering proprietary information about underground faults. Publicly, the industry wants Oklahomans to beware of killing the golden goose. Many in the industry were reluctant to comment for this article. But Kim Hatfield, the regulatory chairman of the Oklahoma Independent Petroleum Association and president of Crawley Petroleum, warned: “A reaction of panic is not useful.” Shutting down disposal wells and the industry they serve, he added, “will make ‘The Grapes of Wrath’ look like a cheery movie.”

The mechanics of wastewater-induced earthquakes are straightforward: Soaked with enough fluid, a layer of rock expands and gets heavier. Earthquakes can occur when the pressure from the fluid reaches a fault, either through direct contact with the soaked rock or indirectly, from the expanding rock. Seismologists have documented such quakes in Colorado, New Mexico, Arkansas, Kansas and elsewhere since the 1960s. But nowhere have they approached the number and scope of Oklahoma’s quakes, which have rocked a fifth of the state. One reason, scientists suspect, is that Oklahoma’s main waste disposal site, a bed of porous limestone thousands of feet underground, lies close to the hard, highly stressed rock containing the faults that cause quakes.

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“..while green lawns may be at risk, urban water use accounts for a minority of the state’s total water use, PPIC noted. About 80% of human water use is in agriculture.”

Half Of Urban California’s Water Is Used To Water The Grass (MarketWatch)

As California searches for ways to dramatically cut its water use, the lawn may have to go, or at least shrink. About half of water usage in the state’s urban areas goes for landscaping, said Jeffrey Mount, a senior fellow at the Public Policy Institute of California and a water expert. “We have a lot of room in the urban sector to adjust,” and the most obvious place is in landscaping. Reducing the amount of water devoted to lawns won’t have a major negative impact on the economy or on lifestyle, he said. On Wednesday, California Gov. Jerry Brown ordered statewide water reductions of 25% for the first time ever, as California’s drought worsens. Previously he had sought voluntary cuts of 20%. The State Water Resources Control Board is expected to decide on new regulations over the next month.

Brown’s announcement said campuses, golf courses, cemeteries and other large landscapes will have to make significant cuts in water use. But it did not mention residential lawns. PPIC says outdoor residential use accounts for one-third of urban water use, twice that of commercial and institutional landscapes, including golf courses and cemeteries. While homeowners may face further curbs of their water use, the state has already made strides in conserving water. Per-capita water use dropped more than 23% from 1990 to 2010, based on data compiled by the U.S. Geological Survey that is collected every five years. Some of that has come through low-flow shower heads, low-flush toilets, new standards for washing machines and dishwashers, and other water-saving technologies.

The state’s population has increased in that time, leaving overall urban water use essentially unchanged. And while green lawns may be at risk, urban water use accounts for a minority of the state’s total water use, PPIC noted. About 80% of human water use is in agriculture.

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Apr 022015
 
 April 2, 2015  Posted by at 10:05 pm Finance Tagged with: , , , , , ,  11 Responses »


Esther Bubley Passengers on Memphis-Chattanooga Greyhound bus 1943

I think I’ve never understood the American – and international – fascination with money, with gathering wealth as the no. 1 priority in one’s life. What looks even stranger to me is the idolization of people who have a lot of money. Like these people are per definition smarter or better than others. It seems obvious that most of them are probably just more ruthless, that they have less scruples, and that their conscience is less likely to get in the way of their money and power goals.

America may idolize no-one more than Warren Buffett, the man who has propelled his fund, Berkshire Hathaway, into riches once deemed unimaginable. For most people, Buffett symbolizes what is great about American society and its economic system. For me, he’s the symbol of everything that’s going wrong.

Last week, Buffett announced a plan to merge a number of ‘food’ companies in a deal he set up with Brazilian 3G Capital. For some reason, they all have German names (I’m not sure why that is or what it means, if anything): Heinz, Kraft, Oscar Mayer. Reuters last week summed up a few of the ‘foods’ involved:

His move on Wednesday to inject Velveeta cheese, Jell-O, Lunchables, Oscar Mayer wieners, and Kool-Aid into his portfolio, stuffs an already amply supplied larder. The additions came from the acquisition of Kraft Foods Group Inc by H.J. Heinz Co, which is controlled by 3G Capital and Buffett’s Berkshire Hathaway. His larder already included everything from Burger King’s Triple Whopper burgers, Coca-Cola soft drinks and Tim Horton donuts to See’s Candies and Dairy Queen icecream Blizzards, as well as such Heinz brands as Tomato Ketchup, Ore-Ida fries, bagel bites and T.G.I. Friday’s mozzarella sticks.

Isn’t it curious to see that once people have more than enough to eat, they sort of make up for that by drastically lowering the quality of their food, like there’s some sort of balance that needs to be found? Give them more than plenty, and they’ll start using it to poison themselves.

The key term here, the one that tells you where this goes awry, is what in economics is called ‘externalities’. Something large industries are very good at circumventing. The larger the are, the better they get at it. Mostly this has to do with environmental destruction as a result of resource extraction, but the razing of large swaths of natural habitat for the construction of highways and suburbs that make people use more products provided by the oil industry, is a good example too. That and the direct effect these products have on people’s physical health.

Buffett, the supposed genius, can only do these deals because nobody demands anybody to pay for the externalities that arise as a result of Warren pushing crap posing as food upon the American people. And then when he’s done getting even richer off of poisoning your kids, he’ll donate billions to their well-being.

But in a better and wiser world, Warren should pay into the health care system right now, he should pay for the obesity and diabetes costs his ventures and investments are going to cause. And he should do so in advance, not just after the fact in some warped and distorted kind of philanthropy. Warren Buffett kills American kids for profit. Huge profits.

The ballooning waistlines of America can be traced back, in a very simple and straight line, to the sorts of ‘food’ that Buffett’s new conglomerate produces. That’s where type 2 diabetes comes from. This is not some vague future scare scenario, it’s here and it’s now. As someone in a poor black community said a few years back: ‘we’re raising a generation of blind amputees’.

And it’s of course not just Buffett, the poisoning and degradation of America’s food runs across and through industries, both vertically and horizontally. The insanity of corn syrup and processed food ranges from Monsanto to Cargill to McDo’s to a zillion other companies and products. Who, as an industry, have managed to keep any responsibility, let alone litigation, at bay.

Who would even dream of taking McDonald’s to court for poisoning American kids? In the present set-up, it would be an impossible and unwinnable case. But that’s not because the accusation is absurd or even far-fetched. It’s because the narrative is that, even if it could be proven, people still have the right to choose to eat what they want.

The companies get the profits, society at large gets the damage. It’s the ultimate form of the Tragedy of the Commons. If you allow people – and companies – to dump the negative consequences, and the costs, of their undertakings on the public, they will, and they can get very rich off of that.

Yeah, Warren has Coke and Utz Potato Stix for breakfast. What a great story… But does that mean he is too thick to understand what happens in America? Does he not see the bulging waistlines? Or is his own bottom line simply that much more important? Does Warren Buffett consider his own profits way more important than the future of America’s children?

You could be forgiven for thinking so, couldn’t you? Warren Buffett is revered all over the place, but in reality, he’s the schoolbook example of everything that’s wrong with America. That whole money before and over anything else (including people’s health and well-being) mentality.

It makes people stupid, and it makes for stupid people. And sick ones, too. It’s their own choice, though, and their own responsibility, advocates of the model will say. All the industry does is help them make that choice by bombarding them with endless feel-good ads. But is that really a good idea if and when it means the world’s health care systems threaten to implode because of it?

Like many other industries, Buffett’s crap-for-food enterprise would not nearly be as profitable (probably not even viable) if it were to be charged for the damage it does to society and the people living in it. That’s what’s wrong with the current American economic model, and Warren epitomizes this.

This Tragedy of the Commons abuse is so ingrained in the economy that it’s hard to see how it can be changed. And that does not bode well for anyone except the Warren Buffetts profiteering from it.