Mar 192019
 


René Magritte The conquerer 1926

 

Boeing, FAA Under Intense Scrutiny Over 737 MAX Certification (AFP)
7 In 10 Americans Say Economy In Good Shape (CNN)
UK In Constitutional Chaos After Speaker Blocks Third Vote On Brexit Deal (G.)
Are The English Ready For Self-Government? (Fintan O’Toole)
Hardline Tory Brexiteers Threaten Strike If Brexit Delayed By A Year (Sun)
UK Students Studying Abroad Left In Limbo (G.)
Deadly Serious (Jim Kunstler)
Paris Police Chief Sacked After Riots (G.)
Merging Deutsche Bank And Commerzbank Won’t Solve Their Problems (Coppola)
China’s Banks Have a Hidden Wave of Bad Debt (Balding)
Chelsea Manning and the New Inquisition (Chris Hedges)
Bumblebee Added To The Ever-Growing List Of Endangered Species (SNR)

 

 

 

 

“Unlike France, where criminal investigations into aviation accidents seems common, it is very, very rare in the US..”

Boeing, FAA Under Intense Scrutiny Over 737 MAX Certification (AFP)

Boeing and US aviation regulators are coming under intense scrutiny over the certification of the 737 MAX aircraft after news that two recent crashes share similarities. On March 11, just a day after the Ethiopia crash left 157 dead, a grand jury in Washington issued a subpoena to at least one person involved in the plane’s certification, according to a Wall Street Journal article citing people close to the matter. The subpoena, which came from a prosecutor in the Justice Department’s criminal division, seeks documents and correspondence related to the plane, according to the report. A criminal inquiry is “an entirely new twist,” said Scott Hamilton, managing director of the Leeham Company, who recalled a probe of a 1996 ValuJet crash as the only other aviation probe that was not a civil investigation.

“Unlike France, where criminal investigations into aviation accidents seems common, it is very, very rare in the US,” Hamilton added. The Transportation Department’s inspector general also is probing the approval of the 737 MAX by the Federal Aviation Administration (FAA), The Wall Street Journal also reported. The probe is focusing on the Maneuvering Characteristics Augmentation System, or MCAS, implicated in the Lion Air crash, which authorities have said shared similarities with the latest accident. The Ethiopian Airlines crash on March 10 came less than five months after a 737 MAX 8 operated by Lion Air crashed in Indonesia, killing 189. While it may take months for definitive conclusions, Ethiopian officials said Sunday there were “clear similarities” between the two catastrophes based on information from the flight data recorder.

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Still only 19% of Democrats report an improved financial situation?!

7 In 10 Americans Say Economy In Good Shape (CNN)

Americans give the nation’s economy glowing reviews in a new CNN Poll conducted by SSRS, and Donald Trump’s approval rating may be reaping the benefits. Overall, 71% say the nation’s economy is in good shape, the highest share to say so since February 2001, and the best rating during Trump’s presidency by two points. A majority give the President positive reviews for his handling of the nation’s economy (51% approve), and his overall approval rating has ticked up to 42% in the new poll. The 51% who say they disapprove of the President’s job performance overall represent the lowest share to do so in CNN polling since the start of his presidency.

Trump’s 42% approval rating at this point in his presidency puts him near the bottom of the list of modern elected presidents, between President Bill Clinton in 1995 (44%) and President Ronald Reagan in 1983 (41%). Both were re-elected to second terms. The President’s approval ratings for other major issues have largely held steady or turned downward. On handling foreign affairs, 40% approve – the same share who said so in early February before the President’s abruptly-ended summit with North Korean leader Kim Jong Un. About 4 in 10 approve of Trump’s handling of taxes (42%), roughly the same as just before the midterm elections last year.

[..] The President’s strong reviews on the economy come as a plurality say their personal financial situation is better off today than it was three years ago — before Trump took office. About 4 in 10 (42%) say they are better off now, a similar share (41%) say they’re about the same, and 15% say they’re worse off than they were three years ago. Those results are closely tied to partisanship, with Republicans most apt to report an improved financial situation (65%), and Democrats far less so (19%).

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Because 1604.

UK In Constitutional Chaos After Speaker Blocks Third Vote On Brexit Deal (G.)

Theresa May’s government has been plunged into constitutional chaos after the Speaker blocked the prime minister from asking MPs to vote on her Brexit deal for a third time unless it had fundamentally changed.
With 11 days to go until Britain is due to leave the EU, May was forced to pull her plans for another meaningful vote because John Bercow said she could not ask MPs to pass the same deal, after they rejected it twice by huge margins. EU officials, meanwhile, were considering offering her a new date for a delayed Brexit to resolve the crisis. Quoting from the guide to parliamentary procedure, Erskine May, Bercow said the question “may not be brought forward again during the same session” and that it was a “strong and longstanding convention” dating back to 1604.

It must be “not different in terms of wording, but different in terms of substance”, he said, suggesting there must be a change in what the EU is offering. Bercow’s surprise intervention means May is likely to have to go to Thursday’s Brussels summit with a request for a long extension to article 50, which could mean the UK has to spend more than £100m on participating in European parliament elections. During the delay, parliament would have to make a decision on how to break the deadlock, potentially with a second referendum, an election or a cross-party proposal for a softer Brexit. Alternatively, government sources suggested May could negotiate a lengthy extension with the EU, with a “get-out clause” enabling it to be cut short if her Brexit deal is passed by parliament before the European parliamentary elections.

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“..the House of Commons was a Benny Hill chase on acid, running through a Salvador Dali painting in a spaceship on its way to infinity”

Are The English Ready For Self-Government? (Fintan O’Toole)

“The alleged aptitude of the English for self-government,” wrote Bernard Shaw in his preface to Androcles and the Lion, “is contradicted by every chapter of their history.” Shaw was, of course, parodying British imperialist rhetoric and its insistence that lesser peoples – including his own nation, the Irish – were not ready to govern themselves. He was being naughtily provocative, which only the most irresponsible of commentators would dare to be in these grave times. But there is nonetheless some tinge of truth in his words. Aptitude for self-government is not what comes to mind when one looks in from the outside at the goings-on in Westminster last week, when, as Tom Peck so brilliantly put it in the London Independent, “the House of Commons was a Benny Hill chase on acid, running through a Salvador Dali painting in a spaceship on its way to infinity”.

Let’s just say that if Theresa May were the head of a newly liberated African colony in the 1950s, British conservatives would have been pointing, half-ruefully, half-gleefully, in her direction and saying “See? Told you so – they just weren’t ready to rule themselves. Needed at least another generation of tutelage by the Mother Country.” There is a surreal kind of logic to this. If, as the Brexiteers do, you imagine yourself to be an oppressed colony breaking away from the German Reich aka the European Union, perhaps you do end up with a pantomime version of the travails of newly independent colonies, including the civil wars that often follow national liberation.

And without wishing to rub it in, Shaw’s quip does point up two of the deep problems that underlie, and undermine, the whole Brexit project. First, the problem of this imagined effort at self-government is the “self” bit. What is the self of the British polity? As in all nationalist revolts, the easy bit of “Them against Us” is Them: in this case the EU. The hard bit is Us. Brexit appeals to a collective British self but it is itself the most dramatic symptom of the unravelling of that very thing. The anarchy at Westminster is the political expression of anarchy in the UK, the sundering of a common sense of belonging. Brexit is a fabulous form of displacement – it acknowledges a profound and genuine unhappiness about how the British are governed but deflects it on to Europe.

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Get in line.

Hardline Tory Brexiteers Threaten Strike If Brexit Delayed By A Year (Sun)

Hardline Tory Brexiteers have threatened Theresa May they will go on strike if she carries out her vow to delay Brexit by a year. No10 on Monday set a deadline of late on Tuesday for MPs to agree the PM’s exit deal before Thursday’s European summit. But instead of buckling to the pressure, diehard Tory MP Leavers raised the stakes back on the PM with a pledge to withdraw their cooperation. As many as 20 members of the hardline European Research Group have told whips they will carry out “vote strikes” – a move that would push Mrs May’s minority government to the verge of collapse. On another dramatic day in Westminster:

Fears among Tory Brexiteers began to rise that the PM is preparing to put her Brexit deal to a second In/Out referendum rather than go ahead with a long delay, Mrs May was given a boost when ERG chairman Jacob Rees-Mogg signalled he was ready to switch his vote to support her deal, Boris Johnson was accused by his own allies of torpedoing his fading hopes of taking the Tory leadership after he vowed to block Theresa May’s Brexit deal. As Conservative tensions over Brexit reached boiling point around the PM’s ultimatum strategy, one senior Tory backbencher told The Sun: “If she tried to go ahead with a long extension, there will be vote strikes on all Government legislation.

“She will lose us, and lose us permanently if she goes ahead with this, and that has been made crystal clear to her.” Staring down Mrs May in the ultra-high stakes game of bluff, ERG member Lee Rowley added: “The Prime Minister is going to have to reflect very carefully over the next few days. “I don’t think she wants to be a PM who has failed to get a deal through, and then has to enforce a two-year extension. “That won’t look very good.”

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One of countless issues they had over 2 years to prepare for.

UK Students Studying Abroad Left In Limbo (G.)

For Alice Watkins, a Manchester University student, a year in Paris, then Madrid, as part of her degree was a dream. Now, with the turmoil of Brexit, she is preparing to arrive in France this summer with nowhere to live and no idea whether the money will still be there to support her. “It’s horrible not knowing,” Watkins says. “We’ve been told to take at least £1,200 of our own cash to cover us for the first six weeks, and that we can’t realistically sort any accommodation before we arrive. Turning up abroad with nowhere to live is a big stress.” Last Wednesday the European parliament voted to guarantee funding for UK students already studying abroad on the Erasmus+ student exchange programme, in the event of a no-deal Brexit on 29 March.

It also promised to continue supporting European students already in the UK on the scheme. But uncertainty hangs over the 17,000 British students who had planned to study in Europe under Erasmus+ from this September. A technical note, published by the government at the end of January, failed to guarantee any funding for the scheme if Britain leaves the EU with no deal. In recent weeks both Spain and Norway have advised their students planning to study in the UK to go elsewhere. [..] Vivienne Stern, director of the international arm of Universities UK, the vice-chancellors’ body, says the organisation had been under the impression that the government would create a national alternative to the Erasmus+ scheme to protect students in the event of no deal. She says, however, there is no evidence of this happening. “As we understand it, there is no money on the table for an alternative scheme, and no work is under way in the DfE to prepare one.”

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American pitchforks.

Deadly Serious (Jim Kunstler)

Last week, coincidental with the New Zealand mosque massacre, Mr. Trump said the following: “You know, the left plays a tougher game. It’s very funny. I actually think that the people on the right are tougher, but they don’t play it tougher. O.K.? I can tell you I have the support of the police, the support of the military, the support of the Bikers for Trump. I have the tough people, but they don’t play it tough — until they go to a certain point, and then it would be very bad, very bad.”

As usual, his syntax is disastrous as well as his habit of placing himself at the center of every issue. But, also as usual with Mr. Trump, and because of his filter-less tongue, he lays out matters that should be extremely troubling to all Americans: that the land is full of men with tremendous potential for violence — and most particularly men with military and paramilitary training in killing and warfare, who have, so far, barely expressed in action their discontent with the tactics of their adversaries on the Left. This Pandora’s box of calamity includes the Left’s recent campaign to denigrate men as toxic and without value, especially white men wearing their scarlet letter “P” for privilege.

The Left had better sober up and join an intelligible good faith debate about US immigration policy and the enforcement of existing laws or this will lead to exactly what Brent Tarrant laid out and what Mr. Trump maladroitly hinted at. Instead, of course, we will more likely commence another bootless campaign over guns. Here are some plain facts about that. There are already enough firearms of every sort loose in this land to commence hot civil warfare and they will not be surrendered by their owners. The horses are out of the barn on that one, even if sales of military-style weapons are outlawed. Any effort to confiscate them from people already possessing them will only provoke more overt antagonism between the two poles of American politics — and would probably lead to exactly the sort of violence that sober observers discern on the horizon.

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Basically, for not using enough violence.

Paris Police Chief Sacked After Riots (G.)

The French government has removed the Paris police chief and announced it will shut down all anti-government street protests by the gilets jaunes (yellow vests) in central parts of Paris, Bordeaux and Toulouse if violent groups are spotted in the crowds. The prime minister, Édouard Philippe, announced the hardline measures on Monday after the government admitted failures in dealing with rioting and arson in Paris this weekend. “From next Saturday, we will ban ‘yellow vest’ protests in neighbourhoods that have been the worst hit as soon as we see sign of the presence of radical groups and their intent to cause damage,” Philippe said in a televised statement. He replaced the Paris police chief, Michel Delpuech, with Didier Lallement, a colleague serving in western France.

The government was on the defensive after security forces were again unable to prevent violence, arson and looting on the Champs Élysées at the weekend. Several hundred black-clad rioters caused havoc for more than seven hours as 10,000 gilets jaunes protesters marched in the capital. More than 90 shops and businesses, including luxury stores such as Longchamp and Bulgari, were damaged and looted, and a bank and a restaurant were burnt. Since the end of December the number of protesters has fallen, but each Saturday thousands of people still take to the streets in the movement, which began as a fuel tax revolt and morphed into a protest against the government. The interior ministry has said violence at the demonstrations is carried out by rioters from far-right and far-left groups as well as anarchists.

The police have been criticised for alleged excessive use of force and weapons against protesters, and the United Nations recently called for a full investigation. Rights groups have tried to force a ban on the handheld rubber bullet launchers used by police, noting that France is one of only a handful of western countries to use them. Lawyers have said a number of people have lost eyes or hands as a result of the use of rubber-bullet launchers and explosive sting grenades. However, the French government argued that not enough force was used by police at the weekend, and urged a greater use of weapons by police.

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A $2 trillion zombie in the heart of Europe. This can blow up the ECB.

Merging Deutsche Bank And Commerzbank Won’t Solve Their Problems (Coppola)

Rumors of a potential merger between Germany’s two biggest banks have now crystallized. Deutsche Bank and Commerzbank are officially engaged in talks. Not that either bank seems enthusiastic about being dragged to the altar. The broker of this marriage appears to be the German government, which has ideas about creating a national bank large enough to compete with American investment banks. But it is not at all clear that a merger would solve the banks’ problems, let alone create a “national champion.” Both banks are zombies. Commerzbank, the smaller of the two, was bailed out after swallowing up Germany’s third largest bank, Dresdner Bank, in the 2007-8 financial crisis: the German government still holds 15% of its shares.

Despite years of “restructuring” (aka cost-cutting), Commerzbank is still struggling to deliver much in the way of returns to shareholders: return on equity for the third quarter of 2018 was a pathetic 4% and earnings per share only 60 euro cents (which is less than 1 dollar). Unsurprisingly, investors are encouraged by the merger talks: the share price rose by 6.81% today. Investors are less impressed with the merger prospects for Deutsche Bank: the share price was only up 4.15%. This might be because Deutsche Bank is in very deep trouble. Although it has now put behind it most of its litigation and conduct issues, the business has enormous structural problems. It has a very high cost/income ratio, large debts and no profitable business lines.

Since 2010 its share price has collapsed from over 76.00 to 8.00, and its market cap is now a paltry $18.35bn, the lowest it has been since the 2008 financial crisis. And after years of losses, it is still barely making a profit, though it has now restored a small dividend. Earnings per share and return on equity are both negative. Quite why the German government thinks that merging two zombie banks would create a national flag-carrier capable of competing successfully with the giant American banks is a mystery. It is surely much more likely that this merger would just create a much larger zombie.

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“..newly soured debt was coming through the front door as fast as banks could shovel it out the back.”

China’s Banks Have a Hidden Wave of Bad Debt (Balding)

China’s banks may have a flood of bad loans waiting in the wings. Not that you’d know it from looking at official levels for 2018, which suggest the problem was broadly contained. The reality is that newly soured debt was coming through the front door as fast as banks could shovel it out the back. Authorities worked hard to restrain financial-system leverage in 2018. Outstanding credit increased a relatively modest 10 percent, with growth in new loans falling 14 percent. The government accomplished this primarily by tightening restrictions on shadow banking and moving that lending into the formal banking system, which recorded a 13 percent jump in new loans last year.

To make way for that increase, and with new deposits falling 1 percent last year, banks sold a lot of nonperforming debt to asset management companies. Sales to AMCs and other disposals totaled almost 1.8 trillion yuan ($268 billion), according to a report by Jason Bedford, executive director of Asian financials research at UBS Group AG in Hong Kong. To put that in perspective, China began the year with 1.7 trillion yuan in bad loans and ended it with 2 trillion yuan. In other words, after selling roughly their entire declared stock of soured advances, lenders still closed the year with more than they started with.

This has a couple of implications. First, banks are having to dedicate more earnings to loan loss-provisions. In the first half of 2018, Industrial & Commercial Bank of China Ltd. allocated 43 percent of pre-provision profit to boosting capital reserves. At Agricultural Bank of China Ltd., impairment losses were equal to 56 percent of first-half profit, up from 41 percent a year earlier.

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Who among the two dozen Democrat candidates will stand up for her?

Chelsea Manning and the New Inquisition (Chris Hedges)

Manning has always insisted her leak of the classified documents and videos was prompted solely by her own conscience. She has refused to implicate Assange and WikiLeaks. Earlier this month, although President Barack Obama in 2010 commuted her 35-year sentence after she served seven years, she was jailed again for refusing to answer questions before a secret grand jury investigating Assange and WikiLeaks. While incarcerated previously, Manning endured long periods in solitary confinement and torture. She twice attempted to commit suicide in prison. She knows from painful experience the myriad ways the system can break you psychologically and physically. And yet she has steadfastly refused to give false testimony in court on behalf of the government.

Her moral probity and courage are perhaps the last thin line of defense for WikiLeaks and its publisher, whose health is deteriorating in the Ecuadorian Embassy in London, where he has been holed up since 2012. Manning—who was known as Bradley Manning in the Army—has undergone gender reassignment surgery and needs frequent medical monitoring. Judge Claude M. Hilton, however, dismissed a request by her lawyers for house arrest. Manning was granted immunity by prosecutors of the Eastern District of Virginia, and because she had immunity she was unable to invoke the Fifth Amendment protection against self-incrimination or to have her attorney present. The judge found her in contempt of court and sent her to a federal facility in Alexandria, Va.

Hilton, who has long been a handmaiden of the military and intelligence organs, has vowed to hold her there until she agrees to testify or until the grand jury is disbanded, which could mean 18 months or longer behind bars. Manning said any questioning of her by the grand jury is a violation of First, Fourth and Sixth Amendment rights. She said she will not cooperate with the grand jury. “All of the substantive questions pertained to my disclosures of information to the public in 2010—answers I provided in extensive testimony, during my court-martial in 2013,” she said on March 7, the day before she was jailed. “I will not comply with this, or any other grand jury,” she said later in a statement issued from jail. “Imprisoning me for my refusal to answer questions only subjects me to additional punishment for my repeatedly-stated ethical objections to the grand jury system.”

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Maybe the saddest thing is the lack of alarm.

Bumblebee Added To The Ever-Growing List Of Endangered Species (SNR)

The bumblebee has been officially added to the list of endangered species along with the gray wolf, grizzly bear, the northern spotted owl, and about 700 other extinct animal species. According to National Geographic: “The rusty-patched bumblebee (Bombus affinis), once a common sight, is “now balancing precariously on the brink of extinction,” according to the U.S. Fish and Wildlife Service. Once thriving in 28 states and the District of Columbia, but over the past two decades, the bee’s population has plummeted nearly 90 percent. There are more than 3,000 bee species in the United States, and about 40 belong to the genus Bombus—the bumblebees.” ”Advocates for the rusty-patched bumblebee’s listing are abuzz with relief, but it may be the first skirmish in a grueling conflict over the fate of the Endangered Species Act under the Trump administration.”

According to James Stranger, a research entomologist, and Bumblebee ecologist: “There are a few little spots where we know they are. But only a really few spots.” The scientific name of the bee, Bombus affinis, was given due to the red patch in its abdomen. Even though the original listing date as an endangered species was set for April 2018, it was not until now that it was listed. According to Xerces Society director of endangered species Sarah Jepsen: “We are thrilled to see one of North America’s most endangered species receive the protection it needs. Now that the Fish and Wildlife Service has listed the rusty-patched bumble bee as endangered, it stands a chance of surviving the many threats it faces — from the use of neonicotinoid pesticides to diseases.”

According to the U.S. Fish and Wildlife Service: “Bumblebees are among the most important pollinators of crops such as blueberries, cranberries, and clover, and almost the only insect pollinators of tomatoes. The economic value of pollination services provided by native insects (mostly bees) is estimated at $3 billion per year in the United States.” One of the main factors in the declining trend of its population was the human encroachment which led to the subsequent loss of their natural habitat. Therefore, this classification will protect the grasslands needed by these bees and other pollinators.

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Jul 272017
 


Hieronymus Bosch St. Jerome in Prayer 1482

 

Fed Says Balance-Sheet Unwind to Start ‘Relatively Soon’ (BBG)
Time Flies for Draghi and the Bumblebees (BBG)
The Greater Moderation (DDMB)
Thursday Is the ‘Day From Hell’ for Europe’s Stock Watchers (BBG)
Market Hype Triggers ‘New Major Warning’ Sign For Stocks (CNBC)
Financialization and Risk Asymmetry (CHS)
China’s Banks Now Stable, ‘Shadow’ Banking Less Threatening – Moody’s (CNBC)
Investor Howard Marks Says Bitcoin Is A ‘Pyramid Scheme’ (CNBC)
German Business Lobby Urges EU Action Against New US Sanctions On Russia (RT)
Macron Unleashes a Decade of Italian Anger (BBG)
Sweden Leaks Details Of Almost All Of Its Citizens (Ind.)
Armageddon Is Two and One-half Minutes Away (PCR)
Half Our Bodies’ Atoms ‘Formed Beyond The Milky Way’ (G.)

 

 

Far too much power. And then you get inane stuff like: Fed Chair Janet Yellen has allowed the labor market to strengthen .. That means exactly nothing at all.

Fed Says Balance-Sheet Unwind to Start ‘Relatively Soon’ (BBG)

Federal Reserve officials said they would begin running off their $4.5 trillion balance sheet “relatively soon” and left their benchmark policy rate unchanged as they assess progress toward their inflation goal. The start of balance-sheet normalization – possibly as soon as September – is another policy milestone in an economic recovery now in its ninth year. The Fed bought trillions of dollars of securities to lower long-term borrowing costs after cutting the main interest rate to zero in December 2008. “Near-term risks to the economic outlook appear roughly balanced,” the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington. “Household spending and business fixed investment have continued to expand.”

Fed watchers had anticipated that the inclusion of the term “relatively soon” would signal the central bank could announce the timing of the balance-sheet reduction program at its next meeting, scheduled for Sept. 19-20. U.S. stocks rose slightly and 10-year Treasury yields fell following the Fed’s statement. “I expect an announcement of the onset of the balance-sheet reduction at the conclusion of the September meeting, effective on the first of October,” Carl Tannenbaum, chief economist at Northern Trust Corp. in Chicago, said after Wednesday’s statement. U.S. central bankers have raised the benchmark policy rate four times since they began removing emergency policy in December 2015, and project another increase before the end of this year.

In June, the FOMC outlined gradually rising runoff caps for maturing Treasuries and mortgage-related securities, and said the program would start “this year.” Fed Chair Janet Yellen has allowed the labor market to strengthen while inflation has remained lower than the 2% goal of officials, with price pressures declining in recent months. The target range for the benchmark federal funds rate was held at 1% to 1.25%. The FOMC said it’s “monitoring inflation developments closely.”

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Also far too much power. It’s crazy to see the man’s babytalk endanger entire societies.

Time Flies for Draghi and the Bumblebees (BBG)

Five years ago today, Mario Draghi was talking about bumblebees. The European Central Bank president’s speech in London on July 26, 2012, became instantly famous because of his pledge to do “whatever it takes” to save the euro. But for all the power and clarity of that phrase, he started his remarks more obliquely. “The euro is like a bumblebee. This is a mystery of nature because it shouldn’t fly but instead it does. So the euro was a bumblebee that flew very well for several years. And now — and I think people ask “how come?”– probably there was something in the atmosphere, in the air, that made the bumblebee fly. Now something must have changed in the air, and we know what after the financial crisis.”

At the time, the currency bloc was being buffeted by soaring bond yields in peripheral nations as speculators bet the union’s fundamental flaws would rip it apart. Draghi’s answer was to state unequivocally that the immediate crisis fell under the ECB’s responsibility and he would deal with it. “The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” That pledge was followed by a program to buy the debt of stressed countries in return for structural reforms, and in that respect the words alone proved to be enough. Yield spreads collapsed even though the program has never been tapped.

The bumblebee metaphor tends to be forgotten, but Draghi’s point was this: even with many national governments and more than a dozen different languages dividing the labor force, the single currency can fly. He went further though, saying that it would fly better if European governments overhaul their economies and work more closely together. On that point, the ECB has less reason to be satisfied with the past five years. The institution has since become the regional banking supervisor but European-level integration has otherwise largely stalled, and Draghi has repeatedly lamented the sluggish pace of national economic reforms.

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“The last great central banker that we had in the last 110 years other than Volcker was J.P. Morgan. The difference is, when Morgan tried to contain the 1907 crisis, he wasn’t using zeros and ones of imaginary computer money; he was using his own capital.”

The Greater Moderation (DDMB)

In late June, the recently retired Robert Rodriguez, a 33-year veteran of the markets, sat down for a lengthy interview with Advisor Perspectives (linked here). Among his many accolades, Rodriguez carries the unique distinction of being crowned Morningstar Manager of the Year for his outstanding management of both equity and bond funds. He likens the current era to that of the nine years ended 1951, a period during which the Fed and Treasury held interest rates at artificially low levels to finance World War II. His main concern today is that price discovery has been so distorted by the Fed that the stage is set for a ‘perfect storm.’ His personal allocation to equities is at the lowest level since 1971. The combination of meteorological forces to bring on said storm, you ask? It may well be an act of God, an earthquake. It could just as easily be a geopolitical tremor the system cannot absorb; it’s easy enough to name a handful of potential aggressors.

Or history may simply rhyme with the unrelenting shock waves that catalyzed the subprime mortgage crisis, coupled per chance with a plain vanilla recession. We may simply and slowly wake to the realization that the assumptions we’ve used to delude ourselves into buying the most expensive credit markets in the history of mankind are built on so much quicksand. The point is panics do not randomly come to pass; they must be shocked into existence as was the case in advance of 1907 and 2007. One of Rodriguez’s observations struck a raw nerve for yours truly, who prides herself on being a reformed central banker: “The last great central banker that we had in the last 110 years other than Volcker was J.P. Morgan. The difference is, when Morgan tried to contain the 1907 crisis, he wasn’t using zeros and ones of imaginary computer money; he was using his own capital.”

It is only fair and true to honor history and add that Morgan’s efforts rescued depositors. Income inequality in the years that followed 1907 declined before resuming its ascent to its prior peak, reached at the climax of the Roaring Twenties. The Fed’s intrusions since 2007, built on the false premise of a fanciful wealth effect concocted using models that have no place in the real world, have accomplished the opposite. Income inequality has not only grown in the aftermath of The Great Financial Crisis and throughout The Greater Moderation; it has long since smashed through its former 1927 record and kept rising. The Fed’s actions have not saved the little guy; they’ve skewered him.

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Oh so busy with no price discovery.

Thursday Is the ‘Day From Hell’ for Europe’s Stock Watchers (BBG)

If you think your Thursday looks bad, spare a thought for James Edwardes Jones. The RBC analyst is bracing for what he calls the busiest earnings day he’s experienced in about 20 years covering the consumer-goods industry. Edwardes Jones plans to arrive at RBC Europe’s London offices along the River Thames about the time the world’s largest brewer, Anheuser-Busch InBev, reports results at 6 a.m. local time. Fifteen minutes later he has Nestle, followed by Danone at 6:30. Then come Diageo and British American Tobacco, along with a trading update from Britvic, all before the morning team meeting at 7:15 a.m. Next up are calls with executives of some of those companies at 8 a.m., 9:30 a.m., 1 p.m. and 2 p.m. Edwardes Jones has client notes to write before his final set of results from L’Oreal SA at 5 p.m. – 11 hours after the first batch.

Other retail or consumer-goods companies reporting Thursday include French grocer Casino, U.K. bookmaker Ladbrokes Coral and Paris-based luxury conglomerate Kering. “There has never been a day like that,” Edwardes Jones said. His recipe for getting through the day: “Maybe a quadruple espresso.” Across London’s financial district, analysts are readying themselves for what Martin Deboo at Jefferies called a “day from hell”: a bumper earnings session in which European companies worth more than $3 trillion are set to report results, according to data compiled by Bloomberg.

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Everyone still thinks they’ll be able to get out in time.

Market Hype Triggers ‘New Major Warning’ Sign For Stocks (CNBC)

With a fresh round of record-breaking highs in the stock market has come a surge in investor optimism, and that eventually could create problems. Bullishness in the most recent Investors Intelligence survey hit 60.2%, the highest level since late February. The survey comes from editors of market newsletters and thus provides a snapshot of what professional investors are thinking. Elevated levels of optimism often coincide with market dips. The last time the II survey hit this level, the S&P 500 proceeded to fall nearly 3%. John Gray, editor at II, cautions that the big spread between bulls and bears, who are at just 16.5%, is an indicator of potential danger ahead. “The latest sentiment is not encouraging for the rest of the year as markets rarely fulfill expectations,” Gray wrote.

“This is a new major warning calling for defensive measures to protect profits, renewing the same signal from earlier this year.” While there’s been plenty of talk in the market about elevated levels that could trigger a correction — or a 10% drop — II respondents don’t see it happening. Expectations for a correction dipped to 23.3% of respondents. By comparison, the correction reading was at a comparatively lofty 34% prior to the November presidential election — just before the market surged on hopes that President Donald Trump would usher in a new pro-business era in Washington. Since hitting the most recent bottom earlier in July, the market has been on what is just the latest leg higher. Defying expectations that stocks could see limited gains this year, the S&P 500 has climbed 10.6% on strength in tech, materials, health care and discretionary stocks.

Among the sampling of newsletter sentiment that II cited was a warning from Bert Dohmen’s Wellington Letter, which said the Fed could thwart the rally. “As long as Fed officials talk about hiking rates, it will enhance concerns about the Fed producing a recession,” Dohmen wrote. “We interpret each rate hike as another nail in the coffin for an economic recovery.” Ten of the last 13 Fed rate-hiking cycles ended with recession. Dohmen said that could be the case again, though he did not advocate that investors panic. “We are seeing warning signs, but not enough to run for the hills just yet. We have said for a number of months that the final phase in the bull market should be a noticeable spurt to the upside, forcing all skeptics into the market,” he wrote. “We haven’t seen that yet.”

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The opposite of skin in the game.

Financialization and Risk Asymmetry (CHS)

One of the most pernicious consequences of financialization is the shifting of risk from the top of the wealth-power pyramid to the bottom: those who benefit the most from financialization’s leveraged, speculative credit bubbles protect themselves from losses while those at the bottom of the pyramid (the bottom 99.5%) face the full fury of financialization’s formidable risk. Longtime correspondent Chad D. and I recently exchanged emails exploring how the higher debt loads and higher interest payments of financialization inhibits people at the bottom of the wealth-power pyramid (i.e. debt-serfs) from taking risks such as starting a small business. But this is only one serving of financialization’s toxic banquet of risk-related consequences.

Chad summarized how those at the apex of the wealth-power pyramid protect themselves from risk and losses. At the top levels of the pyramid, members in those groups collect way more interest than they pay out and at the very top, they get a ton of interest and pay little to none. The people at the top can take all sorts of risk, because of this dynamic and further, they also usually have a heavy influence on the financial/political machinery, so they get bailed out by taxpayers when their investments go bad. In addition, because their influence extends to the criminal justice system, they are able to commit fraud and at the same time neutralize regulators and prosecutors, thereby escaping any ramifications from their excessive risk taking and in many cases massive fraud.

As Chad observed, the wealthy own the income streams from debt (bonds, etc.), while everyone else owes the interest and principal due on debt. As this chart shows, the wealthy own business equity and financial securities and have a modest slice of debt. The bottom 90% owe most of the debt, and their primary asset is the family home– an asset that doesn’t generate income while it generates interest income for those who own the mortgage. In other words, it’s less an investment than a form of consumption– especially when the current housing bubble deflates.

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Moody’s is smoking the good stuff. What utter nonsense.

China’s Banks Now Stable, ‘Shadow’ Banking Less Threatening – Moody’s (CNBC)

Moody’s Investors Service no longer takes a negative view on China’s banking system, raising its outlook to stable on Thursday as concerns over so-called shadow banking eased. “The government’s adoption of more coordinated policy measures to curb shadow banking will help mitigate asset risks for banks, and address some key imbalances in the financial system,” Yulia Wan, a Moody’s banking analyst, said in a statement on Thursday. Shadow banking is a broad category of banking-like services from non-traditional players; it can include loans from non-financial companies as well as investment products. It is outside the bounds of normal banking regulation, so it largely goes unregulated.

Earlier this month, Moody’s had noted that actions on shadow-banking had included the central bank changing its monetary policy setting in the last quarter of 2016 to “moderate neutral” from “moderate,” which raised market funding costs and refinancing risks for banks, reducing the return from supporting long-term investments with short-term market funds. In March and April, the China Banking Regulatory Commission also requested banks test whether their interbank liabilities would exceed the regulatory ceiling at one-third of total liabilities. Moodys’ noted in the Thursday report that there were signs of declines in outstanding wealth management products issued by the mainland’s banks and fewer investments in loans and receivables among the 26 listed banks.

But it added that profit growth would be limited by continued pressure on net interest margins and slower fee-income growth on higher funding costs and stricter shadow-banking regulations. [..] “Overall delinquency rates will stabilize as corporate profit continues to recover, helped by stable and solid economic growth, steady commodity prices and a slower increase in corporate leverage,” the Moody’s statement said.

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In the present evironment, there’s no need to consider underlying value. Everything’s just a big leveraged bet on the Fed.

Investor Howard Marks Says Bitcoin Is A ‘Pyramid Scheme’ (CNBC)

Howard Marks, one of the most respected value investors out there, starkly warned his clients to avoid high-flying digital currencies. “In my view, digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it,” Marks wrote in the investor letter Wednesday. Ethereum cryptocurrency is up more than 2,300% year to date through Wednesday, while bitcoin is up nearly 160% this year, according to data from industry website CoinDesk.

The co-chairman of Oaktree Capital is famous for his prescient investment memos, which predicted the financial crisis and the dotcom bubble implosion. The manager then went on to compare cryptocurrencies to the Tulip mania of 1637, the South Sea bubble of 1720 and the internet bubble of 1999. “Serious investing consists of buying things because the price is attractive relative to intrinsic value,” he wrote. “Speculation, on the other hand, occurs when people buy something without any consideration of its underlying value or the appropriateness of its price.”

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“There are suspicions the US government is introducing the new sanctions against Russia to boost exports of American natural gas to the European market.”

German Business Lobby Urges EU Action Against New US Sanctions On Russia (RT)

A US move to expand sanctions against Russia may have an adverse impact on Europe’s energy security, hurt the German economy, and appears to favor American firms, says Volker Treier, chief economist at the German Chambers of Commerce and Industry (DIHK). Treier has urged European authorities to address the new round of anti-Russian sanctions approved by the US House of Representatives on Tuesday. “The European Commission now must make efforts to shed light on the current situation, as well as resist the exterritorial effect of new US penalties. We get the impression the US pursues their own economic interests”, he told in an interview with TASS.

“If German firms are banned from participating in gas pipeline enterprises, very important projects in the energy supply security sector can be halted. In that case, the German economy will be discernibly influenced,” Treier said. The future of the Nord Stream-2 natural gas pipeline project from Russia to Germany is of particular concern to Europeans. Roughly a third of the European Union’s natural gas supply still comes from Russia. The proposed expansion would double the existing pipeline’s capacity and make Germany EU’s main energy hub. There are suspicions the US government is introducing the new sanctions against Russia to boost exports of American natural gas to the European market.

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What is happening to Italy’s sovereignty? And what do Italians think about that?

Macron Unleashes a Decade of Italian Anger (BBG)

The 2006 World Cup final should have been a triumph for Italians, but all people remember now is the iconic French soccer captain Zinedine Zidane headbutting an opponent in the last minutes. The controversy overshadowed much of the glory for the winning team that night and the subsequent carping of French fans convinced many Italians that their bigger, richer neighbor will never give them the respect they deserve, whether the field is sports, business or politics. That resentment burst into the open on Wednesday when Finance Minister Bruno Le Maire said France is ready to nationalize the STX shipyard in Saint-Nazaire if its would-be Italian buyer Fincantieri SpA doesn’t accept his government’s conditions. Fincantieri stock plunged as much as 13% and Italian ministers erupted.

Italian Finance Minister Pier Carlo Padoan said there’s “no reason” why Fincantieri should accept only a minority stake and his colleague Carlo Calenda, in charge of economic development, told Ansa newswire that Italy is ready to walk away from the deal after Le Maire changed terms already agreed with the previous administration, citing the need to protect a key national asset from foreign influence. The Italians have struggled to accept that rationale, given STX’s previous owner was Korean. President Emmanuel Macron’s June election victory may have reinvigorated the Franco-German relationship at the heart of the European Union. But ties with Italy, the continent’s No. 3 economy, are going from bad to worse, suggesting that competition for jobs, security, and indeed glory, could quickly dampen hopes for tighter EU cooperation.

“This situation is not good for business and not good for European integration,” Alessandro Ungaro, a security and defense analyst at Rome’s Institute for International Affairs, said in a phone interview. “We were hoping for a more market-friendly and pro-European stance, but they’re rejecting a European ally and reasonable industrial project in favor of a possible nationalization.” Italian officials were already smarting when they woke up on Wednesday. The previous day Macron had snubbed their Prime Minister Paolo Gentiloni by leaving him out of peace talks in Paris with Libyan Prime Minister Fayez al-Serraj and Khalifa Haftar, leader of the country’s powerful eastern-based military force. Italy sees Libya, its former colony, as its sphere of influence. Privately many Italian officials blame French meddling for contributing to the collapse of the North African country’s institutions.

[..] On Wednesday, Italy’s front pages were filled with anger at the French. “Macron’s blitz overshadows Italy,” said La Stampa, later adding on its website, “Italy and France head for naval battle.” Il Messaggero went with “Libya deal without Italy.” In response, Gentiloni invited the Libyan leader al-Serraj to Rome and held his own press conference on television to reassert his influence. “This is getting a bit childish,” said Sofia Ventura, a professor of politics at the University of Bologna, whose father is Italian and mother is French. “The problem is individual countries are looking after their interests and not really keeping with the European spirit. Among the bigger nations, Italy is weaker, it can’t fully compete.”

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IBM doesn’t look good either, I would say. Government ministers may not have the know-how, but IBM personnel does.

Sweden Leaks Details Of Almost All Of Its Citizens (Ind.)

Sweden appears to have accidentally leaked the details of almost all of its citizens. And now it’s getting worse. The brewing scandal – based around a leak that actually happened in 2015 but only emerged last week – could see prominent members of Sweden’s government removed from their post. The leak allowed unvetted IT workers in other countries to see the details of people registered in Swedish government and police databases. It happened after the government looked to outsource data held by the Transport Agency, but did so in a way that allowed that information to be available to almost anyone, critics have claimed. The opposition is seeking to boot out the ministers of infrastructure, defence and the interior – Anna Johansson, Peter Hultqvist and Anders Ygeman, respectively – for their role in outsourcing IT-services for the Swedish Transport Agency in 2015.

The minority government has said that contract process – won by IBM Sweden – was speeded up, bypassing some laws and internal procedures in a manner that may have led to people abroad, handling servers with sensitive materials. Prime Minister Stefan Lofven said on Monday his country and its citizens were exposed to risks by potential leaks as a result of the contract. The centre right opposition Alliance, comprising the Moderate, Centre, Liberal and Christian Democrat parties, has taken aim at the three ministers. “It is obvious (they) have neglected their responsibility. They have not taken action to protect Sweden’s safety”, Centre party leader Annie Loof told a news conference.

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“America has failed itself and the world.”

Armageddon Is Two and One-half Minutes Away (PCR)

Are you ready to die? You and I are going to die and not from old age, because our fellow Americans are so stupid, ignorant, and brainwashed that they believe the lies that are leading us to our certain destruction. This is what the Atomic Scientists tell us. And they are right. Can you comprehend the absurdity? President Trump is under full-scale attack from the military/security complex, the US presstitute media, the Democratic Party, and from many Republicans, such as Republican Senator from South Carolina Lindsey Graham and Republican Senator from Arizona John McCain simply because President Trump wants to reduce the dangerous tensions between the two major nuclear powers. What explains the total lack of concern for their own lives on the part of the populations in South Carolina and Arizona who send to the Senate and keep sending to the Senate two morons determined to provoke war between the US and Russia?

It should send shivers up your spine that you can ask this same question about all 50 states, and almost all congressional districts. You can ask the same question about the bordello known as “the American media.” There will be no one alive to post or to read the headlines of the war that they are helping to promote. The United States and the rest of the world with it along with all life on earth are being sent to their graves by the total failure of American leadership. What is wrong with Americans that they cannot understand that any “leader” who provokes war with a major nuclear power should be instantly institutionalized as criminally insane? Why do Americans sit night after night in front of the TV absorbing lies that commit them beyond all doubt to their deaths? America has failed itself and the world.

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We are stardust from far away.

Half Our Bodies’ Atoms ‘Formed Beyond The Milky Way’ (G.)

Nearly half of the atoms that make up our bodies may have formed beyond the Milky Way and travelled to the solar system on intergalactic winds driven by giant exploding stars, astronomers claim. The dramatic conclusion emerges from computer simulations that reveal how galaxies grow over aeons by absorbing huge amounts of material that is blasted out of neighbouring galaxies when stars explode at the end of their lives. Powerful supernova explosions can fling trillions of tonnes of atoms into space with such ferocity that they escape their home galaxy’s gravitational pull and fall towards larger neighbours in enormous clouds that travel at hundreds of kilometres per second.

Astronomers have long known that elements forged in stars can travel from one galaxy to another, but the latest research is the first to reveal that up to half of the material in the Milky Way and similar-sized galaxies can arrive from smaller galactic neighbours. Much of the hydrogen and helium that falls into galaxies forms new stars, while heavier elements, themselves created in stars and dispersed in the violent detonations, become the raw material for building comets and asteroids, planets and life. “Science is very useful for finding our place in the universe,” said Daniel Anglés-Alcázar, an astronomer at Northwestern University in Evanston, Illinois. “In some sense we are extragalactic visitors or immigrants in what we think of as our galaxy.”

The researchers ran supercomputer simulations to watch what happened as galaxies evolved over billions of years. They noticed that as stars exploded in smaller galaxies, the blasts ejected clouds of elements that fell into neighbouring, larger galaxies. The Milky Way absorbs about one sun’s-worth of extragalactic material every year. “The surprising thing is that galactic winds contribute significantly more material than we thought,” said Anglés-Alcázar. “In terms of research in galaxy evolution, we’re very excited about these results. It’s a new mode of galaxy growth we’ve not considered before.” The simulations showed that elements carried on intergalactic winds could travel a million light years before settling in a new galaxy, according to a report in the Monthly Notices of the Royal Astronomical Society.

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Jan 252017
 
 January 25, 2017  Posted by at 11:16 am Finance Tagged with: , , , , , , , , , ,  13 Responses »


Jack Delano Family of Dennis Decosta, Portuguese Farm Security Administration client 1940

US Demoted To ‘Flawed Democracy’ (CNBC)
David Stockman: Prepare for Fiscal Bloodbath, Not Fiscal Stimulus (DR)
Donald Trump Claims ‘Environmentalism Is Out Of Control’ (Ind.)
Trump Administration Seeks To Muzzle US Agency Employees (R.)
Trump Poised To Build Wall, Ban Many Middle East Immigrants (WSJ)
Trump Pins Keystone, Dakota Pipeline Fate on Renegotiation (BBG)
Pricier Oil Means China’s Foreign Reserves Will Shrink Even Faster (BBG)
A $90 Billion Wave of Debt Shows Cracks in US Real Estate Boom (BBG)
A New Deal to Save Europe (Varoufakis)
The European New Deal (Varoufakis)
Karl Rove’s Prophecy (Unz)
Bumblebee Added to US Endangered Species List (VoA)
Half Of Families In Greece Live On Pensions (Kath.)
Cold Weather Reignites Fears For Refugees Poorly Sheltered In Greece (G.)

 

 

“..Washington can’t point fingers at President Donald Trump for the nation’s downgrade. “The U.S. has been teetering on the brink of becoming a flawed democracy for several years..”

US Demoted To ‘Flawed Democracy’ (CNBC)

The U.S. has been demoted from a full democracy to a flawed democracy for the first time, according to the Economist Intelligence Unit (EIU). Every year, the firm’s Democracy Index provides a snapshot of global democracy by scoring countries on five categories: electoral process and pluralism; civil liberties; the functioning of government; political participation; and political culture. Nations are then classified under four types of governments: full democracy, flawed democracy, hybrid regime and authoritarian regime.America’s score fell to 7.98 last year from 8.05 in 2015, below the 8.00 threshold for a full democracy, the EIU announced in a report on Wednesday. That put the world’s largest economy on the same footing as Italy, a country known for its fractious politics.

A flawed democracy is a country with free elections but weighed down by weak governance, an underdeveloped political culture and low levels of political participation, according to the EIU. Other flawed democracies in 2016 included Japan, France, Singapore, South Korea and India, the report said. However, Washington can’t point fingers at President Donald Trump for the nation’s downgrade. “The U.S. has been teetering on the brink of becoming a flawed democracy for several years, and even if there had been no presidential election in 2016, its score would have slipped below 8.00,” the report explained. Instead, dwindling trust in government, elected representatives and political parties is to blame.

“Trust in political institutions is an essential component of well-functioning democracies. Yet surveys by Pew, Gallup and other polling agencies have confirmed that public confidence in government has slumped to historic lows in the U.S. This has had a corrosive effect on the quality of democracy,” the report found. As other developed countries experience a similar trust deficit, contemporary democracy is undergoing a crisis, the EIU said. The increasing role played by non-elected technocrats, increased voter abstention and curbs on civil liberties are among the main symptoms of this global malaise, the EIU said, noting that almost half of the 167 countries covered by its index registered a decline in overall scores between 2006 and 2016.

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“The Congressional Budget Office (CBO) baseline says there will be no recession through 2026. That is 206 months. The longest one we have ever had is about 100 months, under a much better circumstance.”

David Stockman: Prepare for Fiscal Bloodbath, Not Fiscal Stimulus (DR)

“I have lots of hope and zero faith.” “Somehow the idea that Donald Trump is the second coming of Ronald Reagan has gotten in the mix. Wall Street has priced it in. It is just completely wrong.” David Stockman served within the Ronald Reagan administration as the director of the Office of Management and Budget from 1981-1985 and is a two term Congressman. Stockman is also the recent bestselling author of Trumped! His book hits at the heart of exactly what the incoming administration must do in order to correct the dangerous direction toward financial turmoil. Cavuto then pressed on fiscal stimulus and the Reagan approach, where Stockman replied, “We are not going to get big tax cuts. We are in a diametrically different position. In 1980 the public debt was $930 billion, that was 30% of GDP.

There was huge running room and an open balance sheet for the accidental Keynesian stimulus. This resulted from the tax cuts and the defense increase, along with a massive deficit.” “Ronald Reagan actually increased the public debt by $1.8 trillion, or two times more than had been generated by the first 39 presidents.” “Today we have used that all up. We are at $20 trillion of debt.” “The base case forecast is so optimistic, such a rosy scenario, that they are going to need reflow of extra economic growth to get back to where they started. The Congressional Budget Office (CBO) baseline says there will be no recession through 2026. That is 206 months. The longest one we have ever had is about 100 months, under a much better circumstance.”

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Yeah, we need more cars…

Donald Trump Claims ‘Environmentalism Is Out Of Control’ (Ind.)

President Donald Trump has claimed that “environmentalism is out of control”. Mr Trump spent the morning meeting with auto executives as part of a push to bring jobs back to the US. Mr Trump told his guests at the White House that he was looking to ease regulations to help car companies and other businesses wishing to operate in the US. Among the attendees at the breakfast meeting were Ford chief executive Mark Fields, Fiat Chrysler chairman Sergio Marchionne and General Motors chief executive Mary Barra. Mr Trump called on car firms to increase production in the United States and boost American employment, adding that he hoped to see new auto plants built in the country. “We have a very big push on to have auto plants and other plants,” Mr Trump said.

Mr Trump has repeatedly criticised companies for building cars in Mexico and elsewhere and has threatened to impose 35 per cent tariffs on imported vehicles. The President often singled out Ford’s Mexico investments for criticism during his election campaign. The gathering was the first time the CEOs of the big three car makers have met jointly with a US president since a July 2011 session with former president Barack Obama to highlight a deal to raise fuel efficiency standards to 54.5 miles per gallon by 2025. White House spokesman Sean Spicer said on the eve of the meeting that Mr Trump was looking forward to meeting the CEOs and “hearing their ideas about how we can work together to bring more jobs back to this industry”.

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This will only lead to more publicity.

Trump Administration Seeks To Muzzle US Agency Employees (R.)

U.S. President Donald Trump’s administration has moved since he took office last week to curb the flow of information from several government agencies involved in environmental issues, in actions that may have been designed to discourage dissenting views. Employees at the Environmental Protection Agency, the Interior Department, the Department of Agriculture and the Department of Health and Human Services (HHS) have seen directives from the newly minted leadership seeking to limit how they communicate to the public, according to multiple sources. The moves have reinforced concerns that Trump, a climate change doubter, could seek to sideline scientific research showing that carbon dioxide emissions from burning fossil fuels contributes to global warming, as well as the career staffers at the agencies that conduct much of this research.

All of the agencies affected by the actions have some input on issues related to the environment and have been involved in various efforts related to climate change, including effects on natural resources and human health. On Tuesday, a source at the EPA said that staff had been told by members of the Trump administration not to speak to reporters or publish any press releases or blog posts on social media. EPA staff have also been asked not to publicize any talks, conferences, or webinars that had been planned for the next 60 days, the staffer said, asking not to be named. Asked if the EPA had been gagged, White House press secretary Sean Spicer said on Tuesday: “I don’t know … we’re looking into it. … I don’t think it’s a surprise we’re going to review the policies, but I don’t have any info at this time.”

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No surprise here. That may come when these things become real.

Trump Poised To Build Wall, Ban Many Middle East Immigrants (WSJ)

President Donald Trump was set to announce plans to expedite construction of his promised wall along the Mexican border, and was preparing orders banning entry to the U.S. of people from countries deemed risky and suspending the U.S. refugee program, people familiar with the planning said. Trump planned to travel Wednesday to the Department of Homeland Security, where he said he would be announcing his border security plans. Trump has given few details about his promise for a border wall, a project that is estimated to cost at least $10 billion and possibly much more.

Congressional Republicans have been mulling appropriating funds in spending legislation that must pass by April to keep the government funded, but Trump may be able to divert funds from other projects to begin work sooner. The other executive actions on immigration were possible for later in the week. That includes a ban on entry, which was expected to include Iraq, Iran, Syria, Yemen, Somalia, Sudan and Libya, one person familiar with the planning said. During his presidential campaign, Trump initially said he would ban entry by Muslims but later modified his proposal to call for suspending visas to people from any place “where adequate screening cannot occur.”

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“White House spokesman Sean Spicer cast that possible renegotiation of the Dakota Access project as a way to address concerns by stakeholders, including the Standing Rock Sioux Tribe..”

Trump Pins Keystone, Dakota Pipeline Fate on Renegotiation (BBG)

President Donald Trump took steps to advance construction of the Keystone XL and Dakota Access oil pipelines, while demanding a renegotiation to get a better deal for the U.S. government. Trump stopped short of green lighting construction on either pipeline but put a deadline on the government’s review of TransCanada’s proposed Keystone XL to transport Alberta oil sands crude to U.S. refineries. Trump also announced policies to encourage the use of American-made products in U.S. pipeline projects and to curtail federal environmental reviews for major infrastructure projects. “If we’re going to build pipelines in the United States, the pipes should be made in the United States,” Trump said.

The moves, taken on Trump’s fourth full day in office, are a major departure from the Obama administration, which rejected the Keystone proposal in 2015 and has kept Dakota Access blocked since September. Environmentalists, concerned about climate change and damage to water and land, now face an executive branch that’s less sympathetic to their efforts. For the oil industry, it heralds more freedom to expand infrastructure and ease transportation bottlenecks. White House spokesman Sean Spicer cast that possible renegotiation of the Dakota Access project as a way to address concerns by stakeholders, including the Standing Rock Sioux Tribe, which is concerned about Native-American cultural sites and the safety of its water supply.

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As I said a while ago: throw in a major devaluation and see what you get then.

Pricier Oil Means China’s Foreign Reserves Will Shrink Even Faster (BBG)

Much focus is on how China’s capital outflows will impact the world’s biggest pile of foreign-exchange reserves, but another issue in need of attention here is the rally in crude, argues Goldman Sachs. In a country where oil prices play “a disproportionate role” in the balance of payments – and China’s crude output is forecast to fall as much as 7% this year – the commodity’s bullish outlook poses a serious threat to reserves that have already shrunk more than 20% in the past two years. “The outlook for the balance of payments has deteriorated from a year ago, because oil prices are now on an upward trajectory, which could push the current-account surplus to around $200 billion this year, down from $331 billion as recently as 2015,” Goldman analysts Robin Brooks and Michael Cahill wrote in a Jan. 23 note.

That 40% slump is part of the picture for reserves, which contracted to $3.01 trillion at the end of 2016 from a record $3.99 trillion in mid-2014. A stronger dollar will also drive outflows. Goldman estimates the greenback will strengthen 15% by the end of 2019 against its major developed-market peers, so China is likely to keep weakening its currency fixing to maintain stability. The analysts reckon this could trigger a renewed pick-up in capital flight, which abated to $532 billion in 2016 from $736 billion in 2015. China even registered net inflows via its capital and financial accounts in December for the first time for 1 1/2 years.

Still, Goldman sees capital outflows slowing this year to $500 billion, and it expects reserve losses to accelerate to $394 billion from $369 billion in 2016 because the deterioration in the current account, led by surging oil prices, is “so sizable.”

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Like this: “Extremely low interest rates over the last four or five years have forgiven a lot of sins.”

A $90 Billion Wave of Debt Shows Cracks in US Real Estate Boom (BBG)

A $90 billion wave of maturing commercial mortgages, leftover debt from the 2007 lending boom, is laying bare the weak links in the U.S. real estate market. It’s getting harder for landlords who rely on borrowed cash to find new loans to pay off the old ones, leading to forecasts for higher delinquencies. Lenders have gotten choosier about which buildings they’ll fund, concerned about overheated prices for properties from hotels to shopping malls, and record values for office buildings in cities such as New York. Rising interest rates and regulatory constraints for banks also are increasing the odds that borrowers will come up short when it’s time to refinance. “There are a lot more problem loans out there than people think,” said Ray Potter, founder of R3 Funding, which arranges financing for landlords and investors. “We’re not going to see a huge crash, but there will be more losses than people are expecting.”

The winners and losers of a lopsided real estate recovery will be cemented as the last vestiges of pre-crisis debt clear the system. While Manhattan skyscraper values have surged 50% above the 2008 peak, prices for suburban office buildings still languish 4.8% below, according to an index from Moody’s Investors Service and Real Capital Analytics Inc. Borrowers holding commercial real estate outside of major metropolitan areas are now feeling the pinch as they attempt to secure fresh financing, Potter said. The delinquency rate for commercial mortgages that have been packaged into bonds is forecast to climb by as much as 2.4 percentage points to 5.75% in 2017, reversing several years of declines, as property owners struggle with maturing loans, according to Fitch Ratings. That sets the stage for bondholder losses.

Banks sold a record $250 billion of commercial mortgage-backed securities to institutional investors in 2007, and lax lending standards enabled landlords across the U.S. to saddle buildings with large piles of debt. When credit markets froze the following year, Wall Street analysts warned of a cataclysm, with $700 billion of commercial mortgages set to mature over the next decade. “At the depths of the panic, it was just that: panic,” said Manus Clancy, a managing director at Trepp, a firm that tracks commercial-mortgage debt. “That made people’s future expectations extremely bearish. Extremely low interest rates over the last four or five years have forgiven a lot of sins.”

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Yanis ignores the role the decline of growth plays. That is a shame.

A New Deal to Save Europe (Varoufakis)

“I don’t care about what it will cost. We took our country back!” This is the proud message heard throughout England since the Brexit referendum last June. And it is a demand that is resonating across the continent. Until recently, any proposal to “save” Europe was regarded sympathetically, albeit with skepticism about its feasibility. Today, the skepticism is about whether Europe is worth saving. The European idea is being driven into retreat by the combined force of a denial, an insurgency, and a fallacy. The EU establishment’s denial that the Union’s economic architecture was never designed to sustain the banking crisis of 2008 has resulted in deflationary forces that delegitimize the European project. The predictable reaction to deflation has been the insurgency of anti-European parties across the continent.

And, most worrying of all, the establishment has responded with the fallacy that “federation-lite” can stem the nationalist tide. It can’t. In the wake of the euro crisis, Europeans shudder at the thought of giving the EU more power over their lives and communities. A eurozone political union, with a small federal budget and some mutualization of gains, losses, and debt, would have been useful in 1999, when the common currency was born. But now, under the weight of massive banking losses and legacy debts caused by the euro’s faulty architecture, federation-lite (as proposed by French presidential hopeful Emmanuel Macron) is too little too late. It would become the permanent Austerity Union that German Finance Minister Wolfgang Schäuble has sought for years. There could be no better gift to today’s “Nationalist International.”

Simply put, progressives need to ask a straightforward question: Why is the European idea dying? The answers are clear: involuntary unemployment and involuntary intra-EU migration. Involuntary unemployment is the price of inadequate investment across Europe, owing to austerity, and of the oligopolistic forces that have concentrated jobs in Europe’s surplus economies during the resulting deflationary era. Involuntary migration is the price of economic necessity in Europe’s periphery. The vast majority of Greeks, Bulgarians, and Spaniards do not move to Britain or Germany for the climate; they move because they must. Life for Britons and Germans will improve not by building electrified border fences and withdrawing into the bosom of the nation-state, but by creating decent conditions in every European country.

And that is precisely what is needed to revive the idea of a democratic, open Europe. No European nation can prosper sustainably if other Europeans are in the grip of depression. That is why Europe needs a New Deal well before it begins to think of federation. In February, the DiEM25 movement will unveil such a European New Deal, which it will launch the next month, on the anniversary of the Treaty of Rome. That New Deal will be based on a simple guiding principle: All Europeans should enjoy in their home country the right to a job paying a living wage, decent housing, high-quality health care and education, and a clean environment.

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The practical measures in Yanis’ ’manifesto’.

The European New Deal (Varoufakis)

The European New Deal should include five precise goals and the means to achieve them under existing EU treaties, without any centralization of power in Brussels or further loss of sovereignty:

· Large-scale green investment will be funded by a partnership between Europe’s public investment banks (the European Investment Bank, KfW, and others) and central banks (on the basis of directing quantitative easing to investment project bonds) to channel up to 5% of European total income into investments in green energy and sustainable technologies.

· An employment guarantee scheme to provide living-wage jobs in the public and non-profit sectors for every European in their home country, available on demand for all who want them. On condition that the scheme does not replace civil-service jobs, carry tenure, or replace existing benefits, it would establish an alternative to choosing between misery and emigration.

· An anti-poverty fund that provides for basic needs across Europe, which would also serve as the foundation of an eventual benefits union.

· A universal basic dividend to socialize a greater share of growing returns to capital.

· Immediate anti-eviction protection, in the form of a right-to-rent rule that permits homeowners facing foreclosure to remain in their homes at a fair rent set by local community boards. In the longer term, Europe must fund and guarantee decent housing for every European in their home country, restoring the model of social housing that has been dismantled across the continent. Both the employment scheme and the anti-poverty program should be based on a modern version of an old practice: public banking for public purpose, funded by a pragmatic but radical currency reform within the eurozone and the EU, as well as in non-EU European countries. Specifically, all seigniorage profits of central banks would be used for these purposes.

In addition, an electronic public clearing mechanism for deposits and payments (outside the banking system) would be established in each country. Tax accounts would serve to accept deposits, receive payments, and facilitate transfers through web banking, payment apps, and publicly issued debit cards. The working balances could then be lent to the fund supporting the employment and anti-poverty programs, and would be insured by a European deposit insurance scheme and deficits covered by central bank bonds, serviced at low rates by national governments. Only such a European New Deal can stem the EU’s disintegration.

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“We’re an empire now, and when we act, we create our own reality.”

Karl Rove’s Prophecy (Unz)

In a famous exchange between a high official at the court of George W. Bush and journalist Ron Suskind, the official – later acknowledged to have been Karl Rove – takes the journalist to task for working in “the reality-based community.” He defined that as believing “that solutions emerge from your judicious study of discernible reality.” Rove then asserted that this was no longer the way in which the world worked: “We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality – judiciously, as you will – we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors . . . and you, all of you, will be left to just study what we do.” (Ron Suskind, NYTimes Magazine, Oct. 17, 2004).

This declaration became popular as an illustration of the hubris of the Bush-Cheney government. But we could also see it as fulfilled prophecy. Fulfilled in a manner that no journalist at that time would have deemed possible. Yes, the neoconservatives brought disrepute upon themselves because of the disaster in Iraq. Sure, opposition to the reality Rove had helped create in that devastated country became a first rung on the ladder that could lead to the presidency, as it did for Barack Obama. But the neocons stayed put in the State Department and other positions closely linked to the Obama White House, where they became allies with the liberal hawks in continuing ‘spreading democracy’ by overthrowing regimes. America’s mainstream news and opinion purveyors, without demurring, accommodated the architects of reality production overseen by Dick Cheney.

[..] publications that used to be rightly known as quality newspapers have turned into unreadable rags. The newspaper that was my employer for a couple of decades used to be edited on the premise that its correspondents rather than authorities were always correct in what they were saying. Today greater loyalty to the reality created in Washington and Langley cannot be imagined. For much of northern Europe the official story that originates in the United States is amplified by the BBC and other once reliable purveyors of news and opinion like the Guardian, the Financial Times and the (always less reliable) Economist.

[..] How could Rove’s predictions so totally materialize? There’s a simple answer: ‘they’ got away with momentous lies at an early stage. The more authorities lie successfully the more they are likely to lie again in a big way to serve the purposes of earlier lies. The ‘they’ stands for those individuals and groups in the power system who operate beyond legal limits as a hydra-headed entity, whose coordination depends on the project, campaign, mission, or operation at hand. Those with much power got away with excessive extralegal use of it since the beginning of this century because systems of holding the powerful to account have crumbled on both sides of the Atlantic. Hence, potential opposition to what the reality architects were doing dwindled to almost nothing. At the same time, people whose job or personal inclination leads them to ferret out truth were made to feel guilty for pursuing it.

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Your children’s children are going to love you for this.

Bumblebee Added to US Endangered Species List (VoA)

A small insect is getting a lot of attention in the United States. The rusty patched bumblebee is the first of its species to be declared endangered in the lower 48 states – meaning every state except Alaska and Hawaii. The rusty patched bumblebee is named for a rust-colored line on its back. The U.S Fish and Wildlife Service announced this month it was adding the bee to its endangered species list. The insects are “on the brink of extinction,” according to the service. It said the bees were once found in 28 states. But there now are only small populations remaining in 13 states. The government agency will make a plan to help the dying bees recover. The agency said that such a plan might help other insects, like butterflies.

U.S. officials think land owners can take small steps to help the rusty patched bumble bee. They say land owners can be friendlier towards bees by using native plants in their gardens. The insects directly fertilize many kinds of fruit and vegetable crops. And they fertilize grain crops used to feed cattle and milk cows. It costs billions of dollars to duplicate the job the bees do for free. Land owners are also being urged to cut back on their use of pesticide products. The officials also suggest that gardeners leave their plants alone at the end of the summer instead of cutting them. That way, the bees will have a place to live over the winter. The Fish and Wildlife Service says the rusty patched bumblebee was added to the endangered species list partly because of habitat loss. Other reasons were disease, pesticides and climate change.

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It gets worse by the day.

Half Of Families In Greece Live On Pensions (Kath.)

Greek society is evolving into a sum of households surviving on pensions while its most dynamic section, young people aged between 18 and 35, are abandoning it or considering abandoning it to seek a better life abroad, a survey by the Small Enterprises Institute of the Hellenic Confederation of Professionals, Craftsmen and Merchants (IME GSEVEE) has concluded. The report published on Tuesday suggests that the long-term financial crisis, whose main victims are the middle class, is not only leading to a further decline in incomes and the broadening of inequalities, but also openly threatening social cohesion. The so-called therapy, with its constantly increasing direct and indirect taxes, may lead to primary budget surpluses but this is not returned to taxpayers in the form of public services, as at the same time public spending on health and education is also being reduced.

The survey, conducted between November 14 and 26, used a sample of 1,000 households across Greece. It found that more than three-quarters of households (75.3%) had endured significant declines in their income in 2016. Crucially, 37.1% of households said that they live on less than €10,000 per year, while 49.2% said that their main source of income is pensions. This was actually higher in December 2014 (at 52%), and the small decline is attributed to the cuts in pensions. Salaries are the main source of revenues for 37.9% of households, up from 37.3% in the 2015 survey, while 9% said that they mainly rely on incomes from businesses.

Almost one in every three households has an unemployed member, which amounts to 1.1 million households, while the long-term unemployed amount to 73.3% of all jobless. Financial problems are not limited to the unemployed though, as 22.4% of households also include an employee who earns less than the minimum monthly salary of €586 gross. No wonder 9.7% of respondents said at least one member of their family has left the country.

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The entire aid industry must be overhauled, from EU to NGOs and ‘charities’, or this will continue. Brussels likes the agony because it thinks it’s a deterrent, the NGOs are profit seekers. The model is completely broken.

Cold Weather Reignites Fears For Refugees Poorly Sheltered In Greece (G.)

A new bout of cold weather across southern Europe has reignited fears for thousands of refugees and migrants sheltered in deplorable conditions in Greece. Forecasts of freezing temperatures have also been met with trepidation by international agencies, aid groups and local mayors on islands. “Thousands of people are poised to suffer needlessly in conditions that are becoming increasingly desperate,” said Eva Cossé at Human Rights Watch. “Europe’s failed policies have contributed to immense suffering for people warehoused on the Greek islands.” Greece was the focus of public outcry this month after shocking footage emerged of refugees on Lesbos living in flimsy, snow-swamped tents as an arctic blast sent temperatures plummeting to -14C.

The outcry prompted the government to dispatch a naval ship to temporarily house up to 500 people detained at the island’s vastly overcrowded Moria reception centre. Others were moved into heated containers, hotel rooms and apartments. But the measures have proved inadequate and with more severe weather on the way officials, volunteers and human rights defenders fear the worst. Sub-zero temperatures are expected by Thursday. Since the closure of the Balkan route into Europe, more than 62,000 men women and children have been trapped in Greece, according to government figures. Every day a steady trickle continues to arrive on rickety boats from Turkey, placing increasing pressure on Lesbos and other eastern Aegean islands close to the Asia Minor coast. “It is not much talked about, but this month alone 900 people have reached Greece,” said Gianmaria Pinto, country director of the Norwegian Refugee Council.

“Right now I am on Chios and in one camp there are people living on the beach, in small tents, exposed to the wind and rain. They should be moved to better and more humane conditions and the structures and opportunity for that are only on the mainland.” Under a controversial deal agreed by the EU and Turkey to curb an influx that surpassed a million people in 2015, Greek authorities last year accepted the introduction of a policy of containment in order to process asylum seekers at accelerated rates. By restricting refugees to islands it was hoped “secondary movement” into Europe could be reduced and those undeserving of asylum easily repatriated to Turkey. Instead, the policy has backfired with thousands of refugees being forced to endure dire conditions in overcrowded camps while their asylum requests are processed slowly. Many have been in the facilities since March when the EU-Turkey accord was signed.

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