Apr 062019
 


Dante Gabriel Rossetti Monna Vanna 1866

 

Cross-Party Talks Fail As Labour Says May Unable To Compromise (G.)
France, Spain and Belgium ‘Ready For No-Deal Brexit Next Week’ (G.)
Sucker Punch (Jim Kunstler)
The Russian Collusion Hoax Meets An Unbelievable End (Nunes)
Boeing Slashes 737 Production By 20% (ZH)
Trump Says Economy Would Take Off Like ‘A Rocket Ship’ If Fed Cut Rates (CNBC)
Ray Dalio Says Capitalism Needs Urgent Reform (MW)
Kondratiev – Riding the Economic Wave (Kerevan)
EU Charges BMW, Daimler and VW With Collusion Over Emissions (G.)
Australian Housing Downturn Becomes Widespread |(ZH)
Saudi Arabia Threatens To Ditch Petrodollar (R.)

 

 

6 days to April 12. May can’t offer Labour anything the Brexiteers don’t want. And vice versa. Thing is, that was obvious 3 years ago.

The problem is not the idea of Brexit, it’s purely the execution.

Cross-Party Talks Fail As Labour Says May Unable To Compromise (G.)

Theresa May’s prospects of cobbling together a cross-party majority to convince EU leaders to grant a short Brexit delay next week appear to be slipping away after Labour claimed she had failed to offer “real change or compromise” in talks. The prime minister made a dramatic pledge to open the door to talks with Labour on Tuesday after a marathon cabinet meeting. But after two days of negotiations and an exchange of letters on Friday, Labour issued a statement criticising the prime minister for failing to offer “real change or compromise”.= “We urge the prime minister to come forward with genuine changes to her deal in an effort to find an alternative that can win support in parliament and bring the country together,” a spokesperson said.


The pessimistic note came after May wrote to the European council president, Donald Tusk, on Friday morning, asking for Brexit to be delayed until 30 June, while cross-party talks continue. Even before Labour’s statement, EU politicians responded with bemusement to her failure to offer a concrete plan for assembling a coalition behind a workable deal – increasing the risk that they will take a tough line at next Wednesday’s summit. May’s letter suggested that the UK was preparing to field candidates in European parliamentary elections on 23 May if no deal could be reached.

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Don’t be surprised if one country just says NO. Or more than one. For a new extension, May will need a new plan. She has none.

France, Spain and Belgium ‘Ready For No-Deal Brexit Next Week’ (G.)

France has won the support of Spain and Belgium after signalling its readiness for a no-deal Brexit on 12 April if there are no significant new British proposals, according to a note of an EU27 meeting seen by the Guardian. The diplomatic cable reveals that the French ambassador secured the support of Spanish and Belgian colleagues in arguing that there should only be, at most, a short article 50 extension to avoid an instant financial crisis, saying: “We could probably extend for a couple of weeks to prepare ourselves in the markets.” The chances of Theresa May’s proposal of an extension to 30 June succeeding appeared slim as France’s position in the private diplomatic meeting was echoed by an official statement reiterating its opposition to any further Brexit delay without a clear British plan.


May wrote to the president of the European council, Donald Tusk, on Friday to ask for the delay until 30 June while she battles to win cross-party agreement on a way forward. EU states are extremely sceptical that an extension to 30 June will resolve anything in Westminster. Tusk is pushing the EU to offer at a summit next Wednesday what he has described as a “flextension” in which the UK would be given a year-long extension with an option to come out early if the deal is ratified.

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“Mr. Mueller produced a brief of arguments pro-and-con about obstruction for others to decide upon. In doing that, he was out of order, and maliciously so.”

Sucker Punch (Jim Kunstler)

Having disgraced themselves with full immersion in the barren RussiaGate “narrative,” the Resistance is now tripling down on RussiaGate’s successor gambit: obstruction of justice where there was no crime in the first place. What exactly was that bit of mischief Robert Mueller inserted in his final report, saying that “…while this report does not conclude that the President committed a crime, it also does not exonerate him?” It’s this simple: prosecutors are charged with finding crimes. If there is insufficient evidence to bring a case, then that is the end of the matter. Prosecutors, special or otherwise, are not authorized to offer hypothetical accounts where they can’t bring a criminal case. But Mr. Mueller produced a brief of arguments pro-and-con about obstruction for others to decide upon.

In doing that, he was out of order, and maliciously so. Of course, Attorney General Barr took up the offer and declared the case closed, as he properly should where the prosecutor could not conclude that a crime was committed. One hopes that the AG also instructed Mr. Mueller and his staff to shut the fuck up vis-à-vis further ex post facto “anonymous source” speculation in the news media. But, of course, the Mueller staff — which inexplicably included lawyers who worked for the Clinton Foundation and the Democratic National Committee — at once started insinuating to New York Times reporters that the full report would contain an arsenal of bombshells reigniting enough suspicion to fuel several congressional committee investigations.

The objective apparently is to keep Mr. Trump burdened, hobbled, and disabled for the remainder of his term, and especially in preparation for the 2020 election against whoever emerges from the crowd of lightweights and geriatric cases now roistering through the primary states. It also leaves the door open for the Resistance to prosecute an impeachment case, since that is a political matter, not a law enforcement action. This blog is not associated with any court other than public opinion, and I am free to hypothesize on the meaning of Mr. Mueller’s curious gambit, so here goes: Mr. Barr, long before being considered for his current job, published his opinion that there was no case for obstruction of justice in the RussiaGate affair. By punting the decision to Mr. Barr, Mr. Mueller sets up the AG for being accused of prejudice in the matter — and, more to the point, has managed to generate a new brushfire in the press.

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Investigate the road the Steele dossier traveled. Might be all you need.

The Russian Collusion Hoax Meets An Unbelievable End (Nunes)

It is astonishing that intelligence leaders did not immediately recognize they were being manipulated in an information operation or understand the danger that the dossier could contain deliberate disinformation from Steele’s Russian sources. In fact, it is impossible to believe in light of everything we now know about the FBI’s conduct of this investigation, including the astounding level of anti-Trump animus shown by high-level FBI figures like Peter Strzok and Lisa Page, as well as the inspector general’s discovery of a shocking number of leaks by FBI officials.

It’s now clear that top intelligence officials were perfectly well aware of the dubiousness of the dossier, but they embraced it anyway because it justified actions they wanted to take – turning the full force of our intelligence agencies first against a political candidate and then against a sitting president. The hoax itself was a gift to our nation’s adversaries, most notably Russia. The abuse of intelligence for political purposes is insidious in any democracy. It undermines trust in democratic institutions, and it damages the reputation of the brave men and women who are working to keep us safe. This unethical conduct has had major repercussions on America’s body politic, creating a yearslong political crisis whose full effects remain to be seen.

Having extensively investigated this abuse, House Intelligence Committee Republicans will soon be submitting criminal referrals on numerous individuals involved in these matters. These people must be held to account to prevent similar abuses from occurring in the future. The men and women of our intelligence community perform an essential service defending American national security, and their ability to carry out their mission cannot be compromised by biased actors who seek to transform the intelligence agencies into weapons of political warfare.

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The only thing they talk about is software. But if anything goes wrong, these people will be guillotined.

Boeing Slashes 737 Production By 20% (ZH)

Just a few hours after Ethiopian Airlines warned of a “stigma” associated with the 737 Max that may make them choose not to take delivery of the planes they ordered, Boeing has released a statement after-hours that the company will slash production of the 737 plane from 52 to 42 airplanes per month. Bloomberg reports that Boeing plans to coordinate with customers and suppliers to blunt the financial impact of the slowdown, and for now it doesn’t plan to lay off workers from the 737 program. “When the Max returns to the skies, we’ve promised our airline customers and their passengers and crews that it will be as safe as any airplane ever to fly,” Boeing Chief Executive Officer Dennis Muilenburg said in a statement Friday after the market close.


Boeing had planned to hike output of the 737, a workhorse for budget carriers, about 10 percent by midyear, to meet the backlogs. [..] if the issues are not resolved in a timely manner and production of the 737 MAX needs to be halted for an extended period of time, it would take about 0.15% off the level of GDP, or about 0.6%-point off the quarterly annualized growth rate of GDP in the quarter in which production is stopped. [..] the value of total shipments of aircraft by domestic producers in the US totaled $129 billion in 2016. Extrapolating that figure using monthly shipments data by the aircraft and parts industry implies a similar figure for 2018, around $130 billion.

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End the Fed.

Trump Says Economy Would Take Off Like ‘A Rocket Ship’ If Fed Cut Rates (CNBC)

President Donald Trump said Friday the U.S. economy would climb like “a rocket ship” if the Federal Reserve cut interest rates. Commenting after a strong jobs report for March, Trump said the Fed “really slowed us down” in terms of economic growth, and that “there’s no inflation.” “I think they should drop rates and get rid of quantitative tightening,” Trump told reporters, referring to the Fed’s policy of selling securities to unwind its balance sheet, a stimulus put in place during the financial crisis. “You would see a rocket ship. Despite that we’re doing very well.” White House aides have called for the Fed to cut interests rates by as much as 50 basis points. Following the Fed’s most recent meeting in March, the central bank decided to maintain interest rates and hold off on any further increases this year.

As Trump’s chief economic adviser Larry Kudlow did on Friday, Federal Reserve Chairman Jerome Powell highlighted the slowing global economy. “We’re facing a worldwide slowdown [as] Europe is not doing well,” Kudlow said on Bloomberg TV. But unlike the White House, the Fed did not conclude in March that slowing global growth means the bank should begin cutting rates. Trump has been heavily critical of Powell’s decisions at the Fed, going as far as to say that “the Fed has gone crazy” with raising rates. Trump has blamed Powell’s decision-making for drops in the stock market, calling him “loco” for steadily raising rates in 2018 and saying choosing Powell for Fed chairman was the worst mistake of his presidency,

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Capitalism needs capitalism first of all. For that to happen, the Fed will have to be dismantled. You can’t have capitalism without functioning markets. Ergo: America doesn’t appear to like capitalism, or it would make sure it exists.

Ray Dalio Says Capitalism Needs Urgent Reform (MW)

Ray Dalio, founder of Bridgewater Associates LP, the world’s biggest hedge fund, says capitalism has developed into a system that is promoting an ever-wider wealth gap that puts the very existence of the United States at risk. In a two-part series published on LinkedIn, the noted investor argues that capitalism is now in need of reform — and offered ways to accomplish it: ‘I have also seen capitalism evolve in a way that it is not working well for the majority of Americans because it’s producing self-reinforcing spirals up for the haves and down for the have-nots. This is creating widening income/wealth/opportunity gaps that pose existential threats to the United States because these gaps are bringing about damaging domestic and international conflicts and weakening America’s condition.’

[..] Today, however, the system has produced little or no real income growth for most people for decades, according to the Dalio essay on LinkedIn. Prime-age workers in the bottom 60% have had no real (inflation-adjusted) income growth since 1980, and the percentage of children who grow up to earn more than their parents has fallen to 50% from 90% in 1970. The wealth gap is at its widest point since the late 1930s, with the top 1% owning more than the bottom 90% combined, “which,” Dalio notes, “is the same sort of wealth gap that existed during the 1935-40 period (a period that brought in an era of great internal and external conflicts for most countries).”

Most people in the bottom 60% “are poor,” he writes. About 40% of all Americans would struggle to raise $400 in the event of an emergency, he says, citing a recent Federal Reserve study. The childhood poverty rate stands at 17.5% and has not shown meaningful improvement in decades. That, in turn, leads to poor academic achievement, low productivity and low incomes.

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It’s good when people who are not familar with it learn about Kondratieff (though I’ve seen better write-ups), but again: the Fed has become the economy, so what is real anymore?

Kondratiev – Riding the Economic Wave (Kerevan)

There is a rich literature trying to identify the cause, in particular the work of the Belgian economist, the late, great Ernest Mandel. Crudely, it works like this. Social and economic conditions mature to spark a runaway investment boom in the latest cluster of new technologies. After a period, excess investment and increased competition lower rates of profitability, curbing the boom. At the same time – because this is as much a sociological as an economic process – growth expands the global workforce, both in numbers and geographically. The new, militant workforce launches social struggles to capture some of the wealth created in the boom.


This, in turn, adds to the squeeze on profits. The peak and early down wave are characterised by violent social conflicts, whose outcome determines the length of the contraction. To date each K-wave has seen a crushing of social protest and a halt to wage growth, if not a fall in real incomes for the working class. Thus conditions accumulate for a fresh investment boom, as profitability recovers. The ultimate trigger for the new upcycle is investment in the next bunch of new technologies, which simultaneously provide monopoly profits and a new set of markets.

Where precisely are we in the Kondratiev cycle? There is a dispute about this. Economists convinced by the Kondratiev theory largely agree there was a strong up-phase following the Second World War, lasting till the early 1970s. This was driven by the collapse in European wages imposed earlier by the Nazis and by the universal adoption of Fordist, mass production techniques. This expansion turned into a downswing in the 1970s and early 1980s, as profitability declined and the revived European economies (linked through the early Common Market) eroded American competitiveness.


The dispute concerns what happened next – the era of Reagan, Thatcher, neoliberalism and globalisation, running up to the present. In 1998, the American economic historian Robert Brenner published a hugely influential account of global capitalism which claimed to identify a super downswing running from circa 1970 to the turn of the millennium. Brenner rejected the notion global capitalism had (or was likely) to regain profitability, citing excess capacity rather than working class resistance as the primary driver. He pointed to the sudden stagnation in the Japanese economy, in the 1990s, as a precursor for the West’s future.

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Youi’re going to have to go after individuals, not allow them to hide behind corporations.

EU Charges BMW, Daimler and VW With Collusion Over Emissions (G.)

The European commission has charged BMW, Daimler and Volkswagen with colluding to limit the introduction of clean emissions technology, in the preliminary findings of an antitrust investigation. The car manufacturers have 10 weeks to respond and could face fines of billions of euros – up to 10% of their global annual turnover – if their explanations are rejected. A similar cartel case the commission took out in 2014 against MAN, Volvo/Renault, Daimler, Iveco and DAF ended with €2.93bn (£2.53bn) of penalties being levied. The EU’s competition commissioner, Margrethe Vestager, said: “Companies can cooperate in many ways to improve the quality of their products. However, EU competition rules do not allow them to collude on exactly the opposite: not to improve their products, not to compete on quality.”


She added: “Daimler, VW and BMW may have broken EU competition rules. As a result, European consumers may have been denied the opportunity to buy cars with the best available technology.” The EU announcement follows raids on the auto manufacturers in July 2017 after allegations in Der Spiegel that they had met in secret working groups in the 1990s to coordinate a response to diesel emissions limits. Between 2006 and 2014, the commission suspects that the “circle of five” carmakers – including VW’s Audi and Porsche divisions – colluded to limit, delay or avoid the introduction of selective catalytic reduction systems (SCRs) and “Otto” particle filters.

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The drought comes one drop at a time.

Australian Housing Downturn Becomes Widespread |(ZH)

After a three-decade boom, the Australian economy is finally facing a recession. The outlook for the economy is exceptionally bleak this year, as the decline in housing prices is more widespread than thought, according to a new report from CoreLogic. National home prices recorded a month-on-month decline of 0.60% in March, which CoreLogic noted was the smallest rate of monthly decline since October. “While the pace of falls has slowed in March, the scope of the downturn has become more geographically widespread,” CoreLogic head of research Tim Lawless said. All eight capital cities in Australia posted declines, with Sydney recording the most significant price drop of .90% month-on-month.

Quarterly, the value of single-family homes and condos declined 3.9%, followed by Melbourne (3.4%), Sydney (3.2%), Perth (2.9%), and Brisbane (1.1%). Prices in Canberra were unchanged. Sydney recorded the most significant annual decline of 10.9%. Melbourne followed with 9.8%. Australia’s regional housing markets have also deteriorated. Regional areas outside Sydney declined by 3.6% over the past year while regional Queensland saw a 1.6% decline. Regional Western Australia experienced a 9.5% decline over the past year, and for the past five years, values in the region have collapsed by 25.8%

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It’s not entirely Fake News, but it’s certainly No News. There’s one competitor for the USD, and that’s the renminbi, which nobody wants because it’s not traded freely. End of story.

Saudi Arabia Threatens To Ditch Petrodollar (R.)

Saudi Arabia is threatening to sell its oil in currencies other than the dollar if Washington passes a bill exposing OPEC members to U.S. antitrust lawsuits, three sources familiar with Saudi energy policy said. They said the option had been discussed internally by senior Saudi energy officials in recent months. Two of the sources said the plan had been discussed with OPEC members and one source briefed on Saudi oil policy said Riyadh had also communicated the threat to senior U.S. energy officials.


The chances of the U.S. bill known as NOPEC coming into force are slim and Saudi Arabia would be unlikely to follow through, but the fact Riyadh is considering such a drastic step is a sign of the kingdom’s annoyance about potential U.S. legal challenges to OPEC. In the unlikely event Riyadh were to ditch the dollar, it would undermine the its status as the world’s main reserve currency, reduce Washington’s clout in global trade and weaken its ability to enforce sanctions on nation states. “The Saudis know they have the dollar as the nuclear option,” one of the sources familiar with the matter said. “The Saudis say: let the Americans pass NOPEC and it would be the U.S. economy that would fall apart,” another source said.

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Nov 112018
 
 November 11, 2018  Posted by at 10:39 am Finance Tagged with: , , , , , , , , , , ,  2 Responses »


Paul Gauguin Christ in the garden of olives 1889

 

China Can Never Allow Its Housing Bubble To Burst (ZH)
One Thing Unites Britain (O.)
Four UK Ministers On Verge Of Quitting, EU Rejects Latest Plan (R.)
Top Tory Says Theresa May Is ‘Handing Power To EU’ In Brexit Deal (G.)
Khashoggi Murder Fails To Stop Britain Selling Arms To The Saudis (O.)
Saudi Arabia Wants To Cut OPEC Allies Oil Output By Up To 1 Million Bpd (R.)
Court Clears Rome’s Mayor Of Cronyism And Abuse Of Power (G.)
2 Koreas Complete The Disarming Of 22 Guard Posts (AP)
Moorside’s Atomic Dream Was An Illusion. Renewables Are The Future (G.)
Next Generation ‘May Never See The Glory Of Coral Reefs’ (G.)
Why Women Have Better Sex Under Socialism (G.)

 

 

50 million empty apartments. ‘Real’ estate holds 75% of Chinese private ‘assets’. There can hardly be a more dangerous concept for the global economy.

China Can Never Allow Its Housing Bubble To Burst (ZH)

Back in 2017, we explained why the “fate of the world economy is in the hands of China’s housing bubble.” The answer was simple: for the Chinese population, and growing middle class, to keep spending vibrant and borrowing elevated, it had to feel comfortable and confident that its wealth would keep rising. However, unlike the US where the stock market is the ultimate barometer of the confidence boosting “wealth effect”, in China it has always been about housing as three quarters of Chinese household assets are parked in real estate, compared to only 28% in the US, with the remainder invested financial assets. Beijing knows this, of course, which is why China periodically and consistently reflates its housing bubble, hoping that the popping of the bubble, which happened in late 2011 and again in 2014, will be a controlled, “smooth landing” process.

For now, Beijing has been successful in maintaining price stability at least according to official data, allowing the air out of the “Tier 1” home price bubble which peaked in early 2016, while preserving modest home price appreciation in secondary markets. How long China will be able to avoid a sharp price decline remains to be seen, but in the meantime another problem faces China’s housing market: in addition to being the primary source of household net worth – and therefore stable and growing consumption – it has also been a key driver behind China’s economic growth, with infrastructure spending and capital investment long among the biggest components of the country’s goalseeked GDP.

One result has been China’s infamous ghost cities, built only for the sake of Keynesian spending to hit a predetermined GDP number that would make Beijing happy. Meanwhile, in the process of reflating the latest housing bubble, another dire byproduct of this artificial housing “market” has emerged: tens of millions of apartments and houses standing empty across the country. According to Bloomberg, soon-to-be-published research will show that roughly 22% of China’s urban housing stock is unoccupied, according to Professor Gan Li, who runs the main nationwide study. That amounts to more than 50 million empty homes.

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Britain is shrinking away from not just Europe, but the world, unable to focus on anything other than its domestic squabbles.

One Thing Unites Britain (O.)

[..] Theresa May has always hung on in the belief that, when it came to the crunch moment, when a deal was on offer that would take the UK out of the EU on 29 March next year, her party and the country would unite sufficiently behind her to allow a withdrawal agreement to pass through parliament. The country would rally behind her vision of Brexit. But instead, as people become more aware of what leaving the EU entails, many MPs believe the reverse may be happening. [..] With more Tory Remainers and Leavers now opposing her, May’s task is daunting. Downing Street’s immediate task is to get her deeply split cabinet to unite around the final unresolved element of a potential deal with the EU: the legally complex issue of how to avoid a hard border between Northern Ireland and the Republic after Brexit.

Downing Street knows it is in a race against time. May is desperate to put a motion before the House of Commons before Christmas, in the hope that, somehow, it will pass. No 10 has pencilled in a cabinet meeting for early this week, probably on Tuesday. But disagreements remain among her most senior ministers over how the UK would exit from the so-called “backstop” agreement, under which the whole of the UK would remain in the EU customs union until a final UK-EU trade deal is struck. Several cabinet ministers are unhappy with what they fear will be fudged wording in the withdrawal agreement that fails to chart a clear path to exit the backstop. They want to see the full legal advice and want guarantees that the EU will not be able to prevent the UK breaking free from its system once and for all, so that it can strike its own trade deals.

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It’s still the Irish hard border. And they’re still no closer to a solution.

Four UK Ministers On Verge Of Quitting, EU Rejects Latest Plan (R.)

Four British ministers who back remaining in the European Union are on the verge of quitting Theresa May’s government over Brexit, the Sunday Times reported, as pressures built on the prime minister from all sides. The newspaper also said that the European Union had rejected May’s plan for an independent mechanism to oversee Britain’s departure from any temporary customs arrangement it agrees. The newspaper sourced the development to British sources, and not sources in the EU team. May is trying to hammer out the final details of the British divorce deal but the talks have become stuck over how the two sides can prevent a hard border from being required in Ireland.

Britain has proposed a UK-wide temporary customs arrangement with the EU to resolve the issue but Brexiteers in her party want London to have the final say on when that arrangement would end, to prevent it from being tied indefinitely to the bloc. A senior cabinet minister was quoted in the paper as saying: “This is the moment she has to face down Brussels and make it clear to them that they need to compromise, or we will leave without a deal.” An EU diplomat told Reuters earlier on Saturday that they were cautiously hopeful that an EU summit could happen in November to endorse the deal but that the volatile situation in Britain made it very difficult to predict.

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Well, May herself doesn’t appear to know what to do with that power.

Top Tory Says Theresa May Is ‘Handing Power To EU’ In Brexit Deal (G.)

Theresa May was accused last night by a former cabinet colleague of planning the “biggest giveaway of sovereignty in modern times”, as she faced a potentially devastating pincer movement from Tory remainers and leavers condemning her Brexit plans. The day after Jo Johnson, the pro-remain brother of former foreign secretary Boris Johnson, resigned from the government and called for a second referendum on Brexit, former education secretary Justine Greening launched an attack on the prime minister, saying her plans would leave the country in the “worst of all worlds”. Piling yet more pressure on May, Greening – who resigned from the cabinet in January – backed the former transport minister’s call for another public vote and said MPs should reject the prime minister’s deal.

Greening told the Observer: “The parliamentary deadlock has been clear for some time. It’s crucial now for parliament to vote down this plan, because it is the biggest giveaway of sovereignty in modern times. “Instead, the government and parliament must recognise we should give people a final say on Brexit. Only they can break the deadlock and choose from the practical options for Britain’s future now on the table.” Greening added: “Like many of us, Jo Johnson is a pragmatist on Britain’s relationship with the EU. But Conservative MPs can increasingly see that this sovereignty giveaway from No 10 leaves our country with less say over rules that govern our lives … That is not in the national interest, it’s the worst of all worlds and it resolves nothing.”

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Even as the UK has also received the audio from Turkey.

Khashoggi Murder Fails To Stop Britain Selling Arms To The Saudis (O.)

Britain has pursued its assiduous courtship of Saudi Arabia despite the murder of the journalist Jamal Khashoggi, with diplomats and Ministry of Defence officials meeting their counterparts in the kingdom to discuss closer economic, military and political ties. The discussions have taken place as Britain enters the final phase of negotiations to sell more Typhoon jets to Riyadh. They are similar to those used in the Saudi-led bombing of Yemen in a war that has caused a humanitarian disaster.

Britain sells billions of pounds of weapons to the countries bombing Yemen and is keen to strengthen its ties after Brexit. In July last year, the government confirmed it had created a dedicated Gulf region working group to promote “high-level dialogue with key trading partners to progress our trade and investment relationships”. Since then, civil servants have regularly visited the region for confidential talks to prepare for future deals once Britain leaves the European Union. A delegation from the Department for International Trade visited the Eastern Province chamber of commerce in Dammam in Saudi Arabia on 2 October – the day Khashoggi was murdered.

Alastair Long, the UK’s deputy trade commissioner for the Middle East and director of trade for Saudi Arabia, stressed that Britain was keen to create alternative markets and that Saudi Arabia “is at the head of these markets”. On 31 October, another UK government delegation visited Riyadh for a meeting with the Gulf Cooperation Council secretariat. A press release from the council said the meeting discussed expanding “the horizons of political, security, military and commercial cooperation”

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Much discussed before: smaller producers have only one reaction to falling prices: produce more (if they can).

Saudi Arabia Wants To Cut OPEC Allies Oil Output By Up To 1 Million Bpd (R.)

Saudi Arabia is discussing a proposal to cut oil output by up to 1 million barrels per day by OPEC and its allies, two sources close to the discussions told Reuters on Sunday. The sources said the discussions were not finalized as much depended on the reduction in Iranian exports. “There is a general discussion about this. But the question is how much is needed to reduce by the market,” one of the sources said, speaking in Abu Dhabi where a market monitoring committee is due to be held on Sunday, attended by top exporters Saudi Arabia and Russia.

Asked by reporters in Abu Dhabi if the market is in balance, Saudi Energy Minister Khalid Al-Falih said: “We will find out. We have our meeting later.” Al-Falih last month said there could be a need for intervention to reduce oil stockpiles after increases in recent months. The United States this month imposed sanctions curtailing Iran’s oil exports as part of efforts to curb Tehran’s nuclear and missile programs as well as its support for proxy forces in Yemen, Syria, Lebanon and other parts of the Middle East.

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Smearing M5S has become less easy.

Court Clears Rome’s Mayor Of Cronyism And Abuse Of Power (G.)

The Rome mayor, Virginia Raggi, has been cleared of cronyism and abuse of power after a judge ruled that the alleged offence did not constitute a crime. Prosecutors had called for a 10-month jail term over allegations that Raggi, from the anti-establishment Five Star Movement, lied to investigators over the appointment of Renato Marra, the brother of one of her close aides, as Rome’s tourism chief. His brother Raffaele, the former head of staff at Rome city hall, faces separate corruption allegations. The accusations emerged not long after Raggi was elected as Rome’s first female mayor in June 2016. Had she been convicted she would have been forced to resign as mayor, in line with the Five Star Movement’s code of ethics.

She wept upon hearing the ruling, saying afterwards: “This sentence wipes out two years of mud-slinging. We’ll go forward with our heads held high for Rome, my beloved city, and for all citizens.” Luigi Di Maio, the Five Star Movement leader and Italy’s deputy prime minister, celebrated the court ruling while using the opportunity to criticise journalists whom he accused of “attacking Italy’s most massacred mayor” for two years and generating “fake news” to bring her down. “Go Virginia! I am happy for always having defended you and believed in you,” he wrote on Facebook.

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There are people who genuinely want peace. Get out of their way.

2 Koreas Complete The Disarming Of 22 Guard Posts (AP)

The North and South Korean militaries completed withdrawing troops and firearms from 22 front-line guard posts on Saturday as they continue to implement a wide-ranging agreement reached in September to reduce tensions across the world’s most fortified border, a South Korean Defense Ministry official said. South Korea says the military agreement is an important trust-building step that would help stabilize peace and advance reconciliation between the rivals. But critics say the South risks conceding some of its conventional military strength before North Korea takes any meaningful steps on denuclearization — an anxiety that’s growing as the larger nuclear negotiations between Washington and Pyongyang seemingly drift into a stalemate.

South Korea reportedly has about 60 guard posts — bunker-like concrete structures surrounded with layers of barbed-wire fences and manned by soldiers equipped with machine guns — stretched across the ironically named Demilitarized Zone. The 248-kilometer (155-mile) border buffer peppered with millions of land mines has been the site of occasional skirmishes between the two forces since the 1950-53 Korean War. The North is believed to have about 160 guard posts within the DMZ.


In this Nov. 4, 2018, photo provided by South Korea Defense Ministry, a yellow flag is raised at a guard post of South Korea in the demilitarized zone, South Korea. A South Korean Defense Ministry official said on Saturday, Nov. 10, 2018, the North and South Korean militaries have completed withdrawing troops and firearms from 22 front-line guard posts as they continue to implement a wide-ranging agreement reached in September to reduce tensions. The flag marks the post that is to be dismantled so that each side can observe the work in progress.

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Sorry, but no. Using much less energy of any kind is the future. Voluntarily or forced. That’s what we should prepare our societies for.

Moorside’s Atomic Dream Was An Illusion. Renewables Are The Future (G.)

Toshiba’s decision to pull out of building a nuclear power station in Cumbria last week will cause shockwaves far beyond the north-west of England. The outcome is a disaster for the surrounding area, which is heavily reliant on the nuclear industry for jobs and prosperity. Local politicians admit it is a blow and a disappointment for Cumbrians hoping for roles at the proposed Moorside plant. They say they genuinely believe a new buyer for the site will come forward. But that looks like wishful thinking. To an extent, the demise of Moorside can be attributed to problems with it as a specific project. It has looked doomed since Toshiba’s US nuclear unit, Westinghouse, declared bankruptcy in 2017 and the company ruled out new nuclear investments outside of Japan.

Efforts to woo the South Korean energy company Kepco as a buyer then floundered. The executive leading the sale for Toshiba blamed the failure to find a buyer on being “caught between a series of unplanned and uncontrollable events”. But the end of Moorside is also emblematic of the wider challenges that new nuclear faces. It took a decade from Tony Blair signalling the UK’s renewed interest in nuclear power in 2006 for France’s EDF Energy and the British government to sign a generous subsidy deal and green-light Hinkley Point C, the UK’s first new nuclear plant in a generation. In all likelihood, it will not be generating electricity until 2027. Ministers insist new nuclear power stations are still an essential way of hitting the country’s greenhouse gas emission targets and providing energy security as old plants are switched off in the 2020s.

Losing Moorside means there are just five other new nuclear projects planned, including Hinkley Point C. Eyes will now turn to Hitachi’s proposed Wylfa Newydd plant on Anglesey. The project is the furthest along the line after Hinkley, but it’s far from a done deal. The new nuclear drive was meant to be solely funded by the private sector, but the government has already made a striking exception in the case of Wylfa. Ministers have promised Hitachi they will use public money to take a £5bn stake in the scheme. Such a dramatic U-turn on policy is explained by the fact that Wylfa is about more than the UK’s desire for new nuclear: it is also about cooperation with Tokyo and bringing forth other investment from Japanese firms, such as carmakers, after Brexit.

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We get the drift, but we also know only a small part of 1 or 2 generations of mankind have ever ‘seen’ coral reefs. And most people only do ‘see’ them in pics and movies. You might want to think about that. it’s definitely not about you ‘seeing’ coral reefs or rhino’s or orangutans. It’s about something else.

Next Generation ‘May Never See The Glory Of Coral Reefs’ (G.)

Children born today may be the last generation to see coral reefs in all their glory, according to a marine biologist who is coordinating efforts to monitor the decline of the world’s most colourful ecosystem. Global heating and ocean acidification have already severely bleached 16 to 33% of all warm-water reefs, but the remainder are vulnerable to even a fraction of a degree more warming, said David Obura, chair of the Coral Specialist Group in the International Union for the Conservation of Nature. “It will be like lots of lights blinking off,” he told the Observer. “It won’t happen immediately but it will be death by 1,000 blows. Between now and 2 degrees Celsius, we will see more reefs dropping off the map.”

Obura added: “Children born today may be the last generation to see coral reefs in all their glory. Today’s reefs have a history going back 25 million to 50 million years and have survived tectonic collisions, such as that of Africa into Europe, and India into Asia. Yet in five decades we have undermined the global climate so fundamentally that in the next generation we will lose the globally connected reef system that has survived tens of millions of years.”

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Headline obviously for effect. But interesting theme. Still, is it capitalism that is to blame for suppressing women, or patriarchy?

Why Women Have Better Sex Under Socialism (G.)

This book has a simple premise: “Unregulated capitalism is bad for women,” Kristen Ghodsee argues, “and if we adopt some ideas from socialism, women will have better lives.” Ghodsee is an ethnographer who has researched the transition from communism to capitalism in eastern Europe, with a particular focus on gender-specific consequences. “The collapse of state socialism in 1989 created a perfect laboratory to investigate the effects of capitalism on women’s lives,” she writes. Less regulated economies, she finds, place a disproportionate burden on women. Women subsidise lower taxes through their unpaid labour at home. Cuts to the social safety net mean more women have to care for children, the elderly and the sick, forcing them into economic dependence.

Ghodsee contends that without state intervention, the private sector job market punishes those who bear and raise children and discriminates against those who might one day do so. The government is better at ensuring wage parity across different groups than the private sector, and economies with more public sector jobs tend to have more gender equality, too. Women bear the brunt of capitalism’s cyclical instability, and are often the last to be hired and the first to be fired in economic downturns. They are paid less, they have less representation in government and, she writes, all of this affects their sexuality. The less economic independence women have, the more sexuality and sexual relationships conform to the marketplace, with those who are disadvantaged in the free market pursuing sex not for love or pleasure but for a roof over their heads, health insurance, or access to the wealth or status that capitalism denies them.

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Sep 272018
 
 September 27, 2018  Posted by at 9:40 am Finance Tagged with: , , , , , , , , ,  8 Responses »


M. C. Escher Symmetry Drawing 1948

 

Kavanaugh Mayhem (ZH)
Argentina Gets Biggest Loan In IMF’s History At $57 Billion (G.)
The Next Financial Crisis Will Hit In 12-24 Months – Griffin (ZH)
Macron Rejects Trade Deals With Countries Outside Paris Climate Accord (Ind.)
For The First Time Ever, Jeremy Corbyn Looked Like A Prime Minister (Ind.)
UK Appoints Food Supplies Minister Amid Fears Of No-Deal Brexit (G.)
No-Deal Brexit ‘Would Stop British Farming Exports For Six Months’ (G.)
UK Could Use Brexit To Avoid EU Ban On Antibiotics Overuse In Farming (G.)
How UN Scientists Are Preparing For The End Of Capitalism (Nafeez Ahmed)
How Economics Became A Cult (Steve Keen)
1% Of Greeks Owe 90% Of Tax Arrears To State (K.)
World’s Wetlands Disappearing Three Times Faster Than Forests (AFP)

 

 

Well, it’s Kavanaugh day, and yesterday both sides did what was expected: double down. New allegations, denials, talk of restraining orders, gang rapes that went unreported, it was a circus. No telling what will happen today.

You can read the Senate Judiciary Committe interview with Kavanaugh here.

Let’s get this over with.

Kavanaugh Mayhem (ZH)

The Senate Judiciary Committee on Wednesday night released a time of their efforts to responded to various accusations against Supreme Court nominee Brett Kavanaugh – including two men who say they they were the basis for the “groping” allegation. The claims also include a new allegation from a San Diego woman who alleges that Kavanaugh and others raped her in the backseat of a car, though it does not specify the place, date or identities of the alleged accomplices. [..] earlier Wednesday, another Kavanaugh accuser – Julie Swetnick, had an ominous cloud of doubt cast over her allegation that the Supreme Court nominee and a friend were operating a date-rape “gang bang” operation at 10 high school parties she attended as a legal adult three years older than Kavanaugh (yet didn’t report once).

Politico reports that Swetnick’s ex-boyfriend, Richard Vinneccy – a registered Democrat, took out a restraining order against her, and says he has evidence that she’s lying. “Right after I broke up with her, she was threatening my family, threatening my wife and threatening to do harm to my baby at that time,” Vinneccy said in a telephone interview with POLITICO. “I know a lot about her.” -Politico. “I have a lot of facts, evidence, that what she’s saying is not true at all,” he said. “I would rather speak to my attorney first before saying more.” Avenatti called the claims “outrageous” and hilariously accused the press of “digging into the past” of a woman levying a claim against Kavanaugh from over 35 years ago. Meanwhile, Swetnick has now been linked to Blasey Ford – as she utilized the law firm run by Ford to sue her previous employer, New York Life Insurance Co. for sexual harassment.

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Rudy Havenstein on Twitter: All Argentina got from Paulie was protection from other guys looking to rip them off. That’s what it’s all about. What Paulie and the IMF offer is protection for the kinds of guys who can’t go to the cops. They’re like the police department for wiseguys.

Argentina Gets Biggest Loan In IMF’s History At $57 Billion (G.)

Argentina has received the biggest loan package ever from the IMF, aimed at shoring up the country’s ailing finances: a whopping $57.1bn that will be disbursed over the next three years. “This is the biggest loan in the history of the IMF,” said the fund’s director, Christine Lagarde, on Wednesday as the final loan agreement was announced in New York. The loan – $15bn of which has already been received by Argentina – comes with stringent conditions, including a commitment to a zero deficit for 2019. Argentina had initially secured $50bn in a deal worked out in June after the South American country was battered by a currency crisis, a run on the peso and double-digit inflation. The economy minister, Nicolás Dujovne, said that at the last minute the IMF agreed to increase the lending package by $7.1bn.

Lagarde said that as part of the deal, Argentina’s central bank had agreed to intervene in currency markets only in case of extreme circumstances and that the new amount would help Argentina’s government face its challenges. The agreement will only allow Argentina’s central bank to intervene to stabilize its currency if the peso depreciates below 44 pesos to the dollar. It is currently at 39 pesos to the dollar after losing 50% of its value since the start of the year. The deal was announced just a day after the president of Argentina’s central bank, Nicolás Caputo, resigned unexpectedly, reportedly after disagreements with the IMF’s guideline limiting the bank’s future intervention to rescue the peso. Thousands of Argentinians joined in a nationwide strike on Tuesday to protest against economic turmoil and Mauricio Macri’s austerity measures.

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EU countries are vulnerable in the next crisis; they don’t control their currencies.

The Next Financial Crisis Will Hit In 12-24 Months – Griffin (ZH)

With Ray Dalio predicting that the US has about 2 years until the next recession, earlier today the head of hedge fund Citadel, Ken Griffin, echoed the Bridgewater founder and predicted that there are “at least 18-to-24 months left in the market rally”, thanks to the “giant adrenaline shot” of the U.S. tax overhaul. Speaking at the Bloomberg Global Business Forum in New York Wednesday, Griffin said that “we are in this debt-fueled buying binge.” He said that the U.S. economy is “running hot now” thanks to President Trump’s actions: “The Trump policies, whether deregulation or tax reform, are certainly pushing corporate America to go, go, go,” he said, citing low unemployment and meaningful wage growth.

That’s the “good” news. The bad new: the artificial “binge” that will extend what is already the longest bull market of all time is “laying the seeds of the next financial crisis”, said Griffin. And what may come as a surprise to many, Griffin admitted that that he’s already managing his fund for the next economic downturn. “My position today is very much focused on managing the tail risks for that… we are late in the cycle, the animal spirits have been unleashed and when these correction occur they happen with very little notice”, he said.

In terms of specific crisis catalysts, the hedge fund manager said his biggest worry is the European Union, where individual nations like Italy and Spain can’t print euros to rescue their own economies. “Every crisis in the West for the last 50 years has been ultimately solved by intervention of governments,” he said. “There has been a huge sea change that has taken place, which is in the EU, the individual governments can no longer issue debt in their own currency.” And thanks to Brussels’ monetary strait-jacket, the ability of “those countries as sovereigns to rescue their financial system in the next crisis is greatly diminished or not even there,” he said.

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Seems fair, even if Paris is a dud.

Macron Rejects Trade Deals With Countries Outside Paris Climate Accord (Ind.)

Emmanuel Macron has announced France will no longer accept “commercial agreements” with countries that do not “respect” the Paris Climate Accord during a fiery speech at the United Nations General Assembly. The French president called for the upholding of trade rules that “guarantee fair competition on equal footing” during his Tuesday speech, following a Monday afternoon meeting with Donald Trump and the US president’s speech on Monday morning. Mr Macron appeared defiant towards Mr Trump, suggesting he’d no longer negotiate trade deals with the US after its withdrawal from the climate agreement last year.

“We will no longer sign commercial agreements with powers that do not respect the Paris accord,” Mr Macron said without directly referencing Mr Trump or the US. The high-profile speech arrived a day after Mr Macron met with Mr Trump for a discussion involving trade. Officials from both sides described the meeting as “constructive”. The US is now reportedly the only nation in the world which remains opposed to the Paris Agreement, after Mr Trump decided to pull out of the accord in 2017.

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I’ll just leave this here: ..the Liverpool People’s Choir singing “He Ain’t Heavy, He’s My Brother”.

For The First Time Ever, Jeremy Corbyn Looked Like A Prime Minister (Ind.)

The Labour leader offers no solution to the problems of Brexit, but that doesn’t matter. He knows all he has to do is look the part, sound the part and wait for the desire for change to come to him

It may well be that claims the Labour Party has been turned into a personality cult are not completely fair, and never before has Jeremy Corbyn worked harder to counteract this unjust narrative than when he, Corbyn, stood on stage before his leader’s speech, joining in with the crowds as they chanted “Oooaaah Jeremy Corrrr-byn”. They held aloft scarves reading “Oh Jeremy Corrr-byn”. They sang the words “Oaaaah Jeremy Corr-byn,” and there, both on the stage and towering above on gigantic television screens, Corbyn mouthed along to the song, of which 66 per cent of the lyrics are his own name. To Corbyn’s credit, it certainly placed on proceedings a Waco siege-style edge he would not otherwise have engendered through the power of oratory alone.

As he descended into a spiral of circular arguments on the “mainstream media”, furtive glances were made at the door, wondering when special forces might finally storm the place and liberate the captives. There was no clearer evidence of the civil war that still hides in plain sight in the party than the fact that its deputy leader, the now seven stone lighter Tom Watson, did not address the conference from its main stage. But it would be nice to think his contribution to the party did not go entirely unacknowledged as he led the shadow cabinet on to the stage to the sound of the Liverpool People’s Choir singing “He Ain’t Heavy, He’s My Brother”.

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There’s something dawning.

UK Appoints Food Supplies Minister Amid Fears Of No-Deal Brexit (G.)

The government has appointed a minister to oversee the protection of food supplies through the Brexit process amid rising concerns about the effect of a no-deal departure from the European Union. The MP David Rutley, a former Asda and PepsiCo executive, was handed the brief at the Department for Environment, Food and Rural Affairs earlier this month. Defra said that Rutley, who once ran home shopping and e-commerce businesses at Asda, was merely taking on responsibilities already held by other ministers. He said: “It is an honour to join the Defra ministerial team at such an important time. I am determined to ensure that we fully realise the opportunities of leaving the EU.” Food industry insiders welcomed his appointment after warnings that delays of only half an hour at UK ports and the Irish border would risk one in 10 British firms going bankrupt.

One food industry business leader said: “The issue at the ports is a big threat. The UK always has been a net importer of food. If the ports don’t work then exporters will be struggling and importers will have a challenge too.” The executive said that while some food manufacturers were already setting aside additional supplies, stockpiling was not possible for products with a short shelf life, such as milk or vegetables. Another industry insider said the appointment of Rutley was “totally welcome”. They added: “There has been a level of naivety that people can stockpile food which is completely impossible and shows a misunderstanding of how the supply chain works. We would welcome someone genuinely informed and engaged.”

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Not an exaggeration.

No-Deal Brexit ‘Would Stop British Farming Exports For Six Months’ (G.)

The National Farmers Union has warned of “catastrophic” consequences for the industry if there is no Brexit deal, after being warned by the EU that the UK faces a six-month wait to be certified as an approved third-country supplier. This would be a major setback to the food and drink sector, where exports to the EU are worth £13.2bn a year. The NFU says it has been told informally that although Britain is in complete regulatory alignment with the EU, if there is no deal, the same health checks countries such as China and the US undergo will apply to UK suppliers. “What we are talking about in effect is a six-month trade embargo until such time we can get the product in, from that point we will face the European’s external tariff wall meaning we will be priced out of the market,” said the NFU’s director general, Terry Jones.

It has been told that 6,000 meat processing plants that export to the EU will have to undergo individual audits by British authorities. These will then be checked by EU officials and then put to a standing veterinary committee for approval, a process that the NFU has calculated will take six months “at a conservative reading”. These checks will also be conducted on any other companies supplying food and drink to the EU, including those exporting bottled water, honey, jam, dairy and other fresh foods. “‘No deal is unpalatable and catastrophic for the industry and the more we hear, the more certain we are that our lines all along are right,” said NFU president, Minette Batters.

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Lovely.

UK Could Use Brexit To Avoid EU Ban On Antibiotics Overuse In Farming (G.)

UK farmers could be allowed to use powerful antibiotics in ways soon to be banned by the European Union, after the government was accused of using Brexit to avoid implementing tougher rules on animal health. New rules aimed at curbing overuse of the drugs are being brought in by the European commission, but they will not come into effect before the Brexit cut-off date in March. The Guardian understands that government animal health experts have been advising vets and farmers they will therefore not have to implement the change. A divergence from EU rules could allow farmers and vets in the UK to dose healthy animals through their feed, as well as those diagnosed with illnesses – while EU farmers will be prevented from doing so.

Campaigners say this is irresponsible misuse of antibiotics that can lead to resistance and should be stopped in line with European rules. At an event this summer held by the UK’s Veterinary Medicines Directorate (VMD), which regulates farm antibiotics, the VMD’s director of operations, Paul Green, said the UK would implement the new EU regulations “as fully as we see fit … there may be some clauses we wish to omit [or] alter”. According to a person present at the event, Green then went on to say the government would allow farmers in some circumstances to continue to mix antibiotics in feed and drinking water to groups of animals for disease prevention.

Antibiotic use in farming is controversial; livestock account for the majority of antibiotics consumed, and overuse on herds and flocks can build up resistant bacteria that can spread to humans. Rules on the medicines have been toughened by the EU over the past decade. Under the EU’s planned improvements, it would no longer be possible for vets and farmers to mix antibiotics with feed to be given to large numbers of animals at a time, except under exceptional circumstances. This is seen as essential to cutting the overuse of antibiotics, as currently whole herds or flocks can be treated at once because of one sick animal.

The government is coming under pressure from potential trade partners not to adhere to stringent EU animal welfare standards after Britain leaves the EU, in order to open up the UK market to imports from countries with weaker regulations. The US Department of Agriculture, which has a strong influence on trade deals, has been working on plans that would allow groups of healthy animals to be dosed with antibiotics, against World Health Organization guidelines. These plans could play a key part in future trade with the US.

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In the end, it’s all about energy and thermodynamics.

How UN Scientists Are Preparing For The End Of Capitalism (Nafeez Ahmed)

Capitalism as we know it is over. So suggests a new report commissioned by a group of scientists appointed by the UN secretary general. The main reason? We’re transitioning rapidly to a radically different global economy, due to our increasingly unsustainable exploitation of the planet’s environmental resources and the shift to less efficient energy sources. Climate change and species extinctions are accelerating even as societies are experiencing rising inequality, unemployment, slow economic growth, rising debt levels, and impotent governments. Contrary to the way policymakers usually think about these problems these are not really separate crises at all. These crises are part of the same fundamental transition. The new era is characterised by inefficient fossil fuel production and escalating costs of climate change.

Conventional capitalist economic thinking can no longer explain, predict or solve the workings of the global economy in this new age. Those are the implications of a new background paper prepared by a team of Finnish biophysicists who were asked to provide research that would feed into the drafting of the UN Global Sustainable Development Report (GSDR), which will be released in 2019. For the “first time in human history”, the paper says, capitalist economies are “shifting to energy sources that are less energy efficient.” Producing usable energy (“exergy”) to keep powering “both basic and non-basic human activities” in industrial civilisation “will require more, not less, effort”.

At the same time, our hunger for energy is driving what the paper refers to as “sink costs.” The greater our energy and material use, the more waste we generate, and so the greater the environmental costs. Though they can be ignored for a while, eventually those environmental costs translate directly into economic costs as it becomes more and more difficult to ignore their impacts on our societies. And the biggest “sink cost”, of course, is climate change: “Sink costs are also rising; economies have used up the capacity of planetary ecosystems to handle the waste generated by energy and material use. Climate change is the most pronounced sink cost.”

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“What an education in economics does is make you into a zealot”.

How Economics Became A Cult (Steve Keen)

Watch Steve Keen discuss how mainstream economics acts more like a cult than a science, how mathematics has been misused by the economic discipline, and how with the right tools a grad student can make a better economic model than a central bank.

[..] present day #economics is based on mythomatics, not #mathematics! Economists belong to a cult that make fantastical assumptions and live in a dream world disconnected from real life.

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Tax arrears as high as the entire GDP.

1% Of Greeks Owe 90% Of Tax Arrears To State (K.)

The vast majority of state debtors (93.3 percent) owe amounts of up to 10,000 euros each, while just 1 percent are behind 90 percent of total debts to the state. This is according to data processed by the Independent Authority for Public Revenue that was published in Parliament following a question put to the finance minister. In total, about 3.8 million taxpayers and enterprises have arrears to the Greek state that add up to 101.5 billion euros, most of which have been run up since Greece resorted to the bailout mechanisms.

Data indicate that some 3.6 million Greeks owe up to 10,000 euros each, totaling 3.7 billion euros. About another 240,000 people owe 10,000-100,000 euros, totaling 6.6 billion euros, while major debtors number 41,232 but owe a total of 91.2 billion euros to the state. Notably, about a third of the debtors’ arrears to the state, some 33 billion euros, concerns fines concerning corporate taxation, that have a low collection rate. One of the reasons for this low rate is the particularly heavy fines imposed in the past, which have led to the closure of several enterprises.

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“35% of wetlands across the globe were lost between 1970 and 2015.”

World’s Wetlands Disappearing Three Times Faster Than Forests (AFP)

Wetlands, among the world’s most valuable and biodiverse ecosystems, are disappearing at alarming speed amid urbanisation and agriculture shifts, conservationists said Thursday, calling for urgent action to halt the erosion. “We are in a crisis,” Martha Rojas Urrego, head of the Ramsar Convention on Wetlands, told reporters in Geneva, warning of the potential devastating impact of wetland loss, including on climate change. The convention, adopted in the Iranian city of Ramsar nearly a half-century ago, on Thursday issued its first-ever global report on the state of the world’s wetlands.

The 88-page report found that around 35 percent of wetlands — which include lakes, rivers, marshes and peatlands, as well as coastal and marine areas like lagoons, mangroves and coral reefs — were lost between 1970 and 2015. Today, wetlands cover more than 12 million square kilometres (4.6 million square miles), the report said, warning that the annual rates of loss had accelerated since 2000. “We are losing wetlands three times faster than forests,” Rojas Urrego said, describing the Global Wetland Outlook report as a “red flag”. While the world has been increasingly focused on global warming and its impact on oceans and forests, the Ramsar Convention said wetlands remain “dangerously undervalued”.

Directly or indirectly, they provide almost all of the world’s consumption of freshwater and more than 40 percent of all species live and breed in wetlands. Animals and plants who call wetlands home are particularly vulnerable, with a quarter at risk of extinction, the report said. Wetlands also provide a livelihood for more than one billion people, while mitigating floods and protecting coastlines. They are also a vital source of food, raw materials and genetic resources for medicines.

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Sep 092018
 


Vincent van Gogh A Restaurant at Asnieres 1887

 

The ‘Most Striking Development’ In 40 Years Of The US Economy (BI)
This Insider Betrayal Is A Sorry Precedent (Observer ed.)
Argentina, Turkey, Mexico … Fear Of Contagion Haunts Emerging Markets (G.)
No-Deal Brexit Could Lead To “Military On The Streets” (Ind.)
Brexit Talks At Risk Of Collapse (Ind.)
Bombshell Poll Reveals Heavy Union Backing For Second Brexit Vote (G.)
YouGov Poll Shows Support For A People’s Brexit Vote Is Solid (G.)
Fresh From End Of Bailout, Greek PM Announces Tax Breaks (R.)
Protect Assange From US Extradition, Amnesty International Tells UK (RT)
The Latest Incarnation of Capitalism (Jacobin)
What’s The Biggest Influence On The Way We Think? (G.)

 

 

This is going spectacularly wrong. Somone better stop it.

The ‘Most Striking Development’ In 40 Years Of The US Economy (BI)

French economist Thomas Piketty is one of the world’s leading researchers of global income and wealth inequality, and became well-known in the United States when the English translation of his book “Capital in the 21st Century” became a surprise bestseller. For the past year, Piketty has been speaking about the 2018 World Inequality Report, published by the Paris School of Economics’ World Inequality Lab last December. Piketty coauthored the report alongside Facundo Alvaredo, Lucas Chancel, Emmanuel Saez, and Gabriel Zucman. In his talks in the US, Piketty has paid special attention to the following chart, which shows what he and his coauthors called “perhaps the most striking development in the United States economy over the last four decades.”

The authors write that “the incomes of the top 1% collectively made up 11% of national income in 1980, but now constitute above 20% of national income, while the 20% of US national income that was attributable to the bottom 50% in 1980 has fallen to just 12% today.” Further, “while average pre-tax income for the bottom 50% has stagnated at around $16,000 since 1980, the top 1% has experienced 300% growth in their incomes to approximately $1,340,000 in 2014. This has increased the average earnings differential between the top 1% and the bottom 50% from 27 times in 1980 to 81 times today.”

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The Guardian/Observer, leading anti-Trump voice, has a piece ‘Unfit for President, but…” Look, just like the NYT, you no longer are a voice, because you’ve spent two years 24/7 denouncing the man with rumors and half-truths -like you did with Corbyn being anti-semite. You can’t now turn around and be a voice for democracy. You’re done.

This Insider Betrayal Is A Sorry Precedent (Observer ed.)

[..] the president’s discomfort, and his detractors’ glee, should not obscure more serious issues raised by this affair and by similarly critical revelations contained in a new exposé by the celebrated Watergate reporter Bob Woodward. Whatever one’s opinion of Trump, it is a matter of concern that unelected, unnamed officials are apparently willing and able to act in ways contrary to an elected president’s stated wishes and calculated to thwart his policies. Trump’s worst instincts must undoubtedly be resisted, as Barack Obama, rejoining the fight last week, has declared. The best way to achieve that, as ever in a democracy, is through public scrutiny and open debate. Every leader needs candid advisers.

But who are these self-described “adults in the room” to clandestinely decide what is in the best interests of the country? Their motives may be sound, but their illicit actions, boasted of publicly, set a worrisome precedent. They have also gifted Trump a golden opportunity to peddle his favourite narrative of an establishment conspiring against him, aided and abetted by media organisations – which he terms “enemies of the people”. Speaking in Montana on Thursday, he seized his chance. “Unelected, deep state operatives who defy the voters to push their own secret agendas are truly a threat to democracy itself,” he declared.

The anonymous writer tried to provide reassurance that things in the White House are not as bad as they seem. Woodward’s new book, Fear, suggests the exact opposite: they are worse. It describes a “Crazytown” of tantrums, endless crises, serial lying, unhinged behaviour, and an administration in a recurring state of nervous breakdown.

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It’s not so much dominoes falling one by one, it’s the USD that crashes down everything.

Argentina, Turkey, Mexico … Fear Of Contagion Haunts Emerging Markets (G.)

In the past six months, some of the world’s fastest-growing economies have found themselves flat on the floor, gasping for breath and, in one case, seeking help from the global financial rescue centre otherwise known as the IMF. Argentina’s $50bn bailout by the Washington-based lender of last resort is the most extreme event so far, but it sits alongside the dramatic collapse of the Turkish lira, a recession in South Africa and dire economic predictions for the Philippines, Indonesia and Mexico. Making matters worse, the US is poised to slap tariffs as high as 25% on as much as $200bn worth of Chinese goods. If the US goes ahead, Beijing has already threatened to retaliate, which would only incense President Donald Trump further.

This tit-for-tat might only end when tariffs are applied to the entire $500bn of Chinese goods imported by America each year. In response, the stock markets of many developing nations have slumped in value, leaving investors to ask themselves whether they are witnessing an emerging-markets meltdown akin to the Asian crisis of 1997: a panic that wrecked the finances of several hedge funds and proved to be an hors d’oeuvre before the dotcom crash of 1999 and the global financial crisis of 2008. Investors have run for safety to such an extent that the MSCI Emerging Markets index, which measures the value of shares in emerging economies, has tumbled by more than 20% since the beginning of the year.

That slump appeared to be over in July, when Turkey and Argentina were seen as being isolated, and more importantly ringfenced, economic trouble spots. But figures last week showing that the US economy is steaming along like a runaway train – underlining the likelihood of more US interest rate rises – have sent the currencies and stock markets of most emerging-market economies tumbling again. Lukman Otunuga, research analyst at currency dealer FXTM, says that a sense of doom is lingering in the financial markets as fears of contagion from the “brutal emerging-market sell-off” rattle investor confidence. “More pain seems to be ahead for emerging markets as the combination of global trade tensions, prospects of higher US interest rates and overall market uncertainty haunt investor attraction,” he says.

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Now we’re talking.

No-Deal Brexit Could Lead To “Military On The Streets” (Ind.)

A no-deal Brexit could lead to the “real possibility” of police calling upon the military to help with civil disorder, a leaked document claims. Contingency plans are being drawn up by police chiefs if there is chaos on the streets due to shortages of goods, food and medicine, The document prepared by the National Police Co-ordination Centre (NPoCC) warns of traffic queues at ports with “unprecedented and overwhelming” disruption to the road network. Concerns around medical supplies could “feed civil disorder”, while a rise in the price of goods could also lead to “widespread protest”, the document obtained by the Sunday Times said.

The potential for a restricted supply of goods raised concerns of “widespread protest which could then escalate into disorder”. It could also trigger a rise in non-Brexit-related acquisitive crime such as theft. The document, set to be considered by the National Police Chiefs’ Council (NPCC) later this month, also sets out concerns of increased data costs, loss of warrant cards and queues at ports and docks around the country. Shadow police minister Louise Haigh lashed out at the Government’s handling of the situation. “This is the nightmare scenario long feared; according to the UK’s most senior police officers a no-deal Brexit could leave Britain on the brink,” she said.

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May keeps pushing the same button after it’s failed 1000 times. The EU won’t give.

Brexit Talks At Risk Of Collapse (Ind.)

Brexit talks are at risk of collapse as a planned EU compromise on the critical question of the Irish border has been branded “unacceptable” by British cabinet ministers. The Independent has learnt that EU officials believe they have struck upon “the only way” to bring the two sides together on the Irish border in a bid to secure a withdrawal agreement later this year. But their proposal has already been outright rejected by at least two cabinet ministers, with one going further and branding the EU’s suggestion “bollocks”. The impasse over the Irish border threatens to bring the talks crashing down with Theresa May’s beleaguered Chequers proposal already lacking support both in Europe and among her own MPs in Westminster.

The Independent now understands that the EU will try to break the deadlock in negotiations by offering the UK a vague political declaration on the future UK-EU relationship in return for a deal on the Irish border. A well-placed Brussels source said: “This may well prove the only way to respect the EU’s red lines and allow Theresa May to win approval for a deal in the UK parliament. “The political declaration holds the key to reaching a deal.” Since the start of Brexit talks Brussels has insisted the UK sign up to a legally binding “backstop”, which would come into play if no arrangement to avoid a hard border in Northern Ireland is found before Brexit day. It would see Northern Ireland effectively remain in the EU’s customs union and single market, creating a customs border down the Irish sea – something both Ms May and her DUP partners say is unacceptable.

[..] The strength of opposition indicates Ms May could face a further round of cabinet resignations if she were to consider agreeing to such a proposal, with Boris Johnson and David Davis having already quit earlier this year. A government spokesman said: “We don’t comment on speculation. The proposals we have put forward for our future relationship would allow both sides to meet our commitments to the people of Northern Ireland in full and we are working hard to get a deal on that basis. “But we are clear the EU backstop proposals are unacceptable.”

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The Tories are thinking: we got rid of unions, didn’t we?

Bombshell Poll Reveals Heavy Union Backing For Second Brexit Vote (G.)

Members of Britain’s three biggest trade unions now support a new referendum on Brexit by a margin of more than two to one, according to a bombshell poll that will cause political shockwaves on the eve of the party conference season. The survey of more than 2,700 members of Unite, Unison and the GMB by YouGov, for the People’s Vote campaign, also finds that a clear majority of members of the three unions now back staying in the EU, believing Brexit will be bad for jobs and living standards. The poll comes as union delegates gather in Manchester for the annual TUC conference, where Brexit will be debated on Monday, and two weeks before the Labour party conference in Liverpool, where delegates are expected to debate and vote on Brexit policy. They will also consider calls to keep open the option of a fresh referendum on any deal Theresa May may strike on the UK’s exit from the EU.

In an interview with the Observer before the poll findings were released, shadow chancellor John McDonnell said his preferred option was still for voters to be offered a say on the government’s handling of Brexit – and any deal brought back from Brussels by May – in a general election. But he said that if Labour was unable to force one in the coming months, he wanted to “keep all options open”, including supporting a new referendum. McDonnell said he was sure there would be a full debate, and votes, on Brexit at the Labour conference. And he went out of his way to praise the People’s Vote campaign, which he said had been very “constructive” and had made clear that its attempts to influence Labour policy should not be seen “as an attack on Jeremy Corbyn or positioning around the leadership. It should be a constructive debate and that is right.”

The poll found that members of Unite, the country’s biggest union, and Labour’s largest financial backer, now support a referendum on the final Brexit deal by 59% to 33% and support staying in the EU by 61% to 35%. GMB’s members support putting the issue back to the people by 56% to 33% and its members want the UK to stay in the EU by 55% to 37%. Unison members back another referendum by 66% to 22% and would opt to stay in the EU by 61% to 35%.

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That second vote will come, or else…

YouGov Poll Shows Support For A People’s Brexit Vote Is Solid (G.)

Thirty years ago this week, Jacques Delors came to Bournemouth to urge Britain’s trade unions to change their stance on Europe. The president of the European commission told TUC delegates that the EU was good for workers’ jobs, workers’ rights and workers’ living standards. It was a decisive moment in the union movement’s relationship with Brussels. This week could be equally decisive for the TUC – perhaps even more so – given the precarious balance of forces at Westminster. And the clear message from YouGov’s poll of more than 2,700 members of the TUC’s three biggest unions is that most trade union members think Brexit is bad for jobs; they want a fresh public vote and the chance to keep the UK in the EU.

Can we be sure that YouGov’s figures are right? Do the people it polled accurately reflect the views of all the members of the three big unions? I recall the same questions being asked when YouGov first showed Jeremy Corbyn well ahead in the race for the Labour leadership three years ago. Nonsense, said the critics. YouGov’s respondents, they claimed, were hopelessly biased towards leftwing activists. When it came to it, Corbyn won by almost precisely the majority reported in the final poll. And the methods YouGov used in the latest union survey are essentially the same as it used in Labour’s leadership election three years ago.

It’s not that trade union members are indulging in gesture politics or ideological breast-beating. They are worried about the impact of Brexit on jobs, taxes, living standards and the NHS. They fear a Brexit Britain would find it harder to sell products and services abroad. Their attitudes to immigration are especially significant. In the 2016 referendum, one of the arguments for Brexit was that immigrant workers were undercutting the pay of low-paid British workers. Brexit, so the argument ran, would allow Britain to stop this. As a result, there would be more, and better-paid, jobs for British workers.

Many Unite, Unison and GMB members earn below-average wages. They might be expected to support that part of the Brexit agenda. They don’t. Overwhelming majorities, ranging from 74% to 85%, want EU citizens either to have complete freedom of movement to come to the UK, or the freedom to settle here if they have a job or university place lined up.

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Tsipras is trying to create the impression that he decides and is bold. He has no say at all.

Fresh From End Of Bailout, Greek PM Announces Tax Breaks (R.)

Greek Prime Minister Alexis Tsipras on Saturday unveiled plans for tax cuts and pledged spending to heal years of painful austerity, less than a month after Greece emerged from a bailout program financed by its EU partners and the IMF. Tsipras, who faces elections in about a year’s time, used a keynote policy speech in the northern city of Thessaloniki to announce a spending spree that he said would help fix the ills of years of belt-tightening, and help boost growth. But he said Athens was also committed to sticking to the fiscal targets and reforms promised to its lenders. Greece has agreed to maintain an annual primary budget surplus – which excludes debt servicing costs – of 3.5 percent of GDP up to 2022.

So far, it has outperformed on fiscal goals and the economy has returned to growth. “We will not allow Greece to revert to the era of deficits and fiscal derailment,” he told an audience of officials, diplomats and businessmen. He said would beat its primary surplus target again this year and, following a debt relief deal in June, he could “safely plan its post-bailout future”. Government officials have put this year’s fiscal room at 800 million euros. Tsipras promised a phased reduction of corporate tax to 25 percent from 29 percent from next year, as well as an average 30 percent reduction in a deeply unpopular annual property tax on homeowners, rising to 50 percent for low earners.

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Amnesty’s Aussie branch. Timing?!

Protect Assange From US Extradition, Amnesty International Tells UK (RT)

Amnesty International has backed calls to not extradite WikiLeaks founder Julian Assange to the United States, arguing that this would put his human rights at serious risk of abuse. The statement, issued Friday by the group’s Australian branch, backed Assange’s lawyers and supporters’ claim that if he is sent to the US, “he would face a real risk of serious human rights violations due to his work with WikiLeaks.” Amnesty said that Assange could face several human rights violations in the event that he is extradited to the US, including: violation of his right to freedom of expression; right to liberty; right to life if the death penalty were sought; and being held in conditions that would violate his right to humane treatment.

While Amnesty said it took “no position” on Ecuador’s decision to grant, and then withdraw, Assange’s diplomatic asylum, it did call on the UK government to recognize the “need for international protection vis-a-vis the USA” in relation to the whistleblower’s case. Amnesty has joined several other humanitarian organizations by backing Assange and denouncing any extradition attempt. These include the UN Human Rights office, Human Rights Watch, and the Inter-American Court of Human Rights.

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How cheap money saved and doomed the world at the same time.

The Latest Incarnation of Capitalism (Jacobin)

Financialization — “the increasing importance of financial markets, financial motives, financial institutions, and financial elites in the operation of the economy” — is a process that began in the 1980s with the removal of barriers to capital mobility. Global capital flows rose from about 5 percent of world GDP in the mid-1990s to about 20 percent in 2007. This is about three times faster than world trade flows. Increases in capital mobility helped facilitate the emergence of large imbalances between creditor countries with large current account surpluses and debtors with large current account deficits. According to textbook economic theory, these imbalances should be self-correcting.

When a country runs a deficit, currency is flowing out of the country. If this currency does not return in the form of capital inflows, the resulting increase in supply will exert downward pressure on the currency. A less valuable currency makes your exports cheaper to international consumers and should therefore increase demand for those exports. Played out over the scale of the global economy, this should lead to equilibrium. In the lead-up to the crisis, the fact that this equilibrium was not forthcoming puzzled some economists. Deficit countries should have been experiencing large currency depreciations, given the size of their current account deficits. These depreciations should, in turn, then have increased the competitiveness of their goods.

Ben Bernanke, then chairman of the Fed, accused a number of emerging economies of “hoarding” savings to protect themselves from future crises, preventing the global economy from reaching equilibrium. In fact, deficit countries were able to maintain strong currencies because, even though there was relatively little demand for their goods, there was strong demand for their assets — particularly financial assets. The main reason for the high demand for UK and US assets was the financial deregulation undertaken by neoliberal governments in these states in the 1980s, which facilitated a dramatic expansion in the provision of private credit to individuals, businesses, and financial institutions.

In the UK, consumer debt — primarily composed of mortgage lending — reached 148 percent of household disposable incomes in 2008, the highest it has ever been. While UK banks’ lending to the non-financial economy rose 50 percent between 2005-8, their lending to other financial institutions rose by 260 percent. Capital from the rest of the world flowed into banks in the UK and the US, which were generating significant returns from this lending.

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Google shapes are thought and we have no idea.

What’s The Biggest Influence On The Way We Think? (G.)

Google search is in a different league from earlier tools, and so the consequences of being dependent on it are more serious and far-reaching – for two inter-related reasons. The first is that it can influence what you think you know and shape the way you think because it knows more about you than you realise. And secondly, it’s not a passive tool that you own and control, but the property of a huge corporation that has acquired strange – and in some ways unprecedented – powers. Ten years ago, Nicholas Carr published a striking article – “Is Google Making Us Stupid?” – in the Atlantic. The title was misleading because the thrust of the piece was actually about how the internet might be messing with our brains, and in that sense Carr was using Google as a proxy for the technology in general.

Which is a pity because there are plenty of important questions to be asked about Google’s impact on the way we think. Its search results, for example, are heavily influenced by how many websites it finds that are supposedly relevant to a query. Sometimes, that’s fine. But sometimes it’s toxic – yet many people think it provides the “truth”. And because people’s search queries can sometimes be very revealing, the company knows more about people’s innermost secrets, fears and fantasies than even their friends or partners. We ask Google questions that we would not breathe to any living soul.

So Google, as philosopher Benjamin Curtis points out, is anything but a passive cognitive tool. Its current offerings, boosted by machine learning algorithms, are increasingly suggestive. Its Maps not only provide navigational help but give us “personalised location suggestions that it thinks will interest us”. Gmail makes helpful suggestions about what to type in a reply and Google News highlights stories that it believes we will find interesting. “All of this,” says Curtis, “removes the very need to think and make decisions for ourselves.” It “fills gaps in our cognitive processes, and so fills gaps in our minds”.

In two short decades, therefore, Google has gone from being a geeky delight to something that influences the way we think. All of which brings to mind something that John Culkin, a buddy of Marshall McLuhan, said many years ago: “We shape our tools and then our tools shape us.” Amen to that. And you can Google him to check the quote.

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Sep 032018
 
 September 3, 2018  Posted by at 8:16 am Finance Tagged with: , , , , , , , , , , , ,  12 Responses »


Vincent van Gogh Courtyard of the hospital in Arles 1889

 

China’s ‘Silk Road’ Project Runs Into Debt Jam (AFP)
Should Africa Be Wary Of Chinese Debt? (BBC)
China’s Xi Says No Strings Attached To Funds For Africa (R.)
Anatomy Of A Fusion Smear (WSJ)
No-Deal Brexit: Study Warns Of Severe Short-Term Impact On UK (G.)
Boris Johnson Launches Fresh Attack On May’s Brexit Plans (G.)
Half The Staff Leaves UK’s Brexit Department (Ind.)
Britain Loses Medicines Contracts As EU Body Anticipates Brexit (G.)
Emerging Markets Haunt Spanish Banks (DQ)
Capitalism Is Beyond Saving, and America Is Living Proof (TD)

 

 

I’ve been saying for a long time that the BRI (Belt and Road) is China’s attempt at exporting its overcapacity. They make poor countries borrow billions, which these can’t pay back. And then… Only now do other parties wake up to that. And Xi is trying to do some damage control.

China’s ‘Silk Road’ Project Runs Into Debt Jam (AFP)

China’s massive and expanding “Belt and Road” trade infrastructure project is running into speed bumps as some countries begin to grumble about being buried under Chinese debt. First announced in 2013 by President Xi Jinping, the initiative also known as the “new Silk Road” envisions the construction of railways, roads and ports across the globe, with Beijing providing billions of dollars in loans to many countries. Five years on, Xi has found himself defending his treasured idea as concerns grow that China is setting up debt traps in countries which may lack the means to pay back the Asian giant. “It is not a China club,” Xi said in a speech on Monday to mark the project’s anniversary, describing Belt and Road as an “open and inclusive” project.

Xi said China’s trade with Belt and Road countries had exceeded $5 trillion, with outward direct investment surpassing $60 billion. But some are starting to wonder if it is worth the cost. During a visit to Beijing in August, Malaysia’s Prime Minister Mahathir Mohamad said his country would shelve three China-backed projects, including a $20 billion railway. The party of Pakistan’s new prime minister, Imran Khan, has vowed more transparency amid fears about the country’s ability to repay Chinese loans related to the multi-billion-dollar China-Pakistan Economic Corridor. Meanwhile the exiled leader of the opposition in the Maldives, Mohamed Nasheed, has said China’s actions in the Indian Ocean archipelago amounted to a “land grab” and “colonialism”, with 80 percent of its debt held by Beijing.

Sri Lanka has already paid a heavy price for being highly indebted to China. Last year, the island nation had to grant a 99-year lease on a strategic port to Beijing over its inability to repay loans for the $1.4-billion project.

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“This debt acquired from China comes with huge business for Chinese companies, particularly construction companies that have turned the whole of Africa into a construction site..”

Should Africa Be Wary Of Chinese Debt? (BBC)

African countries have shown a healthy appetite for Chinese loans but some experts now worry that the continent is gorging on debt, and could soon choke. The Entebbe-Kampala Expressway is still something of a tourist attraction for Ugandans, nearly three months after it opened. The 51km (31 mile), four-lane highway that connects the country’s capital to the Entebbe International Airport was built by a Chinese company using a $476m (£366m) loan from the China Exim Bank. It has cut what was a torturous two-hour journey through some of Africa’s worst traffic into a scenic 45-minute drive into the East Africa nation’s capital. Uganda has taken $3bn of Chinese loans as part of a wider trend that Kampala-based economist Ramathan Ggoobi calls its “unrivalled willingness to avail unconditional capital to Africa”.

“This debt acquired from China comes with huge business for Chinese companies, particularly construction companies that have turned the whole of Africa into a construction site for rails, roads, electricity dams, stadia, commercial buildings and so on,” the Makerere University Business School lecturer told the BBC. The Chinese loans come as many African countries are once again in danger of defaulting on their debts more than a decade after many had their outstanding borrowing written off. At least 40% of low-income countries in the region are either in debt distress or at high risk, the International Monetary Fund warned in April.

Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe were considered to be in debt distress at the end of 2017 while Zambia and Ethiopia were downgraded to “high risk of debt distress”. “In 2017 alone, the newly signed value of Chinese contracted projects in Africa registered $76.5bn,” Standard Bank’s China Economist Jeremy Stevens wrote in a note. “However, despite a sizeable remaining infrastructure deficit on the continent, there is a concern that African countries’ debt-service ability will soon dissolve,” he says.

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Until you can’t pay up. China knows many countries won’t be.

China’s Xi Says No Strings Attached To Funds For Africa (R.)

Xi said at a business forum before the start of a triennial China Africa summit their friendship was time-honoured and that China’s investment in Africa came with no political strings attached. “China does not interfere in Africa’s internal affairs and does not impose its own will on Africa. What we value is the sharing of development experience and the support we can offer to Africa’s national rejuvenation and prosperity,” Xi said. “China’s cooperation with Africa is clearly targeted at the major bottlenecks to development. Resources for our cooperation are not to be spent on any vanity projects but in places where they count the most,” he said.

China has denied engaging in “debt trap” diplomacy but Xi is likely to use the gathering of African leaders to offer a new round of financing, following a pledge of $60 billion at the previous summit in South Africa three years ago. Chinese officials have vowed to be more cautious to ensure projects are sustainable. China defends continued lending to Africa on the grounds that the continent still needs debt-funded infrastructure development. Beijing has also fended off criticism it is only interested in resource extraction to feed its own booming economy, that the projects it funds have poor environmental safeguards, and that too many of the workers for them are flown in from China rather than using African labour.

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The Wall Street Journal is the only remaining paper of record. This is an editorial.

Anatomy Of A Fusion Smear (WSJ)

A partner at Foley & Lardner, Ms. Mitchell was astonished to find herself dragged into the Russia investigation on March 13 when Democrats on the House Intelligence Committee issued an interim report. They wrote that they still wanted to interview “key witnesses,” including Ms. Mitchell, who they claimed was “involved in or may have knowledge of third-party political outreach from the Kremlin to the Trump campaign, including persons linked to the National Rifle Association (NRA).” Two days later the McClatchy news service published a story with the headline “NRA lawyer expressed concerns about group’s Russia ties, investigators told.” The story cited two anonymous sources claiming Congress was investigating Ms. Mitchell’s worries that the NRA had been “channeling Russia funds into the 2016 elections to help Donald Trump.”

Ms. Mitchell says none of this is true. She hadn’t done legal work for the NRA in at least a decade, had zero contact with it in 2016, and had spoken to no one about its actions. She says she told this to McClatchy, which published the story anyway. Now we’re learning how this misinformation got around, and the evidence points to Glenn Simpson of Fusion GPS, the outfit that financed the infamous Steele dossier. New documents provided to Congress show that Mr. Simpson, a Fusion co-founder, was feeding information to Justice Department official Bruce Ohr. In an interview with House investigators this week, Mr. Ohr confirmed he had known Mr. Simpson for some time, and passed at least some of his information along to the FBI.

In handwritten notes dated Dec. 10, 2016 that the Department of Justice provided to Congress and were transcribed for us by a source, Mr. Ohr discusses allegations that Mr. Simpson made to him in a conversation. The notes read: “A Russian senator (& mobster) . . . [our ellipsis] may have been involved in funneling Russian money to the NRA to use in the campaign. An NRA lawyer named Cleta Mitchell found out about the money pipeline and was very upset, but the election was over.”

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But they still claim damage won’t be long-lasting..

No-Deal Brexit: Study Warns Of Severe Short-Term Impact On UK (G.)

The short-term impact of a no-deal Brexit on Britain’s economy would be “chaotic and severe”, jeopardising jobs and disrupting trade links, warn experts from the thinktank UK in a Changing Europe. The Brexit secretary, Dominic Raab, has said he believes 80% of the work on completing an exit deal with the EU27 is already done, as negotiations enter their final phase. But his cabinet colleague Liam Fox recently suggested a no-deal scenario – which would occur if negotiations broke down, or both sides agreed to disagree – was the most likely outcome. In a 30-page updated assessment of the impact of no deal, the thinktank said on Monday it would mean “the disappearance without replacement of many of the rules underpinning the UK’s economic and regulatory structure”.

Its analysis claimed that in the short term: • Food supplies could be temporarily disrupted – the beef trade could collapse, for example, as Britain is heavily reliant on EU imports, and would be forced to apply tariffs, in accordance with World Trade Organisation (WTO) rules. • European health insurance cards, which allow British tourists free healthcare in the EU, would be invalid from Brexit day. • There would almost certainly have to be a “hardening of the border” between Northern Ireland and the Irish Republic, including some “physical manifestation”. • The status of legal contracts and commercial arrangements with EU companies would be unclear, as the UK would become a “third country” overnight. • Increased and uncertain processing times for goods at the border would be “nearly certain”, risking queues at Dover and forcing firms to rethink their supply chains.

In the longer term, UK in a Changing Europe’s experts say, the UK would have time to normalise its trading status, and agreements could be struck with the EU27 to tackle many other practical challenges. “It should not be assumed that the damage, while real, will necessarily be long-lasting,” the report says.

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6 months to go. It’ll be a spectacle.

Boris Johnson Launches Fresh Attack On May’s Brexit Plans (G.)

Boris Johnson has used his first newspaper column of the new parliamentary term to attack Theresa May’s Chequers plan, saying it means the UK enters Brexit negotiations with a “white flag fluttering”. The declaration amounts to a significant escalation the former foreign secretary’s guerrilla campaign against the prime minister and her Chequers plan a day before the Commons returns and at a time when party disquiet over the direction of the divorce talks is mounting. Johnson wrote that “the reality is that in this negotiation the EU has so far taken every important trick. The UK has agreed to hand over £40 billion of taxpayers’ money for two thirds of diddly squat”.

Johnson added that by adopting the Chequers plan, which will see the UK adopt a common rule book for food and goods, “we have gone into battle with the white flag fluttering over our leading tank”. It will be “impossible for the UK to be more competitive, to innovate, to deviate, to initiate, and we are ruling out major free trade deals,” he added. The intervention comes after a summer in which the former minister, who resigned over the Chequers deal, had avoided touching on Brexit in his Daily Telegraph column – although he did unleash a storm of complaint by describing fully veiled Muslim women as looking like letter boxes and bank robbers. It will be seen as preparing the ground for a leadership challenge to May just as the Brexit negotiations reach their critical phase in the autumn, which is to culminate in any final deal agreed by the UK government being put to parliament for a vote.

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“..the average age of workers left in the department is 32..”

Half The Staff Leaves UK’s Brexit Department (Ind.)

The number of officials who have left the Whitehall department trying to deliver Brexit is equivalent to more than half of its total staff, shock new figures reveal. Data seen by The Independent shows hundreds of civil servants went elsewhere as the department tried to get on its feet and cobble together a negotiating stance for the UK over the last two years. The exodus means the average age of workers left in the department is 32, though they are tasked with winning a complex deal that could change Britain for a generation.

The information obtained by the Liberal Democrats appears to corroborate previous reports about an extraordinarily high turnover at the Department for Exiting the European Union (Dexeu), with critics now claiming it points to “deep instability” at the heart of the government’s Brexit operation. According to the turnover data obtained under freedom of information, a staggering 357 staff have left the Dexeu in just two years. Yet the total number of those employed at the Whitehall department amounts to only 665, indicating a turnover rate of more than 50 per cent in that period.

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Expect many more similar examples.

Britain Loses Medicines Contracts As EU Body Anticipates Brexit (G.)

Britain’s leading role in evaluating new medicines for sale to patients across the EU has collapsed with no more work coming from Europe because of Brexit, it has emerged. The decision by the European Medicines Agency to cut Britain out of its contracts seven months ahead of Brexit is a devastating blow to British pharmaceutical companies already reeling from the loss of the EMA’s HQ in London and with it 900 jobs. All drugs sold in Europe have to go through a lengthy EMA authorisation process before use by health services, and the Medicines & Healthcare products Regulatory Agency (MHRA) in Britain has built up a leading role in this work, with 20-30% of all assessments in the EU.

The MHRA won just two contracts this year and the EMA said that that work was now off limits. “We couldn’t even allocate the work now for new drugs because the expert has to be available throughout the evaluation period and sometimes that can take a year,” said a spokeswoman. In a devastating second blow, existing contracts with the MHRA are also being reallocated to bloc members. Martin McKee, the professor of European health at the London School of Hygiene and Tropical Medicine, who has given evidence to select committees about Brexit, said it was a disaster for the MHRA, which had about £14m a year from the EMA. The head of the Association of British Pharmaceutical Industry said it was akin to watching a “British success story” being broken up.

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Draghi!!

Emerging Markets Haunt Spanish Banks (DQ)

Almost exactly six years ago, the Spanish government requested a €100 billion bailout from the Troika (ECB, European Commission and IMF) to rescue its bankrupt savings banks, which were then merged with much larger commercial banks. Over €40 billion of the credit line was used; much of it is still unpaid. Yet Spain’s banking system could soon face a brand new crisis, this time not involving small or mid-sized savings banks but instead its alpha lenders, which are heavily exposed to emerging economies, from Argentina to Turkey and beyond. In the case of Turkey’s financial system, Spanish banks had total exposure of $82.3 billion in the first quarter of 2018, according to the Bank for International Settlements.

That’s more than the combined exposure of lenders from the next three most exposed economies, France, the USA, and the UK, which reached $75 billion in the same period. According to BIS statistics, Spanish banks’ exposure to Turkey’s economy almost quadrupled between 2015 and 2018, largely on the back of Spain’s second largest bank BBVA’s madcap purchase of roughly half of Turkey’s third largest lender, Turkiye Garanti Bankasi. Since buying its first chunk of the bank from the Turkish group Dogus and General Electric in 2010, BBVA has lost over 75% of its investment under the combined influence of Garanti’s plummeting shares and Turkey’s plunging currency.

But the biggest fear, as expressed by the ECB on August 10, is that Turkish borrowers might not be hedged against the lira’s weakness and begin to default en masse on foreign currency loans, which account for a staggering 40% of the Turkish banking sector’s assets. If that happens, the banks most exposed to Turkish debt will be hit pretty hard. And no bank is as exposed as BBVA, though the lender insists its investments are well-hedged and its Turkish business is siloed from the rest of the company. In Argentina, whose currency continues to collapse and whose economy is now spiraling down despite an IMF bailout, Spanish banks’ total combined investments amounted to $28 billion in the first quarter of 2018. That represented almost exactly half of the $58.9 billion that foreign banks are on the hook for in the country. The next most at-risk banking sector, the US, has some $10 billion invested.

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Maybe you should define capitalism first.

Capitalism Is Beyond Saving, and America Is Living Proof (TD)

Real wage growth has been nonexistent in the United States for more than 30 years. But as America enters the 10th year of the recovery—and the longest bull market in modern history—there are nervous murmurs, even among capitalism’s most reliable defenders, that some of its most basic mechanisms might be broken. The gains of the recovery have accrued absurdly, extravagantly to a tiny sliver of the world’s superrich. A small portion of that has trickled down to the professional classes—the lawyers and money managers, art buyers and decorators, consultants and “starchitects”—who work for them. For the declining middle and the growing bottom: nothing.

This is not how the economists told us it was supposed to work. Productivity is at record highs; profits are good; the unemployment rate is nearing a meager 4 percent. There are widely reported labor shortages in key industries. Recent tax cuts infused even more cash into corporate coffers. Individually and collectively, these factors are supposed to exert upward pressure on wages. It should be a workers’ market. But wages remain flat, and companies have used their latest bounty for stock buybacks, a transparent form of market manipulation that was illegal until the Reagan-era SEC began to chip away at the edifice of New Deal market reforms.

The power of labor continues to wane; the Supreme Court’s Janus v. AFSCME decision, while ostensibly limited to public sector unions, signaled in certain terms the willingness of the court’s conservative majority—five guys who have never held a real job—to effectively overturn the entire National Labor Relations Act if given the opportunity. The justices, who imagine working at Wendy’s is like getting hired as an associate at Hogan & Hartson after a couple of federal clerkships, reason that every employee can simply negotiate for the best possible deal with every employer.

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Aug 162018
 
 August 16, 2018  Posted by at 8:51 am Finance Tagged with: , , , , , , , , , , , , ,  16 Responses »


Vasily Polenov Moscow courtyard 1878

 

Turkish Lira Rallies As Qatar Makes $15bn Loan Pledge (G.)
Turkey Slashes Capacity Of Banks To Bet Against Struggling Lira (CNBC)
Turkey Joins Russia In Liquidating US Treasuries (ZH)
Turkey Wants Its Share Of Syria’s Reconstruction (AlM)
Italy, Not Turkey, Is The Biggest Threat To European Banks (CNBC)
RBS Bankers Joked About Destroying The US Housing Market (G.)
Elizabeth Warren Unveils Bold New Plan To Reshape American Capitalism (G.)
Our “Prosperity” Is Now Dependent on Predatory Globalization (CHS)
EU Rebuffs Idea Of Escalating Brexit Talks To Leaders’ Summit (G.)
Trump Strikes Back at ‘Ringleader’ Brennan (Ray McGovern)
Trump Is Right: America Was ‘Built On Tariffs’ (MW)
Rand Paul Thinks Julian Assange Should Be Granted Immunity for Testimony (GP)
Australia’s Record Household Debt Is A Ticking Time Bomb (ZH)
SEC Serves Tesla With Subpoena (CNBC)
Monsanto’s Roundup Found In Wide Range Of Cereals Aimed At Children (G.)

 

 

$15 billion is chump change.

Turkish Lira Rallies As Qatar Makes $15bn Loan Pledge (G.)

Turkey’s beleagured currency has bounced back from record lows after Qatar pledged to shore up the banking sector’s shaky finances with loans worth $15bn. A week after a diplomatic spat with the US sent the lira into a tailspin, the agreement with Qatar was calculated to help Turkey avoid having to ask the IMF for emergency funding. Officials in Ankara said the Qatari money would be “channeled into Turkey’s financial markets and banks”, with the implication that the investment would be enough to head off a banking collapse. However, while the investment gave the Turkish lira much-needed respite, the US president Donald Trump’s announcement of further trade sanctions against Ankara, along with concerns about the rising value of the dollar and weak profits in Chinese tech firms, sent global financial markets into reverse.

[..] Mohamed A El-Erian, the chief economic adviser at the German insurer Allianz, tweeted that Erdogan’s policies, including the Qatari investment, would act like sticking plaster, leaving the possibility open for an IMF rescue. He said: “This is part of the Turkish government’s strategy to avoid the IMF by finding alternative external support. To be a sustainable stabilizer, funding needs to be larger and reach the central bank.” However, the lira rallied by 6% after the Qatari pledge and a separate move by Turkey’s central bank to boost the finances of the country’s banks. In an effort to defend the lira, Turkey’s central bank tightened its rules on currency swaps and other foreign exchange transactions, limiting the ability of banks to supply lira to foreign financial companies.

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It’s hardly ever a good sign when short sellers are curtailed. Question is why are they shorting?

Turkey Slashes Capacity Of Banks To Bet Against Struggling Lira (CNBC)

Action by Turkey’s banking regulator has stymied investor ability to buy and short the lira, helping the currency to gain value in overnight trade. The Banking Regulation and Supervision Agency (BRSA) has reduced the amount of swap market contracts that offshore banks can undertake, reducing their access to the beleaguered currency. A swap is where on flow of cash income, usually a fixed or steady rate, is swapped for a typically riskier flow of income. The derivative contract is set for a fixed period. The BRSA has stipulated that banks now cannot run swap contracts for no more than 25% of the equity that they hold. The figure was previously 50%.

BlueBay Asset Management strategist Timothy Ash said in a note Wednesday that Turkey’s central bankers had finally taken action to restrict international access to lira. “They are killing offshore TRY (lira) liquidity to stop foreigners shorting the lira,” he said before adding “why did they not do all this much earlier?” [..] This year the dollar has gained more than 60% in value versus the lira, and the Turkish currency has become the world’s worst performer this year.

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Maybe Turkey simply needs the money?!

Turkey Joins Russia In Liquidating US Treasuries (ZH)

Last month, when we reported that Russia had liquidated the bulk of its US Treasury holdings in just two months, we said that “we can’t help but wonder – as the Yuan-denominated oil futures were launched, trade wars were threatened, and as more sanctions were unleashed on Russia – if this wasn’t a dress-rehearsal, carefully coordinated with Beijing to field test what would happen if/when China also starts to liquidate its own Treasury holdings.” As it turns out, Russia did lead the way, but not for China. Instead, another recent US foreign nemesis, Turkey, was set to follow in Putin’s footsteps of “diversifying away from the dollar”, and in the June Treasury International Capital, Turkey completely dropped off the list of major holders of US Treasurys, which has a $30 billion floor to be classified as a “major holder.”

According to the US Treasury, Turkey’s holdings of bonds, bills and notes tumbled by 52% since the end of 2017, dropping to $28.8 billion in June from $32.6 billion in May and $61.2 billion at the recent high of November of 2016. [..] The selloffs took place well before a diplomatic fallout between the US and both Turkey and Russia resulted in new sets of sanctions and tariffs imposed on both nations. The Trump administration last week imposed new sanctions against Russia in response to the nerve agent poisoning in the U.K. of a former Russian spy and his daughter. Meanwhile, the Turkish selloff certainly continued into July and August as U.S. relations with Turkey deteriorated this week

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It‘s in Putin’s hands.

Turkey Wants Its Share Of Syria’s Reconstruction (AlM)

Although Turkey publicly appears to sustain its anti-Bashar al-Assad stance on Syria, it is actually getting ready for a new Syria that will allow Assad to stay on as the country’s president. While a termination of the de facto Kurdish autonomy in northern Syria seems to be the first precondition for a possible normalization between Ankara and Damascus, there is another unspoken condition as well: the allotment of a share in Syria’s reconstruction. Naturally, the Assad administration does not have the intention to allot any share to Turkey, which is accused of supporting anti-regime military groups that have destroyed the country and looted Aleppo’s industrial zones. However, Turkey’s control of a sizable territory in northern Syria and its cooperation with Russia make it difficult for Damascus to exclude Turkey from these calculations.

Turkey’s influence over opposition groups that could have a bearing on the Geneva process can not be dismissed. Turkey has been able to preserve its most important trading partner position with Syria despite the seven-year-old conflict. Its geographical proximity to Syria, logistical superiority and advanced capacity of its construction sector encourages Turkey to obtain a substantial part in the reconstruction process. Moreover, Turkey is currently organizing local entities in al-Bab, Jarablus, Azaz, Cobanbey and Afrin that are de facto under its control. It is also setting up systems for security, education, religion and even issuing ID cards to residents. In addition it has started building a road network.

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“The issues in Italy… in the next three months are going to dictate the whole European banking narrative for the next three to five years,”

Italy, Not Turkey, Is The Biggest Threat To European Banks (CNBC)

The European Central Bank (ECB) was reported Friday to be concerned that the ongoing currency crisis in Turkey could result in problems for the continent’s banks. However, the real problem for Europe’s banking industry is Italy and what happens in that country in the coming months, an analyst said Tuesday. “The issues in Italy… in the next three months are going to dictate the whole European banking narrative for the next three to five years,” Tom Kinmonth, fixed income strategist at ABN Amro, told CNBC’s “Squawk Box Europe.” Italy’s economy is the third largest in the European Union and the country’s new coalition government is currently working on next year’s budget.

Its financial plan will be closely scrutinized by European authorities and, more importantly, by market players, following promises to increase public spending. Investors are wary of rises in pensions and state benefits, given that Italy already has a significantly high public debt pile — the second largest in the euro zone, at about 130% of GDP. If market players do not approve of the next budget, due around October, then borrowing costs for Italy are likely to go up, which in turn could affect neighboring European countries. It could also create problems for certain European banks that hold Italian debt.

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And they’re still in business.

RBS Bankers Joked About Destroying The US Housing Market (G.)

RBS bankers joked about destroying the US housing market after making millions by trading loans that staff described as “total fucking garbage”, according to transcripts released as part of a $4.9bn (£3.8bn) settlement with US prosecutors. Details of internal conversations at the bank emerged just weeks before the 10-year anniversary of the financial crisis, which saw RBS rescued with a £45bn bailout from the UK government. The US Department of Justice (DoJ) criticised RBS over its trade in residential mortgage backed securities (RMBS) – financial instruments underwritten by risky home loans that are cited as pivotal in the global banking crash. It said the bank made “false and misleading representations” to investors in order to sell more of the RMBS, which are forecast to result in losses of $55bn to investors.

Transcripts published alongside the settlement reveal the attitude among senior bankers at RBS towards some of the products they sold. The bank’s chief credit officer in the US referred to selling investors products backed by “total fucking garbage” loans with “fraud [that] was so rampant … [and] all random”. He added that “the loans are all disguised to, you know, look okay kind of … in a data file.” The DoJ said senior RBS executives “showed little regard for their misconduct and, internally, made light of it”. In one exchange, as the extent of the contagion in the banking industry was becoming clear, RBS’ head trader received a call from a friend who said: “[I’m] sure your parents never imagine[d] they’d raise a son who [would] destroy the housing market in the richest nation on the planet.” He responded: “I take exception to the word ‘destroy.’ I am more comfortable with ‘severely damage.’”

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No chance until the whole thing collapses.

Elizabeth Warren Unveils Bold New Plan To Reshape American Capitalism (G.)

Elizabeth Warren, the Massachusetts senator tipped as a Democratic presidential candidate in 2020, has unveiled new plans for legislation aimed at reining in big corporations, redistributing wealth, and giving workers and local communities a bigger say. Warren will introduce the bill dubbed the Accountable Capitalism Act on Wednesday. The proposal aims to alter a model she says has caused corporations to chase profits for shareholders to the detriment of workers. Under the legislation, corporations with more than $1bn in annual revenue would be required to obtain a corporate charter from the federal government – and the document would mandate that companies not just consider the financial interests of shareholders.

Instead, businesses would have to consider all major corporate stakeholders – which could include workers, customers, and the cities and towns where those corporations operate. Anyone who owns shares in the company could sue if they believed corporate directors were not meeting their obligations. Employees at large corporations would be able to elect at least 40% of the board of directors. An estimated 3,500 public US companies and hundreds of other private companies would be covered by the mandates. [..] Large companies dedicated 93% of their earnings to shareholders between 2007 and 2016 – a shift from the early 1980s, when they sent less than half their revenue to shareholders and spent the rest on employees and other priorities, Warren said.

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Here’s what Warren wants to change.

Our “Prosperity” Is Now Dependent on Predatory Globalization (CHS)

So here’s the story explaining why “free” trade and globalization create so much wonderful prosperity for all of us: I find a nation with cheap labor and no environmental laws anxious to give me cheap land and tax credits, so I move my factory from my high-cost, highly regulated nation to the low-cost nation, and keep all the profits I reap from the move for myself. Yea for free trade, I’m now far wealthier than I was before. That’s the story. Feel better about “free” trade and globalization now? Oh wait a minute, there’s something missing–the part about “prosperity for all of us.” Here’s labor’s share of U.S. GDP, which includes imports and exports, i.e. trade:

Notice how labor’s share of the economy tanked once globalization / offshoring kicked into high gear? Now let’s see what happened to corporate profits at that same point in time:

Imagine that–corporate profits skyrocketed once globalization / offshoring kicked into high gear. Explain that part about “makes us all prosperous” again, because there’s no data to support that narrative. What’s interesting about all this is the way that politicians are openly threatening voters with recession if they vote against globalization. In other words, whatever “prosperity” is still being distributed to the bottom 80% is now dependent on a predatory version of globalization.

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Britain simply refuses to understand what the EU is. May can only get what she wants if the EU bends itself out of shape. Not going to happen.

EU Rebuffs Idea Of Escalating Brexit Talks To Leaders’ Summit (G.)

European officials have poured cold water on hopes that Theresa May could negotiate Brexit with other EU leaders in September to break the deadlock over Britain’s departure. Diplomatic sources have rejected suggestions that May could hold direct talks on Brexit with the 27 other EU heads of state and government at a summit in Salzburg next month. “That is completely ridiculous, that is complete overspin of Salzburg,” one senior source told the Guardian. “It would mean that we would ditch our negotiating approach of the last two years and discuss at 28 instead of 27 to one, and I don’t see why this would happen.” Brexit talks are due to resume in Brussels on Thursday and Friday, the start of a new intense phase of negotiations, with the aim of reaching a deal in the autumn.

Since the referendum, the EU has insisted that all formal talks are led by the chief negotiator, Michel Barnier. May is allowed to update EU leaders on her plans at quarterly EU summits but is not in the room for discussions. Officials expect this approach to be continued at Salzburg, an informal summit on 20 September officially dedicated to migration. The meeting has been organised by Austria, which currently holds the EU rotating presidency, but it will be for the European council president, Donald Tusk, to decide whether to add Brexit to the agenda. The Salzburg gathering comes four weeks before an EU summit in Brussels, pencilled in by Barnier as the moment to strike a deal. Many in Brussels expect the deadline to slip to November or even December, squeezing the time available to ratify the text ahead of the UK’s departure on 29 March 2019.

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The view of a CIA veteran.

Trump Strikes Back at ‘Ringleader’ Brennan (Ray McGovern)

There’s more than meets the eye to President Donald Trump’s decision to revoke the security clearances that ex-CIA Director John Brennan enjoyed as a courtesy customarily afforded former directors. The President’s move is the second major sign that Brennan is about to be hoist on his own petard. It is one embroidered with rhetoric charging Trump with treason and, far more important, with documents now in the hands of congressional investigators showing Brennan’s ringleader role in the so-far unsuccessful attempts to derail Trump both before and after the 2016 election.

Brennan will fight hard to avoid being put on trial but will need united support from from his Deep State co-conspirators — a dubious proposition. One of Brennan’s major concerns at this point has to be whether the “honor-among-thieves” ethos will prevail, or whether some or all of his former partners in crime will latch onto the opportunity to “confess” to investigators: “Brennan made me do it.” Well before Monday night, when Trump lawyer Rudy Giuliani let a small bomb drop on Brennan, there was strong evidence that Brennan had been quarterbacking illegal operations against Trump. Giuliani added fuel to the fire when he told Sean Hannity of Fox news:

“I’m going to tell you who orchestrated, who was the quarterback for all this … The guy running it is Brennan, and he should be in front of a grand jury. Brennan took … a dossier that, unless he’s the biggest idiot intelligence agent that ever lived … it’s false; you can look at it and laugh at it. And he peddled it to [then Senate Majority Leader] Harry Reid, and that led to the request for the investigation. So you take a false dossier, get Senators involved, and you get a couple of Republican Senators, and they demand an investigation — a totally phony investigation.”

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History lessons always good.

Trump Is Right: America Was ‘Built On Tariffs’ (MW)

President Trump defended his use of tariffs to force other countries to renegotiate “unfair” trade deals by claiming that “our country was built on tariffs.” He’s right. America was a staunchly protectionist country for most of its history before World War II. One of the very first bills new President George Washington signed, for instance, was the Tariff Act of 1789. He inked the bill on July 4 of that year. The tariff of 1789 was designed to raise money for the new federal government, slash Revolutionary War debt and protect early-stage American industries from foreign competition. Then, as now, some industries sought protection in Congress from a flood of imports. Most goods entering the U.S. were subjected to a 5% tariff, though in a few cases the rates ranged as high as 50%.

It was the first of many tariffs that Congress passed over a century and a half. They generated the vast majority of the federal government’s revenue until the U.S. adopted an income tax in 1913. Tariffs have always been a source of controversy, however, starting with that very first one. Early on, the North preferred higher tariffs to protect infant American industries such as textiles from established English manufacturers. Alexander Hamilton, the nation’s first Treasury secretary, feared the U.S. would remain a weakling unless it built its own industries and became economically independent of the mother country. Over time the arguments on behalf of protectionism became closely tied to the emerging Republican party.

“Give us a protective tariff and we will have the greatest nation on earth,” a young politician named Abraham Lincoln said in 1847. Later, as the country’s 16th president, Lincoln rejected free trade and jacked up tariffs during the Civil War to pay for the North’s military campaigns.

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Paul has already topped the Iran regime change cabal. Let’s hope he gets his way again. Assange can be a very important Russiagate witness.

Rand Paul Thinks Julian Assange Should Be Granted Immunity for Testimony (GP)

Senator Rand Paul believes that WikiLeaks founder Julian Assange should be given immunity in exchange for him testifying before the Senate Intelligence Committee. Speaking to the Gateway Pundit, Senator Paul asserted that Assange likely has important information about the hack and that it’s unlikely he would agree to testify without immunity. “I think that he should be given immunity from prosecution in exchange for coming to the United States and testifying,” Senator Paul told the Gateway Pundit. “I think he’s been someone who has released a lot of information, and you can debate whether or not any of that has caused harm, but I think really he has information that is probably pertinent to the hacking of the Democratic emails that would be nice to hear.” “It’s probably unlikely to happen unless he is given some type of immunity from prosecution,” Senator Paul added.

[..] Christine Assange, Julian’s mother, has a list of things that she would like to see happen before her son agrees to testify. She told the Gateway Pundit that her wishes include an end to the WikiLeaks grand jury, a dismissal of charges against all WikiLeaks staff, safe passage for him to a nation where he can receive medical care and an agreement that there will be no future US extradition requests. She would also like to see the testimony conducted publicly through Skype.

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Household debt. Mortal enemy no. 1. Check it where you live.

Australia’s Record Household Debt Is A Ticking Time Bomb (ZH)

The Australian household debt to income ratio has ballooned to shocking levels over the past three decades as Sydney is ranked as one of the most overvalued cities in the world. According to the Daily Mail Australia, credit card bills, home mortgages, and personal loans now account for 189% of an average Australian household income, compared with just 60% in 1988, as Callus Thomas, Head of Research of Topdown Charts, demonstrates that record high household debt is a ticking time bomb. The average Australian credit card bill is roughly $3,272.70 as average income earners spend at least $2,000 a month on mortgage repayments, which has contributed to the affordability crisis, said the Daily Mail Australia.

The average Australian holds about a $400,000 mortgage after they put down 20% deposit for a $500,000 property. The paper notes that the loan would barely buy a one-bedroom unit in most outer suburbs, as full-time workers take in about $82,000 salary per annum and spend an alarming 40% on mortgage repayments. With household debt at crisis levels, CoreLogic said Australian home prices experienced their sharpest monthly drops in July since late 2011 as declines gathered momentum in Sydney and Melbourne (Sydney and Melbourne cover about 60% of Australia’s housing market by value and 40% by number). Nationally, the index of home prices dropped .60% in July from June, leading to an annual fall of 1.6%.

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The board may have to get rid of Musk. But what is Tesla without him?

SEC Serves Tesla With Subpoena (CNBC)

The Securities and Exchange Commisison has served Tesla with a subpoena after CEO Elon Musk tweeted that he was considering taking the company private and that he had the necessary funding lined up, according to reports from The New York Times and other outlets published Wednesday. Earlier reports said the SEC had intensified scrutiny of the automaker after the controversial tweet. A subpoena would be one of the first steps in a formal inquiry. Shares of Tesla were down 3% in afternoon trading, though they moved only a fraction of 1% following the Times article.

Musk publicly floated the possibility of taking the company private in a tweet that sent shares seesawing and company leadership scrambling. His statement that he had the “funding secured” came under particular scrutiny, as it may have violated an SEC rule that essentially stipulates public statements made by company executives must be true. Musk explained earlier this week that the Saudi Arabia sovereign wealth fund had expressed interest in taking Tesla private.

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Will this get the EU to move?

Monsanto’s Roundup Found In Wide Range Of Cereals Aimed At Children (G.)

Significant levels of the weedkilling chemical glyphosate have been found in an array of popular breakfast cereals, oats and snack bars marketed to US children, a new study has found. Tests revealed glyphosate, the active ingredient in the popular weedkiller brand Roundup, present in all but two of the 45 oat-derived products that were sampled by the Environmental Working Group, a public health organization. Nearly three in four of the products exceeded what the EWG classes safe for children to consume. Products with some of the highest levels of glyphosate include granola, oats and snack bars made by leading industry names Quaker, Kellogg’s and General Mills, which makes Cheerios.

One sample of Quaker Old Fashioned Oats measured at more than 1,000 parts per billion of glyphosate. The Environmental Protection Agency has a range of safe levels for glyphosate on crops such as corn, soybeans, grains and some fruits, spanning 0.1 to 310 parts per million. “I grew up eating Cheerios and Quaker Oats long before they were tainted with glyphosate,” said EWG’s president, Ken Cook. “No one wants to eat a weedkiller for breakfast, and no one should have to do so.” Cook said EWG will urge the EPA to limit the use of glyphosate on food crops but said companies should “step up” because of the “lawless” nature of the regulator under the Trump administration.

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Mar 212018
 
 March 21, 2018  Posted by at 9:24 am Finance Tagged with: , , , , , , , , , , , ,  6 Responses »


Dirk de Herder Amstel Bridge, Amsterdam1946

 

Sign of Pending Recession? Total American Net Worth Ratio At New High (CNBC)
EU To Unveil Digital Tax Targeting Facebook, Google (AFP)
UK Tells Facebook’s Auditors Visiting Cambridge Analytica To Stand Down (CNBC)
Whatsapp Co-Founder Who Made Billions From Facebook Now Says To Delete It (MW)
The NSA Worked To “Track Down” Bitcoin Users – Snowden Documents (IC)
Bitcoin Bust Is Like Nasdaq Crash, But Faster (BBG)
German Prosecutors Launch New Enquiry Into VW Over Market Manipulation (R.)
Capitalism And The Veil Of Ignorance (Claire Connelly)
Libya: The True Face Of ‘Humanitarian Intervention’ (RT)
France’s Bird Population Collapses As Pesticides Kill Off Insects (AFP)

 

 

Net worth my ass.

Sign of Pending Recession? Total American Net Worth Ratio At New High (CNBC)

Nine years into the second-longest bull market run in history, the level of total net worth compared with income has reached a record, according to Joe LaVorgna, chief economist for the Americas at Natixis, citing Federal Reserve data. Since the Great Recession ended in June 2009, the disparity between net worth and income has soared, attributable in large part to the growth in financial assets, which have increased by $33.9 trillion, compared with $10.4 trillion in nonfinancial assets. Essentially, that means that American wallets have grown fatter from the accumulation of financial assets like stocks and mutual fund holdings than they have from gains in their homes and other physical assets like autos.

In all, total net worth of $98.75 trillion is now 6.79 times the $14.55 trillion in disposable income for households as of the fourth quarter, according to Fed financial accounts figures. That’s up from 6.71 times in the third quarter. The previous tops came in the first quarter of 2006, with 6.51, and the first quarter of 2000, at 6.12. Those two levels cast ominous signals over the U.S. economy. “A recession started four quarters from the peak of the former and eight quarters from the zenith in the latter,” LaVorgna said Tuesday in a note to clients. As a practical matter, the level should serve as a yellow flag for Fed officials, who are on a course of hiking rates gradually but steadily.

[..] The Fed is an important part of the equation in that it helped boost financial assets through historically low interest rates and an aggressive policy of monthly bond buying called quantitative easing. This is the first meeting for new Chairman Jerome Powell, who must navigate the Fed through rate increases aimed at controlling but not stopping growth. After years of mostly steady gains since the bull market run began in 2009, volatility has crept in 2018 and raised the specter that forward gains will be tougher to achieve. “Powell needs to be mindful of the current backdrop and not signal aggressive rate hikes to come,” LaVorgna said. “Otherwise, stock prices and the economy are in trouble.”

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Brussels and Facebook: they’re going to come for part of the loot of selling your data.

EU To Unveil Digital Tax Targeting Facebook, Google (AFP)

The EU will unveil proposals for a digital tax on US tech giants on Wednesday, bringing yet more turmoil to Facebook after revelations over misused data of 50 million users shocked the world. The special tax is the latest measure by the 28-nation European Union to rein in Silicon Valley giants and could further embitter the bad-tempered trade row pitting the EU against US President Donald Trump. EU Economics Affairs Commissioner Pierre Moscovici will present proposals aimed at recovering billions of euros from mainly US multinationals that shift earnings around Europe to pay lower tax rates.

The transatlantic blow has been championed by French President Emmanuel Macron and will be discussed over dinner at an EU leaders summit on Thursday. “This will be given top priority as tax file. There is a lot of political momentum on this issue,” an EU official said ahead of the announcement. The unprecedented tech tax follows major anti-trust decisions by the EU that have cost Apple and Google billions and also caught out Amazon. The commission’s tax, expected to be about 3% of sales, would affect revenue from digital advertising, paid subscriptions and the selling of personal data.

The EU tax plan will target mainly US companies with worldwide annual turnover above 750 million euros ($924 million), such as Facebook, Google, Twitter, Airbnb and Uber. Spared are smaller European start-ups that struggle to compete with them. Companies like Netflix, which depend on subscriptions, will also avoid the chop. Brussels is seeking to choke tax-avoidance strategies used by the tech giants that, although legal, deprive EU governments of billions of euros in revenue.

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Got to admit, hard to say who I’d trust least with this, Facebook or the UK deep state.

UK Tells Facebook’s Auditors Visiting Cambridge Analytica To Stand Down (CNBC)

The U.K.’s data protection watchdog ordered Facebook’s auditors to back down from a probe into a political analytics company accused of wrongly harvesting the data of millions of its users. The tech giant was planning to investigate Cambridge Analytica’s servers and systems, but the Information Commissioner’s Office told Facebook on Monday that it should withdraw from the research firm’s London premises. The ICO said it would seek to gain its own warrant to access the company’s computers and servers.

Facebook had said Monday that it was pursuing a forensic audit of Cambridge Analytica and had hired digital forensics firm Stroz Friedberg to determine whether the data analytics company still possessed Facebook user data. But in an updated statement later that day, Facebook said: “Independent forensic auditors from Stroz Friedberg were on site at Cambridge Analytica’s London office this evening. At the request of the U.K. Information Commissioner’s Office, which has announced it is pursuing a warrant to conduct its own on-site investigation, the Stroz Friedberg auditors stood down.”

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Sold his shares first?!

Whatsapp Co-Founder Who Made Billions From Facebook Now Says To Delete It (MW)

WhatsApp co-founder Brian Acton left Facebook last year. Now he’s saying others should do the same. In a tweet Tuesday, Action said: “It is time. #deletefacebook,” referencing the online movement that is gaining steam in the wake of revelations that the personal data of 50 million Facebook users was used without their permission by political data company Cambridge Analytica during the 2016 presidential campaign. He did not immediately expand on his comment. While his Facebook profile was still active for hours after his tweet, it appeared deactivated later Tuesday night.

Acton and fellow co-founder Jan Koum sold the messaging service WhatsApp to Facebook in 2014 for $22 billion. Acton received about $3 billion in the deal, and has a net worth of about $5.5 billion, according to Forbes. After staying on for three years, Acton quit Facebook in September, and is now a major backer of rival messaging service Signal, which boasts encryption to make its messages resistent to government surveillance. In February, he joined the newly launched nonprofit Signal Foundation as executive chairman, and invested $50 million into the app.

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Now connect this to the Facebook stories.

The NSA Worked To “Track Down” Bitcoin Users – Snowden Documents (IC)

Classified documents provided by whistleblower Edward Snowden show that the National Security Agency indeed worked urgently to target bitcoin users around the world — and wielded at least one mysterious source of information to “help track down senders and receivers of Bitcoins,” according to a top-secret passage in an internal NSA report dating to March 2013. The data source appears to have leveraged the NSA’s ability to harvest and analyze raw, global internet traffic while also exploiting an unnamed software program that purported to offer anonymity to users, according to other documents. Although the agency was interested in surveilling some competing cryptocurrencies, “Bitcoin is #1 priority,” a March 15, 2013 internal NSA report stated.

The documents indicate that “tracking down” bitcoin users went well beyond closely examining bitcoin’s public transaction ledger, known as the Blockchain, where users are typically referred to through anonymous identifiers; the tracking may also have involved gathering intimate details of these users’ computers. The NSA collected some bitcoin users’ password information, internet activity, and a type of unique device identification number known as a MAC address, a March 29, 2013 NSA memo suggested. In the same document, analysts also discussed tracking internet users’ internet addresses, network ports, and timestamps to identify “BITCOIN Targets.”

The agency appears to have wanted even more data: The March 29 memo raised the question of whether the data source validated its users, and suggested that the agency retained bitcoin information in a file named “Provider user full.csv.” It also suggested powerful search capabilities against bitcoin targets, hinting that the NSA may have been using its XKeyScore searching system, where the bitcoin information and wide range of other NSA data was cataloged, to enhance its information on bitcoin users. An NSA reference document indicated that the data source provided “user data such as billing information and Internet Protocol addresses.” With this sort of information in hand, putting a name to a given bitcoin user would be easy.

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One took 519 days, the other 35 days. That’s an actual compariosn?

Bitcoin Bust Is Like Nasdaq Crash, But Faster (BBG)

Bitcoin has long been compared to the dot-com bubble. Morgan Stanley says its recent moves are similar to the tech boom and bust, but on steroids. Bitcoin’s recent moves almost mirror that of the Nasdaq Composite Index in the lead-up to and aftermath of 2000, but at 15 times the speed, Morgan Stanley said. The Nasdaq climbed 278% in 519 days in the rally leading up to its high in March 2000, while Bitcoin soared 248% in 35 days in the last leg of the rally to its $19,511 high in December, according to the report. There have been three waves of weakness since Bitcoin peaked in December, with prices falling between 45% and 50% each time, before rebounding.

The Nasdaq’s bear market from 2000 had five price declines, averaging a similar 44%. The bear market also looks similar on the way up. There have been two Bitcoin bear market rallies of 43% on average, while the Nasdaq bear market rallies averaged 40%. Bear markets are nothing new for the first decentralized digital currency. Since the coin’s creation in 2009 there have been four bear markets with price declines ranging from 28% to 92%. From the December peak to the most recent low on February, Bitcoin’s price fell by 70%, “nothing out of the ordinary,” Morgan Stanley said.

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C’mon, close them down already. This movie’s getting boring.

German Prosecutors Launch New Enquiry Into VW Over Market Manipulation (R.)

German prosecutors said on Tuesday they had searched Volkswagen’s headquarters as part of a new investigation into whether the carmaker had overstated the fuel efficiency of more vehicles than previously disclosed. The news is the latest setback in the German company’s efforts to move on from a 2015 scandal in which it admitted to cheating U.S. emissions tests on diesel engines. Prosecutors from the city of Braunschweig searched 13 offices at Volkswagen’s (VW) headquarters in nearby Wolfsburg at the start of March, seizing documents and computer files that will now be reviewed, a spokesman for the prosecutor’s office said, confirming a report by German magazine WirtschaftsWoche.

They were checking a statement issued by VW on Dec. 9, 2015—about three months after its “dieselgate” scandal broke in the United States—over suspicions its contents were incorrect In that statement, VW said its own investigations found it had understated fuel consumption, and hence carbon dioxide (CO2) emissions, on no more than 36,000 vehicles. That was much lower than its preliminary estimate of around 800,000 diesel and gasoline vehicles produced five weeks earlier, which caused VW to warn it could face a 2 billion euro ($2.5 billion) hit to profits from the disclosure. VW also said in its December 2015 statement that it had found no evidence of unlawful alterations to CO2 emissions data.

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We might as well keep thinking as long as we still can.

Capitalism And The Veil Of Ignorance (Claire Connelly)

So our taxes don’t pay for spending, so what? So the government can’t run out of money. Big deal. Does that change anything? ‘We can’t afford it’ has been the proverbial comforter of opponents of the welfare state harking back to the Clinton / Blair days. Perhaps even earlier. And while it might make you feel good to believe that, it is simply untrue. This argument has been used as an emotional crutch for people who don’t want to admit that they’re comfortable with homelessness and unemployment if it keeps export prices low. Or the currency competitive. Or their bottom line stable. Ultimately, this comes down to what government is for, and what role markets should play in our lives. People are divided on this. And that is ok. Civil disagreements are a hallmark of a civilised society.

Economies and markets are complex beasts, that perform differently in different environments, under different conditions. Arguably across the duration of time, a range of potential solutions could apply at any given scenario. And the best solution is to pick and choose from a range of different economic schools of thought, and use them in combination. Unfortunately, across the world, the economists and historians that are seeking to gain greater clarity of how to do just that, by understanding the true function of economies and markets are being pushed out of universities and barred from institutions and organisations that would allow their research to come to fruition. This is not a mark of a civilised society, but corporate fascism that is actively suppressing research that threatens the dominance of late-stage capitalism.

If you feel comfortable convincing yourself that unemployment and homelessness is acceptable, if you think the fact that wages have not only stagnated but are in many countries actually going backwards somehow doesn’t affect you, that what most people earn in a lifetime will be insufficient to cover a modestly comfortable retirement should not concern you, that addressing any one of these things would be a detriment not only to your bottom line but to the economy itself, if you can justify that position without relying on arguments over deficits and balanced budgets, well, more power to you, I guess. But we should be honest about our disagreements. And our opinions should be informed by an as accurate understanding of how wealth is created as possible.

For many people, whether or not government can afford to address unemployment and social spending isn’t the issue, the question is whether it should. The argument over budgets, debt ceilings and deficits have been used as a national pacifier that would have us believe that the health of the economy and our ability to earn a living relies on a degree of human suffering. We have been convinced that the balancing of federal budgets somehow relates to our ability to put food on the table, when in fact the opposite is true. These lies have made us paranoid and competitive, where the well-being of everyone else is a direct threat to our own. It’s a pretty genius strategy, really.

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On the 15th anniversary of the invasion of Iraq.

“Libya had the highest GDP per capita and life expectancy on the continent. Less people lived below the poverty line than in the Netherlands.”

Libya: The True Face Of ‘Humanitarian Intervention’ (RT)

Seven years ago today, NATO began its “humanitarian bombing” of Libya. While “humanitarian bombing” is an oxymoron, many believe that a country is not truly advancing human rights if it’s not bombing another back to the Stone Age. As an initial matter, it must be said that while the UN had authorized a NATO fly-zone over Libya to protect civilians – all civilians, by the way – there was never authorization for the full-scale invasion which was carried out and which quickly became aimed at regime change. Therefore, the NATO operation which actually took place was illegal.

[..] the intervention was spearheaded by Hillary Clinton, Samantha Power and Susan Rice – three self-described warriors for human and women’s rights. Instead, they became three ushers of the Apocalypse. In addition, Italy and France, which also helped lead the charge for invasion, had their own reasons for intervening in Libya. For his part, French President Nicolas Sarkozy appeared to be singularly focused on killing Libyan leader Muammar Gaddafi, who allegedly gave him €50 million for his presidential campaign – a claim which was just coming to light and to which Gaddafi was the chief witness.

[..] Gaddafi had taken Libya from being the least prosperous country in Africa to the being the most prosperous by the time of the NATO operation. Thus, as one commentator explains, before the intervention, “Libya had the highest GDP per capita and life expectancy on the continent. Less people lived below the poverty line than in the Netherlands.” Moreover, one of the main reasons, we were told, that NATO needed to intervene in 2011 was to save Benghazi from imminent harm from the government forces of Gaddafi.

However, Hillary Clinton’s own internal emails show that her team recognized that any humanitarian problems confronting Benghazi had passed by the time of the NATO bombing. For example, Clinton’s assistant, Huma Abedin, in an email dated February 21, 2011 – that is, just a mere four days after the initial anti-government protests broke out in Libya – explains that the Gaddafi forces no longer controlled Benghazi and that the mood in the city was indeed “celebratory” by that time. Then, on March 2, just over two weeks before the bombing began, Harriet Spanos of USAID sent an email describing “[s]ecurity reports” which “confirm that Benghazi has been calm over the past couple of days.”

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Rhinos, insects, birds. You are next.

Bird populations in France have fallen by 33% in just 15 years.

France’s Bird Population Collapses As Pesticides Kill Off Insects (AFP)

Bird populations across the French countryside have fallen by a third over the last decade and a half, researchers have said. Dozens of species have seen their numbers decline, in some cases by two-thirds, the scientists said in a pair of studies – one national in scope and the other covering a large agricultural region in central France. “The situation is catastrophic,” said Benoit Fontaine, a conservation biologist at France’s National Museum of Natural History and co-author of one of the studies. “Our countryside is in the process of becoming a veritable desert,” he said in a communique released by the National Centre for Scientific Research (CNRS), which also contributed to the findings.

The common white throat, the ortolan bunting, the Eurasian skylark and other once-ubiquitous species have all fallen off by at least a third, according a detailed, annual census initiated at the start of the century. A migratory song bird, the meadow pipit, has declined by nearly 70%. The museum described the pace and extent of the wipe-out as “a level approaching an ecological catastrophe”. The primary culprit, researchers speculate, is the intensive use of pesticides on vast tracts of monoculture crops, especially wheat and corn. The problem is not that birds are being poisoned, but that the insects on which they depend for food have disappeared.

“There are hardly any insects left, that’s the number one problem,” said Vincent Bretagnolle, a CNRS ecologist at the Centre for Biological Studies in Chize. Recent research, he noted, has uncovered similar trends across Europe, estimating that flying insects have declined by 80%, and bird populations has dropped by more than 400m in 30 years. Despite a government plan to cut pesticide use in half by 2020, sales in France have climbed steadily, reaching more than 75,000 tonnes of active ingredient in 2014, according to EU figures. “What is really alarming, is that all the birds in an agricultural setting are declining at the same speed, even ’generalist’ birds,” which also thrive in other settings such as wooded areas, said Bretagnolle.

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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.

Read more …

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.

Read more …

Oct 222017
 
 October 22, 2017  Posted by at 2:02 pm Finance Tagged with: , , , , , , , , , ,  14 Responses »


Alfred Wertheimer Elvis 1956

 

New Zealand’s new prime minister Jacinda Ardern calls capitalism a blatant failure. Former Greek finance minister Yanis Varoufakis says capitalism is ‘merely’ coming to an end because it is making itself obsolete. Mathematics professor Bruce Boghosian claims that without redistribution of wealth, our market economy would not be stable, because wealth always tends to concentrate. The people at Artemis Capital Management write that the stock market has begun self-cannibalizing like a snake eating its tail, and the only reason we’re not in a recession already is ‘financial alchemy’.

At the very least we can say that the system is under pressure. But what system is that? It would be nice to have a clearcut definition of capitalism, but alas, there are many, about as many as there are different forms of it. That doesn’t make this any easier. Americans call many European economies ‘socialist’, which seems to mean they are not capitalist. But Scandinavian countries don’t function like the Soviet Union either.

And if you see how much money is involved in transfer payments to citizens in the US, the supposed bastion of free market capitalism, it’s tempting to conclude the system has already failed. But even with transfer payments, inequality is at record levels. That would seem to confirm Boghosian’s statement that “even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result..” So what then?

 

 

Varoufakis and others want a “universal basic dividend”, or “universal basic income”. Would that be the end of capitalism as we know it? Or is it just a -perhaps more extreme- form of ‘state capitalism’? Varoufakis deems it inevitable because technology will eradicate so many jobs from societies that people won’t be able to make money from work. Personally, I’ve long thought that the pending large-scale demise of pensions systems will lead to some form of UBI.

37-year-young Jacinda Ardern is very clear in her assessment of New Zealand’s form of capitalism. If you’ve got the worst homelessness in the developed world, you have a broken system. If the system fails the people, it’s no good. Other people might argue that capitalism never promised to take care of everyone. Or rather, not through state interference. Labour’s Ardern has her view:

 

New Zealand’s New Prime Minister Brands Capitalism A ‘Blatant Failure’

[Jacinda] Ardern, has pledged her government will increase the minimum wage, write child poverty reduction targets into law, and build thousands of affordable homes. In her first full interview since becoming prime minister-elect, she told current affairs programme The Nation that capitalism had “failed our people”. “If you have hundreds of thousands of children living in homes without enough to survive, that’s a blatant failure,” she said. [..] “When you have a market economy, it all comes down to whether or not you acknowledge where the market has failed and where intervention is required. Has it failed our people in recent times? Yes. How can you claim you’ve been successful when you have growth roughly 3%, but you’ve got the worst homelessness in the developed world?”

So to which extent should a state interfere in markets, and in society at large? There are obviously wide ideological divides when it comes to answering that one. Does that mean there is no answer possible at all? Perhaps not. Perhaps the answer lies in the fact that the system is predestined to fail, as Boghosian’s mathematical models suggest: “Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair..”

That doesn’t necessarily demand a lot of interference, we could ‘simply’ write the rules of the game in such a way that the ‘natural tendency’ towards wealth concentration is blocked. An example is the history of the top US income tax rate. Arguably, the nation was doing a lot better under Eisenhower and Kennedy, with a top rate of 91%, than it is today. If you put a few rules like that in play, perhaps including Varoufakis’ idea of a ‘common welfare fund’, maybe the state doesn’t have to interfere much otherwise.

 

 

One of the main underlying claims of capitalism, and of macroeconomics in general, is that markets -and societies- will sort themselves out if left alone. Bruce Boghosian says this is not true, and that he has the math to prove it. The entire notion of markets tending towards a ‘supply-demand equilibrium’ is nonsense, he says (echoing Minsky, Steve Keen et al). Trickle-down economics is a figment of the imagination, while trickle up-economics flourishes.

This refutes much of what our economic systems are based on, which would appear to indicate that we need an urgent revision of these systems. Unless we would agree that Darwin-on-Steroids is a good idea. We don’t and won’t, because it would mean Stephen Foster’s “frail forms fainting at the door” all over the place. A market ideology that causes widespread misery has no future.

 

The Mathematics of Inequality

Seven years ago, the combined wealth of 388 billionaires equaled that of the poorest half of humanity , according to Oxfam International. This past January the equation was even more unbalanced: it took only eight billionaires, marking an unmistakable march toward increased concentration of wealth. Today that number has been reduced to five billionaires.

Trying to understand such growing inequality is usually the purview of economists, but Bruce Boghosian, a professor of mathematics, thinks he has found another explanation—and a warning. Using a mathematical model devised to mimic a simplified version of the free market, he and colleagues are finding that, without redistribution, wealth becomes increasingly more concentrated, and inequality grows until almost all assets are held by an extremely small percent of people.

“Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair,” he said. “Our model, which is able to explain the form of the actual wealth distribution with remarkable accuracy, also shows that free markets cannot be stable without redistribution mechanisms. The reality is precisely the opposite of what so-called ‘market fundamentalists’ would have us believe.”

While economists use math for their models, they seek to show that an economy governed by supply and demand will result in a steady state or equilibrium, while Boghosian’s efforts “don’t try to engineer a supply-demand equilibrium, and we don’t find one,” he said. [..] The model tracks the data with remarkable accuracy, he said. He and his team will soon publish a paper on how it relates to U.S. wealth data from 1989 to 2013.

“We have also begun to apply it to wealth data from the ECB, and so far it seems to work very well for certain European countries as well,” he said [..] It turns out that when agents do well in early transactions, the odds are so increasingly stacked in their favor that—without redistribution from taxes or other wealth-transfer mechanisms—they will get more money, and keep accruing wealth inevitably.

“Without redistribution of wealth, our market economy would not be stable,” said Boghosian. “One person would run away with all the wealth, and it would keep going until it came to complete oligarchy.” And even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result,” Boghosian said.

If markets and societies cannot survive under current rules, theories and ideologies, what do we do? The Artemis guys strongly suggest we stop the practice of excessive stock buybacks- even if they’re the only thing propping up the whole market system. Because they’re leading us straight into a recession. Because they’re making that recession a lot worse.

 

Volatility and the Alchemy of Risk

The Ouroboros, a Greek word meaning ‘tail devourer’, is the ancient symbol of a snake consuming its own body in perfect symmetry. The imagery of the Ouroboros evokes the infinite nature of creation from destruction. The sign appears across cultures and is an important icon in the esoteric tradition of Alchemy. Egyptian mystics first derived the symbol from a real phenomenon in nature. In extreme heat a snake, unable to self-regulate its body temperature,will experience an out-of-control spike in its metabolism. In a state of mania, the snake is unable to differentiate its own tail from its prey,and will attack itself, self-cannibalizing until it perishes. In nature and markets, when randomness self-organizes into too perfect symmetry, order becomes the source of chaos.

The Ouroboros is a metaphor for the financial alchemy driving the modern Bear Market in Fear. Volatility across asset classes is at multi-generational lows. A dangerous feedback loop now exists between ultra-low interest rates, debt expansion, asset volatility, and financial engineering that allocates risk based on that volatility. In this self-reflexive loop volatility can reinforce itself both lower and higher. In a market where stocks and bonds are both overvalued, financial alchemy is the only way to feed our global hunger for yield, until it kills the very system it is nourishing.

 

 

[..] At the head of the Great Snake of Risk is unprecedented monetary policy. Since 2009 Global Central Banks have pumped in $15 trillion in stimulus creating an imbalance in the investment demand for and supply of quality assets. Long term government bond yields are now the lowest levels in the history of human civilization dating back to 1285. As of this summer there was $9.5 trillion worth of negative yielding debt globally. Last month Austria issued a 100-year bond with a coupon of only 2.1%(6) that will lose close to half its value if interest rates rise 1% or more. The global demand for yield is now unmatched in human history. None of this makes sense outside a framework of financial repression.

Amid this mania for investment, the stock market has begun self-cannibalizing… literally. Since 2009, US companies have spent a record $3.8 trillion on share buy-backs financed by historic levels of debt issuance. Share buybacks are a form of financial alchemy that uses balance sheet leverage to reduce liquidity generating the illusion of growth. A shocking +40% of the earning-per-share growth and +30% of the stock market gains since 2009 are from share buy-backs. Absent this financial engineering we would already be in an earnings recession.

Any strategy that systematically buys declines in markets is mathematically shorting volatility. To this effect, the trillions of dollars spent on share buybacks are equivalent to a giant short volatility position that enhances mean reversion. Every decline in markets is aggressively bought by the market itself, further lowing volatility. Stock price valuations are now at levels which in the past have preceded depressions including 1928, 1999, and 2007. The role of active investors is to find value, but when all asset classes are overvalued, the only way to survive is by using financial engineering to short volatility in some form.

Yanis Varoufakis doesn’t so much argue that capitalism has already failed, he says it is bound to fail in the near future. Because new technology, including artificial intelligence, will destroy too many jobs for society to continue to function intact. That is already happening, in that we both produce and consume Google’s ‘products’, but we get none of the profits. An example:

 

Google’s Plan To Revolutionise Cities Is A Takeover In All But Name

Alphabet’s weapons are impressive. Cheap, modular buildings to be assembled quickly; sensors monitoring air quality and building conditions; adaptive traffic lights prioritising pedestrians and cyclists; parking systems directing cars to available slots. Not to mention delivery robots, advanced energy grids, automated waste sorting, and, of course, ubiquitous self-driving cars. Alphabet essentially wants to be the default platform for other municipal services. Cities, it says, have always been platforms; now they are simply going digital.

“The world’s great cities are all hubs of growth and innovation because they leveraged platforms put in place by visionary leaders,” states the proposal. “Rome had aqueducts, London the Underground, Manhattan the street grid.” Toronto, led by its own visionary leaders, will have Alphabet. Amid all this platformaphoria, one could easily forget that the street grid is not typically the property of a private entity, capable of excluding some and indulging others. Would we want Trump Inc to own it? Probably not. So why hurry to give its digital equivalent to Alphabet?

Google aims at taking over our entire communities, and claims this will be to our benefit. We let the new technology companies expand far and wide, to a large extent because our ‘leaders’ don’t understand what is happening any better than we do. But that is not a good thing, for many different reasons. It’ll be very hard to whistle them back later, both because of the wealth they’re building, and because of the intensifying links they have to government, including -or especially- the intelligence community.

 

Capitalism Is Ending Because It Has Made Itself Obsolete

Former Greek finance minister Yanis Varoufakis has claimed capitalism is coming to an end because it is making itself obsolete. The former economics professor told an audience at University College London that the rise of giant technology corporations and artificial intelligence will cause the current economic system to undermine itself.

Mr Varoufakis [..] said companies such as Google and Facebook, for the first time ever, are having their capital bought and produced by consumers. “Firstly the technologies were funded by some government grant; secondly every time you search for something on Google, you contribute to Google’s capital,” he said. “And who gets the returns from capital? Google, not you. “So now there is no doubt capital is being socially produced, and the returns are being privatised. This with artificial intelligence is going to be the end of capitalism.”

Warning Karl Marx “will have his revenge ”, the 56-year-old said for the first time since capitalism started, new technology “is going to destroy a lot more jobs than it creates”. He added: “Capitalism is going to undermine capitalism , because they are producing all these technologies that will make corporations and the private means of production obsolete. “And then what happens? I have no idea.”

Describing the present economic situation as “unsustainable” and fearing the rise of “toxic nationalism”, Mr Varoufakis said governments needed to prepare for post-capitalism by introducing redistributive wealth policies. He suggested one effective policy would be for 10% of all future issue of shares to be put into a “common welfare fund” owned by the people. Out of this a “universal basic dividend” could be paid to every citizen.

Has capitalism failed already, as Jacinda Ardern claims, or will that happen only in the future, as Varoufakis says? It may be a moot question once the system and the markets start collapsing. That they will, and must, is not a question but a certainty, even a mathematical one. Whatever your ideology, that is not a good thing. And the current ideology has caused this, that much is clear.

If the remaining wealth is not divided better than it is today, those who have gathered most of it will also find themselves in non-functioning societies and communities. Unless perhaps you’re George W. and have property in Paraguay.

But even then. We’re eating our tails.

 

 

Oct 222017
 
 October 22, 2017  Posted by at 9:14 am Finance Tagged with: , , , , , , , ,  1 Response »


Edmund Melzl The Buddhas of Bamiyan in Afghanistan 1958

 

Political Economics (Snider)
Smart Money And Dumb Money Are Moving In Opposite Directions (MW)
Beijing Is The Covert Buyer Of A Quarter Of All Chinese Real Estate (ZH)
The Mathematics of Inequality (TuftsNow)
New Zealand’s New Prime Minister Brands Capitalism A ‘Blatant Failure’ (Ind.)
Euroskeptic Billionaire on Route to Czech Election Victory (BBG)
US Immigrant Population Climbed To Record 43.7 Million In 2016 (F.)
After 54 Years America Deserves To Know Everything (PP)
Into the Cold and Dark (Jim Kunstler)
Google’s Plan To Revolutionise Cities Is A Takeover In All But Name (O.)
Put Drivers In Control (NEF)
“Success, Greeks No Longer Seek Food In Garbage Bins” (KTG)
5 Year Old Syrian Girl Dies In ‘Concentration Camp’ Funded By UK Taxpayers (RT)

 

 

“How can anyone claim the Fed under Yellen or Bernanke performed even minimally well?”

Political Economics (Snider)

The political winds are changing, and the parties themselves are being realigned in different directions (which is not something new; there have been several re-alignments throughout American history even though the two major parties have been entrenched since the 1850’s when Republicans first appeared). Who the next Fed Chair is could tell us something about how far along we are in this evolution. What Krugman wants, meaning, it is safe to assume, what all those like him want, is simple: success. He believes that the central bank has given us exactly that, therefore it is stupid to upset what works.

“In particular, both Bernanke and Yellen responded effectively to a once-in-three-generations economic crisis despite constant heckling from back-seat drivers in Congress and on the political right in general. And their intellectual and moral courage has been completely vindicated by events.” This is right here is the very central point of political difference that is pulling the world slowly apart. Krugman offers no evidence for his assertion, that the Fed has performed admirably and successfully, he just states it as if it was so (a common tactic in the mainstream, the fallacy of authority). Whenever challenged on this contention, the argument will always go back to “jobs saved.”

A worse counterfactual downside is not a rational standard for evaluation in any discipline or context. The only benchmark that should matter is recovery, as any economy facing recession, even an unusually severe one, has to make it back to the prior condition. On that score the Fed has utterly and unambiguously failed. One reason for it is the one thing Economists like Krugman never bring up; the 2008 panic. How can anyone claim the Fed under Yellen or Bernanke performed even minimally well? The very fact that the panic happened at all is a direct indictment on monetary policy and the people who were there during it (you had one job to do!).

[..] The irrational, emotional defense for the ideology is what is driving political upheaval, including Donald Trump’s occupying the White House. To most people, Krugman’s ideas and assertions are nonsense. They don’t have to know anything about QE’s effect on the TBA market and dollar rolls, how exactly McDonald’s was borrowing from FRBNY, or what it was that AIG did that ultimately made the Federal Reserve profits. People know the Fed did a bunch of stuff that didn’t work because they can tell there is something very wrong with the economy.

Read more …

Short, long, smart, dumb.

Smart Money And Dumb Money Are Moving In Opposite Directions (MW)

While all seems calm in the U.S. equity markets, with stocks continuing to hit all-time highs, an interesting trend has emerged beneath the surface. Combing through the latest Commitments of Traders report from the Commodity Futures Trading Commission (CFTC), we found that commercial traders (“smart money”) have a record number of short positions in the Dow Jones Industrial Average. At the same time, noncommercial traders (“dumb money”) have a record number of long positions. You may be thinking “one group thinks stocks will go up, and the other thinks stocks will go down. What’s the big deal?” Here’s the big deal. There’s a strong negative correlation between commercial traders’ short positions and the Dow Jones Industrial Average, as the below chart shows. When short positions increase, the DJIA usually falls … perfect timing!

The opposite also is true. When noncommercial traders increase their long positions, the market usually drops shortly thereafter. It seems they have a habit of buying the market at exactly the wrong time.

Given that the “smart money” usually wins this tug of war, let’s focus on the reasons behind their negative outlook for stocks. Here’s some of the reasons professional money managers may be growing cautious about stocks today. Findings from Goldman Sachs Asset Management (GSAM) show that by just about every measure, stocks are expensive today. But it’s not only U.S. stocks that are trading at all-time highs. This chart from Deutsche Bank shows that, in their own words, “we’re in a period of very elevated global asset prices — possibly the most elevated in history.”

Lofty valuations are likely a big factor in Warren Buffett’s and Seth Klarman’s reasoning for holding record levels of cash in their portfolios. In September, Buffett’s Berkshire Hathaway had $99.7 billion in cash on the sidelines. Klarman’s Baupost Group held 42% of its portfolio in cash, the largest single position. So U.S. stocks are expensive by most measures. But they have been expensive for quite some time. High valuations don’t mean a crash is imminent. They do, however, tell us something about future returns.

Read more …

Absolutely nuts. But then, the Fed buys mortgage backed securities…

Beijing Is The Covert Buyer Of A Quarter Of All Chinese Real Estate (ZH)

According to a fascinating new WSJ report, China’s housing downturn is likely far worse than meets the eye, as under Beijing’s direction more than 200 cities across China for the last three years have been buying surplus apartments from property developers and moving in families from condemned city blocks and nearby villages. China’s Housing Ministry, which is behind the purchases, said it plans to continue the program through 2020. The strategy, supported by central-government bank lending, has rescued housing developers and lifted the property market, As the WSJ notes, this latest backdoor bailout “It is a sharp illustration of China’s economy under President Xi Jinping and the economic challenges he will face as he renews his 5-year term at a twice-a-decade Communist Party Congress that opens on Wednesday.”

Rosealea Yao from Gavekal Dragonomics, who was also quoted above, wrote that “the government’s creativity in coming up with new ways of supporting the housing market is impressive—but it’s also an indication that it still depends on housing for growth.” While traditionally, China’s government used to build homes for families who lost theirs to development or decay, last year, local governments, from the northeast rust belt to the city of Bengbu with 3.7 million amid the croplands of central Anhui province, spent more than $100 billion to buy housing from developers or subsidize purchases, according to Gavekal Dragonomics. In other words, the reason why China no longer has ghost cities is because the government is buying them in just as concerning, “ghostly” transcations.

The underlying structure is yet another typically-Chinese ponzi scheme: “Underpinning the strategy is a cycle of debt. Cities borrow from state banks for purchases and subsidies, then sell more land to developers to repay the loans. As developers build more housing, they, too, accrue more debt, setting up the state to bail them out again. The burden on the state rises, as does the risk of collapse.” [..] Beijing is now the (covert) marginal buyer of a quarter of all Chinese real estate. That, in itself, is a mindblowing statistic. What is scarier, is that despite this implicit backstop, property sales are once again declining after 30 months of increases. One can only imagine the epic crash that would ensue at this moment, if – for some reason – the government bid were to be pulled, and just how spectacular the ensuing global depression would be as the rug is pulled from below the middle class of the world’s fastest growing economy.

Read more …

“..And even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result..”

The Mathematics of Inequality (TuftsNow)

Seven years ago, the combined wealth of 388 billionaires equaled that of the poorest half of humanity, according to Oxfam International. This past January the equation was even more unbalanced: it took only eight billionaires, marking an unmistakable march toward increased concentration of wealth. Today that number has been reduced to five billionaires. Trying to understand such growing inequality is usually the purview of economists, but Bruce Boghosian, a professor of mathematics, thinks he has found another explanation—and a warning. Using a mathematical model devised to mimic a simplified version of the free market, he and colleagues are finding that, without redistribution, wealth becomes increasingly more concentrated, and inequality grows until almost all assets are held by an extremely small% of people.

“Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair,” he said. “Our model, which is able to explain the form of the actual wealth distribution with remarkable accuracy, also shows that free markets cannot be stable without redistribution mechanisms. The reality is precisely the opposite of what so-called ‘market fundamentalists’ would have us believe.” While economists use math for their models, they seek to show that an economy governed by supply and demand will result in a steady state or equilibrium, while Boghosian’s efforts “don’t try to engineer a supply-demand equilibrium, and we don’t find one,” he said. [..] The model tracks the data with remarkable accuracy, he said. He and his team will soon publish a paper on how it relates to U.S. wealth data from 1989 to 2013.

“We have also begun to apply it to wealth data from the ECB, and so far it seems to work very well for certain European countries as well,” he said [..] It turns out that when agents do well in early transactions, the odds are so increasingly stacked in their favor that—without redistribution from taxes or other wealth-transfer mechanisms—they will get more money, and keep accruing wealth inevitably. “Without redistribution of wealth, our market economy would not be stable,” said Boghosian. “One person would run away with all the wealth, and it would keep going until it came to complete oligarchy.” And even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result,” Boghosian said.

Read more …

Well that’s clear enough.

New Zealand’s New Prime Minister Brands Capitalism A ‘Blatant Failure’ (Ind.)

New Zealand’s new prime minister called capitalism a “blatant failure”, before citing levels of homelessness and low wages as evidence that “the market has failed” her country’s poor. Jacinda Ardern, who is to become the nation’s youngest leader since 1856, said measures used to gauge economic success “have to change” to take into account “people’s ability to actually have a meaningful life”. The 37-year-old will take office next month after the populist New Zealand First party agreed to form a centre-left coalition with her Labour Party. They will be supported by the liberal Greens. New Zealanders had been waiting since 23 September to find out who would govern their country after national elections ended without a clear winner. Ms Ardern has pledged her government will increase the minimum wage, write child poverty reduction targets into law, and build thousands of affordable homes.

In her first full interview since becoming prime minister-elect, she told current affairs programme The Nation that capitalism had “failed our people”. “If you have hundreds of thousands of children living in homes without enough to survive, that’s a blatant failure,” she said. “What else could you describe it as?” Incumbent prime minister Bill English, whose National Party has held power for nine years, has said his party grew the economy and produced increasing budget surpluses which benefited the nation. But Ms Ardern said: “When you have a market economy, it all comes down to whether or not you acknowledge where the market has failed and where intervention is required. Has it failed our people in recent times? Yes. “How can you claim you’ve been successful when you have growth roughly three per cent, but you’ve got the worst homelessness in the developed world?”

Read more …

He won by a landslide. An even more far-right and anti-EU party also won. More problems in the heart of the Union.

Euroskeptic Billionaire on Route to Czech Election Victory (BBG)

A Czech billionaire looks set to win parliamentary elections Saturday, overcoming traditional political parties on a pledge to run the state like a business, fight Muslim immigration and oppose deeper integration with the European Union. Andrej Babis, who has drawn comparisons to Donald Trump and Silvio Berlusconi, had a wide lead in opinion polls before two days of voting started Friday. With a chemical, food and media empire employing 34,000 in 18 countries, the Slovak-born businessman – and second-richest Czech – increased his popularity while serving as finance minister before he was fired by his coalition partner, Prime Minister Bohuslav Sobotka. Taking credit for the EU’s lowest unemployment, one of its fastest rates of economic growth, and a budget surplus, Babis has portrayed himself as a competent manager struggling against traditional parties.

That’s lifted his ANO party’s support, while his attacks against Muslim immigration and criticism of the EU have helped fuel the rise of anti-establishment political forces similar to Germany’s AfD and Austria’s Freedom Party. It’s also raised concern that a Babis victory may add another source of tension within the EU, which has clashed with Poland and Hungary over democratic values. “Babis has managed to take advantage of the crisis of traditional parties and offer something new,” Josef Mlejnek, a political scientist at Charles University in Prague, said by phone. “He has depicted his rivals as an incompetent, corrupt bunch and he is presenting himself as the only one who can get things in order.” [..] Sobotka dismissed Babis in May in a conflict over his past business dealings.

The premier’s Social Democrats later teamed up with the opposition to strip the billionaire of his parliamentary immunity from prosecution to make way for an investigation into fraud allegations. Police have since charged Babis, 63, in the case of a 50 million-koruna ($2.3 million) in EU subsidies transferred to his Stork Nest recreation complex. Babis denies wrongdoing and says the allegations are an attempt to sideline him from politics. Despite the scandal, he’s held on to support siphoned from both the Social Democrats and other traditional parties. He has boasted of streamlining government operations and, via a law requiring retailers to link their cash registers to the Finance Ministry, boosting budget revenue and cracking down on tax evasion. At the same time, he’s railed against EU “meddling,” a stance that resonates with voters in the bloc’s most euroskeptic member.

Read more …

What about the time when almost all Americans were immigrants?

US Immigrant Population Climbed To Record 43.7 Million In 2016 (F.)

According to new data released by the U.S. Census Bureau, the nation’s immigrant population, both legal and illegal, climbed to a record 43.7 million in July 2016. That’s an increase of half a million since 2015 and 12.6 million since the turn of the century. Immigrants now comprise 13.5% of the U.S. population, roughly one out of eight residents, the highest share in 106 years. The all-time highest immigrant share of the U.S. population was 14.7%, recorded in 1910 when the country had 13.5 million immigrants. According to the Census Bureau, that will be eclipsed by 2030 when the immigrant share reaches 15.8% or 56.9 million people. Up to 2050, the influx is expected to continue its upward trajectory, with the number of immigrants projected to reach 72.3 million and account for an 18.2% share of the population.

Currently, Mexico has the highest share of America’s foreign-born population by far with over 11.5 million people. Despite also being the top sending nation with a grand total of 1.1 million new arrivals between 2010 and 2016, the Mexican-born population has not grown in the past six years due to return migration and natural mortality. During the same time frame, the sending countries with the highest increases were Saudi Arabia (122%), Nepal (86%) and Afghanistan (74%). Out of all states, Texas recorded the greatest numeric increase in immigrants (587,889) between 2010 and 2016, ahead of Florida (578,468) and California (527,234).

Read more …

There won’t be much left.

After 54 Years America Deserves To Know Everything (PP)

President of the United States Dwight Eisenhower, a five-star general in the Army before his presidency, upon departing the White House in January 1961, issued a bone-chilling warning about the dangers of the Deep State to President John F. Kennedy before Kennedy took office. Eisenhower warned Kennedy that the “military industrial complex created an imperative for development… It was compelled to create a permanent armaments industry.” Kennedy stood up against the military-industrial complex. Did that lead to Kennedy’s assassination? Did Kennedy’s assassination trigger the Deep State’s birth of a baby vampire squid with tentacles spread throughout many industries? We did have the Warren Commission, but did that commission provide any reasonable explanation as to how President Kennedy was assassinated?

Given what we know today, it’s likely that the truth has been withheld from the American public and the world. For example, doubt remains widespread about the Warren Commission’s conclusions since several trajectory analyses show that one bullet could not have caused all the damage that occurred. Are the CIA and the Deep State colluding to keep this information secret? In one set of recently declassified CIA documents, the American people learned that JFK’s assassination led to the CIA creating the highly derogatory term “conspiracy theory” and “conspiracy theorists”. This was the beginning of Deep State psychological operations used to malign, slander, discredit, and undermine the credibility of anyone who dared to voice dissent towards the government. The CIA called this branch the Clandestine Services unit and its aim was to ruin anyone who wanted to take on the establishment and the military industrial complex.

The military-industrial complex has garnered far too much power in Washington since World War II, and it now presents the biggest threat to democracy and liberty in America. And it has only gotten bigger since George W. Bush entered office and declared “a war on terror”. Just take a look at the stock prices of military-industrial complex participants — they have skyrocketed over 1000% (e.g. Northrop Grumman). The presence of a Deep State became very clear and even more pronounced during the 2016 presidential election cycle, which unearthed Washington’s culture of pay-to-play and cover-ups. This led to the December 2016 proclamation to America by President-elect Trump that he was going to “drain the swamp.” In response, Senate minority leader Chuck Schumer went on The Rachel Maddow Show in January 2017 and delivered the following warning to President Trump: “Let me tell you: You take on the intelligence community—they have six ways from Sunday at getting back at you,”

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“The revolution to come out of this frozen swamp of irresponsibility will be the messiest and most incoherent in world history.”

Into the Cold and Dark (Jim Kunstler)

Many, including yours truly, have expected the distortions and perversions on the money side of life to express themselves in money itself: the dollar. So far, it has only wobbled down about ten percent. This is due perhaps to the calibrated disinformation known as “forward guidance” issued by this country’s central bank, the Federal Reserve, which has been threatening — pretty idly so far — to raise interest rates and shrink down its vault of hoarded securities — a lot of it janky paper left over from the misadventures of 2007-2009. I guess the lesson is that when you have a pervasively false and corrupt financial system, it is always subject to a little additional accounting fraud — until it’s not.

And the next thing you know, you’re sitting in the rubble of what used to be your civilization. The ever more immiserated schnooks who make up the former middle-class know that their lives are crumbling, and may feel that they’re subject to the utterly overwhelming forces of a cruel destiny generated by a leviathan state that hates and despises them. And of course that is exactly why they turned to the Golden Golem of Greatness for salvation. Alas, Mr. Trump has not constructed a coherent strategy for defeating the colossus of fakery that drives the nation ever-deeper toward the cold and dark. He has a talent for distraction and disruption, though, and so far that gave cover to a whole lot of other people in power who have been able to stand around with their hands in their pockets doing nothing about the sinking state of the nation.

Now, the vaudeville act is coming to a spectacular conclusion as the trappings of Halloween go back in the closet and the pulsating, LED-studded Santas go up on the rooftops. Every ceremony of American life seems drained of meaning now, including the machinations of government over the budget and taxes. The revolution to come out of this frozen swamp of irresponsibility will be the messiest and most incoherent in world history. Nobody will have any idea what is going on outside the geo-storm of failure. About the only thing one can say for sure is that the American life which emerges from this maelstrom will not look a whole lot like what we’re living in today. I remain serenely convinced that when it finally passes, the air will be fresh again and the sun will shine, and a lot more people will know what is real and what is not.

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Pay attention.

Google’s Plan To Revolutionise Cities Is A Takeover In All But Name (O.)

Last June Volume, a leading magazine on architecture and design, published an article on the GoogleUrbanism project. Conceived at a renowned design institute in Moscow, the project charts a plausible urban future based on cities acting as important sites for “data extractivism” – the conversion of data harvested from individuals into artificial intelligence technologies, allowing companies such as Alphabet, Google’s parent company, to act as providers of sophisticated and comprehensive services. The cities themselves, the project insisted, would get a share of revenue from the data. Cities surely wouldn’t mind but what about Alphabet? The company does take cities seriously. Its executives have floated the idea of taking some struggling city – Detroit? – and reinventing it around Alphabet services, with no annoying regulations blocking this march of progress.

All of this might have looked counter-intuitive several decades ago, but today, when institutions such as the World Bank preach the virtues of privately run cities and bigwigs in Silicon Valley aspire to build sea-based micronations liberated from conventional bureaucracy, it does not seem so far-fetched. Alphabet already operates many urban services: city maps, real-time traffic information, free wifi (in New York), self-driving cars. In 2015 it launched a dedicated city unit, Sidewalk Labs, run by Daniel Doctoroff, former deputy mayor of New York and a veteran of Wall Street. Doctoroff’s background hints at what the actual Google Urbanism – as opposed to its theoretical formulations – portends: using Alphabet’s data prowess to build profitable alliances with other powerful forces behind contemporary cities, from property developers to institutional investors.

On this view, Google Urbanism is anything but revolutionary. Yes, it thrives on data and sensors, but they only play a secondary role in determining what gets built, why, and at what cost. One might as well call it Blackstone Urbanism – in homage to one of the largest financial players in the property market. [..] Alphabet’s weapons are impressive. Cheap, modular buildings to be assembled quickly; sensors monitoring air quality and building conditions; adaptive traffic lights prioritising pedestrians and cyclists; parking systems directing cars to available slots. Not to mention delivery robots, advanced energy grids, automated waste sorting, and, of course, ubiquitous self-driving cars.

Alphabet essentially wants to be the default platform for other municipal services. Cities, it says, have always been platforms; now they are simply going digital. “The world’s great cities are all hubs of growth and innovation because they leveraged platforms put in place by visionary leaders,” states the proposal. “Rome had aqueducts, London the Underground, Manhattan the street grid.” Toronto, led by its own visionary leaders, will have Alphabet. Amid all this platformaphoria, one could easily forget that the street grid is not typically the property of a private entity, capable of excluding some and indulging others. Would we want Trump Inc to own it? Probably not. So why hurry to give its digital equivalent to Alphabet?

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Sort of the opposite of what Google wants.

Put Drivers In Control (NEF)

Last weekend, Jeremy Corbyn raised an intriguing possibility. “Imagine an Uber,” he said, “run co-operatively by their drivers, collectively controlling their futures, agreeing their own pay and conditions, with profits shared or re-invested.” Many have since dismissed this idea as wishful thinking. First, there is Uber’s undoubted popularity among its users – hundreds of thousands of people signed a petition protesting against Transport for London’s decision not to renew Uber’s licence. Then there is its market dominance, which only ever seems to intensify. How can any rival hope to compete in the increasingly monopolistic world of private hire? Finally there is the factor which underpins both its popularity and its dominance. And that’s its price point. When Uber came on the scene, it undercut other taxi services by a huge margin.

And it appeared to do so by spending vast amounts of venture capital in a bid to achieve global dominance of the market. Any co-operative, driver-owned alternative to Uber has to be competitive on price or it will never break through Uber’s grip on the market. How can they do that without spending vast amounts of capital? Where would that money come from? None of these arguments holds water. At the New Economics Foundation we recently called for ‘Khan’s Cars’, a mutually owned taxi platform for London which would give drivers real control over their working lives while still providing people with the cheap and convenient transport they need. We believe a driver-owned alternative could genuinely compete with Uber on price and convenience, especially if supported by the Mayor of London.

In fact, Uber isn’t as cheap as it seems. The company’s use of surge pricing, which inflates prices during periods of high demand, allows it to present cheaper prices at other times. Partly as a result of this, Uber makes a profit in the UK – suggesting the basic pricing model is financially viable without vast capital resources. So the gap to close isn’t as wide as it may look at first glance. Furthermore, Uber takes between 20-25% of the fares it charges. Khan’s Cars could reduce that %age since it will not have shareholders looking to extract profit.

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Delusionary.

“Success, Greeks No Longer Seek Food In Garbage Bins” (KTG)

“There are no people seeking food in the garbage bins as in 2014,” Culture Minister Elena Kountoura said adding that citizens congratulate the government for its social policies. People are congratulating the government because “in 2014 there were people struggling to have a meal on their table. It is a success that people do not eat from the garbage anymore, “Kountoura from junior coalition partner Independent Greeks claimed speaking to private Skai TV on Saturday morning. “Despite the difficulties, people manage it.” “At least, Greeks are now living in dignity,” she said further adding “we brought growth.” She claimed further that “no minister cuts pensions, no minister introduces taxes.” The Culture Minister said further that “we have ten difficult months ahead” until the Greek program ends in August 2018. She said that also this year was an unprecedented success for the tourism industry saying that “90% of the capacity” was fully booked.

PS no taxes, no pension cuts? I propose, Minister Kountoura to take a fresh look into the 2015 bailout agreement and the additional agreement the coalition government signed last May in order to enable the conclusion of the second review. As for the meals from garbage bins… well… I wonder why neighbors still leave bags with food on the street, bags that quickly disappear. Probably they didn’t hear of the growth and the government success story.

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“Their daughter had just died and they were left there. They had nothing. No visit from a psychiatrist. The mother was silent. They were in shock and the children were saying ‘my sister died – she died just here.’”

5 Year Old Syrian Girl Dies In ‘Concentration Camp’ Funded By UK Taxpayers (RT)

British aid money is propping up a European migrant camp routinely likened to a prison. In just one appalling example, a Syrian girl who survived war, smugglers and the Aegean Sea, died last week in a cold, damp tent in Moria, on the Greek island of Lesbos. She was five. The girl, her parents and her five siblings had been offered a freezing tent in the squalid camp when they arrived in search of safety a week earlier. Her body was discovered last Sunday by her father and pregnant mother, who just hours before were denied extra blankets to keep their daughter warm and given just paracetamol to treat her medical issues. “I crawled inside and the blankets on the floor were wet, it was so cold and dirty and damp,” Daliah, a volunteer and former protection team employee who visited the family, told RT UK.

Their daughter had just died and they were left there. They had nothing. No visit from a psychiatrist. The mother was silent. They were in shock and the children were saying ‘my sister died – she died just here.’ “There was a volunteer there in tears. He told me they just pulled her out like a dog and took her away. There was no dignity.” Following her “unexplained” death, her tiny body was buried without an Islamic funeral and without her mother being present. “She became nothing but a number – she didn’t even get her last respect,” Daliah said. The child, whose parents did not wish to be identified, is yet another victim of the migration crisis Europe has mishandled and misjudged. With grotesque irony, European Union ministers who advocate saving refugees from war zones enjoy worldwide praise for funding camps like these.


The grave of a five-year-old girl who died on Lesbos © Zoie O’Brien / RT

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