Dec 312017
 
 December 31, 2017  Posted by at 10:18 am Finance Tagged with: , , , , , , , , , ,  7 Responses »
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Paul Klee Dancing Under the Empire of Fear 1938

 

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2017 Sets A Record (Roberts)
The Greatest Bubble Ever: Why You Better Believe It, Part 2 (Stockman)
China To Cap Overseas Withdrawals Using Domestic Bank Cards (R.)
Bitcoin Tensions Rise As Australia Investors Claim Banks Freeze Accounts (SMH)
South Korea’s “Bitcoin Zombies” (ZH)
Merkel Reclaims Role of EU Anchor in Outline of Her 2018 Agenda (BBG)
May Says 2018 Brexit Progress Will Renew British Confidence And Pride (AFP)
Ex-Catalan Leader Demands Regional Government Be Reinstated (AFP)
Facebook Deletes Accounts at the Direction of US and Israeli Governments (GG)
One Of Eight Turkish Servicemen Granted Asylum By Greece (K.)
Greek Gov’t Applies For Cancellation Of Asylum Granted To Turkish Soldier (R.)
Calgary Zoo Moves Penguins Indoors Because Of The Cold (Ind.)

 

 

Let’s not forget that 2017 was exceptional in many ways. Record debt and record tranquillity. What are the odds that 2018 will continue along that path?

2017 Sets A Record (Roberts)

In just the past year, the markets set a record by going 12-straight months without a loss. That liquidity driven surge was accompanied by extremely low volatility as noted last week by Dana Lyons: “Specifically, the average daily closing price of the VIX in 2017 was 11.10 (through 12/26/17). That is the lowest of any year — by more than one and a half points — since the VIX inception in 1986 (by comparison, the ‘average yearly average’ is over 20).”

Of course, with very little volatility, there were very few draw downs along the way as markets continued their advance higher. “Accordingly, we took a look at the amount of losses incurred by the stock market during the year as a measure of adversity faced along the way to its solid full-year gains. Specifically, we tabulated the amount of losses incurred during every down day in the market. We used the Dow Jones Industrial Average (DJIA) as it has a longer history than the S&P 500. And based on these calculations, the stock market enjoyed less adversity in 2017 than any other year in history going back over 100 years (our daily DJIA data begins in 1915).”

All that exuberance has got Wall Street already prognosticating that next year could be as good, or better, than 2017. “‘I would expect 2018 to be an almost repeat of 2017,’ said Saut, chief investment strategist at Raymond James. ‘People are still way underinvested. Earnings are starting to come in better than expected. And with the tax reform, and especially the corporate tax cuts, I think earnings are going to continue to surprise on the upside. The professional investors are all in for the most part but the individual investor is not all in.’” Maybe. But there is more than sufficient evidence that not only professional investors, but individuals, are “all in.”

And, not only are they “all in,” they are all in with leverage as I noted previously: “While investors have been chasing returns in the “can’t lose” market, they have also been piling on leverage in order to increase their return.”

Read more …

In a 2-part article, Stockman doesn’t see 2018 as being quiet.

The Greatest Bubble Ever: Why You Better Believe It, Part 2 (Stockman)

During the 40 months after Alan Greenspan’s infamous “irrational exuberance” speech in December 1996, the NASDAQ 100 index rose from 830 to 4585 or by 450%. But the perma-bulls said not to worry: This time is different – it’s a new age of technology miracles that will change the laws of finance. It wasn’t. The market cracked in April 2000 and did not stop plunging until the NASDAQ 100 index hit 815 in early October 2002. During those a heart-stopping 30 months of free-fall, all the gains of the tech boom were wiped out in an 84% collapse of the index. Overall, the market value of household equities sank from $10.0 trillion to $4.8 trillion – a wipeout from which millions of baby boom households have never recovered. Likewise, the second Greenspan housing and credit boom generated a similar round trip of bubble inflation and collapse.

During the 57 months after the October 2002 bottom, the Russell 2000 (RUT) climbed the proverbial wall-of-worry – rising from 340 to 850 or by 2.5X. And this time was also held to be different because, purportedly, the art of central banking had been perfected in what Bernanke was pleased to call the “Great Moderation”. Taking the cue, Wall Street dubbed it the Goldilocks Economy – meaning a macroeconomic environment so stable, productive and balanced that it would never again be vulnerable to a recessionary contraction and the resulting plunge in corporate profits and stock prices. Wrong again! During the 20 months from the July 2007 peak to the March 2009 bottom, the RUT gave it all back. And we mean every bit of it – as the index bottomed 60% lower at 340.

This time the value of household equities plunged by $6 trillion, and still millions more baby-boomers were carried out of the casino on their shields never to return. Now has come the greatest central bank fueled bubble ever. During nine years of radical monetary experimentation under ZIRP and QE, the value of equities owned by US households exploded still higher – this time by $12.5 trillion. Yet this eruption, like the prior two, was not a reflection of main street growth and prosperity, but Wall Street speculation fostered by massive central bank liquidity and price-keeping operations. Nevertheless, this time is, actually, very different. This time the central banks are out of dry powder and belatedly recognize that they have stranded themselves on or near the zero bound where they are saddled with massively bloated balance sheets.

Read more …

Are card withdrawals an actual issue, or is this a show?

China To Cap Overseas Withdrawals Using Domestic Bank Cards (R.)

China’s foreign exchange regulator will cap overseas withdrawals using domestic Chinese bank cards at 100,000 yuan ($15,370) per year in an effort to target money laundering, terrorist financing and tax evasion, it said on Saturday. Individuals who exceed the annual quota will be suspended from overseas transactions for the remainder of the year and an additional year, the State Administration of Foreign Exchange (SAFE) said in a notice posted on its website. Under the new rules SAFE will submit a daily list of individuals banned from making overseas bank card withdrawals, and banks must suspend the users by no later than 5 p.m. the same day, the notice said.

Domestic card users will also be barred from withdrawing more than 10,000 yuan a day overseas, it said. The new rules come into effect on Jan. 1, and reporting adjustments must be adopted by banks by April 1, 2018, it said. China has strengthened regulatory oversight of overseas card transactions in the past year, targeting illegal cross-border transfers and money laundering. In September SAFE brought in regulations requiring Chinese banks to report daily their bank card holders’ overseas withdrawals as well as every transaction exceeding 1,000 yuan. China’s foreign exchange reserves rose for the 10th straight month in November due to tighter regulation and a stronger yuan, which continue to discourage capital outflows.

Read more …

Banks targeting crypto. They’ve talked to each other beforehand, and presumably also with the government.

Bitcoin Tensions Rise As Australia Investors Claim Banks Freeze Accounts (SMH)

Bitcoin investors are claiming Australia’s banks are freezing their accounts and transfers to cryptocurrency exchanges, with a viral tweet slamming the big four and an exchange platform putting a restriction on Australian deposits. Cryptocurrency trader and Youtuber Alex Saunders called out National Australia Bank, ANZ, the Commonwealth Bank of Australia and Westpac Banking Corporation on Twitter for freezing customer accounts and transfers to four different bitcoin exchanges – CoinJar, CoinSpot, CoinBase and BTC Markets. Bitcoin, a currency once known for its use by criminals trading online through a ‘Silk Road’ for drugs and weapons, has become a popular investment option.

After hundreds of shares and responses to the social media posts calling the banks’ alleged behaviour “disgusting” and “appalling” with some threatening to move their accounts, some users said their activities with the cryptocurrency had still been described as a “security risk” by their financial institutions. Banks were remaining tight-lipped on whether bitcoin activity was causing specific accounts to be closed or frozen, though its understood none had company-wide policies banning cryptocurrency investment activity. Yet the terms and conditions in some cases do reference Bitcoin. Commonwealth Bank’s June 2017 terms and conditions for CommBiz accounts specifically excludes this activity, saying it can refuse to process an international money transfer or an international cash management transaction “because the destination account previously has been connected to a fraud or an attempted fraudulent transaction or is an account used to facilitate payments to Bitcoins or similar virtual currency payment services”.

A Commonwealth Bank spokesman said it was receptive to innovation in alternative currencies and payment systems “however, we do not currently use or recommend any existing virtual currencies as we do not believe they have yet met a minimum standard of regulation, reliability, and reputation compared to other currencies that we offer to our customers”. “Our customers can interact with these currencies as long as they comply with our terms and conditions and all relevant legal obligations,” he said.

Read more …

This doesn’t ooze a healthy feeling.

South Korea’s “Bitcoin Zombies” (ZH)

[..] what happens in South Korean crypto trading, does not stay in South Korea: the country is the world’s third-largest market in bitcoin trading after Japan and the US, with roughly 2 million digital-currency investors by one estimate – one in every 25 citizens. The country is also home to one of the world’s biggest cryptocurrency trading exchanges, Bithumb. The country’s crypto-trading craze is so pervasive that the country has developed the term “bitcoin zombie” referring to people who check the cryptocurrency’s price around the clock. Even the country’s prime minister Lee Nak-yeon expressed concerns over Korea’s bitcoin craze, warning that “young people and students are rushing into virtual currency trading to earn huge profits in just a short period of time,” and that “it is time for the government to take action as it could lead to serious pathological phenomena if left unchecked” forcing young people into illegal activities like drug dealing.

For now, the “bitcoin zombies” are winning. As an example, as Reuters details in its just released deep dive in South Korea’s crypto-community, on a recent weeknight at Sungkyunkwan University in Seoul, more than a dozen students crammed into a classroom not to study, but to share tips on investing in so-called cryptocurrencies, which have driven tales of fantastic returns for savvy investors. “The group sat in rapt silence – broken only by a sudden shout of “there was just a big jump!” from someone monitoring his virtual currencies – as one student gave a presentation on how to read financial data and predict future trends.” Make no mistake: it’s a countrywide craze: “I no longer want to become a math teacher,” said 23-year-old Eoh Kyong-hoon, who founded the club, Cryptofactor.

“I’ve studied this industry for more than 10 hours a day over months, and I became pretty sure that this is my future.” [..] Eoh said the talk of more regulation had not dented his plans, especially after making what he said was a 20-fold gain on his investments over the past six months. He added that many students were bringing laptops to class to track the movements of their investments and participate in actual trading. “Even when professors are giving lectures right in front of them,” he said. Meanwhile, with Bitcoin soaring to record levels, younger investors have gravitated toward “altcoins” which often trade at much lower values, analysts say. Today’s surge in Ripple is just one such example. Another is Iota, which traded at $0.82 in late November and now stands at $3.89, a gain of 375%. Energo gained 400% during the same period.

Read more …

Her own people don’t even want a full term from her anymore. Hard to accept you lost power, Angela? You have though.

Merkel Reclaims Role of EU Anchor in Outline of Her 2018 Agenda (BBG)

German Chancellor Angela Merkel said she’ll team up with France to hold the European Union together and pledged to her form next government “without delay.” In a New Year’s Eve speech to the nation, Merkel outlined a vision for her fourth term that includes an alliance with French President Emmanuel Macron to strengthen Europe’s economic clout and control migration, while upholding values of tolerance and pluralism within the EU and abroad. “Twenty-seven countries in Europe must be impelled more strongly than ever to remain a community,” Merkel said in a copy of the speech provided by her office in advance of the televised address on Sunday.

“That will be the decisive question of the next few years. Germany and France want to work together to make it succeed.” Merkel’s effort to combine the strengths of the euro area’s two biggest economies has been hamstrung by Germany’s longest post-election party deadlock since World War II, which has left her a caretaker chancellor since September. Exploratory talks on renewing her coalition with the Social Democrats are due to start on Jan. 7. After a poll this week suggested that Germans increasingly don’t want Merkel, 63, to serve another full term, the chancellor sought to put her stamp on the political debate. Merkel said she’s committed to forming “a stable government for Germany without delay in the new year.”

Read more …

Straight faced lies. Or is it Python?

May Says 2018 Brexit Progress Will Renew British Confidence And Pride (AFP)

Prime Minister Theresa May said 2018 would be a year of “renewed confidence and pride” for Britain as it confronts the challenges of negotiating Brexit, in her New Year message out Sunday. Divorce talks between London and Brussels are set to move on to transition arrangements, trade and security next year as Britain prepares to leave the European Union in March 2019. May said 2017 had been a year of progress for Britain as it struck agreement on its departure bill, Northern Ireland and the rights of EU citizens, in the first phase of Brexit negotiations. “I believe 2018 can be a year of renewed confidence and pride in our country,” the premier said. “A year in which we continue to make good progress towards a successful Brexit deal, an economy that’s fit for the future, and a stronger and fairer society for everyone.

“And whatever challenges we may face, I know we will overcome them by standing united as one proud union of nations and people.” However, the British Chambers of Commerce, which represents thousands of firms across the country, warned that business was losing patience waiting for clarity on what will happen once Britain leaves the EU. “That patience is now wearing thin. Businesses want answers,” director general Adam Marshall told The Observer newspaper. “Getting the twin challenges of Brexit and the economic fundamentals right will require leadership, consistency and clarity – after a year in which business has been dismayed by what it sees as division and disorganisation.”

Read more …

Once again we’ll see how the EU and democracy don’t go well together.

Ex-Catalan Leader Demands Regional Government Be Reinstated (AFP)

Ousted Catalan president Carles Puigdemont on Saturday demanded Madrid reinstate his regional government, which was deposed after an independence referendum that Spanish courts judged illegal, as part of a political settlement. “As president, I demand the Spanish government and those who support it… restore all they have expropriated from the Catalans without their say-so,” Puigdemont said from Brussels as he called on Madrid to “negotiate politically.” Puigdemont’s administration followed up the October 1 referendum by declaring independence but Madrid promptly sacked him and his team and, facing arrest, he fled into Belgian exile while colleagues were arrested and jailed. Puigdemont campaigned for the region’s December 21 snap election from his Brussels exile after a Spanish court charged him with rebellion, sedition and misuse of public funds.

But a solid showing by pro-independence parties in the poll strengthened the hand of the secessionists, albeit they did not capture a majority of votes cast. In a seven-minute recorded message Puigdemont insisted he was still Catalonia’s “legitimate” leader and that the electorate had shown themselves to be “democratically mature, winning the right to constitute a republic of free men and women.” After the divisive regional elections, how the independence camp intends to rule remains a mystery, with other secessionist leaders, including Puigdemont’s former deputy Oriol Junqueras, behind bars pending trial. “The ballot box has spoken,” said Puigdemont, who said he hoped the election outcome could kickstart moves towards “dialogue and negotiation.” “So what is (Prime Minister Mariano) Rajoy waiting for to accept the results?”

Read more …

Facebook will be a big story next year.

Facebook Deletes Accounts at the Direction of US and Israeli Governments (GG)

IN September of last year, we noted that Facebook representatives were meeting with the Israeli government to determine which Facebook accounts of Palestinians should be deleted on the ground that they constituted “incitement.” The meetings — called for and presided over by one of the most extremist and authoritarian Israeli officials, pro-settlement Justice Minister Ayelet Shaked — came after Israel threatened Facebook that its failure to voluntarily comply with Israeli deletion orders would result in the enactment of laws requiring Facebook to do so, upon pain of being severely fined or even blocked in the country. The predictable results of those meetings are now clear and well-documented. Ever since, Facebook has been on a censorship rampage against Palestinian activists who protest the decades-long, illegal Israeli occupation, all directed and determined by Israeli officials.

[..] Facebook now seems to be explicitly admitting that it also intends to follow the censorship orders of the U.S. government. Earlier this week, the company deleted the Facebook and Instagram accounts of Ramzan Kadyrov, the repressive, brutal, and authoritarian leader of the Chechen Republic, who had a combined 4 million followers on those accounts. To put it mildly, Kadyrov — who is given free rein to rule the province in exchange for ultimate loyalty to Moscow — is the opposite of a sympathetic figure: He has been credibly accused of a wide range of horrific human rights violations, from the imprisonment and torture of LGBTs to the kidnapping and killing of dissidents. But none of that dilutes how disturbing and dangerous Facebook’s rationale for its deletion of his accounts is.

A Facebook spokesperson told the New York Times that the company deleted these accounts not because Kadyrov is a mass murderer and tyrant, but that “Mr. Kadyrov’s accounts were deactivated because he had just been added to a United States sanctions list and that the company was legally obligated to act.” As the Times notes, this rationale appears dubious or at least inconsistently applied: Others who are on the same sanctions list, such as Venezuelan President Nicolas Maduro, remain active on both Facebook and Instagram. But just consider the incredibly menacing implications of Facebook’s claims. What this means is obvious: that the U.S. government — meaning, at the moment, the Trump administration — has the unilateral and unchecked power to force the removal of anyone it wants from Facebook and Instagram by simply including them on a sanctions list. Does anyone think this is a good outcome? Does anyone trust the Trump administration — or any other government — to compel social media platforms to delete and block anyone it wants to be silenced?

Read more …

It took almost a year and a half to decide this. In custody.

One Of Eight Turkish Servicemen Granted Asylum By Greece (K.)

One of eight Turkish servicemen who sought protection in Greece in the wake of a botched coup in Turkey in the summer of 2016 was granted asylum on Saturday. The Asylum Appeals Committee that examines applications in the second degree approved a request for protection from the copilot of the helicopter that flew the eight servicemen into the northern Greek town of Alexandroupoli on July 16, 2016, a day after the attempted takeover by the military in Turkey.

According to the ANA-MPA news agency, the committee upheld an opinion from human rights groups, the Council of Europe and other international agencies decrying human rights violations in Turkey in the aftermath of the failed coup. The panel said that there is no evidence to suggest that the copilot was involved in the coup attempt, yet is nevertheless, being sought by Turkey for “political crimes” and on these grounds may not receive a fair trail if extradited. The other seven Turkish officers remain in custody until a decision is reached on their respective applications.

Read more …

At the exact same time that Athens lauds the independence of its courts, it seeks to interfere with their decisions.

Greek Gov’t Applies For Cancellation Of Asylum Granted To Turkish Soldier (R.)

The Greek government said on Saturday that it had filed a request for the cancellation of the asylum granted to a Turkish soldier accused of involvement in last year’s coup attempt. Greece’s administrative court of appeal will now look into the case. Eight Turkish soldiers fled to Greece following Turkey’s abortive July 2016 coup. Seven of them applied for asylum and were rejected, but have been kept in preventive custody. Angered by a decision to grant asylum to the eighth soldier by the Greek asylum service committee, a panel of judges and experts, Turkey said earlier in the day that the move would affect bilateral relations and cooperation. Athens said it was following its standing position regarding the eight soldiers, “as it has been repeatedly expressed, also in public”, a government official said.

The Greek government has said that it does not support coup plotters and that the country’s justice system is independent. A Greek police official said the soldier who was granted asylum would be released from custody. “By granting asylum to one of eight coup plotters involved in the July 15 coup, Greece has once again showed that it is a country that protects and embraces coup plotters with this decision,” Turkey’s Foreign Ministry said in a statement. Greek courts have blocked two extradition requests by Turkish authorities, drawing an angry rebuke from Ankara and highlighting the tense relations between the NATO allies, who remain at odds over various issues. During his visit to Greece earlier this month, Turkish Foreign Minister Mevlut Cavusoglu said Ankara did not want Greece to turn into a safe haven for coup plotters.

Read more …

But the people still come to watch them.

Calgary Zoo Moves Penguins Indoors Because Of The Cold (Ind.)

Temperatures have dropped so low in Canada that Calgary Zoo has had to move its penguins indoors. As an extreme-cold warning was in effect for the country – temperatures hit a frosty -25C late this week – zookeepers thought it safer to move the penguins to their indoor enclosure. Larissa Mark, manager of communications at Calgary Zoo told Global News that: “On cold days like this, we have to make that choice for them because it is so cold, but on other days, we do give them the option of coming in and out as they please.” Ms Mark explained that king penguins, like the ones at Calgary zoo, are not as accustomed to sub-zero temperatures as their cousins, the emperor penguins.

King penguins, characterised by the bright orange spots on the sides of their heads and feathers at the nape of their necks, are generally found in sub-Antarctic regions in Chile and Argentina and temperate places like the Falklands, Macquarie and the Sandwich islands. However, the cold snap has not stopped people from going to the zoo. “Calgarians are a hardy bunch. A cup of hot chocolate and a warm fire and they are still coming out and enjoying Zoolights. Our attendance is doing well, it is on par with where we were last year,” said Ms Mark of the annual holiday-lights display event put on by the zoo.

Read more …

Dec 302017
 
 December 30, 2017  Posted by at 10:28 am Finance Tagged with: , , , , , , , , , ,  6 Responses »
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Ansel Adams Evening at McDonald Lake, Glacier National Park 1942

 

UPDATE: There is a problem with our Paypal widget/account that makes donating hard for some people, but that Paypal apparently can’t be bothered to fix. At least not over the past 2 weeks. What happens is that for some a message pops up that says “This recipient does not accept payments denominated in USD”. This is nonsense, we do.

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The Automatic Earth and its readers have been supporting refugees and homeless in Greece since June 2015. It has been and at times difficult and at all times expensive endeavor. Not at least because the problems do not just not get solved, they actually get worse. Because the people of Greece and the refugees that land on their shores increasingly find themselves pawns in political games.

Therefore, even if the generosity of our readership has been nothing short of miraculous, we must continue to humbly ask you for more support. Because our work is not done. Our latest essay on this is here: The Automatic Earth for Athens Fund – Christmas and 2018 . It contains links to all 14 previous articles on the situation.

Here’s how you can help:

 

 

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Global Markets End On Record High After Adding $9 Triilion In 2017 (G.)
Value Of US Housing Market Climbs To Record $31.8 Trillion (HW)
Return of Volatility Foreshadowed In Economic Data (BBG)
Trump’s Tax Changes To Blow A $5 Billion Hole In Goldman Sachs Profits (G.)
Doug Casey on the Coming Financial Crisis (CR)
The Year in Trump (Jim Kunstler)
The New Poverty (Alt)
Theresa May’s Infrastructure Czar Quits, Lashing Out at Brexit (BBG)
Rajoy Says Spain Won’t Yield to Blackmail by Catalan Separatists (BBG)
Putin Tells Assad Russia Will Help Defend Syrian Sovereignty (R.)
Greek Banks Offer Borrowers Haircuts Of Up To 90% (K.)
How Did Half Of The Great Florida Coral Reef System Disappear? (G.)

 

 

No, this is not actual value, this is just another bubble in a system built exclusively on bubbles.

Global Markets End On Record High After Adding $9 Triilion In 2017 (G.)

Global stock markets have ended 2017 on record highs, gaining $9tn in value over the year due to a strong worldwide economy, President Donald Trump’s tax cuts and central banks’ go-slow approach to easing financial support. The FTSE 100 hit a new peak in London, with an all-time closing high of 7687.77, having earlier hit a new all-time peak of 7697.62. The leading UK index was boosted by a late surge in mining stocks as commodity prices rose against a weaker dollar and optimism grew about the Chinese economy, leaving the index up 7.6% over the year. In global terms, the MSCI all-country world index gained 22% or $9tn on the year to an all-time high of 514.53.

Even the rival attractions of bitcoin, up nearly 14 times over the year, and concerns about war with North Korea, political upheaval in Europe with the Catalan separatist movement in Spain and an inconclusive German election failed to dampen the party mood. Craig James, chief economist at Sydney-based fund manager CommSec, said that of the 73 bourses it tracks globally, all but nine have recorded gains in local currency terms this year. The key for 2018 will be whether central banks maintain a benign approach to reducing their financial support, he added, with the Federal Reserve and Bank of England raising borrowing costs only gradually this year. Low interest rates and quantitative easing, where central banks buy bonds from financial institutions, have been a major support for investors and asset prices in recent years.

“For the outlook, the key issue is whether the low growth rates of prices and wages will continue, thus prompting central banks to remain on the monetary policy sidelines,” said James. “Globalisation and technological change have been influential in keeping inflation low. In short, consumers can buy goods whenever they want and wherever they are.”

Read more …

And here’s your next bubble. Now, remember, the Fed is set to tighten, taking the fuel for the bubble away with it.

Value Of US Housing Market Climbs To Record $31.8 Trillion (HW)

The total value of all homes in the U.S. increased in 2017 to a total $31.8 trillion, according to the latest report from Zillow. This is up from last year’s record high of $29.6 trillion, data from 2016 shows. This is so high, that total homes in Los Angeles and New York City metro areas are worth $2.7 trillion and $2.6 trillion, respectively, the size of the U.K. and French economies. To put it in perspective, the total value of the housing market is 1.5 times greater than the GDP of the U.S., and nearly three times that of China. This is an increase of $1.95 trillion over the past year, more than all of Canada’s GDP or two companies the size of Apple, Zillow’s report showed. And renters are also now spending more money than ever before on housing, spending a record $485.6 billion in 2017.

This is an increase of $4.9 billion from 2016. Renting in San Francisco is especially expensive as renters collectively paid $616 million more than renters in Chicago, despite having 467,000 fewer renters in San Francisco. Of the 35 largest U.S. markets, most home value growth occurred in Columbus, Ohio, which saw an increase of 15.1% to $152.3 billion in 2017. But home prices continue to increase, fueling the housing market’s value growth. Home prices recently increased in October, and experts are beginning to fear 2018 could lock many potential buyers out of the housing market, forcing them to rent, according to the latest report released by S&P Dow Jones Indices and CoreLogic.

Read more …

Stating the obvious.

Return of Volatility Foreshadowed In Economic Data (BBG)

If financial market volatility was given up for dead in 2017, then get ready for a resurrection. To understand why, take a look at the incoming economic data. When the underlying dynamics of the economy change, the data tend to become more volatile before markets react. Economic volatility as expressed by the standard deviation of changes in the monthly data has been on the rise since the summer as the global economy gained strength. Financial market volatility, though, has fallen amid a lack a surprises in central bank policies, receding geopolitical tensions and upbeat corporate earnings. But as history shows, such divergences between economic and financial market volatility only last for brief periods. As such, a rebound in market volatility has the potential to be a key driver of risk premiums, bond yields and valuations in 2018.

Volatility is also linked to “financial vulnerability,” which is an aggregate of indicators such as fiscal and current-account balances, the share of local currency bonds held by nonresidents, and short-term external debt as a percentage of currency reserves. Such vulnerabilities picked up in 2017 as portfolio flows into local emerging-market bond and currency funds swelled by $7.5 billion to 15% of local GDP with the growing popularity of exchange-traded funds. And although the data coming from emerging-market economies have been solid, it’s become more volatile, which contrasts with the drop in financial market volatility brought on by large portfolio flows. Countries such as South Africa and Turkey that are political hot spots have seen portfolio flows increase even though their current-account balances have deteriorated. Historically, market volatility has closely tracked economic volatility in emerging markets.

Read more …

$2.5 trillion coming back home?

Trump’s Tax Changes To Blow A $5 Billion Hole In Goldman Sachs Profits (G.)

Goldman Sachs has said Donald Trump’s radical US tax changes will knock about $5bn (£3.7bn) off its profits this year. The investment bank said most of the cost would come from Trump’s “repatriation tax” designed to encourage multinationals to bring back the trillions of dollars they hold overseas to avoid tax. Goldman, which made profits of $7.4bn last year, said: “The enactment of the tax legislation will result in a reduction of approximately $5bn in the firm’s earnings for the fourth quarter and year ending 31 December 2017, approximately two-thirds of which is due to the repatriation tax. “The remainder includes the effects of the implementation of the territorial tax system and the remeasurement of US deferred tax assets at lower enacted corporate tax rates,” the bank said in a filing with the Securities and Exchange Commission on Friday.

Last week Congress approved the biggest tax overhaul in 30 years, which includes big tax cuts for companies and wealthy people. The reduction in corporation tax – from 35% to 21% – is designed in part to encourage multinational to repatriate cash from overseas. US companies were estimated, by Citigroup, to hold $2.5tn of capital overseas. Companies had previously explained that they had a duty to shareholders to keep the money abroad, rather than bring it back to the US and pay large tax bills. The tax overhaul will allow Apple to bring back its $252.3bn foreign cash mountain without a major tax hit. The huge amount of untaxed profits Apple holds overseas has become a major political football and a headache for the world’s most valuable company. Drugmaker Amgen said last week that it expected to pay $6bn to $6.5bn repatriating its cash to the US.

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More of the obvious, in a long article: “I don’t care that some university gave her a Ph.D., and some politicians made her Fed Chair ..”

Doug Casey on the Coming Financial Crisis (CR)

Justin’s note: Earlier this year, Fed Chair Janet Yellen explained how she doesn’t think we’ll have another financial crisis “in our lifetimes.” It’s a crazy idea. After all, it feels like the U.S. is long overdue for a major crisis. Below, Doug Casey shares his take on this. It’s one of the most important discussions we’ve had all year. Justin: Doug, I know you disagree with Yellen. But I’m wondering why she would even say this? Has she lost her mind?

Doug: Listening to the silly woman say that made me think we’re truly living in Bizarro World. It’s identical in tone to what stock junkies said in 1999 just before the tech bubble burst. She’s going to go down in history as the modern equivalent of Irving Fisher, who said “we’ve reached a permanent plateau of prosperity,” in 1929, just before the Great Depression started. I don’t care that some university gave her a Ph.D., and some politicians made her Fed Chair, possibly the second most powerful person in the world. She’s ignorant of economics, ignorant of history, and clearly has no judgment about what she says for the record. Why would she say such a thing? I guess because since she really believes throwing trillions of dollars at the banking system will create prosperity.

It started with the $750 billion bailout at the beginning of the last crisis. They’ve since thrown another $4 trillion at the financial system. All of that money has flowed into the banking system. So, the banking system has a lot of liquidity at the moment, and she thinks that means the economy is going to be fine. [..] The whole banking system is screwed-up and unstable. It’s a gigantic accident waiting to happen. People forgot that we now have a fractional reserve banking system. It’s very different from a classical banking system. I suspect not one person in 1,000 understands the difference… Modern banking emerged from the goldsmithing trade of the Middle Ages. Being a goldsmith required a working inventory of precious metal, and managing that inventory profitably required expertise in buying and selling metal and storing it securely.

Those capacities segued easily into the business of lending and borrowing gold, which is to say the business of lending and borrowing money. Most people today are only dimly aware that until the early 1930s, gold coins were used in everyday commerce by the general public. In addition, gold backed most national currencies at a fixed rate of convertibility. Banks were just another business—nothing special. They were distinguished from other enterprises only by the fact they stored, lent, and borrowed gold coins, not as a sideline but as a primary business. Bankers had become goldsmiths without the hammers.

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“..we’re more likely to land in a return to something more like 1834, with scant central heating, and a lot of suspense about getting a hot meal at sundown. I want a mule…”

The Year in Trump (Jim Kunstler)

There he is, our president, both immovable object and irresistible force, unsmiling with slitty eyes beneath that car-hood of a hair-doo, lumbering from one presidential prerogative to the next through squalls of opprobrium, perplexing leaders from foreign lands, punking congressmen and senators, inducing swoons of un-safeness among the zhes, theys, and thems on campus, provoking the op-ed bards of The Times to mouth-foaming hysterics, tweeting any old thing that flies through the interstices of his brain-pan, our Golden Golem of Greatness, MAGA sword in smallish hand against a swirling red sky. Well, he made it through the year. I thought the fucker would be sandbagged by a claque of Pentagon patriots inside of three months, but I was wrong, wrong, wrong.

What seems to be forgotten is that Donald Trump brought his own swamp to Washington, as in a history of hinky real-estate wheelings-and-dealings, stiffed vendors, bankruptcies, lowbrow TV hijinks, and dark adventures in the Manhattan nightlife of the late 20th century. So, it’s swamp versus swamp. You may detect that I’m not exactly a fan of the president, but I rather admire his standing up to the permanent bureaucracy that we call the Deep State, and especially its elite poobahs, who have driven this polity into a deeper ditch than the voters realize. The Mueller investigation hangs over Trump’s head like a piñata filled with dog-shit, but he soldiers on.

After more than a year, the RussiaGate narrative is looking like something fished out of the Goodwill Industries dumpster, its chief sponsor, the FBI, riddled with conflicts-of-interest, suspicious political motivations, and flat-out partisan animosity. Right now, there’s more reason to suppose Mueller will have to start asking some hard questions about Russia collusion among the Hillary cohort —and don’t forget, there’s that stinky business featuring ex-DNC-Chief Debbie Wasserman-Schultz and her mysterious Pakistani IT go-fer, Imran Awan, waiting in the wings.

[..] I’m skeptical of Trump’s MAGA program. We’re not going to replay the industrial age in North America, and we’re for sure not going to return to the life-ways of 1962. I also doubt that we are heading into a Silicon Valley inspired robotic A-I nirvana of “creative” weenies in flying, pilotless Ubers. Rather, I think we’re more likely to land in a return to something more like 1834, with scant central heating, and a lot of suspense about getting a hot meal at sundown. I want a mule.

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Pay people for work in non-profit-oriented jobs. Education, health care etc. Good for society, and the only way to save these fields.

The New Poverty (Alt)

We define poverty, I suppose, as that living condition which is unable to acquire enough dollars to purchase some, or most, of the basic necessities of life. It also seems to be an accepted notion that a certain amount of “poverty” is a necessary condition of our modern market economy—that a certain segment of the population will always be “unemployable” by the profit-oriented business community, either because they lack skills or because the business community simply does not need their services in order to generate its profits. Nobody really knows what to do with these “unneeded” people. We talk about “retraining” them—but there is no guarantee the profit-seeking business community will need them even with their newly acquired skills. In the meantime, these “unneeded” people don’t know what do with themselves either.

This is, perhaps, the biggest problem of all—though I will not, in this short essay, go into the details of that (except to say that it is contributing to a tragedy that is now disrupting the lives of too many of us). The point is this: It is time to begin imagining specific, concrete solutions to what is becoming a fundamental dilemma of our time. Imagine, for example, that every American citizen over the age of 16 can choose to earn a living-wage in exchange for providing a useful service to their local or regional community. Imagine that every local community has a free health and pharmacy clinic (in conjunction with a free methadone and counseling center)—where some of the employees are the living-wage earners. Imagine further that every local community has a housing co-op system (built in part by some of the living-wage earners) that makes available—to every family that needs it—a basic dwelling unit that is warm, dry, well-ventilated, and which provides for cooking, bathing, sleeping, and family gathering.

Imagine that every local community has at least one community garden and rookery (managed by some of the living-wage earners) which grows, harvests, and processes vegetables, fruits, eggs, cheese—and perhaps fish—for local consumption. Imagine that every local community has at least one pre-school day-care (manned at least in part by some of the living-wage earners) which provides, free of charge, a safe, early child-hood learning environment between the hours of 6 A.M. and 6 P.M. Imagine that every local community has a system of retirement co-housing villages (built and staffed, in part, by the living-wage earners). Imagine, in other words, replacing what we now define as “poverty” with another kind of living condition—we might call it “community subsistence.”

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If he feels so strongly anti-Brexit, why did he agree to be part of May’s government?

Theresa May’s Infrastructure Czar Quits, Lashing Out at Brexit (BBG)

Andrew Adonis quit as Theresa May’s infrastructure czar, but not before delivering a blistering verdict on the Brexit policy being pursued by the U.K. prime minister and her Conservative Party. The Labour peer and former transport secretary described Brexit as a “populist and nationalist spasm worthy of Donald Trump” in a resignation letter published by the Guardian that he confirmed as “accurate” on Twitter. As for May’s flagship piece of Brexit legislation, which cleared the House of Commons in December, Adonis described it as “the worst legislation of my lifetime,” and indicated he’ll oppose it when the House of Lords debates it. “I feel duty bound to oppose it relentlessly from the Labour benches,” Adonis wrote.

“You are pursuing a course fraught with danger…If Brexit happens, taking us back into Europe will become the mission of our children’s generation, who will marvel at your acts of destruction.” Adonis was appointed to the National Infrastructure Commission in 2015 by then Chancellor of the Exchequer George Osborne, to push cross-party consensus over long-term decisions to invest in infrastructure. His departure and pledge to oppose May’s Brexit strategy is another sign that even as Britain leaves the EU, divisions permeate throughout the political establishment.

His departure means 2017 is bookended by resignations for May. Three days into the year, her EU envoy Ivan Rogers unexpectedly quit, depriving her of a key figure in dealing with EU negotiators. And now, days from the end of the year, Adonis is departing with an excoriating verdict on the country’s direction. “Brexit is causing a nervous breakdown across Whitehall,” Adonis wrote. “The government is hurtling towards the EU’s emergency exit with no credible plan for the future of British trade and European cooperation, all the while ignoring – beyond sound-bites and inadequate programs – the crises of housing, education, the NHS and social and regional inequality which are undermining the fabric of our nation and feeding a populist surge.”

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Rajoy calls an election, tries to influence it be jailing some opponents and making sure others remain in exile, then loses anayway and starts blabbing about extortion. Who’s blackmailing who?

Rajoy Says Spain Won’t Yield to Blackmail by Catalan Separatists (BBG)

Spanish Prime Minister Mariano Rajoy set in motion the process for convening a new Catalan parliament and said he wouldn’t allow a new separatist administration to blackmail his government. A session to swear in lawmakers in Barcelona will take place on Jan. 17 before a vote days later to appoint a new regional president if there is a candidate, Rajoy said in an end-of-year news conference in Madrid. Rajoy dissolved the Catalan parliament in October after drawing on emergency constitutional powers to respond to a unilateral declaration of independence from Spain. Elections held last week in the region produced a majority for parties that support independence in a result that threatens to prolong a secession crisis that is damaging Spain’s economy.

“I hope that very soon in Catalonia we can count on a government dedicated to reversing the grave social and economic effects of the crisis of recent months,” Rajoy said. “There’s no room for more appeals for rupture or illegality because the law will not allow it.” Choosing a president for Catalonia won’t be easy for the pro-independence parties with former President Carles Puigdemont in Brussels avoiding arrest and his former deputy, Oriol Junqueras, already in jail. A Supreme Court judge is investigating whether the campaign to split from Spain amounted to a rebellion against the government. Rajoy said his most pressing task for the start of the year would be the need to build consensus for his minority government to pass a budget for 2018.

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Syria is no-go for the US and its allies. Leave it alone. Let them rebuild.

Putin Tells Assad Russia Will Help Defend Syrian Sovereignty (R.)

Russian President Vladimir Putin told his Syrian counterpart Bashar al-Assad in a new year’s greeting that Russia will continue supporting Syria’s efforts to defend its sovereignty, the Kremlin said on Saturday. Earlier this month Putin ordered the Russian forces in Syria to start withdrawing from the country, but said Russia would keep its Hmeymim air base in Syria’s Latakia Province as well as its naval facility at Tartous “on a permanent basis”.

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The Troika will use this to come up with additional demands.

Greek Banks Offer Borrowers Haircuts Of Up To 90% (K.)

Greek lenders are proposing huge haircuts, ranging from 70% to 90%, for borrowers with debts from consumer loans, credit cards or small business loans without collateral. In the context of the sale of a €2.5 billion bad-loan portfolio named Venus, Alpha Bank is using the incentive of major haircuts in letters it has sent to some 156,000 debtors. The fact that this concerns some 240,000 bad loans means that some debtors may have two or three overdue loans. Eurobank is employing the same strategy for a set of loans adding up to €350 million. Most of them range between €5,000 and €7,000 each and have been overdue for over a decade. This means that the banks are expecting to collect a small amount of those debts, coming to €250 million for Alpha and €35 million for Eurobank – in effect accepting that the rest of the debt is uncollectible.

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Man happened.

How Did Half Of The Great Florida Coral Reef System Disappear? (G.)

The great Florida coral reef system stretches hundreds of miles down the eastern seaboard of the US. It is the world’s third largest, and nearly 1,400 species of plants and animals and 500 species of fish have been recorded there. But last year marine scientists found nearly half the reef was missing. They took the latest satellite images, compared them with precisely drawn 250-year-old British admiralty charts and found them nearly identical. But where the historic charts showed there had been extensive coral reefs close to the shore in the 1760s, the satellite maps revealed just sea grasses and mud. Only those reefs far from the shore were still intact and alive with fish and plants. So when and why did so much of the world’s third largest reef system just disappear?

Natural forces like spells of extreme rainfall and heatwaves may have played some part, but it is more likely that man was responsible. In those 250 years, fishing off the Florida Keys intensified, causeways and cities were built, pollution increased and the flow of freshwater, sediments and nutrients from the land all changed. Any of these factors could have led to the stress and decline of the reef, but it probably took a combination to kill off half the corals. Something similar to what took place over 250 years off the Florida coast is now accelerating across reefs around the world as natural and new anthropogenic threats emerge and combine with deadly effect.

Corals are intolerant both of temperature and salinity change and it just takes a rise of 1C for a few weeks or extreme rainfall for them to begin to die. In the past 20 years, extreme weather linked to El Niño events and climate change has hit the world’s shallow reefs hard. Abnormally warm water caused the world’s first recorded widespread coral bleaching in 1998. Stretches of the Great Barrier Reef off Australia, and other reefs off Madagascar, Belize and the Maldives, were left white and seemingly dead. Most recovered because corals survive if conditions return to normal. But since then, widespread bleaching and other events have occurred nearly every year, leaving many of the world’s reefs stressed and vulnerable to disease.

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Dec 222017
 
 December 22, 2017  Posted by at 8:56 am Finance Tagged with: , , , , , , , , , , ,  11 Responses »
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Bill Watterson is God

 

He Died For Our Debts, Not Our Sins – Michael Hudson (Ren.)
Bitcoin Tumbles Below $13,000, Down Almost 40% From Record Peak (BBG)
Crypto Carnage Continues, Bitcoin Falls Back To $13,000 Handle (ZH)
Gold Only Safe Asset Left – David Stockman (USAW)
What Will the Tax Law Do to Over-Indebted Corporate America? (WS)
Subprime Auto Defaults Are Soaring, and Private Equity Has No Way Out (BBG)
The Ghost of Gann: Another Crash is Coming (Ren.)
Catalan Separatists Win Election In Rebuke To Spain and EU (R.)
China’s Creditor Imperialism (PS)
China Uses Cheap Debt To ‘Bend Other Countries To Its Will’ (CNBC)
Fannie And Freddie Are Here To Stay – There Is No Alternative (ZH)
UK’s Secret Brexit Studies Reveal That Airbus Makes Planes (BBG)
Eco-Terrorists Threaten To Inject Acid In Greek Supermarket Products (WaPo)
New Zealand Gives Mount Taranaki Same Legal Rights As A Person (G.)

 

 

Got to love this angle.

He Died For Our Debts, Not Our Sins – Michael Hudson (Ren.)

As many people turn towards their Christian and Jewish faiths this Christmas and Hanukkah in an attempt to make sense of the year that was, at least one economist says we have been reading the bible in an anachronistic way. In fact he has written an entire book on the topic. In ‘…And Forgive them their Debts: Credit and Redemption’ (available this spring on Amazon), Professor Michael Hudson makes the argument that far from being about sex, the bible is actually about economics, and debt in particular. “The Christianity we know today is not the Christianity of Jesus,” says Professor Hudson. Indeed the Judaism that we know today is not the Judaism of Jesus either. The economist told Renegade the Lord’s Prayer, ‘forgive us our sins even as we forgive all who are indebted to us’, refers specifically to debt.

“Most religious leaders say that Christianity is all about sin, not debt,” he says. “But actually, the word for sin and debt is the same in almost every language.” “‘Schuld’, in German, means ‘debt’ as well as ‘offense’ or, ‘sin’. It’s ‘devoir’ in French. It had the same duality in meaning in the Babylonian language of Akkadian.” Professor Michael Hudson has achieved near complete consensus with the assyriologists & biblical scholars that the Bible is preoccupied with debt, not sin. The idea harks back to the concept of ‘wergeld’, which existed in parts of Europe and Babylonia, and set the value of a human life based on their rank, paid as compensation to the family of someone who has been injured or killed. “The payment – the Schuld or obligation – expiates you of the injury caused by the offense,” Dr Hudson said.

People tend to think of the Commandment ‘do not covet your neighbour’s wife’ in purely sexual terms but actually, the economist says it refers specifically to creditors who would force the wives and daughters of debtors into sex slavery as collateral for unpaid debt. “This goes all the way back to Sumer in the third millennium,” he said. Similarly, the Commandment ‘thou shalt not steal’ refers to usury and exploitation by threat for debts owing. The economist says Jesus was crucified for his views on debt. Crucifixion being a punishment reserved especially for political dissidents. “To understand the crucifixion of Jesus is to understand it was his punishment for his economic views,” says Professor Hudson. “He was a threat to the creditors.”

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That’s still some serious losses.

Bitcoin Tumbles Below $13,000, Down Almost 40% From Record Peak (BBG)

Bitcoin sank as much as 21% on Friday, extending its loss from its intraday high this month toward 40%. The digital currency dropped to as low as $12,191.80 before trading at $12,601.75 as of 3:29 p.m. in Hong Kong. Bitcoin, which is down 38% from its peak of $19,511, is still up more than 1,100% this year. Investors are having a “reality check,” said Stephen Innes, head of trading for Asia Pacific at Oanda. “At the heart of the matter was a frenzied demand for coins with limited supply has now led to unsophisticated investors holding the bag at the top.” Bitcoin’s drop comes amid concern that an offshoot is becoming a stronger rival to the more well-known cryptocurrency. Bitcoin cash, which emerged earlier this year amid a split between factions over proposed software upgrades, was added to Coinbase offerings this week.


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Zero Hedge overnight. It’s hard to keep up.

Crypto Carnage Continues, Bitcoin Falls Back To $13,000 Handle (ZH)

The carnage across cyrptocurrencies has escalated with Bitcoin back to a $13K handle, Ethereum back below $700, and Bitcoin Cash below $2,600… Bitcoin is now almost $6,000 off its record high…

ETH and BCH in trouble too…

The question is – which happens first – Bitcoin $10,000 or Gold $1,300?

[..] renowned analyst Peter Schiff issued a foreboding warning to investors buying Bitcoin at current prices. Even with a shaky week, Bitcoin is hovering around the $15,000 mark, after a two-month bull run that saw the price rise by more than 200%. Schiff says those trying to ride the bubble are too late: “People who got it years ago, even people who got it at the beginning of the year have the opportunity to cash out and make a lot of money. But people who are buying it at these prices or higher prices are going to lose practically everything.” The old adage, “buy on the rumor and sell on the news,” seems to be the perfect way to sum up Schiff’s sentiments: “These currencies are going to trade to zero or pretty close to it when the bubble pops. Right now, the only reason why people are buying Bitcoin is because the price is going up. When it turns around, they are not going to sell it for the same reason.”

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Fed flying blind.

Gold Only Safe Asset Left – David Stockman (USAW)

Record high stock and bond prices are flashing danger signs to former Reagan White House Budget Director David Stockman. Stockman contends, “I don’t think we are going to have a liquidity crisis. I think it’s going to be a value reset. I think there is going to be a jarring downward price adjustment both in the stock market and in the bond market. This phantom or phony wealth that has been created since the last crisis is going to basically evaporate.” So, what asset is safe? Stockman says gold and goes onto explain, “I think the time to buy (gold and silver) is ideal. Gold is the ultimate and only real money. Gold is the only safe asset when push comes to shove. They tell you to buy the government bond, that’s a safe asset. It’s not a safe asset at its current price. I am not saying the federal government is going to default in the next two or three years.

I am saying the yield on a 10-year bond of 2.4% is way below of where it’s going to end up. So, the only safe asset left is gold. This crazy Bitcoin mania has drained off what would otherwise be a demand for gold. . . . When Bitcoin collapses, spectacularly, which it will because it’s sheer mania in the markets right now. When it collapses, I think a lot of that demand will come back into gold, as well as people fleeing the standard stock and bond markets for the first time in 9 or 10 years.” What about the so-called Trump tax cuts? Stockman predicts, “I think it’s going to be a fiscal calamity of Biblical proportions. I want to be clear. I am always for tax cuts and shrinking the size of government, but you have to earn it. You have to cut spending and entitlements and this massive defense budget. Obviously, they didn’t do that.

If you look at honest accounting . . this bill will add $2.5 trillion to the public debt which, and this is a key point, is already going to rise by $10 trillion over the next decade based on the current law and taxes that is still in.” “More importantly,” Stockman says, “The central banks realize they cannot keep printing money at these crazy rates, and by that I mean the bond buying. Now, they are going to begin to normalize and shrink their balance sheet . . By the fall (of 2018), they (the Federal Reserve) will be shrinking their balance sheet by $600 billion a year. What that means in plain simple English is that they (the Fed) are dumping $600 billion a year of existing bonds into the market just as Uncle Sam will be attempting to borrow $1.25 trillion more. Now, if you don’t think that is a financial collision waiting to happen, then I am not sure what would be.

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The tax bill is not one-dimensional.

What Will the Tax Law Do to Over-Indebted Corporate America? (WS)

The new tax law is larded with goodies for Corporate America, but there is one shift – a much needed shift – in this debt-obsessed world that will punish over-indebted companies, discourage companies from taking on too much leverage, and perhaps, just maybe, make these companies less risky: The new law sharply limits the deductibility of corporate interest expense. Starting in 2018, a company can only deduct interest expense of up to 30% of its Ebitda (earnings before interest, taxes, depreciation, and amortization). Any amount in interest expense beyond it will no longer be deductible. This will tighten further in 2022, when the deductibility of corporate debt will be capped at 30% of earnings before interest and taxes but after depreciation and amortization expenses.

This is a much smaller number than Ebitda. And interest expense deduction is capped at 30% of that much smaller amount. This will raise the tax bill further. Most impacted will be highly indebted companies, which often have a junk credit rating. And due to this junk credit rating, they also pay higher interest rates. This made the interest expense deduction very valuable. But now it is getting partially gutted. Businesses have long been incentivized to borrow, not only by the extraordinarily low interest rates even for junk-rated companies, but also by the full deductibility of interest expense. And thus encouraged by the tax code, corporate debt has surged. Mergers & acquisitions, share buybacks, leveraged buyouts, and dividends have often been funded at least partially with debt. And over the years, companies have piled on an enormous amount of debt.

According to estimates by the Congressional Joint Committee on Taxation, cited by The Wall Street Journal, the first phase of curtailing interest-expense deductibility – the phase that kicks in next year – would raise $171 billion in tax revenues over 10 years. The second phase that commences in 2022 would raise $307 billion over 10 years. This would be the billions of dollars that highly indebted companies would pay more in taxes because they’re losing the deductible of some of their debts. It will be a significant hit to their after-tax income. It won’t kill them, but it will lower the incentive to borrow.

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It’ll get messier than subprime housing.

Subprime Auto Defaults Are Soaring, and Private Equity Has No Way Out (BBG)

Private-equity firms that plunged headlong into subprime auto lending are discovering just how hard it might be to get out. A Perella Weinberg Partners fund has been sitting on an IPO of Flagship Credit Acceptance for two years as bad loan write-offs push it into the red. Blackstone has struggled to make Exeter Finance profitable, despite sinking almost a half-billion dollars into the lender since 2011 and shaking up the C-suite multiple times. And Wall Street bankers in private say others would love to cash out too, but there’s currently no market for such exits. In the years after the financial crisis, buyout firms poured billions into auto finance, angling for the big profits that come with offering high-interest loans to buyers with the weakest credit.

At rates of 11% or more, there was plenty to be made as sales boomed. But now, with new car demand waning, they’ve found the intense competition – and the lax underwriting standards it fostered – are taking a toll on profits. Delinquencies on subprime loans made by non-bank lenders are soaring toward crisis levels. Fresh investment has dried up and some of the big banks, long seen as potential suitors, have pulled back from the auto lending business. To top it off, state regulators are circling the industry, asking whether it preyed on borrowers and put them in cars they couldn’t afford. “The PE guys sailed into this thing with stars in their eyes. Some of the businesses have done fine and some haven’t,” said Chris Gillock at Colonnade Advisors, a boutique investment bank. But right now, “it’s about as out-of-favor a sector as I can think of.”

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Two more years to go? I don’t know about that. But then, I didn’t predict the ’29 crash either.

The Ghost of Gann: Another Crash is Coming (Ren.)

While the metrics noted above can accurately indicate the peak of an equities bubbles several months in advance, they cannot tell us anything years ahead of time. For this, we must turn to the research of the original wizard of Wall Street, W.D. Gann. He was a finance trader who developed technical analysis tools and forecasting methods based on geometry, astronomy, astrology and ancient mathematics. He was a successful and wealthy speculator, spending decades investigating patterns in equities markets. He concluded that equities exhibited a cyclical trend over decades and thus prices could be predicted long in advance. In 1908, Gann constructed his financial timetable, which tabulated the booms and busts, peaks and troughs of the US equities market.

Just like the Geoist land market cycle, there is a repeating 18-year average between every major cycle. Gann managed to predict the crash of 1929 years in advance. He realised that the timetable would have to be recalibrated on the 25th December 1989. The updated timetable is amazingly accurate from that date onward, predicting the Dot-Com bubble peak in 2000 and its collapse. The GFC peak was off by one year; 2007 instead of one year earlier in 2006. The trough was in 2009, followed by a minor panic in 2015, when the S&P500 dipped but has since boomed. According to the timetable, 2020 will be the peak of the equities bubble, followed by a major crash similar to that of the Dot-Com bubble.

To the economists we’ve spoken to, the peak could range between 2019M09 to 2020M03. Given how large the S&P500 bubble has become, it is worth treading very carefully during this period for those exposed to US equities. Gann is famous for saying: “Every movement in the market is the result of a natural law and of a Cause which exists long before the effect takes place and can be determined years in advance. The future is but a repetition of the past, as the Bible plainly states…”

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How hard will they come down on Catalunya this time? Neither Rajoy nor Brussels can afford to lose face.

Catalan Separatists Win Election In Rebuke To Spain and EU (R.)

Catalonia’s separatists look set to regain power in the wealthy Spanish region after local elections on Thursday, deepening the nation’s political crisis in a sharp rebuke to Prime Minister Mariano Rajoy and European Union leaders who backed him. With nearly all votes counted, separatist parties won a slim majority in Catalan parliament, a result that promises to prolong political tensions which have damaged Spain’s economy and prompted a business exodus from the region. Rajoy, who called the elections after sacking the previous secessionist government, had hoped Catalonia’s “silent majority” would deal separatism a decisive blow in what was a de facto independence referendum, but his hard line backfired.

The unexpected result sets the stage for the return to power of deposed Catalan president Carles Puigdemont who campaigned from self-exile in Brussels. State prosecutors accuse him of sedition, and he faces arrest if he were to return home. “Either Rajoy changes his recipe or we change the country,” Puigdemont, said in a televised speech. He was flanked by four former cabinet members that fled with him. At jubilant pro-independence rallies around Barcelona, supporters chanted “President Puigdemont” and unfurled giant red-and-yellow Catalan flags as the results came in. Puigdemont’s spokesman told Reuters in a text message: “We are the comeback kids.” The result unnerved global markets, contributing to a softer euro and subdued sentiment in stock markets.

Opinion polls had predicted secessionists to fall short of a majority. More than 3,100 firms have moved their legal headquarters outside Catalonia, concerned that the indebted region, which accounts for a fifth of the national economy, could split from Spain and tumble out of the EU and the euro zone by default. Spain has trimmed its growth forecasts for next year, and official data shows foreign direct investment in Catalonia fell 75% in the third quarter from a year earlier, dragging down national investment. The EU’s major powers, Germany and France, have backed Rajoy’s stance despite some criticism of his methods at times.

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China exports Ponzi and overcapacity.

China’s Creditor Imperialism (PS)

Just as European imperial powers employed gunboat diplomacy, China is using sovereign debt to bend other states to its will. As Sri Lanka’s handover of the strategic Hambantota port shows, states caught in debt bondage to the new imperial giant risk losing both natural assets and their very sovereignty. This month, Sri Lanka, unable to pay the onerous debt to China it has accumulated, formally handed over its strategically located Hambantota port to the Asian giant. It was a major acquisition for China’s Belt and Road Initiative (BRI) – which President Xi Jinping calls the “project of the century” – and proof of just how effective China’s debt-trap diplomacy can be.

Unlike International Monetary Fund and World Bank lending, Chinese loans are collateralized by strategically important natural assets with high long-term value (even if they lack short-term commercial viability). Hambantota, for example, straddles Indian Ocean trade routes linking Europe, Africa, and the Middle East to Asia. In exchange for financing and building the infrastructure that poorer countries need, China demands favorable access to their natural assets, from mineral resources to ports. Moreover, as Sri Lanka’s experience starkly illustrates, Chinese financing can shackle its “partner” countries. Rather than offering grants or concessionary loans, China provides huge project-related loans at market-based rates, without transparency, much less environmental- or social-impact assessments.

As US Secretary of State Rex Tillerson put it recently, with the BRI, China is aiming to define “its own rules and norms.” To strengthen its position further, China has encouraged its companies to bid for outright purchase of strategic ports, where possible. The Mediterranean port of Piraeus, which a Chinese firm acquired for $436 million from cash-strapped Greece last year, will serve as the BRI’s “dragon head” in Europe. By wielding its financial clout in this manner, China seeks to kill two birds with one stone. First, it wants to address overcapacity at home by boosting exports. And, second, it hopes to advance its strategic interests, including expanding its diplomatic influence, securing natural resources, promoting the international use of its currency, and gaining a relative advantage over other powers.

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Same story. I’ve said a thousand times that China is buying the world with Monopoly money. It is.

China Uses Cheap Debt To ‘Bend Other Countries To Its Will’ (CNBC)

China’s continents-spanning Belt and Road network threatens to “shackle” partner countries and deprive them of valuable natural assets, according to one critic. Beijing is financing and executing massive infrastructure projects across the 68 nations participating in the ambitious scheme, which snakes along Europe, the Middle East and Asia. These recipient countries, many of them emerging economies in dire need of investment, obtain funding in various forms such as sovereign loans from Chinese President Xi Jinping’s administration and credit from Chinese state-owned banks. But concerns of developing countries taking on unrealistic financial obligations have sparked allegations of what’s being called ‘dept-trap diplomacy.’

Earlier this year, Indian Prime Minister Narendra Modi’s administration released a statement warning of unsustainable debt burdens being created by Belt and Road. “Just as European imperial powers employed gunboat diplomacy, China is using sovereign debt to bend other states to its will,” according to Brahma Chellaney, professor of strategic studies at the New Delhi-based Center for Policy Research, who described Beijing’s policies as “creditor imperialism.” In a stinging editorial published on Project Syndicate, Chellaney — a former adviser to India’s National Security Council — pointed to Sri Lanka as an example. The South Asian state, unable to pay back onerous bills to China, recently handed over its Hambantota port to state owned China Merchants Port Holdings in a $1.1 billion deal that was widely viewed as an erosion of sovereignty.

“As Hambantota shows, China is now establishing its own Hong Kong-style neocolonial arrangements,” Chellaney said. “Like the opium the British exported to China, the easy loans China offers are addictive. And, because China chooses its projects according to their long-term strategic value, they may yield short-term returns that are insufficient for countries to repay their debts,” he explained. As a result, the world’s second-largest economy holds political leverage over governments and can “force borrowers to swap debt for equity, thereby expanding China’s global footprint by trapping a growing number of countries in debt servitude.”

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The government in charge of the bubble.

Fannie And Freddie Are Here To Stay – There Is No Alternative (ZH)

Since the US government nationalized the two GSEs in 2008 in a $187 billion bailout of the mortgage giants, there have been consistent calls for them to be wound down and for the private sector to fill the void. As we discussed, this view is, or was, shared by new Fed Chairman, Jay Powell. Mr. Powell has called on Congress to overhaul the housing finance system, saying he’d like to see the country’s two large mortgage-finance firms, Fannie Mae and Freddie Mac, move out from under government conservatorship. More private capital in those firms would reduce the risk of a taxpayer-funded bailout in the event of a downturn, he said in a speech in July. Although the Fed isn’t responsible for housing finance, it supervises some of the country’s largest lenders who frequently sell their loan to the two agencies. “No single housing finance institution should be too big to fail,” he said.

In August this year, Fannie and Freddie’s regulator, the Federal Housing Finance Agency (FHFA), published the results of its latest annual stress tests on the two GSE’s. The FHFA outlined a “severely adverse” scenario in which US real GDP decline 6.5%, the unemployment rate rises to 10.0%, equity prices decline almost 50%, home prices decline 25% and commercial real estate prices by 35%. Under these conditions, it estimates Fannie and Freddie would need a bailout of up to $100 billion in the form of a draw on the Treasury (depending on how they treat assets to offset tax). Sadly, after almost a decade of federal ownership, the hope that Fannie and Freddie could be wound down has evaporated. Senators on both sides of the political divide have concluded that they are too big and too risky to replace. Proposed legislation in 2018 will see them retained at the centre of the US mortgage industry, rather than replacing them as a previous senate proposal tried and failed four years ago.


Mortgages guaranteed by Fannie and Freddie amount to about $4 trillion and account for about 40% of the total US market.

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The incompetence is painful.

UK’s Secret Brexit Studies Reveal That Airbus Makes Planes (BBG)

For months, journalists tried to get their hands on government papers setting out how leaving the European Union will affect different parts of the British economy. They contained, according to Brexit Secretary David Davis, “excruciating detail.” But despite boasting about their contents, ministers were reluctant to let anyone else see the documents. In November, after being forced to give way by a vote in Parliament, the government allowed lawmakers to read them under controlled conditions. Their phones were confiscated, and they were only permitted to make notes with pen and paper, lest too much information leak into the public domain. “These documents in aggregate represent the most comprehensive picture of our economy on this issue to date,” Davis wrote this month, explaining why he was being cautious about publication.

On Thursday, the documents were released online. There was detail, as promised. “The parts of an aircraft can be simplistically split into three areas,” began the first, on aerospace. It was explained what the industry makes: “structures which include the nose, fuselage, wings, engine nacelles (which encase the engines) and tail; propulsion system which includes engines and propellers, or fan blades; and systems which include the electronics used in the flight system.” It went on to reveal that there are two companies in the world that make large passenger aircraft. Now that the documents are public, these firms can be named as Boeing and Airbus. The paper covering the insurance and pensions sector, which employs one in every 100 British workers, is 2,732 words long. “Insurance business operates by firms writing insurance policies for clients, intermediated by brokers,” it reveals.

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You sure that you want to victimize the victims?

Eco-Terrorists Threaten To Inject Acid In Greek Supermarket Products (WaPo)

Greek supermarkets were forced to withdraw several food and beverage products from their shelves this week, after a group threatened to contaminate them with acid as part of an environmentally influenced protest of Christmas consumerism. Authorities urged residents in Athens and the city of Thessaloniki not to buy or consume certain types of Coca-Cola, a Greek milk brand and packages of meat. Thessaloniki and Athens combined have about 1 million residents who were affected by the precautionary measures. The “Blackgreen Arsonists” — whose name suggests an eco-anarchist outlook — threatened to inject the products with hydrochloric acid, a powerful, colorless corrosive used in research and industry.

They said it was because the thousands of people doing their Christmas shopping meant “the sacrifice of millions of living creatures, slaughtered and drained to the last drop to satisfy consumers’ needs.” To protest this need every year for people to fill their empty lives with “consumer garbage with beautiful and glittering wrappings,” the sabotaged products would be placed on supermarket shelves in the run-up to Christmas. Authorities said they have no information on the identities of the group members. Similar threats have emerged in the past and nothing has happened, though in this case the group included photos of its members injecting something into the products as part of their online threat.

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Real values.

New Zealand Gives Mount Taranaki Same Legal Rights As A Person (G.)

Mount Taranaki in New Zealand is to be granted the same legal rights as a person, becoming the third geographic feature in the country to be granted a “legal personality”. Eight local Maori tribes and the government will share guardianship of the sacred mountain on the east coast of the North Island, in a long-awaited acknowledgement of the indigenous people’s relationship to the mountain, who view it as an ancestor and whanau, or family member. The new status of the mountain means if someone abuses or harms it, it is the same legally as harming the tribe. In the record of understanding signed this week, Mount Taranaki will become “a legal personality, in its own right”, said the minister for treaty negotiations, Andrew Little, gaining similar rights to the Whanganui river, which was granted legal personhood earlier this year.

Little said the agreement offered the best possible protection for the landmark, which is becoming an increasingly popular tourist attraction after Lonely Planet named the Taranaki region the second best place to visit in the world last year. “As a New Plymouth local I grew up under the gaze of the maunga [mountain] so I’m particularly pleased with the respect accorded to local tangata whenua [local people] and the legal protection and personality given to the mountain,” Little said. “Today’s agreements are a major milestone in acknowledging the grievances and hurt from the past as the Taranaki iwi experienced some of the worst examples of Crown behaviour in the 19th century.” As part of the agreement the New Zealand government will apologise to local Maori for historical breaches of the Treaty of Waitangi against the mountain, although local tribes will receive no financial or commercial redress.

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 December 21, 2017  Posted by at 8:32 am Finance Tagged with: , , , , , , , , , , , ,  3 Responses »
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Claude Monet Houses of Parliament (Sun Breaking through the Fog) 1904

 

Trump Plans Tax Bill Signing on January 3 Due to Technical Issue (BBG)
Why Wall Street Is Furious At The Trump Tax Plan (ZH)
Peak Valuations and Market Corrections (Rosso)
Silicon Valley Homes Going For Nearly $2 Million Over Asking Price (ZH)
Bitcoin Is Biggest Bubble Of Them All, And It’s The Fed’s Fault – Ron Paul (CNBC)
Uber Loses EU Court Fight as Judges Take Aim at Gig Economy (BBG)
Gloomy Brexit Forecasts For UK Are Coming True, Says IMF (G.)
Bank of England To Allow EU Banks To Operate Unchanged After Brexit (G.)
UK PM May Heads to Poland to Seek Brexit Ally After Firing Her Deputy (BBG)
Poland Protests EU ‘Nuclear Option’ Over Judicial Independence (G.)
Catalonia Poised For Hung Parliament In Bitterly Contested Election (G.)
How The US Swindled Russia in The Early 1990s (Zuesse)
Alaska’s Arctic National Wildlife Refuge Now Has A $1 Billion Price Tag (G.)
Russians, Chinese Seek Out Greek Properties for Bargains, Visas (BBG)
Lesvos Mayor Files Suit Over Conditions At Moria Migrant Camp (K.)

 

 

Don’t have the impression it’s a great piece of work. But the entire MSM has only one goal: bash anything Trump. A neutral assessment might be appropriate, but where does one get one?

Trump Plans Tax Bill Signing on January 3 Due to Technical Issue (BBG)

President Donald Trump plans to sign the tax bill on Jan. 3 to ensure automatic spending cuts to Medicare and other programs don’t take effect, according to a House Republican aide familiar with the plans. The White House informed House GOP members of the timetable, following the likely decision by House Republicans to leave the so-called PAYGO provision out of a year-end spending deal to avoid a government shut down before Friday, the person said who asked not to be named because the plan hasn’t been publicly announced. Trump and GOP leaders have repeatedly said the president would sign the legislation before Christmas. White House National Economic Council Director Gary Cohn signaled Wednesday morning that the signing date could be pushed back because of the potential for triggering the cuts.

Under the PAYGO law, automatic cuts to Medicare and other spending categories would be triggered by the tax bill in January because the bill is scored as increasing the deficit by $1.5 trillion over 10 years. Waiting until January means that those cuts would be delayed until 2019, according to budget expert Ed Lorenzen of the Committee for a Responsible Federal Budget. White House officials insisted that no firm timetable had been set. Trump could sign the tax legislation earlier if Congress passed a waiver to the PAYGO rules, but that is unlikely to happen before lawmakers leave Washington for a holiday recess. “I think we’re just working out some of the logistics on that,” Treasury Secretary Steven Mnuchin said Wednesday on Fox News. “He’ll sign it as quickly as he can.”

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But wait, wasn’t Trump making Wall Street that much richer?

Why Wall Street Is Furious At The Trump Tax Plan (ZH)

Back in October 2016, the “millionaire, billionaire, private jet owners” of America’s elitist, liberal mega-cities (A.K.A. New York and San Francisco) celebrated the tax hikes that a Hillary Clinton presidency would have undoubtedly jammed down their throats proclaiming them to be a ‘patriotic duty’. Unfortunately, now that Trump has given them exactly what they apparently wanted…an amazing opportunity to ‘spread their wealth around”…they’re suddenly feeling a lot less patriotic. Of course, as we’ve noted numerous times, while most people across the country and across the income spectrum will benefit from the Republican tax reform package, the folks who stand to lose are those living in high-tax states with expensive real estate as their SALT, mortgage interest and property tax deductions will suddenly be capped. And, as Bloomberg points out today, that has a lot of Wall Street Traders in New York drowning their sorrows in expensive vodka and considering a move to Florida.

“One trader, sipping a Bloody Mary on a morning flight to somewhere more tropical, said he’s going to stop registering as a Republican. En route, he sent more than a dozen text messages ripping the tax bill. A pair of hedge fund managers said the tax bill is too tilted toward corporations, rather than individuals who should get more relief. “My clients are hard-working young professionals on Wall Street. I don’t have a lot of good news for them,” said Douglas Boneparth, a financial adviser in lower Manhattan who counsels people throughout the industry. Most are coming to terms with it. “I don’t think anyone is going to be surprised by the economic reality.” “This provides a clear incentive for financial advisers to go independent,” said Louis Diamond of Diamond Consultants. “We’re hearing from a lot of clients on this; it’s just another reason why it makes a ton of sense, economically, to become self-employed.”

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All bubbles have limited lifespans.

Peak Valuations and Market Corrections (Rosso)

[..] global diversification has enhanced portfolio returns this year. Spreading wealth among different markets and sectors has allowed investors to capture strong equity performance. You see, on the trend higher, investors may seek to employ a series of risk horses to fully participate in the race. Fixed income or bonds, and cash equivalents do a good job of helping investors manage risk through bear markets as they are negatively correlated to stocks. On the way down, stocks across markets connect and head south in sync; some fall faster than others. Unfortunately, when stock diversification is needed the most, it fails. With current valuations and stock prices extended well beyond their long-term trends, investors must be aware of reversions that have the probability of wiping out a decade or longer in gains.

Stock diversification will not protect you if or when this occurs (let me know if you’ve heard this from your broker’s research hub as of late; I bet you haven’t). Strategists for big-box financial retailers are consistently wishy-washy when it comes to the current unsustainable altitude of stock prices. It’s not in their best interest to take a stand. It would be a death knell for their careers. Recently, one of the paunchiest of the brethren shared on CNBC: Stocks are “slightly overvalued;” followed by – “that doesn’t mean you should do anything here.” Perfect. Well done. That’s how seven-figure compensation packages are earned, folks. When it comes to retail investors, time is as or more precious a commodity as money; we at RIA consistently write and research the math of investment losses to make sure you remain emotionally grounded and don’t allow greed to blind your judgment. We are not afraid to outline the risks inherent in extended markets.

Personally, I’m not willing to give up a decade or two to break even. Are you? Don’t worry about your friendly neighborhood talking heads. They’ll continue to collect big paychecks and hefty year-end bonuses as long as they play senior managements’ game. A broker’s research department superstar spokesperson is paid handsomely to point out when markets reach new highs but rarely expound on how long it takes to achieve or in most cases, reclaim them. A big-box financial retail investment strategist’s primary role is to forge and fortify a firm’s presence or brand and help front-line brokers keep investors fully invested through rough market cycles, nothing more.

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It’s different this time, though….

Silicon Valley Homes Going For Nearly $2 Million Over Asking Price (ZH)

If you’re still holding out hope that the following chart is anything but another massive housing bubble in the making then you should probably ignore the disturbing evidence to the contrary that we’re about to present below… Back in 2005/2006, one of the key signs that housing markets across the country were overheating was the number of houses that, thanks to soaring demand from speculators, were suddenly selling at prices well in excess of their asking price. That said, as a local CBS affiliate in San Francisco points out, the premiums of 2005/2006 pale in comparison to homes in Silicon Valley today that are selling for as much as $1-$2 million over their original asking prices.

But if you thought they area housing market couldn’t get any more outrageous, consider a home on Colorado Avenue in Palo Alto. It listed for $2.9 million, but sold for $3.9 million, $1 million over asking price. Another home on Anacapa Drive in the Los Altos hills listed for $2.8 million, but sold for $4.5 million. That is $1.67 million over asking. Finally, there is this home on University Avenue in Los Altos that listed at $7.9 million, but sold for $1.8 million over asking. In 2017, 10 homes in the mid-Peninsula area sold for $1 million over asking. Six of those listings belonged to Deleon Realty.

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Where does the money come from that’s used to buy bitcoin?

Bitcoin Is Biggest Bubble Of Them All, And It’s The Fed’s Fault – Ron Paul (CNBC)

He’s taken on President Donald Trump and the Federal Reserve. Now, libertarian former congressman Ron Paul is taking on bitcoin. According to Paul, cryptocurrencies have become an asset that rivals the bubble he sees in stocks. “I think it’s going to continue to do exactly what it’s doing. It’s going higher and it’s going lower,” he said Tuesday on CNBC’s “Futures Now.” “We can look at what’s happening now, which to me is a climactic end of QEs.” Paul, who has done commercials touting currency competition for a company that benefits from bitcoin’s rise, views the crypto craze as a side effect of central banks doing several rounds of quantitative easing to cope with the last financial crisis. “I look at the problems we face. I think they’re gigantic and people are desperate and looking everywhere. Why would they buy bonds that pay negative interest rates? Why would they buy stocks, and say well this time it’s different? ” asked Paul.

“Cryptocurrency is a reflection of the disaster of the monetary dollar system.” Paul, who’s also a medical doctor and former Republican presidential candidate, argues that cryptocurrencies are in an “exponential bubble” where trying to calculate its real value is extremely difficult. Bitcoin, the largest of the cryptocurrencies, has been trading above $17,000. He hasn’t been able to pinpoint when a plunge could happen in cryptocurrencies or the stock market. But Paul says the danger is real. “They’re both big bubbles in the sense that it occurred because there was excessive credit. But if you look at the curves, I think that the cryptocurrency curve looks more threatening,” Paul said.

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Looks like ‘we are tech’ was always a losing argument.

Uber Loses EU Court Fight as Judges Take Aim at Gig Economy (BBG)

Uber Technologies Inc. will be regulated in European Union countries as a transport company after the bloc’s top court rejected its claim to be a digital service provider, a decision that could increase legal risks for other gig-economy companies including Airbnb. While the EU Court of Justice’s ruling covered UberPop – which used drivers without taxi licenses and has already been shuttered in many countries due to the legal issues – it’s a real blow as the first definitive finding that Uber must be regulated by transport authorities. The decision clarifies for the first time that connecting people via an app to non-professional drivers forms an integral part of a transport service. It rejects Uber’s view that such services are purely digital and could fuel further scrutiny of other gig-economy firms.

Paris regulators are already clamping down on Airbnb, treating the home-rental service more like a hotel, and British food-delivery start-up Deliveroo is in the spotlight for its treatment of workers. In the EU judges’ view, “the most important part of Uber’s business is the supply of transport – connecting passengers to drivers by their smartphones is secondary,” said Rachel Farr at law firm Taylor Wessing. “Without transport services, the business wouldn’t exist.” Uber has argued that it’s a technology platform connecting passengers with independent drivers, not a transportation company subject to the same rules as taxi services. The case has been closely watched by the technology industry because of its precedent for regulating the gig economy, where freelancers make money by plying everything from spare rooms to fast-food deliveries via apps on smartphones and PCs.

“After today’s judgment innovators will increasingly be subject to divergent national and sectoral rules,” said Jakob Kucharczyk, of the Computer & Communications Industry Association, which speaks for companies like Uber, Amazon.com, Google and Facebook. “This is a blow to the EU’s ambition of building an integrated digital single market.” While the ruling is valid EU-wide, it remains limited to Uber’s services and won’t directly affect other disputes Uber is facing over how its drivers are treated. One such case is pending at the U.K. court of appeal.

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You don’t really need to be a genius to see this.

Gloomy Brexit Forecasts For UK Are Coming True, Says IMF (G.)

The IMF has strongly defended its gloomy forecasts for the UK after Brexit, saying pre-referendum warnings of slower growth were coming true. Christine Lagarde, the fund’s managing director, said the vote to leave the EU in June 2016 was already having an impact and Britain’s weaker growth this year was in contrast to accelerating activity in the rest of the world. Speaking at the Treasury as the IMF announced the results of its annual health check of the UK economy, Lagarde hit back at those who lambasted the fund when predictions of an immediate post-referendum recession failed to come to pass. “We feared that if Britain decided to leave, it would most likely entail a depreciation of sterling, higher inflation leading to a squeeze on disposable income and a reduction in investment,” she said.

“People said ‘Oh those experts’, but we are seeing the narrative we identified as a potential risk being rolled out as we speak. This is not the experts speaking, it’s what the economy is demonstrating.” The IMF trimmed its forecast for UK growth this year from 1.7% in October to 1.6%, and said it expected the economy to grow by 1.5% in 2018. It was one of several economic forecasters to say the UK would suffer a downturn should voters back leaving the EU. Last year, the fund had said growth for 2017 would be 1.1%, before raising the forecast to 2%. Since the turn of the year, Lagarde said activity had slowed notably and the UK’s recent performance was a disappointment in the light of the best showing by the global economy since the financial crash.

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A deliberate mess?

Bank of England To Allow EU Banks To Operate Unchanged After Brexit (G.)

The Bank of England plans to allow European banks to maintain their UK operations under current rules following Brexit, in a direct challenge to European Union regulators to adopt the same policy towards UK-based banks. The Bank said it wanted to press ahead with assessing the risks posed by the 177 banks and insurance companies based in the European Economic Area that have branches in London, following the agreement between Theresa May and EU officials to move to the second stage of Brexit talks. In a move that pre-empts trade talks between the UK and EU, the Bank said it would assess each foreign bank’s branch operation to decide whether it needed to be converted into a subsidiary, which effectively separates it from its overseas parent with its own capital.

Banks domiciled in the EEA will be keen to maintain UK branches, which are cheaper to run and come under more direct head office control. They also maintain their chief regulator in their home country. Most branches are expected to retain their current status despite needing to satisfy stringent rules. The BoE said it would carry out a broad assessment of the risks posed by branches, though it would rely heavily on cooperation with regulators across the EU. Branches that are considered to pose a systemic risk to London’s financial centre could be forced to convert to being subsidiaries. The Treasury is expected to give the Bank additional powers to supervise foreign bank branches in the UK, a job largely done by regulators based inside the EU.

Some pro-Brexit campaigners are expected to view the move as throwing away a major bargaining chip in trade talks. The UK might have threatened to block EU access to facilities in the City as the price of concessions in other areas, such as manufacturing and fishing rights. However, Mark Carney, the Bank’s governor, told MPs on the Treasury select committee on Wednesday that the decision to allow EU banks to continue operating under existing UK rules had been taken on the assumption that a “high degree of supervisory cooperation with the EU” would continue after Brexit.

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Desperate?!

UK PM May Heads to Poland to Seek Brexit Ally After Firing Her Deputy (BBG)

Fresh from sacking her trusted deputy, U.K. Prime Minister Theresa May heads to Poland on Thursday to attempt to get close – but not too close – to its new government. May was forced to tell First Secretary of State Damian Green to resign Wednesday afternoon after an inquiry into his behavior found he’d made misleading statements over pornography found on his parliamentary computer by police nearly a decade ago. Green is the third Cabinet minister to quit in two months. A couple of recent Brexit-related successes mean the prime minister is better equipped to handle Green’s departure than she might have been a month ago: The European Union has agreed to move negotiations on to the next phase, and late Wednesday, May’s flagship Brexit Bill completed the detailed scrutiny stage of its journey through the House of Commons.

Still, his departure leaves her without her closest ally in Cabinet. The flight to Warsaw will give May a chance to consider how she manages without him. She’ll be accompanied by her most senior ministers for a summit where she’ll promise cooperation on defense and security as part of a charm offensive to win friends in Europe before negotiations on post-Brexit trade start in March. But Poland’s rift with the EU over judicial reforms – and its government’s fears of a shortfall in EU funding after Britain leaves the bloc – threaten to overshadow the meeting with new Polish Prime Minister Mateusz Morawiecki. “The prime minister will raise her concerns with the prime minister when they meet,” May’s spokesman James Slack told reporters in London.

“We place importance on respect for the rule of law and we expect all our partners to abide by international norms and standards.” Britain’s rush to forge links with Morawiecki’s populist administration reflects a desire both to win friends for the talks ahead and to reassure former eastern European countries that it will continue to support them against Russian expansionism after Brexit. British troops are already stationed in Poland, and May will announce increased cooperation on cyber security.

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You are not sovereign. All your base are belong to us.

Poland Protests EU ‘Nuclear Option’ Over Judicial Independence (G.)

The Polish government has accused the European commission of a politically motivated attack after the EU’s executive body triggered a process that could see the country stripped of voting rights in Brussels, over legal changes that the bloc claims threaten the independence of the judiciary. In a highly symbolic moment, Poland’s fellow 27 EU member states were advised by the commission on Wednesday that the legislative programme of Poland’s government was putting at risk fundamental values expected of a democratic state by allowing political interference in its courts. The row represents the greatest crisis in the EU since Britain’s decision to leave the EU last year, with the Polish government showing little inclination to back down.

Frans Timmermans, the vice-president of the commission, told reporters in Brussels that in two years 13 laws had been adopted that put at serious risk the independence of Poland’s judiciary and the separation of powers. “Judicial reforms in Poland mean that the country’s judiciary is now under the political control of the ruling majority. In the absence of judicial independence, serious questions are raised about the effective application of EU law,” Timmermans, a former Dutch diplomat, said. “We are doing this for Poland, for Polish citizens.” Poland’s new prime minister, Mateusz Morawiecki, responded on Twitter: “Poland is as devoted to the rule of law as the rest of the EU.” The Polish foreign ministry said in a statement: “Poland deplores the European commission’s launch of the procedure […] which is essentially political, not legal.”

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‘Election’ today. Can’t even really call this an election. The goal seems to be to divide the independence vote among multiple parties.

Catalonia Poised For Hung Parliament In Bitterly Contested Election (G.)

Catalans head to the polls on Thursday to vote in an extraordinary and bitterly contested election that will pit secessionists against unionists and determine the next phase of the long-running campaign for independence from Spain. The election was called by the Spanish prime minister, Mariano Rajoy, at the end of October when the central government took control of Catalonia and sacked the regional government after it staged an illegal independence referendum and made a unilateral declaration of independence. Polls suggest Catalonia is set for a hung parliament, with the pro-independence Catalan Republican Left party (ERC) vying for first place with the unionist, centre-right Citizens party.

With no clear winner in sight, Thursday’s result is likely to lead to coalition negotiations to form a government that will either maintain the drive for independence in some form or defend the constitutional status quo. Tensions remain high in the region following the referendum and the Spanish police’s heavy-handed efforts to stop it. Secessionists believe that Madrid’s imposition of direct rule and the jailing of senior independence leaders could increase support for their cause. Unionists, however, argue that Catalans are sick of the social unrest and economic uncertainty generated by the unilateral actions of the government of deposed regional president Carles Puigdemont.

The exceptional circumstances surrounding the election are compounded by the fact that Puigdemont has been campaigning from Belgium. He fled to Brussels hours before Spain’s attorney general asked for charges of rebellion, sedition and misuse of public funds to be brought against his cabinet almost two months ago. Puigdemont’s former number two, Oriol Junqueras, has been fighting the election from prison, where he and two prominent independence leaders are being held as part of a judicial investigation into October’s events. “This is not a normal election,” Puigdemont told supporters via video link on Tuesday evening as the campaign drew to a close.

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A long list of documents. NATO expansion.

How The US Swindled Russia in The Early 1990s (Zuesse)

Due to a historic data-dump on December 10th, the biggest swindle that occurred in the 20th Century (or perhaps ever) is now proven as a historical fact; and this swindle was done by the US Government, against the Government and people of Russia, and it continues today and keeps getting worse under every US President. It was secretly started by US President George Herbert Walker Bush on the night of 24 February 1990; and, unless it becomes publicly recognized and repudiated so that it can stop, a nuclear war between the US and all of NATO on one side, versus Russia on the other, is inevitable unless Russia capitulates before then, which would be vastly less likely than such a world-ending nuclear war now is.

This swindle has finally been displayed beyond question, by this, the first-ever complete release of the evidence. It demonstrates beyond any reasonable doubt (as you’ll verify yourself from the evidence here), that US President G.H.W. Bush (and his team) lied through their teeth to Soviet President Mikhail Gorbachev (and his team) to end the Cold War on Russia’s side, when the US team were secretly determined never to end it on the US-and-NATO side until Russia itself is conquered. And this swindle continues today, and keeps getting worse and worse for Russians.

Until now, apologists for the US-Government side have been able to get away with various lies about these lies, such as that there weren’t any, and that Gorbachev didn’t really think that the NATO issue was terribly important for Russia’s future national security anyway, and that the only limitation upon NATO’s future expansion that was discussed during the negotiations to end the Cold War concerned NATO not expanding itself eastward (i.e., closer to Russia) within Germany, not going beyond the then-existing dividing-line between West and East Germany — that no restriction against other east-bloc (Soviet-allied) nations ever being admitted into NATO was discussed, at all. The now-standard US excuse that the deal concerned only Germany and not all of Europe is now conclusively disproven by the biggest single data-dump ever released about those negotiations.

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When everything is measured in monetary value, nothing will be left in the end.

Alaska’s Arctic National Wildlife Refuge Now Has A $1 Billion Price Tag (G.)

Years ago, camping in Alaska’s Arctic national wildlife refuge, I watched a herd of caribou – 100,000 bulls, cows and their three-week-old calves – braid over the tundra, moving to a rhythm as old as the wind. “Not many places like this left today,” said my friend Jeff, sitting next to me above an ice-fringed river. And so Alaska senator Lisa Murkowski believes this refuge – 80 miles east of Prudhoe Bay – could generate $1bn over 10 years once it’s opened to oil leasing. She and her Republican colleagues slipped this drilling provision into the Senate Republican tax bill. Murkowski repeatedly says this development would cover just 2,000 acres, “about one ten-thousandth of ANWR”.

The acronym ANWR conveniently deletes the words “wildlife” and “refuge”, with no regard for the polar bears, Arctic fox, musk oxen and migratory ground-nesting birds that come there every summer, some species from as far away as Patagonia. Alaska’s lieutenant governor, Byron Mallott, has said that drilling in ANWR is necessary to deal with climate change. His caddywhompus logic: we need to drill for more oil to raise money to address a problem that’s caused by humanity’s addiction to oil. Why not just say the truth? We want the money. Murkowski adds: “We have waited nearly 40 years for the right technology to come along for a footprint small enough for the environment to be respected.” They have not. Alaskans have been trying to drill here for decades, using one crazy rationale after another.

At one hearing the state’s lone congressman, Don Young, put a blue pen mark on his nose to show how small the industry footprint would be. Clever man. The development would in fact be a spider web of roads, pipelines, well pads and landing strips smack in the middle of the biological heart of the refuge. It would look less like a refuge and more like Prudhoe Bay, where thousands of spills have been reported. Senator Maria Cantwell of Washington says the whole idea is “ludicrous”, noting that the Republican tax plan would add roughly $1.5tn to the national deficit in five years [with the richest 1% of Americans reaping half of the tax cuts]. “I am disturbed,” she says. She should be. Christopher Lewis, a retired BP manager of exploration, has said: “I do not believe that there are any adequate, commercially viable reservoirs in the Arctic refuge.” The reality is “there are other less sensitive and less costly places to explore”.

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Brutal.

Russians, Chinese Seek Out Greek Properties for Bargains, Visas (BBG)

George Kachmazov, a Russian realtor, is buying up property in Athens. The Moscow-based chief executive officer of real-estate platform Tranio.com has bought a building in the Greek capital and is in the process of acquiring five others with a view to selling apartments to international investors. For Kachmazov, the sales pitch is clear: buying property in Greece can give an investor a so-called golden visa to the country – and with it an entree into much of Europe. What’s more, the country’s real estate market may be poised for a rebound, helping buyers make some money on their purchase. “Greece’s real estate market is one of the remaining few in Europe that hasn’t recovered since the 2008 economic crisis,” Kachmazov said in an interview in Athens.

Prices in Spain, Portugal, Ireland, Poland and Hungary are heading toward pre-crisis levels because of high liquidity in Europe, he said. Kachmazov is among agents making a beeline for Greece to help property hunters from Russia, China, Turkey and elsewhere bet on a market that may be on the cusp of a revival as the country exits its bailout program in August 2018. Property prices in Greece have fallen more than the 25% contraction in the economy since Europe’s sovereign debt crisis began in 2008. Prices of apartments in Athens more than five years old shrank by 45% between 2008 and June 2017, according to Bank of Greece data.

“The belief is that the worst is over and that this is a good time to take advantage of the low prices and to benefit from future capital gains as the market recovers,” said Carrie Law, CEO of Juwai.com, a Chinese international property website. Juwai this year signed an agreement with Warren Buffett’s real estate brokerage firm to advertise homes in the U.S. The average price per square meter in Greece is 2,846 euros ($3,369), according to Germany-based statistics company Statista. That’s almost 1,000 euros cheaper than Portugal, which has a similar golden visa program for property buyers, one and a half times cheaper than in Spain and Germany, and almost three times cheaper than in Italy and Austria. Greece is more expensive than Bulgaria, Croatia, Romania and Estonia.

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There are reportedly highly superior facilities lying idle on the mainland. But the EU doesn’t want the refugees there.

Lesbos Mayor Files Suit Over Conditions At Moria Migrant Camp (K.)

The mayor of the eastern Aegean island of Lesvos has filed suit against all responsible parties over the conditions at the Moria refugee and migrant processing center. Spyros Galinos filed his suit in Lesvos’s Court of Misdemeanors, claiming that the law is being broken at the government-run facility, which is supervised by the military. His action comes two days after foreign media published videos shot covertly inside the camp and showing the squalor and cramped conditions to which thousands of refugees and migrants are being subjected. The mayor stressed that the facility, a former military base, should not be accommodating more than 1,800 people at a time if decent living standards are to be ensured.

“Unfortunately, though, for the past two years and this year especially there is an extremely large number of third-country citizens and vulnerable groups (men, women – among which pregnant women – and children) indiscriminately trapped and cramped together, coming to more than 6,000 individuals,” Galinos said in his lawsuit. He also stressed poor safety and sanitation standards, saying that an inadequate water and sewerage network is putting the lives of the camp’s residents and workers at risk. People living at the camp “every day experience serious psychological problems and have been led to suicide attempts and self-harm, while others are compelled to serious acts of lawlessness in order to survive,” Galinos said.

His suit came just hours after about a dozen people were injured in a brawl that went on for hours between rival groups at the camp and resulted in extensive destruction. The mayor further stressed the impact of conditions at Moria on the lives of the island’s residents, saying that authorities are failing in their duty to control and monitor such a large number of refugees and migrants. Galinos added that overcrowding at the camp has forced hundreds of migrants to move into the main town of Mytilene in search of some kind of shelter, “taking over public spaces, the city’s parks, sidewalks and courtyards of public and municipal buildings.” In the suit, Galinos asks that “all responsible parties” are taken to task over the situation, as “their actions and omissions are malicious and deliberate, and put at risk the desperate and poor people trapped in [Moria’s] illegal facilities.”

“The disruption of social cohesion and the risk of criminal offenses in defense of life and property by a part of the island’s native population is evident and very likely,” Galinos warned. Since the onset of the refugee crisis at the start of 2015, the residents of Lesvos and its mayor have been distinguished for the support they have given to tens of thousands of migrants that have landed on the island’s shores.

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Dec 192017
 
 December 19, 2017  Posted by at 9:40 am Finance Tagged with: , , , , , , , , , ,  7 Responses »
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Edwin Rosskam Store in alley-dwelling section of Washington, DC 1941

 

China’s Growth Story… Don’t Look For A Happy Ending! (Hamilton)
One Of The Co-Founders Of Bitcoin.com Has Sold All Of His Bitcoin (BI)
Germany Backs French-Led Push for Global Bitcoin Regulation (BBG)
The EU’s Top Court Will Decide Whether Or Not Uber Is A Taxi Company (BBG)
UK Cannot Have A Special Brexit Deal For The City – EU (G.)
Bad Moon: (Trouble) Rising (Crooke)
The RussiaGate Witch-Hunt -The Deep State’s “Insurance Policy” (Stockman)
The Darkest Hours (Jim Kunstler)
As Catalan Vote Looms, Jailed Leader Offers Olive Branch To Spain (R.)
Germany’s Entire Submarine Fleet Is Paralyzed (ZH)
We’re Buying More Stuff We Don’t Need (BBG)
ECB Sued Over Decision To Freeze Help To Greek Banks (R.)
Let It Go: The Arctic Will Never Be Frozen Again (Grist)

 

 

No domestic consumers, no foreign clients. But a truckload of debt going forward.

China’s Growth Story… Don’t Look For A Happy Ending! (Hamilton)

Many economists suggest China is on the cusp of significant growth in domestic consumer demand. That this rising domestic demand coupled with continued growth as the global exporter will push the global economy further. However, I’ll briefly show why neither of these outcomes is remotely likely.

Problem #1- China as Consumer: According to the UN data, China’s 15-40yr/old childbearing population peaked in 2005 and has been rapidly shrinking since. Since ’05, China’s population capable of producing more Chinese has fallen by 83 million persons or a 14.3% decline. By 2030, China’s childbearing population will have declined by 157 million or a 27% reduction of those capable of childbirth (no estimate here…this is simply moving the existing population forward in adulthood). Couple a massive decline in the childbearing population and the ongoing negative birthrate and serious depopulation (particularly among the rural regions) is not only possible but growing more likely. Minor increases in wages will be no match for the massive declines in the consumer base. The chart below shows China’s total 15 to 40 year old population (in blue) and the annual change (in red).

Problem #2- China as Exporter:
Who will China continue to export to? The primary importers of China’s goods are N. America (US/Canada), Europe (including Russia and Eastern Europe), Australia/New Zealand. These nations represent roughly one seventh of the world’s population but consume over half of all the worlds oil production. But here again I have the same problem; combined childbearing population peaked in 1988 and has been declining since. The population capable of childbirth has fallen over 40 million or nearly 10% since the ’88 peak. By 2030, despite many of these nations allowing, promoting, and/or enduring large immigrations of precisely this age of migrants, the population is anticipated to be 60 million fewer than during the peak, or a 15% fall from peak. The basis of present and future demand growth simply is non-existent.

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Illiquidity.

One Of The Co-Founders Of Bitcoin.com Has Sold All Of His Bitcoin (BI)

Bitcoin.com is one of the world’s largest bitcoin sites, having grown its profile thanks to the insane price surge of the cryptocurrency this year. But its co-founder and CTO, Emil Oldenburg, a Swedish native, is extremely skeptical of bitcoin’s future. “I would say an investment in bitcoin is right now the riskiest investment you can make. There’s an extremely high risk,” he says in an interview with Swedish tech site Breakit. “I have in fact sold all my bitcoins recently and switched to bitcoin cash,” says Oldenburg, referring to the problems with bitcoin’s high transaction costs and lead times. Indeed, by some counts, bitcoin transaction fees are doubling every three months, and it now takes on average 4.5 hours to confirm a bitcoin transaction. Ars Technica reported that fees reached $US26 ($34) per trade recently. Bitcoin.com operates in everything that has to do with bitcoins.

Today, the site – based out of Tokyo but registered on St Kitts – has tens of millions of unique monthly visitors, according to Similarweb, a web analytics site. The company’s biggest single revenue stream is its so called bitcoin “mining pool”, where it forges new units of the cryptocurrency that are released on the market. Oldenburg doesn’t want to disclose any revenue numbers, more than revealing “it’s an awfully lot of money”, he says to Breakit. Even on a personal level. “All my salary in the past three years has come in bitcoin,” just as those of his 60 colleagues in Tokyo, Oldenburg says. But according to the Swedish bitcoin expert, it’s time to change to bitcoin cash. There’s a big reason for that switch, and it’s all about the market liquidity — or lack thereof — of bitcoin.

The reason why people haven’t understood the risks inherent in owning bitcoins, according to Oldenburg, is simply because most have so far only bought the cryptocurrency — but never sold or traded with them. “As soon as people realise that this is how it works, they will start to sell,” he tells Breakit. “The old bitcoin network is as good as unusable.” While buying, selling or trading in bitcoins is not an issue today, according to Oldenburg, the problems surface when bitcoin transactions are recorded on the blockchain, the digital ledger that records each transaction. The problem centres on the limited amount of transactions per second you can make in the bitcoin network, which in turn depends on the formation of the memory “block size” that store the transactions. This, according to Oldenburg, makes for a very illiquid and unusable cryptocurrency.

[..] In what may be considered somewhat ironic, Oldenburg says bitcoin.com is distancing itself from bitcoin and has even stopped developing services for it — to mostly focus on bitcoin cash, the currency that split from bitcoin back in August, and recently overtook Ethereum as the world’s second-largest cryptocurrency. “It only costs $0.012 (10 Swedish “öre”, the centesimal subdivision of krona) to send a [Bitcoin Cash transaction] and there are no lead times. The only drawback is that you need larger hard drives, but that’s not a problem for most people,” Oldenburg says to Breakit.

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One tiny problem: how can you regulate something you don’t understand: “I don’t like it,” Le Maire said of bitcoin. [..] we need to look at it, study it,” he said.

Germany Backs French-Led Push for Global Bitcoin Regulation (BBG)

Germany joined European governments pushing for global bitcoin regulation amid mounting alarm that the world’s most popular digital currency is being used by money-launderers, drug traffickers and terrorists. Germany’s Finance Ministry said it welcomed a proposal by French Finance Minister Bruno Le Maire to ask his counterparts in the Group of 20 to consider joint regulation of bitcoin. The concerns are shared by the Italian government, which is also open to discussing regulation, while the European Union is bringing in rules backed by the U.K. that would apply to bitcoin. “It makes sense to discuss the speculative risks of virtual currencies and their impact on the financial system at international level,” the Finance Ministry in Berlin said in an email. The next meeting of G-20 finance ministers and central bank governors would be “a good opportunity to do so.”

Signs of growing European concern came as bitcoin took another step toward acceptability with the launch of futures trading Sunday night at CME’s venue. That’s a week after Chicago rival Cboe Global Markets introduced similar derivatives on the volatile cryptocurrency that was created in the wake of the 2008 financial crisis as an alternative to banks and government-issued currencies. Bitcoin was closing in on a fresh record of $20,000 on Monday. The Finance Ministry in Germany, Europe’s biggest economy, “monitors developments in the financial market very closely,” it said. “This also applies to the current development of bitcoin.” While Europe’s concerns have been voiced before in select forums about a currency which is stepping further into the mainstream financial world, Le Maire made those worries public in a weekend interview. “I don’t like it,” Le Maire said of bitcoin. “It can hide activities such as drug trafficking and terrorism,” and he has concerns for savers. “There is an obvious speculative risk, we need to look at it, study it,” he said.

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You can’t forever hide behind the word ‘tech’. Or every company can do it.

The EU’s Top Court Will Decide Whether Or Not Uber Is A Taxi Company (BBG)

Uber Technologies is set to reach the end of the road in a legal battle over a question that’s reached the European Union’s top court – is the world’s most valuable startup a taxi company or not? Uber has argued that it’s a technology platform connecting passengers with independent drivers, not a transportation company subject to the same rules as taxi services. The decision is being closely watched by the technology industry because it could set a precedent for how other companies in the burgeoning gig economy are regulated across the 28-nation bloc. “The judgment will either promote the digital single market or lead to more market fragmentation for online innovators,” said Jakob Kucharczyk, of the Computer & Communications Industry Association, which speaks for companies like Uber, Amazon.com, Google and Facebook. “The court should make a clear distinction between the online intermediation and the underlying service it facilitates.”

The case centers around UberPop, an inexpensive ride-hailing service Uber launched in several European cities that allowed drivers without a taxi license to use their own cars to pick up passengers. Legal challenges have forced Uber to shutter its UberPop services in most major European companies in favor of UberX, which requires drivers to get a license. A loss for Uber would mean countries in the EU will have to classify Uber as a transportation service. While Uber adheres to many taxi laws in countries where it operates, the case could lead to new regulations and fees. “Any ruling will not change things in most EU countries where we already operate under transportation law,” Uber said in a statement. “However, millions of Europeans are still prevented from using apps like ours. As our new CEO has said, it is appropriate to regulate services such as Uber. We want to partner with cities to ensure everyone can get a reliable ride at the tap of a button.”

The question of whether Uber is a transport service has long vexed regulators and lawmakers across Europe. Uber has faced roadblocks, real and regulatory, across Europe, amid complaints brought by taxi drivers who say the company tries to unfairly avoid regulations that bind established competitors. Without the pressure from regulators, companies in the gig economy will force other businesses to employ similarly aggressive business practices, said Andrew Taylor, who earlier this year was commissioned by U.K. Prime Minister Theresa May to come up with recommendations to regulate the gig economy. “There’s a danger of a race to the bottom,” said Taylor. “Major American companies are treating national norms, culture, regulators and tax systems in a cavalier way.”

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What’s going to be left of Britain without the City?

UK Cannot Have A Special Brexit Deal For The City – EU (G.)

Britain cannot have a special deal for the City of London, the European Union’s chief Brexit negotiator has told the Guardian, dealing a blow to Theresa May’s hopes of securing a bespoke trade agreement with the bloc. Michel Barnier said it was unavoidable that British banks and financial firms would lose the passports that allow them to trade freely in the EU, as a result of any decision to quit the single market. “There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn’t exist.” He said the outcome was a consequence of “the red lines that the British have chosen themselves. In leaving the single market, they lose the financial services passport.”

The stark declaration quashes the hopes of the Brexit secretary, David Davis, for a unique trade deal that would include financial services. The Brexit secretary has called for a “Canada plus plus plus” deal with the EU, a reference to the free trade agreement struck between Ottawa and Brussels in 2016, but with the crucial addition of financial services. In an exclusive interview with European newspapers, including the Guardian, Barnier gave examples of his own three pluses – judicial cooperation, defence and security and aviation.

The negotiator also said: • A trade deal could be agreed within a two-year transition period, but would have to be ratified by more than 35 national and regional parliaments. • The UK could not stop Brexit unilaterally, arguing that overturning the decision to leave would require the consent of 27 EU member states – a view at odds with one of the authors of article 50, Lord Kerr. • The UK must follow all rules and regulations of the EU during the transition period, including new laws passed after the UK has left. • The UK could negotiate trade agreements with the rest of the world during the transition, but they could not come into force. • He would not confirm British estimates that the final Brexit bill – the UK’s outstanding obligations to the EU – would be no more than €45bn (£39bn).

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Boy, what a failure Russiagate has been. How do you recover from that?

Bad Moon: (Trouble) Rising (Crooke)

President Obama lay very much in the globalist ‘struggle for a democratic-liberal world’ mould, (though he did try to make the ‘ruling interests’ understand that there were limits: that there had to be boundaries to US commitments). In other words, Obama accepted the globalist premise, though he tried to mitigate some of its military impulses. Notably however, he acquiesced to re-heating the Russia ‘threat’ (after Medvedev gave place to Mr Putin (thus ending Obama’s hope to seduce Russia into the embrace of the global economic order). But then Donald Trump, elected President by his deplorables’ base, made clear that he wished for détente with Russia, and even disdained the claims made on ordinary Americans by the maintenance of America’s unipolar global ‘order’.

For this heresy, he has been punished by the manufactured ‘Russiagate’ non-scandal. “Can a president, concerned that he might be removed from office by a special prosecutor or possibly assassinated, resist the march toward war?” – asks Paul Craig Roberts, who asserts that the President has been effectively caged, by a trifecta of Establishment generals, on the one hand; and by a Goldman Sachs posse, on the other. That the ‘ruling interests’ have managed substantially to contain President Trump is undeniable, but what is new, and perhaps – or perhaps, not – alters the calculus, is that these ‘ruling interests’ have had to come out from the shadows into the open.

The former Acting Director of the CIA, Mike Morrell, an early voice peddling the Russian collusion meme now publicly admits in a surprisingly frank interview with Politico, his leading role in the intelligence community waging political war against President Trump, describing his actions as something he didn’t “fully think through”, adding that maybe it wasn’t such a great idea to leak against, and bash a new president: “There was a significant downside”, Morrell acknowledges. Just to recall: Not only had Morell in an early NY Times op-ed piece asserted that he was committed to doing “everything I can to ensure that she [Hillary Clinton] is elected as our 45th president”, but he went so far as to call then candidate Trump “a threat to our national security”, while making the extraordinary claim that “in the intelligence business, we would say that Mr. Putin had recruited Mr. Trump as an unwitting agent of the Russian Federation.”

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A list of people who never worked an honest job.

The RussiaGate Witch-Hunt -The Deep State’s “Insurance Policy” (Stockman)

There was a sinister plot to meddle in the 2016 election, after all. But it was not orchestrated from the Kremlin; it was an entirely homegrown affair conducted from the inner sanctums – the White House, DOJ, the Hoover Building and Langley – of the Imperial City. Likewise, the perpetrators didn’t speak Russian or write in the Cyrillic script. In fact, they were lifetime beltway insiders occupying the highest positions of power in the US government. Here are the names and rank of the principal conspirators: John Brennan, CIA director; Susan Rice, National Security Advisor; Samantha Power, UN Ambassador; James Clapper, Director of National Intelligence; James Comey, FBI director; Andrew McCabe, Deputy FBI director; Sally Yates, deputy Attorney General, Bruce Ohr, associate deputy AG; Peter Strzok, deputy assistant director of FBI counterintelligence; Lisa Page, FBI lawyer; and countless other lessor and greater poobahs of Washington power, including President Obama himself.

To a person, the participants in this illicit cabal shared the core trait that made Obama such a blight on the nation’s well-being. To wit, he never held an honest job outside the halls of government in his entire adult life; and as a careerist agent of the state and practitioner of its purported goods works, he exuded a sanctimonious disdain for everyday citizens who make their living along the capitalist highways and by-ways of America. The above cast of election-meddlers, of course, comes from the same mold. If Wikipedia is roughly correct, just these 10 named perpetrators have punched in about 300 years of post-graduate employment – and 260 of those years (87%) were on government payrolls or government contractor jobs.

As to whether they shared Obama’s political class arrogance, Peter Strzok left nothing to the imagination in his now celebrated texts to his gal-pal, Lisa Page: “Just went to a southern Virginia Walmart. I could SMELL the Trump support……I LOATHE congress….And F Trump.” You really didn’t need the ALL CAPS to get the gist. In a word, the anti-Trump cabal is comprised of creatures of the state.

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“..even hogs busy fattening up don’t have a clue about their imminent slaughter.”

The Darkest Hours (Jim Kunstler)

The Tax “Reform” bill working its way painfully out the digestive system of congress like a sigmoid fistula, ought be re-named the US Asset-stripping Assistance Act of 2017, because that’s what is about to splatter the faces of the waiting public, most of whom won’t have a personal lobbyist / tax lawyer by their sides holding a protective tarpulin during the climactic colonic burst of legislation. Sssshhhh…. The media has not groked this, but the economy is actually collapsing, and the nova-like expansion of the stock markets is exactly the sort of action you might expect in a system getting ready to blow. Meanwhile, the more visible rise of the laughable scam known as crypto-currency, is like the plume of smoke coming out of Vesuvius around 79 AD — an amusing curiosity to the citizens of Pompeii below, going about their normal activities, eating pizza, buying slaves, making love — before hellfire rained down on them.

Whatever the corporate tax rate might be, it won’t be enough to rescue the Ponzi scheme that governing has become, with its implacable costs of empire. So the real aim here is to keep up appearances at all costs just a little while longer while the table scraps of a four-hundred-year-long New World banquet get tossed to the hogs of Wall Street and their accomplices. The catch is that even hogs busy fattening up don’t have a clue about their imminent slaughter. The centerpiece of the swindle, as usual, is control fraud on the grand scale. Control fraud is the mis-use of authority in applying Three-Card-Monte principles to financial accounting practice, so that a credulous, trustful public will be too bamboozled to see the money drain from their bank accounts and the ground shift under their feet until the moment of freefall.

Control fraud is at work in the corporate C-suites, of course, because that is its natural habitat — remember that silver-haired CEO swine from Wells Fargo who got off scot-free with a life-time supply of acorns after scamming his account-holders — but their errand boys and girls in congress have been superbly groomed, pampered, fed, and trained to break trail and cover for them. The country has gotten used to thinking that the game of pretend is exactly the same as what is actually going on in the world. The now-seminal phrase coined by Karl Rove, “we make our own reality,” is as comforting these days to Republicans from Idaho as it is to hairy, “intersectional” professors of post-structural gender studies in the bluest ivory towers of the Ivy League. Nobody in this Republic really wants to get his-hers-zhe’s-they’s reality on.

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How can you have a fair election with so many people either in jail or in exile?

As Catalan Vote Looms, Jailed Leader Offers Olive Branch To Spain (R.)

The jailed leader of Catalonia’s main pro-independence party has backed away from demands for unilateral secession from Spain, days before a regional election that polls suggest will produce a hung parliament. The independence drive has tipped Spain into its worst political crisis since the return of democracy in the 1970s, dividing opinion in the region, denting an economic rebound and prompting a business exodus to other parts of the country. In reply to written questions from Reuters passed to him in prison where he is being held on allegations of rebellion and sedition, Oriol Junqueras struck a conciliatory tone. He wrote that he would continue to pursue independence if he became Catalonia’s next president, but also “build bridges and shake hands” with representatives of the Spanish state.

“I can assure you that we are democrats before we are separatists and that the aim (of gaining independence) does not always justify the means,” he said in comments that appeared to drop his party’s earlier demand for unilateral secession. Junqueras’ Esquerra Republicana (Republican Left) party is tipped to become the largest separatist force in parliament in Thursday’s ballot, but surveys suggest neither the pro-independence nor the pro-unity camp will win a majority. He was deputy leader of the Catalan government that was sacked in October after the regional assembly unilaterally declared independence following a referendum that central authorities had deemed illegal. Madrid also dissolved the assembly and called fresh elections.

The Spanish justice system’s actions against the region’s leaders has since then hamstrung the pro-independence camp and further muddied the electoral waters before Thursday’s vote. Catalonia’s ex-president Carles Puigdemont is campaigning from self-imposed exile in Brussels and Junqueras doing so from jail along with several other politicians. It is unclear if many of those likely to be elected will be able to attend parliament.

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The Russians did it.

Germany’s Entire Submarine Fleet Is Paralyzed (ZH)

Throughout 2017, America’s control of NATO policymaking has become more evident than ever, with the sole objective of war-making against Russia. NATO and Russia continue to build up arms, equipment, and troops along the eastern region of Europe, but there is a new development that has NATO worried. Germany’s operational readiness of its entire submarine fleet is dead in the water. Yes, you heard that correctly, Germany’s prized submarines are currently on maintenance calls or in desperate need of repairs. On October 15, Germany lost the last of its submarines when the Type 212a vessel was performing a diving maneuver off the Norweigan coast when it suffered a catastrophic blow to one of its four fins after the submarine struck a boulder. The submarine was quickly rendered not operational and had to be towed back to the German port of Kiel for maintenance work.

In the latest operational summary provided by RT, there are six submarines in the German fleet and all are out of service. Two Type 212a vessels are undergoing scheduled maintenance, and will be redeployed in the second half of 2018, while another two are in a critical state for repairs, with no estimated time of completion. The fifth submarine, as we mentioned above, crashed in October. The sixth submarine was commissioned in October and is currently undergoing rigorous sea trials before it will become operational in May 2018. Germany’s submarine fleet will be paralyzed for the next 4-5 months, which presents an enormous national security risk for the country. The submarines’ most fundamental feature is stealth, coupled with defense capabilities and surveillance, but as mentioned above, there is currently a major gap in Germany’s military defense at the moment, which we hope is not exploited by an adversary.

The German parliament’s Defense Commissioner Hans-Peter Bartels told ARD, “this a real disaster for the navy and it’s the first time in history that none [of the U-boats] would be operational for months.” Bartels blamed the lack of spare parts for the broken submarines with the lack of government funding. Ever since the Cold War, German authorities have decided against stockpiling spare parts due to its high costs.

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Without waste our economies collapse.

We’re Buying More Stuff We Don’t Need (BBG)

Here’s a Grinchian question for the holidays: How much do Americans spend on stuff they don’t really need? A very rough analysis suggests they’re blowing more money on nonessential items than they have in more than 17 years. Back in the 1950s, the economist John Kenneth Galbraith made a bleak argument about modern capitalism: Advertising can create artificial wants – say, for the latest gadget or skin cream – that spur ever-greater consumption without actually making people better off. As a result, economies can grow without improving the lot of humanity. Whether or not he’s right – it remains a matter of debate – the idea raises an interesting empirical question: How much of what we consume is related to wants rather than needs?

This isn’t easy to answer using even the most detailed data on consumer spending, because many categories could go either way. A car, for example, could be pure transportation or a Ferrari. That said, a number of categories – such as gambling, hairdressers and recreational vehicles – are pretty clearly nonessential. Following them consistently over time can give at least a sense of trend. So how are we doing? In the third quarter of this year, nonessential items (of my own subjective selection 1) accounted for almost 18.5 percent of total U.S. consumer spending. That’s the highest share since June 2000. Here’s a chart:

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This is about liquidity, not about the refusal to include in the ECB bond purchases. But it’s equally unjustifiable politically as well as economically. The ECB should not be able to do these things under cover of darkness.

ECB Sued Over Decision To Freeze Help To Greek Banks (R.)

Former Greek finance minister Yanis Varoufakis and a German parliamentarian are suing the ECB to gain access to a document underpinning the ECB’s decision to freeze vital funding to Greek banks in 2015. That move left Alexis Tsipras’ government with little choice but to shut down banks and impose capital controls, weakening his negotiating position with the country’s international lenders during bailout negotiations. Eventually, hard-liner Varoufakis resigned and Tsipras made a deal that gave Greece cash in return for austerity measures and reforms. Varoufakis and a German leftist parliamentarian, Fabio De Masi, are asking the EU’s top court to force the ECB to disclose a legal opinion that informed that decision, which they say might be unlawful.

“By restricting liquidity to the Greek banking sector to force cuts in pensions, tax increases and fire-sale privatizations, the ECB overstepped its mandate,” De Masi said. After their request was rejected by the ECB, Varoufakis and De Masi are turning to the General Court of the European Union to obtain the document. An ECB spokesman said the legal opinion preceded the decision to withhold funding by at least two months. The ECB decided not to disclose it to protect its legal advisers and its internal deliberations, he said. The ECB’s Agreement on Emergency Liquidity Assistance (ELA), published earlier this year, prohibits national central banks from providing ELA if it “interferes with the objectives and tasks” of the Eurosystem, such as maintaining price stability and safeguarding payments.

“There is an overriding public interest in knowing how far the ECB … weighed different goals against each other and how they themselves and their legal experts have interpreted the legal framework in this respect,” the complainants’ lawyer, Andreas Fischer-Lescano, said in the appeal.

Read more …

No more Santa. Or reindeer, polar bears.

Let It Go: The Arctic Will Never Be Frozen Again (Grist)

Last week, at a New Orleans conference center that once doubled as a storm shelter for thousands during Hurricane Katrina, a group of polar scientists made a startling declaration: The Arctic as we once knew it is no more. The region is now definitively trending toward an ice-free state, the scientists said, with wide-ranging ramifications for ecosystems, national security, and the stability of the global climate system. It was a fitting venue for an eye-opening reminder that, on its current path, civilization is engaged in an existential gamble with the planet’s life-support system. In an accompanying annual report on the Arctic’s health — titled “Arctic shows no sign of returning to reliably frozen region of recent past decades” — the National Oceanic and Atmospheric Administration, which oversees all official U.S. research in the region, coined a term: “New Arctic.”

Until roughly a decade or so ago, the region was holding up relatively well, despite warming at roughly twice the rate of the planet as a whole. But in recent years, it’s undergone an abrupt change, which now defines it. The Arctic is our glimpse of an Earth in flux, transforming into something that’s radically different from today. At a press conference announcing the new assessment, acting NOAA Administrator Timothy Gallaudet emphasizes the “huge impact” these changes were having on everything from tourism to fisheries to worldwide weather patterns. “What happens in the Arctic doesn’t stay in the Arctic — it affects the rest of the planet,” Gallaudet said.

[..] Take, for instance, the hypothesis of University of Alaska-Fairbanks permafrost scientist Vladimir Romanovsky: So far, 2017 has seen the highest permafrost temperatures in Alaska on record. If that warming continues at the current rate, widespread thawing could begin in as few as 10 years. The impact of such defrosting “will be very very severe,” Romanovsky says, and could include destruction of local infrastructure — like roads and buildings — throughout the Northern Hemisphere and the release of additional greenhouse gases that have been locked for generations in the ice.

Read more …

Nov 262017
 
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Gallica Great Paris Flood 1910

 

The World’s Twin Asset Bubbles Could Collapse Under Their Own Weight (Filia)
Atlas Stumbles – Inequality And Macroeconomics At A Crossroads (DDMB)
Europeans Still Love Paying Cash, Even if They Don’t Know It (BBG)
Echoes of Weimar Republic as Germans Lose Knack Of Coalition-Building (G.)
EU Demands In Next Round Of Talks Set To Enrage Cabinet Brexiteers (Ind.)
Catalan Leader Doubles Down on Independence Pledge (BBG)
The End of the Age of Benevolence (Marion)
Greeks Cutting Down On Food Due To Overtaxation (K.)
Libya Navy Says Over 30 Migrants Dead, 200 Rescued Off Coast (AFP)
Mexico’s Vast New Ocean Reserve To Protect ‘Galapagos of North America’ (G.)

 

 

Very interesting transcript of a MacroVoices talk with fund manager Francesco Filia. It doesn’t really fit into the Debt Rattle format, so go to Zero Hedge to read it all.

The World’s Twin Asset Bubbles Could Collapse Under Their Own Weight (Filia)

I think the equity bubble is quite uncontroversial, is quite unambiguous. There are a lot of different valuation metrics for those that care to look into them. They’ve been valid for over a hundred years of modern financial markets. And this time is no different in that respect. There are the usual metrics that the valuation guys are looking at, like financial assets to disposable income that shows that this market is way more expensive than at any point in history including the big dot com bubble and the Lehman moment in 2007-2008. But there are other metrics like the Buffett Indicator (market cap on GDP), the median debt on total assets, the corporate debt to GDP, the price on sales, the price to book, enterprise value on sales, enterprise value on EBITDA – there are a number of different metrics. They all convene that this is a market bubble that has not been seen before in history.

But we at Fasanara, we developed our own indicator just to try to add something to what was available already. And we started with one of the most famous of all the indicators in this respect, which is the Shiller adjusted PE ratio, or the CAPE ratio. This is the most famous of them. Professor Shiller got a Nobel Prize in 2013 for it. And for his studies on market inefficiencies and for the ability to infer future expected returns from valuation metrics such as the Shiller PE. And, based on the Shiller PE, what it does is simply to compare current prices to not spot earnings of foreign earnings, but a more reliable measure of the average of the last ten years and adjusted for inflation. So the average of the last ten years of real earnings. And on the basis of this index, we find out that the market is as expensive and just a little bit less expensive than it was in 1929 during the Great Depression, the peak of the market before the biggest collapse in equity prices ever seen, and the year 2000. So just slightly cheaper than the year 2000.

What we do is an evolution of the Hussman PE ratio (which is taken from the Shiller ratio) which is to compare – kind of putting all in the basket. So we put the peak earnings as opposed to average earnings, and for peak earnings we really mean the peak. We take the two top quarters over the last 40 quarters. So we cannot really be seen as being any more generous to the current markets, we take the two peak quarters of the last 40 quarters. And then what we do is we compare these peak earnings to potential growth, or trend growth. Because the point here is that what you pay in terms of stocks, should compare, not just to the past or the earnings of proposition, but also to the overall economy generally. Because if the overall economy has a lower potential growth you should be expecting to be able to pay less in terms of multiples than otherwise. The overall economy has a big correlation to earnings and to profit margins, so you should expect the potential growth rate of the economy to be quite relevant when it comes to PE multiples.

There can be a catalyst. Or there can be no catalyst. If you talk about catalysts, I could argue that can be inflation, for example. At the moment, we have seen that inflation resurfaced. We have seen some tightness in the job market. It has not translated yet into wages growth and therefore inflation. But we could just be about to see that. And, in that case, rates would rise and they would provoke as a catalyst the kind of downfall that we expect. Or the catalyst could be political. A lot of quantitative easing is being created and it is benefiting only the top 1% of the population. And it is resulting in this so-called income inequality concept.

Read more …

“Crap in, crap out? That’s how we make policy?”

Atlas Stumbles – Inequality And Macroeconomics At A Crossroads (DDMB)

Here’s a news flash: “We don’t want a boom-bust situation.” If you’ll pardon the cynicism, Janet Yellen has chosen now, the twilight of her time at the Fed to discover the words and wisdom of Ludwig Von Mises, father of the Austrian economic school of thought, detractor of the perils of malinvestment? Now?? More to the point, it’s a real trick to not want something we’ve had for over 30 years. As for being flummoxed on stubbornly low inflation, as Yellen contends, that in 2017 inflation is “more of a mystery” than ever, allow an outtake from Fed Up to shed some light. For the record, Janet Yellen was in attendance at the 2014 Federal Open Market Committee (FOMC) meeting at which the following scene took place.

“Anything but bashful at his first FOMC meeting, Governor (Stanley) Fischer asked why the Fed relied on the core personal consumption expenditure (PCE) measure of inflation. Fischer said he lived his life by the Consumer Price Index (CPI), as did his children. In his opinion, the only realistic measures of inflation were the CPI and the Dallas Fed Trimmed Mean PCE. (I bet Fisher got a kick out of that, since this relatively young metric had been nurtured under his leadership.) One brave Fed staffer explained that the models the Fed used to set interest rates wouldn’t function if they didn’t use PCE. The no-nonsense Bullard jumped in. “Let me get this straight,” Bullard said, according to a Fed official who was present. “Crap in, crap out? That’s how we make policy?” It’s the model. It’s broken and it has been for years. Stop using it. Mystery solved. Next?

On this Fed Meeting Minutes Wednesday, now that we can safely speak of the end of the Yellen (Greenspan, Bernanke) mega-era, could we please petition Jay Powell and the new regime to stop doctoring the minutes from FOMC meetings in an effort to herald honest and true ‘transparency’ in future Fed communique? After all, it was Yellen herself who brazenly called for manipulating the minutes, in recorded Fed transcripts, no less. She had this to say at the December 2008 meeting at which policymakers voted to take the fed funds rate to the zero bound: “We could also consider using the FOMC minutes to provide quantitative information on our expectations.” Could ‘we’ not instead?

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What you call a leading title. Of course they know. Cashless doesn’t work in Germany at all. Think that’s just some weird coincidence?

Europeans Still Love Paying Cash, Even if They Don’t Know It (BBG)

Digital currencies may be getting all the buzz these days, but notes and coins still reign supreme in most of Europe. Cash made up around 79% of everyday payments across the euro area last year, according to a ECB study. Almost a quarter of consumers also kept some cash at home as a precaution, and 20% said they had a high-denomination note – €200 ($237) or €500 – in their possession in the year before the survey was conducted. As the study notes, the results “challenge the perception that cash is rapidly being replaced by cashless means of payment.” The picture differs across the 19 member states though. Cash is most dominant in southern Europe, Germany, Austria and Slovenia, where it in accounts for 80% of all payment transactions at point-of-sale.

That figures drops to 45-54% in the Netherlands, Estonia and Finland. The study also found that many people don’t actually know their own payment habits. When asked how they prefer to pay, a larger share of respondents said card, not cash. That may be because nearly two-thirds of all transactions are below €15, the report said. Purchases of coffee and lottery tickets don’t stick in the mind as much as, say, a new pair of shoes. The experience of some countries shows how things can change though. While contactless cards accounted for just 1% of payments across the euro area in 2016, the figure was almost 10% for the tech-savvy Netherlands. The authors of the study say that the small size of contactless payments – 81% of transactions are below €25 – give the technology great potential.

Read more …

Power blocks fall apart all over. Germany better be careful. Merkel’s wounded, and she’s all they’ve known for 12 years.

Echoes of Weimar Republic as Germans Lose Knack Of Coalition-Building (G.)

For years, German politics were both mocked and admired for being too uneventful to the point of tedium. Only recently the lack of drama inside the reconstructed Reichstag’s circular plenary chamber led to calls for a more confrontational, Westminster-style approach. But as old geopolitical certainties have crumbled over the past 18 months, Berlin’s consensual, unexcitable style of policymaking has won new admirers. The collapse of talks to form the next coalition government have exposed Angela Merkel’s diminished authority. Many are now beginning to wonder if the division wrought on Britain and the US by Brexit and Donald Trump has also descended on Europe’s biggest economy.

With Merkel’s last coalition partners, the Social Democratic party (SPD) and the Free Democrats (FDP), more eager on parliamentary opposition than on government posts, and an already ultra-oppositional Alternative für Deutschland hoping to receive a further boost from the political standstill, commentators in Germany have started to evoke the darkest days of the Weimar Republic, when short-lived minority governments ruled by emergency decrees. “Like in Weimar, the federal republic is now a multiparty system in which extreme parties have begun to paralyse the working of the parliamentary democracy,” wrote Stephen Szabo, an expert on US-German relations.

“Germany’s obsession with stability was largely a result of reforms aimed at avoiding the mistakes of the Weimar Republic,” said Anthony Glees, a historian at the University of Buckingham. “In spite of a proportional vote system, a 5% threshold for smaller parties guaranteed that postwar Germany was for decades a two-party state, where the power would lie safely in the centre.” With polls for possible fresh elections next year predicting that both Merkel’s Christian Democratic Union and the SDP could drop below 30% while support for the FDP, the AfD, the Greens and the Left party continues to grow, Glees said, “that system is now biting Germany in the leg”.

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A bitter divorce lurks.

EU Demands In Next Round Of Talks Set To Enrage Cabinet Brexiteers (Ind.)

EU negotiators are already laying the groundwork to hit the UK with demands in the next stage of Brexit talks that are unacceptable to key figures in Theresa May’s Cabinet, The Independent can reveal. Leaked documents show chief EU negotiator Michel Barnier wants to make giving the UK a good transition deal conditional on Britain’s “automatic” acceptance of new Brussels regulations during the likely two-year period after March 2019. The plan, set out to EU leaders behind closed doors, would leave the UK with no say over rules it accepts during the transition and is likely to enrage Brexiteers in the Cabinet like Boris Johnson, Michael Gove and Liam Fox, who are determined 2019 should be the last year Britain takes new rules from Brussels.

[..] The papers consist of a presentation, drawn up by Mr Barnier for the EU27’s representatives, in which he says any UK transition out of the EU must involve the “automatic application in the UK of new EU rules post-30 March 2019”. The chief negotiator is clear Britain would have “no institutional rights, no presence in the institutions” and “no voting rights” under his plan, meaning the UK would end up following rules made in the interests of the remaining member states and even incorporating them into British law with no control of how they are formed. Any potential conflict over the transition has yet to surface because the EU has said it will not discuss future arrangements on that or trade until the three withdrawal issues have made “sufficient progress”. But the leak shows the direction the bloc is taking behind the scenes and indicates probable obstacles to agreement in future rounds of talks.

Read more …

Will Rajoy ban the independence parties altogether?

Catalan Leader Doubles Down on Independence Pledge (BBG)

Ousted Catalan President Carles Puigdemont pitched his candidacy ahead of next month’s regional election, doubling down on his pledge to make the region an independent state. Puigdemont, who maintains he’s the legitimate regional president after being sacked by the central government, will lead a new platform under the banner of Together for Catalonia. He said on Saturday a victory at the polls on Dec. 21 would serve to ratify his mandate and send a signal to the European Union, which has repeatedly sided with the government of Mariano Rajoy against unilateral attempts for independence. “The people of Catalonia have shown the world we have the capacity and the will to become an independent state,” Puigdemont told an audience in Bruges, Belgium, where he’s been staying since declaring independence last month.

“On Dec. 21, we must ratify that.” The independence movement is trying to reshape its message after the Rajoy administration invoked unprecedented constitutional powers to oust the regional government and take direct control of the wealthy region. The Madrid government acted after the ill-fated independence declaration that led thousands of local companies move their registered address. Puigdemont remains in Belgium awaiting a court decision to execute a European arrest order from a Spanish judge on charges of rebellion that could see him jailed for as long as 30 years. He blamed authorities in Madrid for limiting his ability to campaign. Rajoy’s administration has accused him of fleeing the nation to escape legal responsibilities.

Catalonia Deputy President Oriol Junqueras and half the ousted regional cabinet remain in prison, pending trial on the same charges unless a judge opts to release them. The question remains whether they’ll be able to campaign if the Supreme Court, which is handling the case, finds sufficient grounds to order their release while the investigation continues.

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“..we have reached peak denial in our civilization and whether we like it or not reality is about to make a come back.”

The End of the Age of Benevolence (Marion)

Some evenings I sit on the sofa in the family room with my teenage daughter and watch a TV program with her. I leave the choice of the show to her, it matters little to me, and when she finds something she likes she sits next to me, puts her head on my shoulder, and snuggles up for the hour it takes to watch whatever it is she’s chosen. It’s our time. Occasionally we’ll sneak in another twenty or thirty minutes to the objection of her mother but I like my time with her so I put up with the raised eyebrows and the, “She’s got school tomorrow,” scoldings. It’s important to me that she knows I love her, that I want to spend time with her and that she feels safe when she is with me. Someday, when she is a grown woman I want her to find a man that will take care of her and protect her like I do. I expect no less from a suitor and neither should she.

There will be women who read this who will object to my stance. They will say, “She doesn’t need a man to feel safe or validated or content,” but I would disagree. When she gets older she’ll need a good man, not just any man, and that’s as true today as much as it was ten years, twenty years, fifty years, one hundred years and even one thousand years ago. And it will become even more so as time goes on. Indeed, we have reached peak denial in our civilization and whether we like it or not reality is about to make a come back. The freedom that we have enjoyed in the west and the modern democracies that have sprung forth from our evolving and enlightened philosophies over the past few hundred years are not a given. Granted, they are preferable outcomes given our natural state but politically speaking they are an anomaly in the history of mankind and not the norm.

As such, democracy and the systems, social structures and institutions that have grown up around them are grossly misunderstood by the vast majority of the western world. Most of the people living in the west today have been raised to believe that democracy is a moral system of governance and that it is our gift to the rest of mankind. But democracy is not an inherently moral system nor is it a guarantor of linear, progressive political growth. At its root democracy is quite simple. It is the exercise of political power by the majority over the minority. It is the power to choose in matters of politics. This, of course, begs the question: to choose what? Since choices in general (and political ones are no exception) can be either good or bad, in this case, both for the individual and the body politic, then it follows that democracy is neither.

It is nothing more than a tool for decision making where the majority holds the power to make decisions that affect everyone, either for better or for worse. Democracy is, therefore, a reflection of the character of the people who exercise it. Additionally, democracy is also the use of soft force. That is, the minority bends to the will of the majority on political matters and the apparatus of the state is responsible for carrying out its demands. The minority consents, willingly or unwillingly not because violence is present but because, by the state’s presence, it is implied. More importantly, though, democracy is a luxury that is preceded by benevolence but does not necessarily guarantee its continuance or creation if forgotten.

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Tragedy. Entirely unnecessary.

Greeks Cutting Down On Food Due To Overtaxation (K.)

Overtaxation has forced Greeks to cut down on grocery spending, as IRI Hellas researchers have found that supermarket sales in the January-September 2017 period were 6.7% below the level recorded two years earlier and 7.4% below the 2014 level. Consumers have become bargain hunters out of necessity, not only because of the proliferation of special offers at supermarket but also due to the hikes in value-added tax and the special consumption taxes on most everyday products, on top of the direct tax obligations that households have to meet.

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Even more tragic. And just as avoidable.

Libya Navy Says Over 30 Migrants Dead, 200 Rescued Off Coast (AFP)

More than 30 migrants died and 200 were rescued on Saturday after their boats foundered off Libya’s western coast, the Libyan navy said. The coastguard conducted two rescue operations off the city of Garabulli, 60 kilometres (40 miles) east of Tripoli, spokesman Colonel Abu Ajila Abdelbarri said. He added that patrols had found 31 bodies and 60 survivors from one boat, while all 140 passengers had survived in a second boat. “When we arrived at the spot, we found an inflatable dinghy with several people clinging to part of it,” he said. Libyan navy spokesman Ayoub Qassem told AFP that 18 women and three children were among the dead recovered from the sea, while 40 people were missing.

Migrants from Somalia, Ghana, Ethiopia, Nigeria and four from Pakistan were among those rescued. Libyan patrol boat commander Nasser al-Ghammoudi said one of the vessels was three-quarters under water when the coastguard arrived. “We looked for other survivors for more than five hours,” he said. “We were able to rescue one woman after we heard her shouts.” A French NGO, SOS Mediterranee, said later Saturday that it had rescued more than 400 people from a stricken wooden boat in international waters further from the Libyan coast. Other rescue operations were ongoing on Saturday evening, the Italian coastguard told AFP. Italy’s coastguard, which coordinates the rescue effort in international waters, reported that a total of 1,500 people had been saved on Thursday and Friday.

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It’s not that vast, really.

Mexico’s Vast New Ocean Reserve To Protect ‘Galapagos of North America’ (G.)

Mexico’s government has created the largest ocean reserve in North America around a Pacific archipelago regarded as its crown jewel. The measures will help ensure the conservation of marine creatures including whales, giant rays and turtles. The protection zone spans 57,000 sq miles (150,000 sq km) around the Revillagigedo islands, which lie 242 miles (390 km) south-west of the Baja California peninsula. Mexico’s president, Enrique Peña Nieto, announced the decision in a decree that also bans mining and the construction of new hotels on the islands. He said on Saturday that the decree reaffirmed the country’s “commitment to the preservation of the heritage of Mexico and the world”. The four volcanic islands that make up the Revillagigedo archipelago, called the Galapagos of North America, are part of a submerged volcanic mountain range.

The surrounding waters, east of Hawaii, are home to hundreds of species of animals and plants, including rays, humpback whales, sea turtles, lizards and migratory birds. The local ecosystem is central to the lives of some 400 species of fish, sharks and ray that depend on the nutrients drawn up by the ocean. The area is a breeding ground for commercially fished species such as tuna and sierra. However, the various fish populations had suffered, unable to reproduce fast enough for the rate at which they were fished. The creation of a marine reserve is expected to help them to recover, as all fishing activities will now be prohibited. This will be policed by the Mexican navy.

Read more …

Nov 122017
 
 November 12, 2017  Posted by at 9:47 am Finance Tagged with: , , , , , , , , , ,  3 Responses »
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Fifth Avenue at 25th Street. New York City 1905

 

“Bitcoin Cash” Quadruples in 2 Days. Bitcoin Crashes by $35 Billion (WS)
Podesta Group “Will Not Exist At The End Of The Year” (ZH)
Global Banks, City of London Raise “Disorderly Brexit” Alarm (DQ)
Forty UK Conservative Lawmakers Ready To Oust PM May (R.)
Theresa May Faces Defeat By MPs Demanding Vote On Final Brexit Deal (G.)
Sack Boris Johnson For Shaming Our Nation, Jeremy Corbyn Tells PM (G.)
German War Reparations ‘Matter Of Honor’ For Poland (R.)
750,000 Protesters Flood Barcelona Demanding Release Of Catalan Leaders (R.)
EU Has Become A ‘Caricature’ Of Its Founding Values – Puidgemont (RT)
Trafficking Laws ‘Target Refugee Aid Workers In EU’ (G.)
Greece’s Middle Incomes Go Under The Knife (K.)

 

 

Safe to say that Wolf Richter is not a big fan.

“Bitcoin Cash” Quadruples in 2 Days. Bitcoin Crashes by $35 Billion (WS)

I’m writing this Saturday night, Pacific Time, and cryptos never rest. By Sunday morning, “Bitcoin Cash” might have soared another $1,000 or crashed by $1,000; and bitcoin might have soared or crashed by another $1,500. Neither would surprise me, the way these things are going. One thing for sure, you’re not watching grass grow. Bitcoin Cash, which was split from bitcoin in August, began surging from $630 on Thursday mid-day Pacific Time. Within 24 hours, it jumped 50% (or by $320) to $950. It then lost steam. But in the wee hours of Saturday morning, it fired up again and soared another $450 to $1,400 by late morning. It then fell off, but Saturday night, it returned to form and spiked to $2,448 at the moment, nearly quadrupling in two days. Here is what the move looks like in US dollars in a seven-day chart (via WorldCoinIndex):

Its market valuation jumped by $30 billion over the two days, from $10.6 billion to $41 billion. I mean why even bother with the stock market. Bitcoin went the opposite way. It plunged from a peak of $7,771 on November 8 mid-morning to $5,519 at this moment, losing $2,252 or 29% in three days. It’s now back where it first had been in late October. Its market valuation plunged by $35 billion from $127 billion to $92 billion. $35 billion is starting to add up, so to speak (via WorldCoinIndex):

Bitcoin ran into an entanglement on November 8, when developers called off a planned software upgrade, SegWit2x. The upgrade was supposed to have improved transactions speeds. This was blamed for the plunge that started on Wednesday. Then the fun focused on Bitcoin Cash. By Friday, as Bitcoin Cash had soared 50% while bitcoin was crashing, it was blamed on traders that were switching from chasing after bitcoin to chasing after Bitcoin Cash. At the time, Joshua Raymond, a director at the foreign-exchange and CFD broker XTB, told Business Insider: “The delay to Segwit2x has damaged confidence amongst bitcoin investors concerning the much-needed resolution to speed up bitcoin’s slow processing speed.

“Everyone was hoping the Segwit2x would address this but unfortunately, the delay due to a lack of consensus on the mechanics has affected confidence. Confidence on transaction speed in Bitcoin has deteriorated significantly in recent months. As Bitcoin Cash enjoys much faster transaction speeds, we have started to see a recycling of positions out of Bitcoin into Bitcoin Cash as a consequence.” Just don’t call cryptos an investment or asset or asset class or currency. While they could be used as currency, in reality, these kinds of violent moves make their use as currency way too risky and nonsensical. What’s left? The blockchain technology, which underpins these cryptos, is free and open source. Currently a lot of smart brains are trying to figure out how to put the technology to work in all kinds of industries.

Some of them will likely succeed. I’m looking forward to the moment when there is a way of transferring money around the world that is universal, convenient, cheap, fast, not subject to violent fluctuations, and 100% reliable. But that moment isn’t here yet, and neither bitcoin nor Bitcoin Cash will have anything to do with it. Instead of being usable currencies, cryptos – CoinMarketCap lists nearly 1,300 of them, with many of them already worthless – are a form of online betting based on a new technology, and they’re subject to different dynamics than classic online betting, but not regulated or forbidden by governments, unlike classic online betting.

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“..both sides of the swamp should probably control themselves in any premature celebrations as this appears to be far from over..”

Podesta Group “Will Not Exist At The End Of The Year” (ZH)

Just three weeks after we reported that special counsel Mueller was targeting lobbying firm Podesta Group. and just two weeks after Tony Podesta resigned from his position at the firm he founded, The Hill reports that Kimberley Fritts, the Podesta Group’s chief executive, told employees on Thursday that the firm would not exist at the end of the year and that they would likely not be paid through the end of November, sources told CNN. Fritts announced her resignation from the top Washington lobbying group after Podesta left the company amid ties to indictments filed in the Russia investigation. Fritts is beginning work on launching a new firm. Her last day at the company Friday created new uncertainty for the Podesta Group after the departure of Podesta on Oct. 30.

Multiple employees who spoke to The Hill said the mood at the firm was mostly optimistic, though they said many of the firm’s dozens of employees could be in limbo as Fritts sets up the new firm and brings Podesta Group talent and clients with her. As a reminder, Mueller is now investigating whether the Podesta Group properly identified to U.S. authorities its foreign work on behalf of a Ukrainian advocacy group in Europe, CNN reported. An NBC report found that the Podesta Group was one of several firms working on Paul Manafort’s public relations campaign for European Centre for a Modern Ukraine, which the Podesta Group claims it thought was a nonpartisan think tank, something which this site reported first last August. And here is one reason why we suspect more than a few on the left are now concerned…

It goes without saying, that Podesta’s brother, John, is arguably one of the top figure in Democratic politics, serving most recently as chief of staff in the Bill Clinton White House and also as the chairman of Hillary Clinton’s 2016 presidential campaign. What happens next to Tony (and perhaps his brother John) is to be determined, but one thing is clear: both sides of the swamp should probably control themselves in any premature celebrations as this appears to be far from over.

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“..the Brexit vote has presented rival European nations and the ECB with a golden opportunity to undermine the UK’s domination of Europe’s financial industry. They won’t let it go to waste.”

Global Banks, City of London Raise “Disorderly Brexit” Alarm (DQ)

For the City of London Corporation, the prospect of a messy Brexit is even more terrifying than it is for many of the global banks it hosts within its coveted Square Mile. The Bank of England has warned that up to 75,000 jobs could be lost in the financial sector following Britain’s departure from the European Union. But it’s not just jobs that are on the line; so, too, is the Square Mile’s role as the world’s most important financial center, not to mention the backbone of the UK economy. In recent months the European Commission and the European Central Bank have redoubled their efforts to compel financial institutions to move at least some of their operations onto the continent. “I have a very clear message to both smaller and larger banks: the clock is ticking,” said Sabine Lautenschläger, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB.

“No one knows how Brexit will play out, and that’s why all affected banks should prepare themselves with a hard Brexit in mind.” Some banks are already taking action. Goldman has set aside the top eight floors of a 37-story block under construction in Frankfurt which is expected to be ready for occupation in the third quarter of 2019. Just a few months before that, construction work on the bank’s new £350m European headquarters in central London should be completed. Ten days ago, Goldman Sachs CEO Lloyd Blankfein, posted a tweet of an aerial shot of the half-finished construction in London, with the words “expecting/hoping to fill it up, but so much outside our control.” As the head of an organization with alumni at the very top of both the Bank of England and the ECB as well as tentacles that reach out to just about every corner of the old continent, Blankfein is clearly selling Goldman short, if you’ll excuse the pun.

Goldman’s not the only major bank hedging its bets. On Tuesday Germany’s struggling behemoth, Deutsche Bank, announced that it had signed an agreement to occupy at least 469,000 square feet at a site under construction in the City of London. The move comes despite a warning in April that thousands of Deutsche Bank’s UK staff may have to relocate after Brexit. To that end, Deutsche has begun work on a Frankfurt booking center that would take up some of the slack if the German lender was forced to turn its London branch into a subsidiary when Britain leaves the EU.

Most banks would prefer the status quo to continue, with the lion’s share of their operations remaining in London, which already has the physical infrastructure, legal apparatus and friendly political and regulatory culture needed to support the full gamut of global financial services. But the Brexit vote has presented rival European nations and the ECB with a golden opportunity to undermine the UK’s domination of Europe’s financial industry. They won’t let it go to waste.

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It truly is Monty Python by now.

Forty UK Conservative Lawmakers Ready To Oust PM May (R.)

Forty members of parliament from Prime Minister Theresa May’s Conservative Party have agreed to sign a letter of no-confidence in her, the Sunday Times newspaper reported. That is eight short of the number needed to trigger a party leadership contest, the mechanism through which May could be forced from office and replaced by another Conservative. May has been struggling to maintain her authority over her party since a snap election on June 8 which she called thinking she would win by a wide margin but instead resulted in her losing her parliamentary majority. Divided over how to extricate Britain from the European Union and hit by multiple scandals involving ministers, May’s government has failed to assert control over a chaotic political situation that is weakening London’s hand in Brexit talks.

An earlier attempt to unseat May in the wake of her disastrous speech at the annual party conference fizzled out, but many Conservatives remain unhappy with the prime minister’s performance and talk of a leadership contest has not gone away. May has lost two cabinet ministers in as many weeks: Michael Fallon stepped down as defense secretary after becoming implicated in a wider scandal about sexual misconduct in parliament, while Priti Patel resigned as aid minister after she was found to have had secret meetings with top Israeli officials.

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So there’s those who just want her gone, and then there’s the ones who look for a reason.

Theresa May Faces Defeat By MPs Demanding Vote On Final Brexit Deal (G.)

Theresa May faces a devastating Commons defeat over Brexit within weeks if she continues to deny parliament a meaningful vote on the final deal with the EU, Tory and Labour MPs have warned. With the withdrawal bill returning to the Commons on Tuesday, a cross-party group who oppose a hard Brexit and are co-operating on tactics say they believe they have the numbers to defeat the government if they are denied such a vote. While the critical amendments and closest votes are not expected to be taken until next month, Tories who oppose a hard Brexit insist there is no softening of their position and that they are biding their time ready to strike before Christmas. Some Tories say they are even more determined to insist on parliament’s right to veto a bad or no deal because the prime minister appears not to have responded to any of their concerns over recent weeks.

Instead, in what was seen by many as a provocative move, she announced last week that the government had tabled its own amendment that would commit the UK to formally leaving on 29 March 2019, whatever the outcome of negotiations and even if there were no deal. Meanwhile, a secret memo to May written by Boris Johnson and Michael Gove dictating terms for a hard Brexit has emerged. In blunt terms, the pair tell the prime minister to “underline her resolve” to achieve a total break with Brussels, and name 30 June 2021 as the fixed end of Britain’s transition period after leaving the EU in March 2019. The missive will undoubtedly lead critics to say the prime minister is being held hostage by the leading Brexiters. A Commons defeat for May over Brexit, at a time when her government is reeling from the loss of two cabinet ministers in six days – and may lose more – would raise further questions over her ability to survive as prime minister.

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She better be quick then, or she won’t have the job anymore.

Sack Boris Johnson For Shaming Our Nation, Jeremy Corbyn Tells PM (G.)

jeremy Corbyn has fired an extraordinary broadside against Boris Johnson, calling for him to be sacked immediately as foreign secretary for “undermining our country” and “putting our citizens at risk”. The blistering attack – and demand that Theresa May fire him – was delivered exclusively in a statement to the Observer on Saturday night, as pressure mounted on Johnson over his diplomatic blunder in the case of Nazanin Zaghari-Ratcliffe, the British mother imprisoned in Iran. The Labour leader cites a litany of undiplomatic and ill-chosen statements from Johnson since his appointment by May as foreign secretary in July last year. Corbyn accuses him of having a “colonial throwback take on the world”, and of repeatedly “letting our country down”.

It is the mishandling of the “heartbreaking” case of Zaghari-Ratcliffe that persuaded Corbyn to call for his dismissal. His statement ends: “We’ve put up with Johnson embarrassing and undermining our country with his incompetence and colonial throwback views and putting our citizens at risk for long enough. It’s time for him to go.” The intervention places both May and Johnson under renewed pressure after 10 days in which the prime minister has been forced to dismiss defence secretary Sir Michael Fallon for inappropriate behaviour towards women, and the international development secretary, Priti Patel, for conducting a freelance aid policy in the Middle East without informing No 10 or the Foreign Office.

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Get in line.

German War Reparations ‘Matter Of Honor’ For Poland (R.)

Demanding reparations from Germany for its actions in Poland during World War Two is a matter of honor for Warsaw, Jaroslaw Kaczynski, the leader of Polish ruling Law and Justice (PiS) party, said on Saturday. The issue of reparations, revived by Poland’s eurosceptic PiS after decades of improving relations with Germany, could escalate tensions between the two European Union members. In September Polish parliamentary legal experts ruled that Warsaw has the right to demand reparations from Germany, although Poland’s foreign minister indicated that no immediate claim would be made. “The French were paid, Jews were paid, many other nations were paid for the losses they suffered during World War Two. Poles were not,” Kaczynski said.

“It is not only about material funds. It is about our status, our honor … And this is not theater. This is our demand, a totally serious demand,” added Kaczynski, Poland’s de facto leader. The PiS government, deeply distrustful of Germany, has raised calls for wartime compensation in recent months but Foreign Minister Witold Waszczykowski has said further analysis was needed before any claims were lodged. Six million Poles, including three million Polish Jews, were killed during the war, and the capital Warsaw was razed to the ground in 1944 after a failed uprising in which 200,000 civilians died.

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They’ll have to do a lot more demonstrating.

750,000 Protesters Flood Barcelona Demanding Release Of Catalan Leaders (R.)

Hundreds of thousands of Catalan independence supporters clogged one of Barcelona’s main avenues on Saturday to demand the release of separatist leaders held in prison for their roles in the region’s banned drive to split from Spain. Wearing yellow ribbons on their lapels to signify support, they filled the length of the Avenue Marina that runs from the beach to Barcelona’s iconic Sagrada Familia church, while the jailed leaders’ families made speeches. Catalonia’s two main grassroots independence groups called the march, under the slogan “Freedom for the political prisoners,” after their leaders were remanded in custody on charges of sedition last month. The protest is seen as a test of how the independence movement’s support has fared since the Catalan government declared independence on Oct. 27, prompting Spanish Prime Minister Mariano Rajoy to fire its members, dissolve the regional parliament and call new elections for December.

An opinion poll this week showed that pro-independence parties would win the largest share of the vote, though a majority was not assured and question marks remain over ousted regional head Carles Puigdemont’s leadership of the separatist cause. “Look at all the people here,” said 63-year-old Pep Morales. “The independence movement is still going strong.” Barcelona police said about 750,000 people had attended, many from across Catalonia. The protesters carried photos with the faces of those in prison, waved the red-and-yellow striped Catalan independence flag and shone lights from their phones. The Spanish High Court has jailed eight former Catalan government members, along with the leaders of the Catalan National Assembly (ANC) and Omnium Cultural, while investigations continue.

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That’s true in many ways.

EU Has Become A ‘Caricature’ Of Its Founding Values – Puidgemont (RT)

Sacked Catalan leader Carles Puigdemont has lashed out against the European Union (EU) over its response to the Catalan crisis, in which Brussels sided with Madrid in suppressing the independence drive of the region. Puigdemont criticized the EU as a “caricature of what Europe is and of what we want Europe to be,” claiming, there is “no will to help solve the politics of the conflict.” Catalonia staged a regional independence referendum on October 1, amid a massive crackdown by police on voters in which nearly 900 people were injured. Following the ‘yes’ vote, Barcelona attempted to initiate dialogue with the central government, hoping the EU would step in and act as mediator to help defuse tensions.

Leaders of European nations, as well as the EU’s main institutions, sided with the Spanish Prime Minister Mariano Rajoy instead, and refused to recognize Catalonia’s self-determination call, referring to the crisis as an internal Spanish matter. The former Catalan leader sees it as a betrayal of the fundamental “values that took us to constitute Europe.” Puigdemont believes the EU leadership, which he said comprises “four or five governments,” are “probably not the most appropriate to lead the EU.” “What will the EU become in hands of this people?” the former Catalan leader asked, pointing out that he does not want the EU’s leadership to “confuse” traditional European values with “their political and economic interests.”

Just this week, European Commission President Jean-Claude Juncker called on all member nations to fight against separatist tendencies in Europe, apparently in reference to Scotland, Lombardy, Venice and other regions throughout the continent which have expressed strong self-determination ambitions. “Nationalisms are a poison that prevent Europe from working together,” Juncker said Thursday in the Spanish city of Salamanca. “We cannot stay with our arms crossed because it is time for us to do what needs to be done. I say ‘no’ to any form of separatism that weakens Europe and further widens the existing fissures.” [..] “To be treated like a criminal, like a drug-trafficker, like a paedophile, like a serial killer, I think this is abuse,” the Catalan leader lamented. “This isn’t politics, this is using the courts to do politics.”

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The shame of the EU keeps getting bigger and deeper.

Trafficking Laws ‘Target Refugee Aid Workers In EU’ (G.)

Aid workers are being targeted throughout Europe as countries including the UK use laws aimed at traffickers and smugglers to discourage humanitarian activity, a study claims. A six-month investigation by the London-based Institute of Race Relations documented the prosecutions of 45 individual “humanitarian actors” under anti-smuggling or immigration laws in 26 separate actions over the past two years. Examples include a 25-year-old British volunteer with a refugee support group, who last January sought to bring an Albanian mother and two children to the UK in the boot of her car so they could join their husband and father. She was sentenced in March to 14 months in jail, although the sentence was suspended to take into account her “misguided humanitarianism”.

UK law does not distinguish between humanitarian and commercial motives in such prosecutions, but does take such factors into account in sentencing. In Switzerland, a 43-year-old woman known to refugees as Mother Teresa for her work in providing food for those stranded on the Italian side of the border, was sentenced in September to a fine and a suspended 80-day jail term for helping unaccompanied children into the country. In France, British volunteers helping refugees in Calais have frequently been harassed by the authorities. In October 2015, former British soldier Rob Lawrie was arrested at the border for hiding a four-year-old Afghan child in his van in response to her father’s pleas to take her to relatives in Leeds. Lawrie, from West Yorkshire, avoided jail after a French court found him guilty of the lesser charge of endangerment rather than assisting illegal entry.

And in March this year three French and British volunteers with charity Roya Citoyenne were arrested for distributing food to migrants. The 68-page IRR report chronicles a culture of criminalisation in which volunteers for charities and aid groups, attempting to fill the gaps in state provision, are targeted for providing food, shelter and clean water to migrants in informal encampments or on streets. The EU’s border force, Frontex, has accused aid groups including Médecins Sans Frontières of co-operating with migrant traffickers in the Mediterranean. The report criticises senior Frontex officials for “attempts to bully and delegitimise” NGO search and rescue missions in the Mediterranean by accusing aid groups of working with smugglers and encouraging trafficking. The IRR’s vice-chair, Frances Webber, said: “Across the continent, criminal laws designed to target organised smuggling gangs and profiteers are distorted and stretched to fit an anti-refugee, anti-humanitarian agenda, and in the process criminalise decency itself.”

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Disposable income down by 50%. Taxes and social security up 96.8%. The Troika is taxing Greece to death. On purpose. It’ll be a tourist destination only. And a refugee camp.

Greece’s Middle Incomes Go Under The Knife (K.)

The disposable income of Greece’s average earners has been slashed by more than 50% due to overtaxation in recent years, according to the latest data examined by Kathimerini, which also paints a grim picture for the coming years. What’s more, the reduction of the income tax threshold is expected to further impact the disposable income of households. Brussels expects Greece’s primary surplus to beat its target of 3.5% of GDP again next year, rising to 3.9%, and then to 3.7% in 2019. However, the primary surpluses Greece has posted in the last two years are largely due to exorbitant taxes rather the result of growth. Moreover, while the European Commission’s statistics point to a disproportionate increase in taxation in Greece, at a time when the economy was shrinking, the country’s industrialists and political opposition say overtaxation has led to more tax evasion and the failure of the tax system.

Those hardest hit have been freelance professionals, who since 2009 have been subjected to unprecedented raids by the tax office, and more recently by social insurance contribution hikes, resulting in the gradual exhaustion of their income. And high taxes, including property taxes, are the reason why both freelancers and self-employed professionals submitted incomes last year that were 20% lower than their actual earnings. A telling example of overtaxation concerns freelance professionals who own a car and an apartment and earn 50,000 euros a year: In 2009 they had to pay 16,333 euros of their annual income to the tax office and their social security fund, leaving them with a net income of 33,667 euros. Five years later, their clear income dropped by a further 4,344 euros to 29,323.

The situation today is even more dire as the same self-employed professional making 50,000 euros must pay 32,151 euros in taxes and contributions, leaving them with a disposable income of 17,849. Taxes and social security contributions have rocketed by 96.8% since 2009, while compared to 2014 they have risen by 55.5%.

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Nov 092017
 
 November 9, 2017  Posted by at 9:28 am Finance Tagged with: , , , , , , , ,  6 Responses »
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Henri Cartier Bresson Madrid 1933

 

How I Sold Out To The Putin-Soros-Murdoch Conspiracy (Steve Keen)
Bill Gates, Jeff Bezos and Warren Buffett Richer Than Poorest Half Of US (G.)
The Middle East Is On The Verge Of New War (SF)
With Saudi Princes Dead, Arrested, King Fahd’s Grandson Flees To… Iran (IT)
Prince Alwaleed Sold His Shares In 21st Century Fox (Abc.au)
It Begins: Pension Bailout Bill To Be Introduced This Week (ZH)
How The Netherlands Became A Tax Haven (SüdD)
FEMA Offers To Airlift Puerto Ricans To Mainland US (CBS)
Catalan Parliament Speaker, 5 MPs Appear In Court On Sedition Charge (G.)
EU Gives Greece Foreclosure Ultimatum (K.)
The Plot Against Greece (K)
UK Will Back Total Ban On Bee-Harming Pesticides (G.)

 

 

“How I sold out to the Putin-Soros-Murdoch conspiracy to destroy Western civilization”

Steve has a sense of humor alright. But the serious note here is that RT is the only place where he can get a chance to discuss the issues he sees as real. The BBC, for one, is not interested.

How I Sold Out To The Putin-Soros-Murdoch Conspiracy (Steve Keen)

I was delighted to find myself in the Top Ten (alright; top 15) of the European Values list of 2,326 “Useful Idiots” appearing regularly on RT shows, and thus legitimizing Vladimir Putin’s attempt to destroy Western civilization as we know it. Why delighted? Because it completes the set of conspiracies to which I can now be accused of belonging. They include: • The Putin Conspiracy, since I am regularly interviewed on Russia Today (and even worse, I now get paid to write for RT!); • The Soros Conspiracy, since my research, has been funded by the Institute for New Economic Thinking (INET) which he established; • The Murdoch Conspiracy, since I appear every week on Sky News Australia with Carson Scott, and I used to get paid by News Ltd to write a weekly column; and • The Alt-Right Conspiracy, since I’ve signed a book contract with Vox Day’s publishing firm Castalia House.

So not only am I a “useful idiot,” I’m a useful idiot for four contradictory conspiracies. Does that make me a double-double agent? No, it makes me someone who’s quadruple pissed off with people who attempt to understand the world from the perspective of conspiracy theories in the first place. I don’t deny the existence of conspiracies: in fact, far from it, because they’re everywhere. What I do deny is the implicit assumption that the conspirators understand the system they’re attempting to manipulate. For example, I’ve heard plenty of conspiracy theorists assert that the 2008 financial crisis was caused by the Federal Reserve/George Soros (Hi George!)/Hedge Funds/Academic-Economists-Who-Peddle-The-Efficient-Markets-Hypothesis, and “they” profited from it.

This implies “they” knew what “they” were doing. Pardon me, but I’ve met many of these protagonists—and in the case of academic economists, I’ve worked with them for 30 years. “They” don’t have a clue (except George). Even those that were actively conspiring—like many hedge funds during the subprime bubble were doing so on the basis of utterly deluded theories about how the system they were trying to game actually worked. Where apparent conspiracies did work, like Soros’s punt against the British Pound decades ago, they did so because a CSP (Clever Sinister Person) bet against the conventional wisdom of others who thought they understood the system (and did not), rather than because the CSP set up the whole thing in the first place.

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“..the “billionaire class” continues to “pull apart from the rest of us” at the fastest rate ever recorded..”

Bill Gates, Jeff Bezos and Warren Buffett Richer Than Poorest Half Of US (G.)

The three richest people in the US – Bill Gates, Jeff Bezos and Warren Buffett – own as much wealth as the bottom half of the US population, or 160 million people. Analysis of the wealth of America’s richest people found that Gates, Bezos and Buffett were sitting on a combined $248.5bn (£190bn) fortune. The Institute for Policy Studies said the growing gap between rich and poor had created a “moral crisis”. In a report, the Billionaire Bonanza, the thinktank said Donald Trump’s tax change proposals would “exacerbate existing wealth disparities” as 80% of tax benefits would end up going to the wealthiest 1% of households. “Wealth inequality is on the rise,” said Chuck Collins, an economist and co-author of the report. “Now is the time for actions that reduce inequality, not tax cuts for the very wealthy.”

The study found that the billionaires included in Forbes magazine’s list of the 400 richest people in the US were worth a combined $2.68tn – more than the GDP of the UK. “Our wealthiest 400 now have more wealth combined than the bottom 64% of the US population, an estimated 80m households or 204 million people,” the report says. “That’s more people than the population of Canada and Mexico combined.” The report says the “billionaire class” continues to “pull apart from the rest of us” at the fastest rate ever recorded. “We have not witnessed such extreme levels of concentrated wealth and power since the first gilded age a century ago.” Forbes celebrated 2017 as “another record year for the wealthiest people in America”, as “the price of admission to the country’s most exclusive club jumped nearly 18% to $2bn”.

That was a tenfold increase on the amount of money needed to enter the list when it first started in 1982. Josh Hoxie, another co-author of the thinktank report, said: “So much money concentrating in so few hands while so many people struggle is not just bad economics, it’s a moral crisis.” The report says many Americans are joining an “emerging anti-inequality movement”. “A century ago, a similar anti-inequality upsurge took on America’s vastly unequal distribution of income and wealth and, over the course of little more than a generation, fashioned a much more equal America,” it says.

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“.. the kingdom’s leadership is desperately in need of an enemy..”

The Middle East Is On The Verge Of New War (SF)

A missile gets fired on the Saudi capital. A missile, which was allegedly built in Iran and smuggled to Yemen, just to be fired at Saudi Arabia. According to initial reports, two Saudi princes died back to back in 24 hours: one in an “accidental” helicopter crash, the other during a firefight that broke out while security forces were trying to arrest him. On November 7, Saudi Arabia’s information ministry spokesman said that “Prince Abdulaziz is alive and well”. However, the prince could not be independently reached for comment by the media. Other high-ranking members of the establishment and the royal family – the two tend to be one and the same in Saudi Arabia – get arrested on charges of corruption, with their bank accounts frozen. Lebanese Prime Minister Saad Hariri unexpectedly resigns after he was summoned to Riyadh by his Saudi-backers.

Meanwhile, Saudi Arabia accused Iran of conducting acts of “direct military aggression” and accused Lebanon of “declaring war” on Riyadh by allowing Hezbollah “aggression” against the kingdom. All this happened in a span of just a few days. With ever-growing security challenges and problems at the regional level, the crisis that took hold of Saudi Arabia does not seem to be slowing down. One contributing factor to the ongoing crisis is a major split in the Saudi royal family: the power struggle that resulted in the former crown prince being deposed and replaced with a new one, a move that shook things up quite a bit inside the country. The echo of this can be seen in the current “anti-corruption” persecution, enforced by the current Crown Prince Mohammad bin Salman.

Outside the country, several key foreign policy projects failed: the effectiveness of the Yemen intervention can be judged by the fact that it resulted in a missile being fired at Riyadh. Bashar al-Assad is still in power in Syria. The attempts to scare Qatar into submission backfired, as Qatar has been getting more and more friendly with Russia, Turkey and Iran. Iran is gaining more and more influence in the region, while the Saudis seem to be losing it, hence they are trying to compensate for their losses by participating in proxy wars elsewhere. The Saudis also tried to flex their diplomatic muscle. King Salman even visited Moscow, where the two sides exchanged promises with no guarantees that these will ever be fulfilled. This also backfired, as some considered it a demonstration of weakness or an attempt to make peace by making concessions.

Add economic struggles to this series of failures, and one can see why the King’s and his Crown Prince’s position seem less and less stable by the minute. The situation apparently seemed so dire, that in order to keep everything afloat active persecution seemed the only possible way to keep the King and his successor in power. The “anti-corruption” campaign is just an excuse: the corruption has always been high in Saudi Arabia, and no one batted an eye before now. These are temporary measures. Persecution can hardly solve foreign and internal matters, and it will not lead to a solution of the problems. Right now, the kingdom’s leadership is desperately in need of an enemy to unite the population and draw their attention away from the chaotic events that unfolding in the country.

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The one that got away.

With Saudi Princes Dead, Arrested, King Fahd’s Grandson Flees To… Iran (IT)

The Saudi royal family – the House of Saud – is throwing up one intrigue after another. Hours after the reported death of Prince Abdul Aziz bin Fahd, his nephew and son of late King Fahd’s eldest surviving son, Prince Turki bin Mohamed bin Fahd has fled the country. His destination, according to speculation among those who are watching the situation closely, is, wait for it, Iran.If this is true, this may put new strain on Tehran and Riyadh, already at loggerheads for dominance in the restive Middle East region, where Saudi Arabia and Iran are fighting, what analysts term, a proxy war in Yemen. What makes Prince Turki bin Mohamed bin Fahd’s reported flight to Iran, where he is said to have sought asylum, interesting, apart from his destination, is that it comes at a time when Saudi aviation authorities are said to have been told not to let any of the oil-rich kingdom’s many royals fly out of the country.

Of course,with the outflow of information from Saudi Arabia particularly restricted right now, all reports of developments on the region must be taken with a pinch of salt. Turki bin Mohamed, is the son of Muhammad bin Fahd Al Saud, the second-oldest son of late Saudi King Fahd bin Abdulaziz Al Saud, and is also the grandnephew of the current King Salman bin Abdulaziz Al Saud This is the same King Salman whose son Crown Prince Mohammad Bin Salman (known informally as MBS) is believed to be have orchestrated what many are seeing as a coup by sideling prominent Saudi royals and taking decisions that could win over the country’s liberal quarters.

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Murdoch’s powers challenged.

Prince Alwaleed Sold His Shares In 21st Century Fox (Abc.au)

One of Rupert Murdoch’s key business allies, who was arrested in last week’s corruption crackdown in Saudi Arabia, has quietly sold off his $1.5 billion stake in 21st Century Fox. The business relationship between Mr Murdoch and Prince Alwaleed bin Talal is now under new scrutiny, with Mr Murdoch’s control over his family-controlled business empire looking more uncertain. “This is very big news,” Murdoch watcher and shareholder activist Stephen Mayne said after the company confirmed Prince Alwaleed had offloaded his shareholdings in Fox and News Corporation. “He’s been the number one backer of Murdoch family control of the public companies for the last 20 years.”

One of the world’s richest men, the Prince is one of dozens of royal family members, officials and business leaders arrested in Saudi Arabia in recent days. With his bank accounts and other assets likely to have been frozen by Saudi authorities, his detention had raised questions about who had control over his almost 40 million Fox shares. It now appears he sold those shares with little fanfare. It is unclear when the shares were sold. But a Bloomberg report on the company’s shareholders shows Prince Alwaleed’s stake fell to zero during the current financial quarter.

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Impossible to overestimate what a disaster this is going to be. We need a whole new economics to confront it.

It Begins: Pension Bailout Bill To Be Introduced This Week (ZH)

Over the past year we have provided extensive coverage of what will likely be the biggest, most politically charged, and most significant financial crisis facing the aging U.S. population: a multi-trillion pension storm, which was recently dubbed “one of the most heated battles of a lifetime” by John Mauldin. The reason, in a nutshell, why the US public pension problem has stumped so many professionals is simple: for lack of a better word, it is an unsustainable Ponzi scheme, in which satisfying accrued pension and retirement obligations requires not only a constant inflow of new money, but also fixed income returns, typically in the 6%+ range, which are virtually unfeasible in a world where global debt/GDP is in the 300%+ range. Which is why we, and many others, have long speculated that it is only a matter of time before the matter receives political attention, and ultimately, a taxpayer bailout.

That moment may be imminent. According to Pensions and Investments magazine, Democratic Senator Sherrod Brown from Ohio plans to introduce legislation that would allow struggling multiemployer pension funds to borrow from the U.S. Treasury to remain solvent. The bill, which is co-sponsored by another Democrat, Rep. Tim Ryan, also of Ohio, could be introduced as soon as this week or shortly after. It would create a new office within the Treasury Department called the Pension Rehabilitation Administration. The funds would come from the sale of Treasury-issued bonds to financial institutions. The pension funds could borrow for 30 years at low interest rates. The one, and painfully amusing, restriction for borrowers is “they could not make risky investments”, which of course will be promptly circumvented in hopes of generating outsized returns and repaying the Treasury’s “bailout” loan, ultimately leading to massive losses on what is effectively a taxpayer-funded pension bailout.

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Amoral.

How The Netherlands Became A Tax Haven (SüdD)

Barack Obama had only been in office for a few weeks when he first tried to take on tax havens. The freshly inaugurated U.S. president wanted greater transparency, harsher penalties and more justice. Obama, who had helped draft anti-tax haven legislation – to date, still not passed – as an Illinois senator, called out many tax havens by name. There were the usual suspects: Bermuda, the Cayman Islands and Switzerland. But there was also, to the surprise of many, the Netherlands. A founding member of the European Union, quaint little Holland has for years been the most important tax haven for American corporations. This includes large multinationals such as the coffee chain Starbucks, the delivery company FedEx, the pharmaceuticals giant Pfizer and – as the Paradise Papers have revealed – the sporting apparel manufacturer Nike and the electric carmaker Tesla.

Every year, other countries lose out on billions of euros in taxes for the apparent reason that the Netherlands has bent to the will of influential lobbyists while neighboring EU member states have stood idly by and done nothing. Experts accuse the country of providing illegal state subsidies, and the European Commission is alarmed, but the Dutch tax loophole will nevertheless remain open for years to come. One of the most important days for the Netherlands as a tax haven was July 6, 2005. That was the day that Paragraph 4 of Article 24 – the so-called anti-abuse clause – was struck from the U.S. tax convention with the Netherlands, effectively legalizing the abuse of Dutch corporate law. The Netherlands’ tax loophole revolves around a business structure known in Dutch as a commanditaire vennootschap, or CV, the Dutch version of a limited partnership. In a CV, just like in a limited partnership, two or more people can join together for business purposes.

One of the partners, namely the limited partner, is only liable for a fixed amount, while the other, the general partner, is fully liable. In contrast to Germany, CVs are not regarded as taxable entities in the Netherlands, but solely as partnerships. In the eyes of the Dutch tax authorities, it’s not the CV itself that’s responsible for paying taxes, but the individual partners. This is where things get interesting, especially for American companies. By founding a CV in the Netherlands plus one or two Dutch subsidiaries, U.S. firms reach “the Holy Grail of tax avoidance.” That’s how Senator Carl Levin once put it while still in office, describing the complex networks of companies that allow their owners to completely avoid taxes.

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Time for a plan?!

FEMA Offers To Airlift Puerto Ricans To Mainland US (CBS)

The Federal Emergency Management Agency (FEMA) is offering to airlift victims of Hurricane Maria in Puerto Rico to the U.S. mainland to reach temporary housing – a complex operation that would be the first of its kind for the agency. Under FEMA’s Transitional Shelter Assistance (TSA) program, displaced residents and families who are still living in shelters on the island can opt to relocate to housing in Florida and New York. The agency is working with the governors in both states to work through logistical issues for families interested in participating. Mike Byrne, a federal coordinating officer for FEMA, said the program is the first time the agency has attempted what it calls an “air bridge,” or a relief operation requiring the transportation of individuals from a disaster area.

In most disasters, FEMA pays for displaced residents to stay in hotels under the TSA program. In Puerto Rico, the hotels are filled to capacity, so FEMA is turning to the mainland and working with states to find accommodations. “A thousand miles adds a whole level of complexity to this,” Byrne said. Byrne says agency teams are traveling to shelters on the island to ask longtime occupants about their housing options going forward, telling them about FEMA’s offer. He said the level of interest in the program has so far been low, with only about 30 out of 300 families interviewed on Tuesday expressing interest in participating. “People really don’t want to leave their homes,” Byrne said. “We want to give them every opportunity we can to be able to stay here, whether it’s providing financial assistance or repairing their homes. So we are going to work hard on those things so people don’t have to leave.”

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And still no-one has come forward with an answer. A third party will have to, the two sides can’t do it be themselves.

Catalan Parliament Speaker, 5 MPs Appear In Court On Sedition Charge (G.)

The speaker of the Catalan parliament and five of its members appeared before Spain’s supreme court in Madrid on Thursday to answer charges of rebellion and sedition over their roles in staging a banned referendum on Catalonia’s independence last month. The court will decide whether to remand Carme Forcadell and the five MPs in custody while the investigation continues or release them under certain conditions. Eight former members of the Catalan government and the leaders of the two main grassroots pro-independence groups are already in custody awaiting trial on sedition charges for their parts in the 1 October referendum, which Spanish courts ruled illegal.

The region’s deposed president, Carles Puigdemont, and four of his former cabinet ministers went into self-imposed exile in Belgium last week after Madrid responded to Catalonia’s declaration of independence by firing his administration, dissolving the parliament and calling regional elections for December. Spain’s high court issued an arrest warrant for for all five last week on sedition and rebellion charges. Forcadell and the five MPs were summoned last week to the supreme court, which handles cases of people who enjoy parliamentary immunity, but it gave them more time to prepare their defences. They are suspected of having followed a “concerted strategy to declare independence” before the official declaration of the Catalan parliament on 27 October, which Spain’s constitutional court annulled on Wednesday.

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The narrative is that rich parties organize protests. But there are certainly people simply wanting to prevent people being thrown out into the streets.

EU Gives Greece Foreclosure Ultimatum (K.)

European officials have given the government an ultimatum to proceed with electronic foreclosures on homes later in the month or else the country’s third bailout review will not be concluded. The warning came despite the recent positive messages emanating from Brussels and Washington that Greece is making progress in the review and is on course to reach an agreement with creditors on a technical level by the end of the year. But lenders appear adamant that the review’s conclusion will be jeopardized if foreclosures do not take place as scheduled and if notaries, who have borne the brunt of attacks by anti-establishment groups and protesters, are not protected. “If the Greek government has the will to protect notaries it will find the way to achieve this,” a source told Kathimerini, adding that “if they want to stop the violence they can do it.”

The sources told Kathimerini they expect to see foreclosures beginning on November 27 “at all banks and throughout the country and not just isolated cases.” Auditors have repeatedly made it clear that the resumption of foreclosures, which have dragged during the crisis years due to strikes by lawyers and notaries and more recently due to anti-austerity protesters, is a prerequisite for the successful conclusion of Greece’s current bailout review. The ultimatum, however, appears to have motivated the government to take action so that foreclosures resume and notaries are protected as sources said that all necessary measures will be taken to “ensure strategic debt defaulters do not hide behind the attacks against notaries.”

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The plot is Greeks themselves?!

The Plot Against Greece (K.)

If some power wanted to undermine all that is good in a country, to waste its natural beauty and people, to damage its past, present and future, it need look no further than Greece. Here it would see the result of a long-term conspiracy against the coue beginning of the modern Greek state, the Greeks were under foreign tutelage. In the past few decades, though, as a member of the European Union, we had begun to believe that we could function as an independent country, without patrons. And suddentry. Fortunately, the Greeks are fighters, they resist as much as they can. That is why the country is still beautiful, with talented, generous people, with bright children capable of competing with the best in the world. The “enemy,” though, holds the people hostage, keeping them from reaching their full potential, from making the country what it could be.

From thnly, bankrupt, we found ourselves under strict supervision again. It is understandable, then, that we blame foreigners for all our ills – those powers that want to suck us dry of our wealth, to keep us weak and under control. Because it is certain that we are not the ones who benefit from continued political and economic insecurity, from unpredictable and excessive taxation, disdain for investments, dysfunctional justice, a weakened education system. The only beneficiaries are the tricksters who know how to exploit the situation – and other countries. When we have almost no investments and the country’s strongest selling point as a tourist destination is its stability in an unstable region, it is clear that we are not creating added value, we are not establishing foundations for the future. Investments go elsewhere and Greece keeps falling behind the competition.

In the World Bank’s latest Doing Business survey of 190 countries, Greece was ranked 67th, from 61st last year (and 60th and 58th before that). It is incredible that after seven years of crisis and three bailout agreements it should still be so difficult to set up a business in Greece. And yet, there is stiff resistance to improving the situation: Taxes and social security contributions are way above the European Union average; there are long delays in the justice system, conflicting and confusing laws and regulations, along with a public administration determined to obstruct whatever it can, encourage corruption and send businesses elsewhere.

Other countries gain even more when thousands of Greek doctors and others with special skills move away in search of a better life, taking with them the money invested in their education. So why should we not believe that it is in our foreign partners’ interests to keep Greece at this level? In the past, they lent us money, now they loot our human resources (and later perhaps our still-to-be-discovered fossil fuels, according to a long-running conspiracy theory). Our partners did not stop lending us money, but now it comes not from their banks but from their taxpayers, and with strict conditions.

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Well well. Something good comes out of that mess of a government.

UK Will Back Total Ban On Bee-Harming Pesticides (G.)

A total ban on insect-harming pesticides in fields across Europe will be backed by the UK, environment secretary Michael Gove has revealed. The decision reverses the government’s previous position and is justified by recent new evidence showing neonicotinoids have contaminated the whole landscape and cause damage to colonies of bees. It also follows the revelation that 75% of all flying insects have disappeared in Germany and probably much further afield, a discovery Gove said had shocked him. Neonicotinoids are the world’s most widely used insecticide but in 2013 the European Union banned their use on flowering crops, although the UK was among the nations opposing the ban. The European Commission now wants a total ban on their use outside of greenhouses, with a vote expected in December, and the UK’s new position makes it very likely to pass.

“The weight of evidence now shows the risks neonicotinoids pose to our environment, particularly to the bees and other pollinators which play such a key part in our £100bn food industry, is greater than previously understood,” said Gove. “I believe this justifies further restrictions on their use. We cannot afford to put our pollinator populations at risk.” In an article for the Guardian, Gove said: “As is always the case, a deteriorating environment is ultimately bad economic news as well.” He said pollinators boost the yield and quality of UK crops by £400m-£680m every year and said, for example, gala apple growers are now having to spend £5.7m a year to do replace the work of lost natural pollinators.

Gove said the evidence of neonicotinoids’ harm to pollinators has grown stronger since 2013, including a landmark field trial published in July that showed neonicotinoids damage bee populations, not just individual insects, and a global analysis of honey revealing worldwide contamination by the insecticides. [..] Gove’s decision has delighted campaigners and scientists who have long argued that heavy pesticide use, along with the destruction of habitat and disease, are having a devastating impact on insects. “Michael Gove is to be congratulated for listening to the experts on this issue and backing tougher restrictions,” said Friends of the Earth’s chief executive Craig Bennett. “But lessons also need to be learned – we now need to move away from chemical-intensive farming and instead boost support for less damaging ways of tackling persistent weeds and pests.

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Nov 082017
 
 November 8, 2017  Posted by at 9:56 am Finance Tagged with: , , , , , , , , ,  4 Responses »
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Henri Cartier Bresson Nehru Announces Gandhi’s Death, Birla House, Delhi, India Jan 30, 1948

 

700 Years of Data Forewarn of Rapid Reversal From Low Interest Rates (BBG)
Saudi Banks Freeze More Than 1,200 Bank Accounts in Anti-Corruption Purge (R.)
Saudi Crackdown to Confiscate Up to $800 Billion in Assets (WSJ)
Leaked Secret Israeli Cable Confirms Israeli-Saudi Coordination In Lebanon (ZH)
Lebanon – The Next Front In The Great Gas War (Golem XIV)
UK Sales Of Bombs And Missiles To Saudi Arabia Increase By Almost 500% (Ind.)
May to Lose Second Top Minister in One Week Over Secret Israel Meetings (BBG)
Those Who Broke The Economy Cannot Fix It (Ann Pettifor)
German ‘Wise Men’ Sound Alarm Over ‘Overheating’ Economy (R.)
Bean Counters: Lost in Paradise (Ren.)
British Mainstream Media Spreading Dangerous MMT Ideas (Bilbo)
Brick-and-Mortar Meltdown Sinks Property Prices (WS)
Catalan Secessionist Parties Fail To Agree On Unity Ticket For Vote (R.)
1 in 200 British, 1 in 60 Londoners Are Homeless (G.)

 

 

Long term is always better.

700 Years of Data Forewarn of Rapid Reversal From Low Interest Rates (BBG)

Forget secular stagnation. One historian says the world is actually in its ninth “real rate depression” and 700 years of data show that – when it comes – the turnaround could be sudden. In research published on the Bank of England’s staff blog, Harvard University’s Paul Schmelzing says most work pointing to a period of permanently lower equilibrium real interest rates is too short term. Instead, he tracked the risk-free rate since 1311 by identifying the dominant asset of each period – starting with sovereign rates in the Italian city states in the 14th and 15th centuries and moving to long-term rates in Spain, then the Province of Holland, the U.K., Germany, and finally the U.S. Real rates, or the benchmark interest rates minus inflation, have averaged 4.78% while the 200-year real-rate average is 2.6%.

That makes the current market environment “severely depressed,” Schmelzing wrote. However, it’s simply following a five-century downward trend, in which there have been nine periods of secular decline followed by reversals. The current period – since the 1980s – is the second-longest recorded and its closest historical analogy is the global “Long Depression” of the 1880s and 1890s which saw low productivity growth, deflationary price dynamics, and the rise of global populism and protectionism. This spell seems to have ended without a push from policy makers. That could be good news for those struggling to find a fix for the current low-rate environment. “There is strong evidence suggesting that the last ‘secular stagnation cycle’ started fading relatively autonomously after just over two decades following the key financial shock, not requiring the aid of decisive fiscal or monetary stimulus.”

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There’ll be more.

Saudi Banks Freeze More Than 1,200 Bank Accounts in Anti-Corruption Purge (R.)

Saudi Arabian banks have frozen more than 1,200 accounts belonging to individuals and companies in the kingdom as part of the government’s anti-corruption purge, bankers and lawyers said on Tuesday. They added that the number is continuing to rise. Dozens of royal family members, officials and business executives have been detained in the crackdown and are facing allegations of money laundering, bribery, extorting officials and taking advantage of public office for personal gain. Since Sunday, the central bank has been expanding the list of accounts it is requiring lenders to freeze on an almost hourly basis, one regional banker said, declining to be named because he was not authorised to speak to media.

The banker did not name the companies affected but said they included listed and unlisted firms across many sectors. He added that if the freezes stayed in place for long, they could start to hurt day-to-day business activities such as paying staff and creditors or making other transactions. A second banker said, however, that most of the frozen accounts belonged to individuals rather than companies, and that banks were being allowed by the regulator to continue to fund existing commitments. Among top business executives detained in the probe are billionaire Prince Alwaleed bin Talal, chairman of investment firm Kingdom Holding; Nasser bin Aqeel al-Tayyar, founder of Al Tayyar Travel; and Amr al-Dabbagh, chairman of builder Red Sea International.

The stocks of all three companies, which have issued statements saying they continue to operate as normal, plunged between 9 and 10% on Tuesday. One of the bankers speaking to Reuters said the central bank had met with some foreign banks this week to reassure them that the freezing of accounts targeted individuals, and that firms linked to those people would not be damaged.

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WSJ has gone full paywall.

Saudi Crackdown to Confiscate Up to $800 Billion in Assets (WSJ)

The Saudi government is aiming to confiscate cash and other assets worth as much as $800 billion in its broadening crackdown on alleged corruption among the kingdom’s elite, according to people familiar with the matter. Several prominent businessmen are among those who have been arrested in the days since Saudi authorities launched the crackdown on Saturday, by detaining more than 60 princes, officials and other prominent Saudis, according to those people and others. The country’s central bank, the Saudi Arabian Monetary Authority, said late Tuesday that it has frozen the bank accounts of “persons of interest” and said the move is “in response to the Attorney General’s request pending the legal cases against them.”

The purge is the most extensive of the kingdom’s elite in recent history. Crown Prince Mohammed bin Salman, the son of King Salman, was named heir to the throne in June and has moved to consolidate power. He has said that tackling corruption at the highest level is necessary to overhaul what has long been an oil-dependent economy. The crackdown could also help replenish state coffers. The government has said that assets accumulated through corruption will become state property, and people familiar with the matter say the government estimates the value of assets it can reclaim at up to 3 trillion Saudi riyal, or $800 billion.

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Strange bedfellows.

Leaked Secret Israeli Cable Confirms Israeli-Saudi Coordination In Lebanon (ZH)

Early this morning, Israeli Channel 10 news published a leaked diplomatic cable which had been sent to all Israeli ambassadors throughout the world concerning the chaotic events that unfolded over the weekend in Lebanon and Saudi Arabia, which began with Lebanese Prime Minister Saad Hariri’s unexpected resignation after he was summoned to Riyadh by his Saudi-backers, and led to the Saudis announcing that Lebanon had “declared war” against the kingdom. The classified embassy cable, written in Hebrew, constitutes the first formal evidence proving that the Saudis and Israelis are deliberately coordinating to escalate the situation in the Middle East. The explosive classified Israeli cable reveals the following:

• On Sunday, just after Lebanese PM Hariri’s shocking resignation, Israel sent a cable to all of its embassies with the request that its diplomats do everything possible to ramp up diplomatic pressure against Hezbollah and Iran.
• The cable urged support for Saudi Arabia’s war against Iran-backed Houthis in Yemen.
• The cable stressed that Iran was engaged in “regional subversion”.
• Israeli diplomats were urged to appeal to the “highest officials” within their host countries to attempt to expel Hezbollah from Lebanese government and politics.

As is already well-known, the Saudi and Israeli common cause against perceived Iranian influence and expansion in places like Syria, Lebanon and Iraq of late has led the historic bitter enemies down a pragmatic path of unspoken cooperation as both seem to have placed the break up of the so-called “Shia crescent” as their primary policy goal in the region. For Israel, Hezbollah has long been its greatest foe, which Israeli leaders see as an extension of Iran’s territorial presence right up against the Jewish state’s northern border.

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“Having failed to liberate the Syrians, Saudi, the West, its Sunni Gulf allies and Israel will now see if they can succeed in blocking any Iranian gas ambitions by liberating the Lebanese from their own government.”

Lebanon – The Next Front In The Great Gas War (Golem XIV)

The Great Gas War has already two distinct fronts: The now relatively quiet Northern Front in Ukraine and the Southern Front in Syria in which the Western empire has been losing. It looks to me that Lebanon is being targeted as the next front, where the West hopes its loses might be recouped. Yesterday, November 6th, Reuters reported, “Saudi Arabia said on Monday that Lebanon had declared war against it because of attacks against the Kingdom by the Lebanese Shi‘ite group Hezbollah.” This comes after Israel, Saudi’s long time though largely un-offical best friend in the region, has been very publicly preparing to renew its own war with Lebanon – or more accurately with Hezbollah. As the American news journal Newsweek put it recently, “ISRAEL PREPARES FOR ANOTHER WAR WITH HEZBOLLAH AS IDF PRACTICES LEBANON INVASION.”

Why now and why Lebanon? Well the rulers of Saudi, a Sunni dominated country, will tell us that it is because Hezbollah is a Shia terrorist organisation. “Hezbollah” literally means the “Party of Allah” or “Party of God”. Saudi Gulf affairs minister Thamer al-Sabhan yesterday pointedly referred to Hezbollah as, “the Lebanese Party of the Devil”. Saudi is not alone of course, Hezbollah has also been listed as a terrorist organisation by America, Israel, the Arab League, the UK and the EU. It is also, however, part of the popular government of Lebanon having seats in its parliament. I suggest, however, a powerful reason that a new war with Hezbollah may be in the offing is because Lebanon is the next link in any gas pipeline that could potentially bring Iranian Gas to Europe.

That was the reason the West decided to “liberate” the Syrian people and it will be why they decide to enforce the same salvation upon the people of Lebanon. Having failed to liberate the Syrians, Saudi, the West, its Sunni Gulf allies and Israel will now see if they can succeed in blocking any Iranian gas ambitions by liberating the Lebanese from their own government. I would not be surprised to hear quite soon from opposition groups vocally denouncing the government or at least Hezbollah. I expect spokes people from those groups to suddenly get a global platform along-side American and regional supporters such as Saudi.

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How to spell insanity.

UK Sales Of Bombs And Missiles To Saudi Arabia Increase By Almost 500% (Ind.)

The number of British-made bombs and missiles sold to Saudi Arabia since the start of its bloody campaign in Yemen has risen by almost 500%, The Independent can reveal. More than £4.6bn of arms were sold in the first two years of bombings, with the Government grant increasing numbers of export licences despite mounting evidence of war crimes and massacres at hospitals, schools and weddings. The United Nations says air strikes by the Saudi-led coalition are the main cause of almost 5,295 civilian deaths and 8,873 casualties confirmed so far, warning that the real figure is “likely to be far higher”. It has condemned the “entirely man-made catastrophe” leaving millions more on the brink of famine and sparking the world’s worst cholera epidemic, while blacklisting Saudi Arabia for killing and maiming children.

There is also fresh concern over the Kingdom’s attempt to shut all air, land and sea ports into Yemen, which it said was to stop the flow of weapons but will also halt aid imports. British-made bombs have been found at the scene of bombings deemed to violate international law but the UK has continued its political and material support for Riyadh’s campaign. Figures from the Department for International Trade (DIT) show that in the two years leading up to the Yemen war, £33m of ML4 licences covering bombs, missiles and countermeasures were approved. But in the two years since the start of Saudi bombing in March 2015, the figure increased by 457% to £1.9bn, according to calculations by Campaign Against the Arms Trade (CAAT). Licences covering aircraft including Eurofighter jets have also risen by 70% to £2.6bn in the same period.

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Secret meetings as the Middle East is imploding. And arms sales are exploding.

May to Lose Second Top Minister in One Week Over Secret Israel Meetings (BBG)

Prime Minister Theresa May is weighing whether to fire a member of her cabinet only seven days after her defense secretary quit in a sexual harassment scandal, as the U.K. government faces fresh turmoil in the midst of Brexit talks. May is likely to dismiss her International Development Secretary Priti Patel in a row over a succession of unauthorized meetings she held with Israeli officials behind the prime minister’s back, according to reports from the BBC and The Sun Tuesday, which the U.K. government declined to deny. The premier has not yet had the chance to speak to Patel – who is on an official trip to Africa – about the latest revelations. A conversation would be expected before a decision is made about the minister’s future. If she is forced out, Patel will be the second minister to depart May’s cabinet in one week, after Michael Fallon resigned from the defense ministry amid allegations over his past behavior toward women.

For some, May’s latest headache is yet another demonstration of her weakness, which draws repeated questions over how her government can last long enough to see Brexit to the finish line. If more dominoes drop – in the shape of senior ministers – the last one to fall could ultimately be the prime minister herself. “The destabilizing effect on an already weak administration has prompted another burst of speculation that May could soon be forced to resign,” Mujtaba Rahman of Eurasia Group said in a note to clients. He thought one likely scenario is for May to be toppled if she fails to get a grip on the latest crisis and is ousted because her MPs judge that the government cannot go on like this – and is incapable of recovering the authority a prime minister needs.

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The British economy is being bled dry….

Those Who Broke The Economy Cannot Fix It (Ann Pettifor)

Make no mistake, last week’s increase in interest rates was a big deal. Painful as it might be for a good share of the population, the real point is that the Bank is signalling the end of a particular phase of monetary policy. Since 2010 the counterpart to self-defeating austerity policies has been expansionary monetary policies. These have inflated assets – enriching the already-rich, while failing to stimulate wider economic recovery. Yesterday the Bank of England’s Monetary Policy Committee signalled an end of this dangerous game. But this technocratic realignment makes no difference to the fact that ‘the Guardians of the nation’s finances’ – Bank and Treasury economists – have failed absolutely to revive the economy.

You need look no further than the (ongoing) decline in real wages, to continuing low levels of private investment, and to the dangers of rising household debt. A small interest rate rise is hardly likely to improve these conditions. Bank and Treasury economists (aided and abetted by the OBR) are guilty of defeatism. They argue that despite their powers, THERE IS NOTHING TO BE DONE. It is assumed that somehow ‘the invisible hand’ or ‘the markets’ will, without intervention by the authorities, correct the weakness, insecurity and failures of the British economy. The prolonged and painfully weak recovery is regularly blamed on something defined as “productivity”. By shifting responsibility for economic failure on to productivity, the Bank, Treasury and OBR economists are saying that somehow economic failure is inherent to the economy – to businesses and especially to workers.

“Nothing to do with us, guv” they mutter. They add that the situation has been exacerbated by the vote to leave the EU. This is a handy way of denying that the ongoing economic failure of the British economy (and the Brexit vote) can be explained by austerity policies, and the failures of the financial system. By taking this approach, economists at the Bank have – conveniently – set the scene for endorsing further inaction by the Chancellor later this month. Yesterday the Governor of the Bank was flanked by Ben Broadbent and Dave Ramsden. Ben Broadbent, as a Goldman Sachs economist, was among the earliest to call for austerity policies. Dave Ramsden (who did not vote for the rate rise) implemented these policies as top economist at the Treasury.

But both Broadbent and Ramsden were senior figures in economic policy-making throughout the debt inflation that preceded the crisis, and (we presume) supporters of financial globalisation. It is obvious to anyone with an ounce of common sense that austerity policies have hurt the most vulnerable, and damaged Britain’s economic potential, by forcing a brutal adjustment to lower quality and lower paid work. Labour has been forced to bear the brunt of the Global Financial Crisis. The weakness in productivity is just the outcome of these policies, not the cause.

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… while Germany’s needs diverge ever more from those of southern Europe.

German ‘Wise Men’ Sound Alarm Over ‘Overheating’ Economy (R.)

The German economy is at risk of overheating, according to a leaked advisory council report that follows pressure from the Bundesbank for a swifter end to the ECB’s expansive monetary policy. In their annual report, seen by Handelsblatt newspaper, the five “wise men” who advise the German government on economic policy said the economy, which they expected to expand strongly this year and next, was moving gradually into a “boom phase”. “There are clear signs that economic capacity is over-utilised,” read the report, which is due to be published on Wednesday. Germans have been among the foremost critics of the ECB’s bond-buying program, which was introduced three years ago to depress borrowing costs and reignite growth in the euro zone’s heavily indebted southern periphery.

The wise men expected Germany’s economy to expand by 2% this year and by 2.2% in 2018, Handelsblatt said. With unemployment at its lowest level since the early 1990s, Germany’s circumstances are very different from Italy’s or Spain‘s, straining the ECB’s ‘one-size-fits-all’ monetary policy. ECB President Mario Draghi last month announced a halving n the size of its 2 trillion euro bond-buying program, but this is far from the return to conventional monetary policy many Germans, including Bundesbank president Jens Weidmann, demand. Without an intervention to cool the economy, Germany’s hawks fear the buoyant economy could tip over into an inflationary cycle. Last week, a senior official from Chancellor Angela Merkel’s conservatives warned that German savers would not tolerate continued low interest rates for much longer.

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Accountants and auditors are not doing their jobs.

Bean Counters: Lost in Paradise (Ren.)

“The phrase ‘Set a thief to catch a thief’ is common parlance,” says Professor Atul K. Shah. “‘Set a global brand of professional accountants to rob society and pilfer its taxes, bleeding governments’, is not, but it should be.’ Professor Bill Black says internal controls are absolutely critical in reducing fraud by insiders in particular, but not just insiders, as the Paradise Papers have repeatedly demonstrated. Emile Woolf says there is no way to remove control fraud and dodgy accounting practices from the economy without first prosecuting the culprits. “The devils that committed this criminal negligence – with the exception of the Royal Bank of Scotland (RBS) – have never been fined or prosecuted” he said. “What you can then do is create a ring fenced fund inside those institutions, earmarked to save them from going under. But the company has to recognise it has to be paid back.

“RBS is incapable of paying back the billions of fines it still owes for misconduct,” he says. “Where does that money come from and where does it go? Without the fines RBS would have made £100 million profit this year, but because of the reserve for fines in the USA and UK, all those fines are far too great to allow for payment of a dividend.” Of course calculating a true profit figure is difficult when a significant portion of that profit is fraudulent, because it doesn’t take into account the result of the inequities of ten years ago. “The worrying thing for all of us is if it happens again,” he says. “My hope is that three years from now, banks will be forced to recognise their loans that will never be repaid. But my worry is that this is going to be after the next financial crisis, because it’s happening again. There is no redeeming features in the present. The only difference is the next crisis is going to be bigger.”

Joel Benjamin told Renegade Inc that accounting is as much about *what* you count or don’t count as it is *how* you count it. “This is evidenced through the practice of ‘base erosion and profit shifting’ – shifting profits to offshore low or no tax jurisdictions, ” he said. In the space of 50 years, Britain’s economy has transformed from an industrial power house, to that of a finance-led extractive parasite, where the cash starved productive economy receives less than 10% of bank credit. “Until the Big Four accountancy firms are accurately viewed as enablers of corporate offshore dealing, regulatory arbitrage and ardent defenders of the neoliberal order, not the ‘reputable’ objective independent arbiters of the public interest as they claim, society will continue to be taken for a ride, and public services and social cohesion will continue their long decline,” he said.

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Bill Mitchell in a long talk with his alter ego.

British Mainstream Media Spreading Dangerous MMT Ideas (Bilbo)

Mitchell tried to tell me that governments do not spend by ‘printing money’ but rather just adjust bank accounts with numbers. But I know as anyone in the street knows that they just want to print more and more. That is at the core of MMT – they want the government to go on a spending spree and just ignore the inflationary consequences. They hide that by saying that “public spending cannot be unlimited and must be commensurate to the capacity of the economy” which is just a smokescreen that I can see through. And everybody will see through it. It is code for spend like a drunken’ sailor – throw money at lazy people who cannot be bothered finding a job. Throw money at public schools that teach socialist doctrines – you know about inequality and stuff like that.

Throw money at public hospitals so that people can receive unlimited health care without having to pay for it – that is the quickest way to encourage waste and bad behaviour. People know that they can just get sick and no matter what their income is they will get some care. Where is the incentive to stay healthy in that sort of system. The article also shows how stupid Mitchell is when it says he: “… debunks the idea that governments borrow money from international markets and with it the notion that they are hostage to the market.” Well where the hell else do they get the cash from? Does he really think we are that stupid? How come China has all those US government debt bonds or whatever they are called and the US government is spending the Chinese cash? How does he explain that obvious point?

Well he tried to claim the Chinese doesn’t issue US dollars and that only the US government issues US dollars so that it cannot possibly be funded by the Chinese. I don’t buy that, not that I understood anything he said about this – all this talk about trade surpluses accumulating financial claims in the currency that the deficit country issues, and then allowing the surplus nation to use those claims (say, US dollars in the first instance) to purchase US dollar financial assets etc ad nauseum. As if that tells us anything. How come the Chinese can loan the US government money that is what I want to know? Mitchell told the journalist that Jeremy Corbyn should not worry about international capital markets because Britain could impose capital controls if it wanted to. That gets to the nub of my worries – socialist governments stealing hard-earned cash from investors who actually have some get up and go.

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Malls don’t look like good investments.

Brick-and-Mortar Meltdown Sinks Property Prices (WS)

Commercial real estate prices soared relentlessly for years after the Financial Crisis, to such a degree that the Fed has been publicly fretting about them. Why? Because US financial institutions hold nearly $4 trillion of commercial real estate loans. But the boom in most CRE sectors is over. The Green Street Property Price Index – which measures values across five major property sectors – had soared 107% from May 2009 to the plateau that began late last year, and 27% from the peak of the totally crazy prior bubble that ended with such spectacular fireworks. But it has now turned around, dragged down by a plunge in prices for retail space. The CPPI by Green Street Advisors dropped 1.1% in October from September. In terms of points, the 1.4-point decline was the largest monthly decline since March 2009. The index is now below where it had been in June 2016:

This phenomenal bubble, as depicted by the chart above, has even worried the Fed because US financial institutions hold nearly $4 trillion of CRE loans, according to Boston Fed governor Eric Rosengren earlier this year. Of them, $1.2 trillion are held by smaller banks (less than $50 billion in assets). These smaller banks tends to have a loan book that is heavily concentrated on CRE loans, and these banks are less able to withstand shocks to collateral values. Rosengren found that among the root causes of the Financial Crisis “was a significant decline in collateral values of residential and commercial real estate.” But the CRE bubble isn’t unraveling as gently as the chart suggests. Some sectors are still surging, while others are plunging. According to the report, the index, which captures the prices at which CRE transactions are currently being negotiated and contracted, “was pushed down by falling mall valuations.”

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Puidgemont predicted to get 14-15 out of 135 seats. He won’t be the leader.

Catalan Secessionist Parties Fail To Agree On Unity Ticket For Vote (R.)

Catalan secessionist parties on Tuesday failed to agree on a united ticket to contest a December snap regional election, making it more difficult to rule the region after the vote and press ahead with their collective bid to split from Spain. Catalonia’s secessionist push has plunged Spain into its worst political crisis in four decades, triggered a business exodus, forced Madrid to cut its economic forecast and reopened old wounds from Spain’s civil war in the 1930s. Pro-independence groups have called for a general strike in the restive region on Wednesday. Catalan political parties had until midnight on Tuesday to register coalitions ahead of the Dec. 21 vote, but the two main forces which formed an alliance to rule the region for the last two years did not manage to agree on a new pact in time.

While they could still find an agreement after the vote, political analysts say the lack of a deal on a joint campaign may also trigger a leadership fight at the top of the movement. This is because center-right PdeCat (Catalan Democratic Party) of sacked Catalan president Carles Puigdemont is expected to be overtaken by leftist Esquerra Republicana de Catalunya (ERC) of former regional vice president Oriol Junqueras. Puigdemont and Junqueras are the two main leaders behind the current secession bid that last month led to a unilateral declaration of independence which Spain thwarted by imposing direct rule on the region. Junqueras is currently in custody pending a potential trial on charges of sedition, rebellion and misuse of public funds. Puigdemont, who faces the same charges, is currently in self-imposed exile in Belgium and has said he would oppose extradition.

An opinion poll released on Sunday by Barcelona-based newspaper La Vanguardia showed Junqueras’ ERC could garner between 45 and 46 seats in the 135-strong regional assembly while Puigdemont’s PdeCat would win between 14 and 15 seats. In order to reach the 68-seat threshold for a majority, they would then have to form a parliamentary alliance with anti-capitalist CUP, which is expected to get seven or eight seats. Such an alliance previously existed between 2015 and 2017.

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Down the drain.

1 in 200 British, 1 in 60 Londoners Are Homeless (G.)

More than 300,000 people in Britain – equivalent to one in every 200 – are officially recorded as homeless or living in inadequate homes, according to figures released by the charity Shelter. Using official government data and freedom of information returns from local authorities, it estimates that 307,000 people are sleeping rough, or accommodated in temporary housing, bed and breakfast rooms, or hostels – an increase of 13,000 over the past year. Shelter said the figures were an underestimate as they did not include people trapped in so-called “hidden homelessness”, who have nowhere to live but are not recorded as needing housing assistance, and end up “sofa surfing”. London, where one in every 59 people are homeless, remains Britain’s homelessness centre. Of the top 50 local authority homelessness “hotspots”, 18 were in Greater London, with Newham, where one in 27 residents are homeless, worst hit.

However, while London’s homeless rates have remained largely stable over the past year, the figures show the problem is becoming worse in leafier commuter areas bordering the capital, such as Broxbourne, Luton, and Chelmsford. Big regional cities have also seen substantial year-on-year increases in the rate of homelessness. In Manchester, one in 154 people are homeless (compared with one in 266 in 2016); in Birmingham one in 88 are homeless (119); in Bristol one in 170 are affected (199). Polly Neate, chief executive of Shelter, said: “It’s shocking to think that today, more than 300,000 people in Britain are waking up homeless. Some will have spent the night shivering on a cold pavement, others crammed into a dingy hostel room with their children. And what is worse, many are simply unaccounted for.

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Nov 062017
 
 November 6, 2017  Posted by at 9:47 am Finance Tagged with: , , , , , , , ,  2 Responses »
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Salvador Dalí Figure at a window 1925

 

The Next Market Cleanse Will Be Sharp, Deep, Fast (Peters)
Round-Up Of Saudi Princes, Businessmen Widens, Travel Curbs Imposed (R.)
Saudi Arabia Seals Yemen Borders, Accuses Iran Over Missile Strike (AFP)
Paradise Papers Leak Reveals Secrets Of The World Elite’s Hidden Wealth (G.)
Are We Taming Offshore Finance? (BBC)
Queen’s Private Estate Invested Millions of Pounds Offshore (G.)
UK Families Thousands Of Pounds Worse Off After Years Of Cuts (G.)
Britain ‘Would Be Booming’ If It Wasn’t For Brexit – Mark Carney (Tel.)
Most EU Firms Plan Retreat From UK Suppliers (R.)
UK Ministers ‘Could Be In Contempt Of Parliament Over Brexit Papers’ (G.)
China’s Shadow Banking Halts as Regulation Bites – Moody’s (BBG)
Catalonia’s Puigdemont Conditionally Released By Belgian Judge (G.)

 

 

Eric Peters gets points for style.

The Next Market Cleanse Will Be Sharp, Deep, Fast (Peters)

Anecdote: “The most common example is a ball sitting atop a hill,” she said, polished accent, hint of condescension. “Locally stable, but one nudge and it’s all over.” She drove terribly fast, discussing Minsky Moments; the idea that persistent stability breeds instability. “Naturally each cycle is different in key respects, and that’s because you’re far better at preventing past problems from recurring than new ones from arising.” I smiled, amused, insulted. “Despite knowing this all too well, you humans remain inexplicably fixated on the rearview mirror. And this blinds you to all manner of hazards ahead.”

She initiated a few perfect turns of the Tesla, dodging a squirrel or two, tumbling, unhurt. “The source of instability in this cycle is your dissatisfaction with ultra-low bond yields.” $8trln of sovereign debt carries a negative yield, still our central bankers buy. “You should logically respond to this historic rise in valuations across asset classes with a reduction in your expectations for future returns.” I nodded. “But instead you respond with indignation.” So I explained to her that without robust growth and a compounding stream of uninterrupted 7.5% returns, our entitlement systems will implode. They probably will anyway. And lacking the stomach for an honest accounting of this predicament, we prefer to pretend it doesn’t exist.

“Is this humor or sarcasm?” she asked. “Both,” I answered. “Fascinating, anyhow, you then demand that we algorithms produce mathematically impossible returns. So we apply leverage, which makes nearly anything possible, even at valuations that are 99th percentile in all of human history. The more leverage we apply, the more stable your system appears. The flatter your hilltop. Naturally, we ensure that today’s leverage looks different from yesterday’s disaster, recognizing your powerful aversion to repeating recent mistakes.” And I stared out the window, lost in thought, fall’s kaleidoscope whizzing by.

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Not done yet.

Round-Up Of Saudi Princes, Businessmen Widens, Travel Curbs Imposed (R.)

An anti-corruption probe that has purged Saudi Arabian royals, ministers and businessmen appeared to be widening on Monday after the founder of one of the kingdom’s biggest travel companies was reportedly detained. Shares in Al Tayyar Travel plunged 10 percent in the opening minutes of trade after the company quoted media reports as saying Nasser bin Aqeel al-Tayyar, who is still a board member, had been held by authorities. The company gave no details but online economic news service SABQ, which is close to the government, reported Tayyar had been detained in an investigation by a new anti-corruption body headed by Crown Prince Mohammed bin Salman.

Dozens of people have been detained in the crackdown, which has consolidated Prince Mohammed’s power while alarming much of the traditional business establishment. Billionaire Prince Alwaleed bin Talal, Saudi Arabia’s best-known international investor, is also being held, officials said at the weekend. The front page of Okaz, a leading Saudi newspaper, challenged businessmen on Monday to reveal the sources of their assets, asking: “Where did you get this?” in a bright red headline. Pan-Arab newspaper Al-Asharq Al-Awsat reported that a no-fly list had been drawn up and security forces in some Saudi airports were barring owners of private jets from taking off without a permit.

Among those detained are 11 princes, four ministers and tens of former ministers, according to Saudi officials. The allegations against the men include money laundering, bribery, extorting officials and taking advantage of public office for personal gain, a Saudi official told Reuters. Those accusations could not be independently verified and family members of those detained could not be reached. A royal decree on Saturday said the crackdown was in response to “exploitation by some of the weak souls who have put their own interests above the public interest, in order to, illicitly, accrue money”.

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The big fear is that it’s all a set-up to go after Iran. Which just signed a $30 billion energy deal with Russia.

Saudi Arabia Seals Yemen Borders, Accuses Iran Over Missile Strike (AFP)

The Saudi-led coalition battling Shiite Huthi rebels in Yemen closed the country’s air, sea and land borders Monday and accused Iran of being behind a weekend missile attack on Riyadh, saying it “may amount to an act of war”. Saudi Arabia intercepted and destroyed the ballistic missile, which was launched from Yemen as rebels appeared to escalate hostilities, near Riyadh’s international airport on Saturday. The missile was the first aimed by the Shiite rebels at the heart of the Saudi capital, underscoring the growing threat posed by the raging conflict. “The leadership of the coalition forces therefore considers this… a blatant military aggression by the Iranian regime which may amount to an act of war,” the official Saudi news agency SPA said in a statement.

Smouldering debris landed inside the King Khalid International Airport, just north of Riyadh, after the missile was shot down but authorities reported no major damage or loss of life. Yemen’s complex war pits the Saudi-backed government of President Abedrabbo Mansour Hadi against former president Ali Abdullah Saleh and his Iran-backed Huthi rebel allies. The Saudi statement said that the borders were being closed “to fill the gaps in the inspection procedures which enable the continued smuggling of missiles and military equipment to the Huthi militias loyal to Iran in Yemen”. Despite the temporary closure of the air, sea and land ports, Saudi would protect “the entry and exit of relief and humanitarian personnel”. “The coalition… affirms the kingdom’s right to respond to Iran at the appropriate time and in the appropriate form,” it added.

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Most of this is legal. But what are the Queen, Bono, Trudeau thinking?

Paradise Papers Leak Reveals Secrets Of The World Elite’s Hidden Wealth (G.)

The world’s biggest businesses, heads of state and global figures in politics, entertainment and sport who have sheltered their wealth in secretive tax havens are being revealed this week in a major new investigation into Britain’s offshore empires. The details come from a leak of 13.4m files that expose the global environments in which tax abuses can thrive – and the complex and seemingly artificial ways the wealthiest corporations can legally protect their wealth. The material, which has come from two offshore service providers and the company registries of 19 tax havens, was obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with partners including the Guardian, the BBC and the New York Times. The project has been called the Paradise Papers. It reveals:

• Millions of pounds from the Queen’s private estate has been invested in a Cayman Islands fund – and some of her money went to a retailer accused of exploiting poor families and vulnerable people. • Extensive offshore dealings by Donald Trump’s cabinet members, advisers and donors, including substantial payments from a firm co-owned by Vladimir Putin’s son-in-law to the shipping group of the US commerce secretary, Wilbur Ross. • How Twitter and Facebook received hundreds of millions of dollars in investments that can be traced back to Russian state financial institutions. • The tax-avoiding Cayman Islands trust managed by the Canadian prime minister Justin Trudeau’s chief moneyman. • A previously unknown $450m offshore trust that has sheltered the wealth of Lord Ashcroft.

• Aggressive tax avoidance by multinational corporations, including Nike and Apple.• How some of the biggest names in the film and TV industries protect their wealth with an array of offshore schemes. • The billions in tax refunds by the Isle of Man and Malta to the owners of private jets and luxury yachts.• The secret loan and alliance used by the London-listed multinational Glencore in its efforts to secure lucrative mining rights in the Democratic Republic of the Congo. •The complex offshore webs used by two Russian billionaires to buy stakes in Arsenal and Everton football clubs.

The disclosures will put pressure on world leaders, including Trump and the British prime minister, Theresa May, who have both pledged to curb aggressive tax avoidance schemes. The publication of this investigation, for which more than 380 journalists have spent a year combing through data that stretches back 70 years, comes at a time of growing global income inequality. Meanwhile, multinational companies are shifting a growing share of profits offshore – €600bn in the last year alone – the leading economist Gabriel Zucman will reveal in a study to be published later this week. “Tax havens are one of the key engines of the rise in global inequality,” he said. “As inequality rises, offshore tax evasion is becoming an elite sport.”

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No. Hell no.

Are We Taming Offshore Finance? (BBC)

The offshore finance industry puts trillions of dollars worldwide beyond the taxman’s reach. Bringing it to heel is like taming a cat; not just a normal moggy – a thankless task in itself – but a Cheshire Cat: nebulous, hard to pin down, disappearing and reappearing when it likes. No-one can actually agree on what a tax haven is. Or even on the name: one person’s tax haven is another’s “offshore financial centre”. No-one can agree on how many there are. Nor on exactly how much money is stashed offshore. No statistics are fully reliable. And this suits those who operate in offshore finance, from the owner of the wealth to the lawyer or accountant middlemen who manage the funds, to the often sun-kissed beaches of the jurisdictions where they are secluded or pass through. The industry’s key word is privacy. Or secrecy – a word it doesn’t like so much.

One adage cited by the taxation author and expert Nicholas Shaxson sums it up: “Those who know don’t talk. And those who talk don’t know.” But do we really not know how much is stashed offshore? A report this September, co-authored by the economist Gabriel Zucman, estimates about 10% of global GDP – the way we measure the size of the world’s economy – is held offshore, about $7.8tn (£6tn) . The Boston Consulting Group reported it last year at about $10tn. If you are thinking, wow, that’s bigger than Japan’s economy, you’d be right. But if you want a real wow, try $36tn – the estimate offered by James Henry, author of the book Blood Bankers. That’s twice as big as the US economy.

But no-one really knows. And here’s another wow. Remember the slogan “we are the 99%” coined by the Occupy movement to lambast the top 1% of the population for their disproportionate share of wealth? Well, the Zucman report says 80% of all offshore cash is owned by 0.1% of the richest households, with 50% held by the top 0.01%. So if you read this and are thinking, if you can’t beat them… quite frankly, it’s unlikely you will ever join them.

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This cannot be. Many Britons are miserable, and their Queen dodges taxes. As someone suggested, she should go live where her money is stashed.

Queen’s Private Estate Invested Millions of Pounds Offshore (G.)

Millions of pounds from the Queen’s private estate has been invested in a Cayman Islands fund as part of an offshore portfolio that has never before been disclosed, according to documents revealed in an investigation into offshore tax havens. Files from a substantial leak show for the first time how the Queen, through the Duchy of Lancaster, has held and still holds investments via funds that have put money into an array of businesses, including the off-licence chain Threshers, and the retailer BrightHouse, which has been criticised for exploiting thousands of poor families and vulnerable people. The duchy admitted it had no idea about its 12-year investment in BrightHouse until approached by the Guardian and other partners in an international project called the Paradise Papers.

Though the duchy characterised its stake in BrightHouse as negligible, it would not disclose the size of its original 2005 investment, which coincided with a boom in the company’s value. BrightHouse has since been accused of overcharging customers, and using hard sell tactics on people with mental health problems and learning disabilities. Last month, it was ordered to pay £14.8m in compensation to 249,000 customers. Critics are likely to ask why the Queen had money in there in the first place, and the duchy may face awkward questions about whether there was enough oversight and management of the Queen’s “onward investments” to ensure they remained ethical. The duchy has also disclosed investments in “a few overseas funds”, including one in Ireland, and will be under pressure to give details of where the money is being held.

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This is Britain’s reality….

UK Families Thousands Of Pounds Worse Off After Years Of Cuts (G.)

Seven years of cuts to tax credits and universal credit have hugely eroded their role in supposedly rewarding people for working, leaving many families thousands of pounds a year worse off, a study has concluded. Ministers’ promises that the systems would benefit families for taking on more work had effectively been broken because of the cuts, according to the report by the Child Poverty Action Group (CPAG) and the Institute for Public Policy Research thinktank. The study, titled Austerity Generation, details what it says are the huge numbers of families with children pushed into poverty due to cuts and freezes to benefits, as well as measures such as the new two-child limit for payments. It calls for the chancellor, Philip Hammond, to tackle the issue in next month’s budget by restoring previous levels of universal credit work allowances, the amount of monthly income that can be earned without penalty. These were cut in April 2016.

It also seeks a pension-style triple lock of the child benefit and child credit element of universal credit, ensuring it kept pace with prices and earnings. This alone, the report argues, would keep 600,000 children out of poverty. Introduced in 2003, working tax credits are intended to top up low earnings. It is among a series of benefits replaced by universal credit, which is gradually being rolled out nationally and is intended to incentivise working. But, according to the report, cuts have eroded much of this effect for families. It calculates that a couple with two young children, one working full-time and the other part-time on the national living wage, will lose more than £1,200 a year due to universal credit cuts. Another example given is that of a single parent with two young children who starts work at 12 hours a week on the national living wage and will have an effective hourly wage of £4.18, as opposed to £5.01 before the cuts.

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… and this is what its central bank chief thinks it is instead.

Britain ‘Would Be Booming’ If It Wasn’t For Brexit – Mark Carney (Tel.)

Britain’s economy would be “booming” if not for Brexit, the Governor of the Bank of England has said. Mark Carney said businesses were waiting for the outcome of Theresa May’s negotiations with the EU before making investment decisions, which was slowing down economic growth. He said the bank’s predictions for foreign investment in Britain was now 20 per cent lower than they estimated in the month before the referendum. Speaking to Peston on Sunday, he said: “Since the referendum, what we’re seeing is that business investment has picked up, but it hasn’t picked up to any of the extent that one would have expected given how strong the world is, how easy financial conditions are, how high profitability is and how little spare capacity they have. Despite acknowledging the strength of economy, Mr Carney warned: “It should really be booming, but it’s just growing.

“I think we know why that’s the case, because they’re waiting to see the nature of the deal with the European Union. “It’s the most important investment destination and [businesses] need to know transition and end state, everybody knows this, the government knows it and is working on it, UK businesses know it and the Europeans know it.” Asked if the economy would take a hit if the UK left the EU without a Brexit deal, he said: “In the short term, without question, if we have materially less access (to the EU’s single market) than we have now, this economy is going to need to reorient and during that period of time it will weigh on growth.” He added that in the event of a bad Brexit deal, the bank would not be able to cut future interest rates because of that inflationary pressure.

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Uncertainty.

Most EU Firms Plan Retreat From UK Suppliers (R.)

Most European businesses plan to cut back orders from British suppliers because of the slow progress of Brexit talks, a survey of company managers showed on Monday. 63% of non-British European companies expect to move some of their supply chain out of Britain, up from 44 percent in May, the Chartered Institute of Procurement and Supply (CIPS) said. With only 17 months left until Britain is due to exit the EU, the lack of clear progress in the negotiations has raised fears among executives of an abrupt departure with no transition. Monday’s survey raised the prospect of disruption for British manufacturers with EU clients. On Sunday, the Confederation of British Industry said almost two in three British firms will have implemented Brexit contingency plans by March if Britain and the rest of the EU have not struck a transitional deal by then.

Britain and the EU said last week they were ready to speed up talks, but CIPS said it was already too late for scores of businesses that look likely to be dropped by European customers. “British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together,” said Gerry Walsh, CIPS’ group CEO. “The lack of clarity coming from both sides is already shaping the British economy of the future – and it does not fill businesses with confidence.” British finance minister Philip Hammond said last month that a transition deal needed to be struck by early 2018. CIPS said a fifth of British businesses were struggling to secure contracts that extend beyond March 2019, the date Britain is due to leave the EU.

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“Offenders can also theoretically be confined to a room in the Big Ben clock tower, although this power has not been used since 1880.”

UK Ministers ‘Could Be In Contempt Of Parliament Over Brexit Papers’ (G.)

Labour is to warn ministers on Monday that they risk being held in contempt of parliament if they do not immediately release dozens of papers outlining the economic impact of Brexit. The government conceded last week that it had to publish the 58 studies covering various parts of the economy after the move was supported in a Labour opposition motion that was passed unanimously on Wednesday. While normal opposition motions are advisory, Labour presented this one as a “humble address”, a rare and antiquated procedure which the Speaker, John Bercow, advised was usually seen as binding. The leader of the Commons, Andrea Leadsom, said on Thursday that the government accepted the motion as binding, and that “the information will be forthcoming”.

However, she gave no timescale – the government has previously said it will respond to opposition motions within 12 weeks – and indicated some elements of the papers would need to be redacted to avoid “disclosing information that could harm the national interest”. The Labour motion called for the papers to be released immediately to the Brexit select committee, which has a majority of Conservative MPs, and which would then decide what elements should not be published more widely. The shadow Brexit secretary, Keir Starmer, has warned that Labour will refer the matter to Bercow over possible contempt if the studies are not passed to the committee before parliament’s one-week recess begins on Tuesday.

The parliamentary rulebook, known as Erskine May after its 19th-century author, says actions that obstruct or impede the Commons “in the performance of its functions, or are offences against its authority or dignity, such as disobedience to its legitimate commands” be can viewed as contempt. MPs held in contempt can be asked to apologise, suspended or even expelled by their fellows. Offenders can also theoretically be confined to a room in the Big Ben clock tower, although this power has not been used since 1880.

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Yeah, yeah, but: “core shadow banking activity,” including entrusted loans, trust loans, and undiscounted bankers’ acceptances, continues to expand…”

China’s Shadow Banking Halts as Regulation Bites – Moody’s (BBG)

China’s shadow banking sector, estimated by some analysts to be worth 122.8 trillion yuan ($18.5 trillion), stopped growing in the first half of the year as issuance of wealth management products declined, according to Moody’s Investors Service. For the first time since 2012, China’s gross domestic product grew faster than shadow banking assets in the six-month period, Moody’s said in a statement Monday. Following last month’s Communist Party Congress, further regulation will continue to rein in shadow banking and address some of the key systemic imbalances, Moody’s said. While Moody’s assessment offers some evidence that China’s crackdown on shadow financing is starting to bite, authorities continue to sound the alarm on high debt levels.

In an article on the People’s Bank of China’s website late Saturday, Governor Zhou Xiaochuan pointed to latent risks that are “hidden, complex, sudden, contagious and hazardous.” Government, household and corporate debt adds up to about 260 percent of the economy, according to Bloomberg Intelligence. Moody’s said that shadow banking assets accounted for 83 percent of GDP on June 30, down from a peak of 87 percent in 2016. Michael Taylor, the company’s chief credit officer for the Asia-Pacific region, said “core shadow banking activity,” including entrusted loans, trust loans, and undiscounted bankers’ acceptances, continues to expand even as regulation has had an effect.

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The pressure on the judge(s) must be deafening.

Catalonia’s Puigdemont Conditionally Released By Belgian Judge (G.)

A Belgian judge has released the ousted Catalan leader, Carles Puigdemont, and four of his ministers under certain conditions after a hearing lasting more than 10 hours. Puigdemont, who faces charges of misuse of public funds, disobedience and breach of trust relating to the secessionist campaign, turned himself in to Belgian police earlier on Sunday. The judge decided to grant them conditional release late in the evening pending a ruling by a court within the next 15 days whether to execute the European arrest warrant issued by Spain. The five have been told they must not leave the country and stay in a fixed address. “The request made by the Brussels’ Prosecutor’s Office for the provisional release of all persons sought has been granted by the investigative judge,” a statement from the federal prosecutor’s office said.

On Friday, the Spanish government had issued European arrest warrants against Puigdemont, Antoni Comín, Clara Ponsatí, Meritxell Serret and Lluís Puig for trying to “illegally change the organisation of the state through a secessionist process that ignores the constitution”. The formal charges, punishable by 30 years in prison, are rebellion, sedition, embezzlement of public funds and disobedience to authority, for their role in organising the referendum on Catalan independence on 1 October. The secessionist politicians fled to Belgium on Monday after the Spanish authorities removed Puigdemont and his cabinet from office for pushing ahead with a declaration of independence following an illegal referendum. From his self-imposed exile, Puigdemont claimed he would not receive a fair trial in Spain but promised to cooperate with the Belgian justice system.

[..] In a sign of the growing headache the crisis is causing the Belgian coalition government, the country’s deputy prime minister, Jan Jambon, from the Flemish nationalist party, questioned Spain’s handling of the crisis in Catalonia and suggested the EU should intervene. “When the police hit people, we can still ask questions,” he said. “When the Spanish state has locked two opinion leaders, I have questions. And now the Spanish government will act in the place of a democratically elected government? “Members of a government are put in prison. What have they done wrong? Simply apply the mandate they received from their constituents.”

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