Jul 132018
 
 July 13, 2018  Posted by at 9:20 am Finance Tagged with: , , , , , , , , , , , ,  


Vincent van Gogh View of Saintes-Maries-de-la-Mer 1888

 

Stock Markets See the US Winning the Trade War, Defying Propaganda (WS)
A Decade On, Pre-Crisis Mortgages Linger For Big Banks, Homeowners (R.)
Fed’s Escape From Crisis Holdings Could Hit Dead End (R.)
Social Security, Medicare To Add Another $50 Trillion to Our National Debt (JM)
China’s Record Trade Surplus With US Further Inflames Trade Tensions (R.)
Approval Of Brexit Negotiations Lowest On Record (Orb)
No Brand Of Brexit Can Command A Commons Majority (G.)
Donald Trump Is Right. NATO Is A Costly White Elephant (G.)
Trump Ready To Help Some NATO States Buy US Arms (R.)
Who Wants To Disrupt Strategic Balance In The Black Sea Region? (SCF)
Germany Puts Last Bailout Tranche to Greece on Hold (GR)
Europe’s Remarkable Ability To Remain In Denial (Varoufakis)
US Judge Asked To Create Mental Health Fund For Migrant Children (R.)
Facebook Users Marked With “Treason” Label (ZH)

 

 

“Now they had a fig leaf – the threat of future tariffs – behind which to hide their long-planned offshoring strategies.”

Stock Markets See the US Winning the Trade War, Defying Propaganda (WS)

The trade war talk has been going on since the presidential campaign but markets just brushed it off and rallied. In 2018, the trade war verbiage moved to the foreground. But until June 14, the administration vacillated between thinking about tariffs and putting the trade war “on hold,” depending on who was doing the talking or tweeting. This vacillation ended on June 14 (Thursday) evening, when it was reported that Trump had approved to hit an initial list of $50 billion in goods (1,300 products) from China with tariffs of 25%. At the time, the administration was also preparing a second list of products, accounting for another $100 billion in imports from China.

On the evening of June 19 (Monday), Trump threatened to hit another $200 billion of imports from China with tariffs of 10%. And on Tuesday, the Shanghai stock market plunged. Markets were taking it seriously. Since then, Corporate America’s propaganda machine – the same that for the past two decades had extolled the unrivalled virtues of offshoring production to cheap countries – fired up the mainstream media, which launched into incessant, deafening, repetitive, and manipulative coverage of how these tariffs would hurt US jobs more than anything.

Two glorious examples are Harley-Davidson and GM, which had been laying off workers and shutting plants in the US for years as they were offshoring production to cheap countries. For example, in July 2017, Harley-Davidson announced layoffs in the US as it was building a factory in Thailand. GM has been laying off workers in the US since 2016, even as it opted to produce more models in Mexico. Now they had a fig leaf – the threat of future tariffs – behind which to hide their long-planned offshoring strategies.

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TBTF banks have no incentive to come clean.

A Decade On, Pre-Crisis Mortgages Linger For Big Banks, Homeowners (R.)

A decade on big U.S. banks are still running down and selling off crisis-era mortgages, a process executives point to as weighing on loan growth. Eager to see a turning point in loan books, analysts count these portfolios as one factor, along with home equity loan runoff and new mortgage demand, to watch for when deciphering the true loan growth picture as U.S. second-quarter bank earnings start on Friday. Wells Fargo and Bank of America executives have flagged portfolios from prior to the 2008-2009 crisis era where banks are no longer originating similar new products when they are asked to predict a turning point in consumer loans. “These are portfolios of a bygone era that were very, very painful for the banks,” said Gerard Cassidy at RBC Capital Markets.

“They are not plain vanilla portfolios, which means they are more costly to manage. It may just not be worth the headache.” Analysts have said higher loan growth is critical to driving bank’s stock prices, but they anticipate only a modest acceleration year over year, driven primarily by commercial and industrial loans, not residential. “Remember that there’s a portion of that book that, again, is pre-crisis,” Chief Executive Tim Sloan said about Wells Fargo’s mortgage book at a May conference. He added the bank continues to examine the older portfolio’s risk-return tradeoff and sells assets when the opportunity arises, factors “that could have some impact” on growth.

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Backpedalling.

Fed’s Escape From Crisis Holdings Could Hit Dead End (R.)

Not long ago the Federal Reserve expected to quietly shed nearly half of its $4.5-trillion portfolio by around 2022, leaving little trace of the extraordinary steps it took to face down the financial crisis. But an unexpected market kink could force the Fed to scrap the plan two or three years early and permanently leave it holding $1 trillion more than it wanted. The U.S. central bank is making adjustments on the fly and keeping its options open. “I don’t think that’s problematic in any way” to halt the process “somewhat earlier,” William Dudley, the former New York Fed president and key architect of the portfolio strategy, told reporters last month.

Yet if the world’s largest holder of U.S. bonds tossed out its play book and effectively took on a more accommodative stance, the result could be an across-the-board easing of market borrowing costs, the foreign-exchange value of the dollar, and of the growing strains on emerging markets. “The evidence that we have suggests that the ultimate size of the balance sheet will be bigger than what people expected,” said Matthew Luzzetti, senior economist at Deutsche Bank Securities in New York. All of this amounts to the final chapter in the Fed’s unprecedented decision over the last decade to buy some $3.5 trillion in mortgage and Treasury bonds in an effort to boost riskier investments, hiring and economic recovery from recession. In a nod to a stronger U.S. economy, the Fed since 2015 has raised interest rates well above zero and, since October of last year, begun shrinking its balance sheet to a more normal but yet-unspecified size.

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“As of this year, both programs are in negative cash flow, meaning Congress must provide additional cash to pay the promised benefits.”

Social Security, Medicare To Add Another $50 Trillion to Our National Debt (JM)

The official, on-the-books federal debt is currently about $21.2 trillion, according to the US National Debt Clock. $21.2T is the face amount of all outstanding Treasury paper, including so-called “internal” debt. This is about 105% of GDP and it’s only the federal government. If you add in state and local debt, that adds another $3.1 trillion to bring total government debt in the US to $24.3 trillion or more than 120% of GDP. Then there’s corporate debt, home mortgages, credit cards, student loans, and more. Add it all together and total debt is about 330% of GDP, according to the IIF data I cited in Debt Clock Ticking. We are in hock up to our ears. In calculating debt, however, we don’t factor in Social Security and Medicare. These aren’t yet debt because they have dedicated revenue streams: payroll taxes.

Most Medicare recipients also pay premiums. To date, these revenue sources have covered current expenditures and more, allowing the programs to build up reserves. But that’s about to change. As of this year, both programs are in negative cash flow, meaning Congress must provide additional cash to pay the promised benefits. It will get worse, too. The so-called “trust funds” are going to run dry sooner or later, and it may be sooner. This month’s annual trustee report estimated Social Security will run out of reserves in 2034, and the hospitalization part of Medicare will go dry in 2026. Just for the record, those “trust funds” don’t exist except as an accounting fiction. It is like you saving $100,000 for your child’s education and then borrowing all the money from your child’s education fund.

You can pretend that you have set aside $100,000 for your child’s future education, but when it comes time to make those payments, you’ll have to pull it out of current income or liquidate other assets. The US government has borrowed (or used or whatever euphemism you want to apply) all the money in those trust funds. So, talking about running out of reserves in 2034 or 2026 is rather meaningless. We’ve already run out of reserves. Any time a politician talks about putting a “lock box” around Social Security or Medicare trust funds, he or she is either staggeringly ignorant or lying.

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Stockpiling ahead of the crash?!

China’s Record Trade Surplus With US Further Inflames Trade Tensions (R.)

China’s trade surplus with the United States swelled to a record in June as its overall exports remained solid, a result that could further inflame a bitter trade dispute with Washington. The data came after the administration of U.S. President Donald Trump raised the stakes in its trade row with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items. China’s trade surplus with the United States, which is at the center of the tariff tussle, widened to a record monthly high of $28.97 billion, up from $24.58 billion in May, according to Reuters calculations based on official data going back to 2008.

Trump, who has demanded Beijing cut the trade surplus, could use the latest result to further ratchet up pressure on China after both sides last week imposed tit-for-tat tariffs on $34 billion of each other’s goods. Washington has warned it may ultimately impose tariffs on more than $500 billion worth of Chinese goods – nearly the total amount of U.S. imports from China last year. The dispute has jolted global financial markets, raising worries a full-scale trade war could derail the world economy. Chinese stocks fell into bear market territory and the yuan currency has skidded, though there have been signs in recent days its central bank is moving to slow the currency’s declines.

[..] China’s exports to the United States rose 13.6 percent in the first half of 2018 from a year earlier, while its imports from the U.S. rose 11.8 percent in the same period. Separate data showed Chinese shipments to U.S. ports rose more than expected in June, suggesting some retailers moved up orders to insulate themselves from the intensifying trade war that threatens to send up costs on a growing number of consumer products. For January-June China’s trade surplus with the United States rose to $133.76 billion, compared with about $117.51 billion in the same period last year.

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May will have to find something else.

Approval Of Brexit Negotiations Lowest On Record (Orb)

Approval of the Brexit negotiations has seen a significant fall in July – now the lowest on record. Last month 36% approved of the negotiations and it is now 29%. In June, 32% agreed that Theresa May would get the right deal for Britain in the Brexit negotiations – this has now fallen to 26% – the lowest again on record. These 2,027 interviews were carried out before the resignation of Brexit Secretary David Davis and Foreign Secretary Boris Johnson.

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Perhaps the biggest one of a million problems.

No Brand Of Brexit Can Command A Commons Majority (G.)

Theresa May’s new cabinet has now rallied behind her Chequers plan, set out fully in the government’s white paper on future UK-EU relations. However, far from settling the Brexit debate, recent events have given rise to another nightmare scenario that is only just beginning to take shape: that every conceivable Brexit outcome may now not command a parliamentary majority. The conventional wisdom in Westminster is that since the general election last year, there is no House of Commons majority for a hard Brexit. With a working majority of only 13, including the Democratic Unionists, it would take just seven Tory MPs to oppose it. But there are at least 20-30 pro-European Tories minded to do so.

Yet May’s softer Brexit blueprint has also significantly increased the prospect of Eurosceptic Conservative MPs voting against her EU deal when it is put to parliament later this year. In the febrile atmosphere at Westminster this week, there have been rumours that up to 70 Tories could oppose it – especially if, as seems likely, May makes further concessions in order to win the EU’s backing for a bespoke deal, instead of having to choose between a Canada or Norway-style agreement. Hints in the white paper about a preferential system for EU migrants, despite May’s rhetoric about ending free movement of labour, will fuel the Tory revolt.

May’s embrace for a softer Brexit has therefore changed the Commons arithmetic – and the political calculations that come with it. It is now Labour MPs, rather than Tory ones, who may prove critical. In recognition of this, May has been reaching out to Labour MPs in the hope that soft Brexit supporters vote for her deal, neutralising the impact of the Eurosceptics voting against it. In an unusual move, David Lidington, the Cabinet Office minister and May’s de facto deputy, briefed Labour (as well as Liberal Democrat and SNP) MPs on the Chequers plan. But Labour won’t want to save May. Their leader, Jeremy Corbyn, will almost certainly whip Labour MPs to oppose May’s deal, in the hope that the ensuing chaos will result in an election.

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What I said a few days ago.

Donald Trump Is Right. NATO Is A Costly White Elephant (G.)

Nato was founded in 1949 in response to Stalin’s blockade of Berlin. It was meant to “keep the Soviet Union out, the Americans in, and the Germans down”. Since then, it has welcomed the American nuclear shield, at vast cost to America. Otherwise, its only military achievements have been the breakup of Yugoslavia and the loss of a squalid 17-year war in Afghanistan. Neither has anything to do with the North Atlantic. Nothing better symbolised this than Theresa May’s bizarre gift to Trump this week of 450 British troops for Kabul. Nato was about deterring an attack on Europe from Russia. In 1945, the west agreed the Potsdam settlement, accepting the Soviets’ “sphere of influence” over eastern Europe.

Thus when Russia invaded Hungary in 1956 and Czechoslovakia in 1968, there was no question of Nato, or Europe, retaliating. The iron curtain was iron. Come 1989 and the collapse of Potsdam Europe, Nato did not approach a broken Russia to agree some new settlement. It did the opposite. To protests from Russia’s weakened leader, Boris Yeltsin, it gathered former Warsaw Pact states under its wing and advanced its border east towards Russia. It embraced Poland, Czechoslovakia and Hungary, then the Baltic states, Romania and Bulgaria. It was like Khrushchev stationing missiles in Cuba. Only Germany counselled caution.

Nato’s provocation was so blatant as to be an open invitation to any new populist leader in Moscow to exploit Russia’s bruised patriotism: hence Vladimir Putin. He and his kleptocratic cronies are virtually a Nato creation. But the fact that America was party to the provocation does not invalidate Trump’s question. What is Nato’s policy beyond needling Russia and feebly relying on the American shield?

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But in the end, it’s all about money. That’s why NATO still exists. Nothing to do with security.

Trump Ready To Help Some NATO States Buy US Arms (R.)

U.S. President Donald Trump said on Thursday he was ready to help smaller NATO countries to buy U.S. weapons as he pushed them to spend more on their own defense. Speaking after a NATO summit, at which he said nations had agreed on new spending pledges, Trump said some less wealthy members had asked during meetings in Brussels if he could help them buy U.S. arms equipment, but did not name the countries. Asked about pressures on countries with weaker finances, he said, “We have many wealthy countries with us today but we have some that aren’t so wealthy and they did ask me if they could buy the military equipment, and could I help them out, and we will help them out a little bit,” he told a news conference.

“We are not going to finance it for them but we will make sure that they are able to get payments and various other things so they can buy – because the United States makes by far the best military equipment in the world: the best jets, the best missiles, the best guns, the best everything.” Trump claimed a personal victory at the summit after telling European allies to increase spending or lose Washington’s support. The White House has been pushing a “Buy American” initiative which aims to help drum up billions of dollars more in arms business. The initiative has raised concerns in Europe, where some see increased weapons sales as a key goal of Trump’s repeated calls for NATO members to increase their military spending.

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Americans have no business there. Go home.

Who Wants To Disrupt Strategic Balance In The Black Sea Region? (SCF)

The US-led series of drills in and around Ukraine’s Black Sea coastline is part of NATO exercise Sea Breeze that kicked off on July 9 to last until July 21. The training event involves an international armada representing 19 countries, including such non-NATO states as Ukraine, India, Georgia, the United Arab Emirates and Moldova. All in all, 29 warships, 1 submarine, and 25 aircraft are involved in the exercise held in Odessa and Mykolayiv and the northwestern Black Sea region. The Black Sea regional security is actually an issue paid little attention to. It’s not addressed by an international forum. NATO official documents adopt an openly provocative language to challenge Russia.

The North Atlantic Alliance always emphasizes the Black Sea’s role as a critical intersection. The US-led NATO activities have been intensifying since 2014 to turn the region into another hotbed along with the South China Sea and the Baltic. Turkey, Bulgaria, and Romania, three of the six Black Sea countries, are NATO members. Ukraine and Georgia are the bloc’s close partners aspiring for membership. The alliance has a significant military presence in Romania, including a US Aegis Ashore BMD system capable of firing long-range cruise missiles at Russia.

American military presence in Romania and Bulgaria is gradually growing. The US plans to deploy up to 2,500 troops at Novo Selo, Bulgaria. The facility is large enough to accommodate as many as 5,000 servicemen. Heavy tanks deployment is envisaged. The 1997 NATO-Russia Founding Act, where NATO pledged not to deploy “substantial forces” near Russia, seems to be forgotten. The US Navy’s policy is aimed at ramping up its presence there. The presence of American warships perilously close to Russia’s borders is undoubtedly provocative. For comparison, the Russian Navy does not stage regular maneuvers in the Caribbean Sea with such allies as Cuba, Nicaragua and Venezuela though nothing prevents it from doing so.

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First, Berlin forces Greece to keep the islands loaded with refugees. Then it forces them to load more taxes on the already destroyed economies there.

Germany Puts Last Bailout Tranche to Greece on Hold (GR)

Germany blocked a final 15 billion-euro ($17.5 billion) bailout payment to Greece after the government in Athens postponed a value-added tax (VAT) hike on a handful of islands that have been hit hard by the influx of migrants. For the tranche to be unblocked by early August, Finance Minister Euclid Tsakalotos pledged at yesterday’s Eurogroup that the measure to retain the 30 percent VAT discount on Lesvos, Chios, Samos, Leros and Kos will end in January 2019, and that the loss of 28 million euros of revenues will be offset from other sources.

The SYRIZA-led government postponed the VAT hike in the islands without consulting Greece’s creditors. Germany was eager to send a message to Athens that it will not tolerate any deviation from the program in the future. Commentators say that the Eurogroup decision shows how difficult it will be for the southern country to regain financial sovereignty even as it exits an eight-year bailout regime in August.

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Given how Greece gets treated, denial doesn’t sound like the correct term.

Europe’s Remarkable Ability To Remain In Denial (Varoufakis)

Europe’s establishment is luxuriating in two recent announcements that would have been momentous even if they were only partly accurate: the end of Greece’s debt crisis, and a Franco-German accord to redesign the eurozone. Unfortunately, both reports offer fresh proof of the European Union (EU) establishment’s remarkable talent for never missing an opportunity to miss an opportunity. The two announcements did not come in the same week by accident. The Greek debt implosion, back in 2010, was the ugly symptom of the eurozone’s design flaws, which is why it triggered a domino effect across the continent. Greece’s continuing insolvency reflects the deep disagreements within the Franco-German axis concerning eurozone redesign.

While three French presidents and the same German chancellor were failing to agree on the institutional changes that would render the eurozone sustainable, Greece was asked to bleed quietly. In 2015, the Greeks staged a rebellion, which Europe’s establishment ruthlessly crushed. Neither Brexit nor the EU’s steady delegitimation in the eyes of European voters managed to convince the establishment to change its ways. French President Emmanuel Macron’s election seemed the last hope for the new Berlin-Paris accord needed to prevent a suffocating Italy from triggering the next—this time lethal—domino effect.

Under Macron, new, hopeful ideas were proposed: a common budget for the eurozone; a new safe debt instrument and quasi-federal tax-raising capacities; a common unemployment insurance fund; common bank deposit insurance and a common pot from which to recapitalize failing banks. Moreover, a new investment fund would mobilize idle savings across Europe, without adding to the fiscal stress of member states. A year later, with Italy on a collision course with the EU, the Meseberg Summit between German Chancellor Angela Merkel and Macron delivered an agreement on eurozone reform. A few days later, the Eurogroup of eurozone finance ministers delivered its own “solution” to the Greek debt crisis.

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Sensible.

US Judge Asked To Create Mental Health Fund For Migrant Children (R.)

A civil rights group asked a federal judge on Thursday to order the U.S. government to provide mental health counseling for the around 2,000 immigrant children separated from their parents by officials at the U.S.-Mexican border. The request by the American Civil Liberties Union follows a chaotic week for U.S. immigration officials, who failed to meet a court-ordered deadline on Tuesday for reuniting children under the age of five. The government “must establish a fund to pay for professional mental health counseling, which will be used to treat children who are suffering from severe trauma as a result of their forcible separation from their parents,” said the ACLU in court papers filed late Thursday.

The group said the cost of the fund could be determined at a future date. The rights group brought the lawsuit that prompted U.S. Judge Dana Sabraw in San Diego last month to order the government to reunite families separated at the border. The family separation policy was instituted as part of President Donald Trump’s efforts to curtail illegal immigration. The administration ended the practice last month after widespread protests. The government, in the same court filing on Thursday, acknowledged that it had missed a Tuesday deadline for reuniting the youngest children with their parents, but said it had now complied with the judge’s order.

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How does anyone make this, too, about Russia? It’s your own people who use this for spying on you. Targeting ‘Russians’ is just a way to divert your attention from that.

Facebook Users Marked With “Treason” Label (ZH)

Beleaguered social media giant Facebook has removed “treason” from their database of the keywords assigned to users for advertising purposes, the company stated Wednesday after Danish state broadcaster DR reported its existence. Company spokesman Joe Osborne replied “National treason was an advertising interest because of its historical significance, but as it is an illegal act, we have removed it.” Facebook tags its more than 2 billion users with a wide variety of keywords depending on their interests – from shopping habits to political and religious views in order to sell more efficiently targeted advertising.

This makes Facebook a sublime sales channel for companies. Categorizing users in areas of interest means that companies with ads on Facebook can buy into an almost perfect audience. Eg. garden equipment for people with special interest in gardens, etc. But categorization also allows intelligence services in all countries to look at the population over the shoulder. DR suggests that the a government such as Russia could have used the “treason” tag to locate around 65,000 Facebook users who had been marked with the keyword. The article notes that they do not know “if the Russian authorities have used Facebook’s “treason” keyword” for nefarious purposes – adding “Only the Russian authorities know that.”

Read more …

Jul 102018
 
 July 10, 2018  Posted by at 12:31 pm Finance Tagged with: , , , , , , , ,  


Herri met de Bles Landscape with Saint Christopher 1535 – 1545

 

It is a strange world where in some parts of the globe children are left to drown when the rubber dinghies they are put in to escape warfare and poverty in order to reach a place where they are expected to be able to grow up in peace and safety and have an education and a future, fail to carry them there, while in other parts they are put in cages and camps, torn away from their families, simply for looking for a better life and future, and at the same time other children just like them are rescued by heroes bigger than life from all over the planet, from a cave they are trapped in, in a no holds or costs barred operation.

What is the difference between these children that could ever justify such divergent treatments? They themselves surely would never be able to answer such a question. But that is all the more reason to ask them. And if they don’t understand, how can we? And if we don’t understand, why is it happening? Why do we allow it to happen? In Thailand, mankind shows it very much possesses humanity. In the Mediterranean and along the US border, it shows that it has none. The two can’t both be true at the same time.

What now? It’s not difficult. From Arab Weekly, writing about the EU’s request to Egypt to set up ‘Regional Disembarkation Centres’ in the country:

Instead of asking economically struggling countries to act as refugee hosts, European leaders need to solve the problems that cause these refugees to leave their countries in the first place, particularly the unrest that has engulfed many countries, Egyptian specialists said.

“The solution to the problem will be to resettle these refugees in their countries,” said Youssef al-Metany, a refugee lawyer at local NGO Egyptian Network for International Law. “This can only happen when the conflicts raging in these countries are settled.”

See? We all know the answer. What we need is the same courage and selflessness that the cave divers in Thailand have demonstrated over the past week. Yes, one died, bless his soul, but he knew there are more important things than one’s own life. One of them is children. Another is honor. And yet another is humanity. Let’s make it happen. Let’s save them all.

Hooyah!

 

 

Jul 102018
 
 July 10, 2018  Posted by at 9:04 am Finance Tagged with: , , , , , , , , , , , ,  


John Swope Trees in fog (Chile) 1939

 

Leveraged-Loan Risks Are Piling Up (WS)
UK House Prices Should Be Frozen For Five Years – Think Tank (Ind.)
24 Hours of Brexit Mayhem (Ind.)
Britain Has Gone To Huge Trouble To Humiliate Itself (Fintan O’Toole)
Novichok In Wiltshire Death ‘Highly Likely’ From Batch Used On Skripals (G.)
Nissan Says Emissions And Fuel Economy Tests Were Falsified (R.)
Trump Slams Pfizer After July 1 Drug Price Hikes (R.)
Judge Rejects Trump Request For Long-Term Detention Of Immigrant Children (R.)
Egypt Rejects Europe’s Intent To Set Up ‘Regional Disembarkation Centres’ (AW)
If You Love Greece, Help Us Get Rid Of Alexis Tsipras And His Zombie Party (G.)
When Collapse Goes Kinetic (Kunstler)
As Trial Opens, Man Dying Of Cancer Blames Monsanto’s Roundup (AFP)

 

 

Not learned a single thing in the past 10 years.

Leveraged-Loan Risks Are Piling Up (WS)

US junk-bond issuance in June plunged 31% from a year ago to just $14.5 billion, the lowest of any June in five years, according to LCD of S&P Global Market Intelligence. During the first half of the year, junk bond issuance dropped 23% from a year ago to $110.6 billion. Is investor appetite for risky debt drying up? Have investors given up chasing yield? On the contrary! They’re chasing harder than before, but they’re chasing elsewhere in the junk-rated credit spectrum: leveraged loans. Leveraged loans are another way by which junk-rated companies can raise money. These loans are arranged by banks and sold either as loans or as Collateralized Loan Obligation (CLOs) to other investors, such as pension funds or loan funds.

They’re a $1 trillion market and trade like securities. But the SEC, which regulates securities, considers them loans and doesn’t regulate them. No one regulates them. In the first half, companies issued $274 billion of non-amortizing leveraged loans, and $97 billion in revolving and amortizing leveraged loans, according to LCD, for a total of $371 billion, on par with the record set in the first half last year. This is well over triple the amount of junk bonds issued in same period ($110 billion). Many of these loans have floating interest rates, typically pegged to the dollar-Libor. And in an investment environment where the Fed has been trying to push up interest rates, Libor has surged, and floating-rate loans, whose interest payments increase as Libor ratchets higher, are very appealing to investors – despite the additional risks these higher interest payments pose for the companies that are already struggling with negative cash flows.

[..] Leveraged loans come with covenants that are supposed to protect investors during the term of the loan and in case of default. With strong covenants and good collateral, leveraged loans tend to be less risky than junk bonds issued by the same company. Alas, investors have the hots for this debt, and companies are taking advantage of it by weakening covenants, giving investors fewer protections and the company more leeway – such as paying interest with more debt rather than cash if it runs out of cash (payment-in-kind or PIK); normally, not being able to pay interest would constitute a default, but not with these “covenant lite” or “cov-lite” loans. The boom in cov-lite has started years ago and has surged to massive record proportions. When these loans default, investors are exposed to much greater losses.

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Interesting idea. Decades too late though.

UK House Prices Should Be Frozen For Five Years – Think Tank (Ind.)

UK house prices should be frozen for five years to help prevent another financial crisis, the think tank IPPR has said. The group has urged the Bank of England to freeze property prices under a separate new inflation target and said this could lead to house prices falling by around 10 per cent in real terms as other prices and wages continue to rise, making homes more affordable. Under the IPPR’s proposals, house prices would be allowed to increase “only after expectations of constantly rising house prices have been ‘reset’”. The think tank also said prices would be allowed to grow “no faster than the general consumer price inflation target of 2 per cent, meaning no further growth in the real value of people’s homes”.

The IPPR said its recommendations were part of a wider plan to “rebalance the UK economy away from finance” so as to avoid another financial crisis. According to the IPPR, the financial sector’s “dominance” since the 1980s has contributed to a strong pound, which has hurt exporters, and has attracted surplus money from other countries, which has been channelled into loans for speculative investors, including mortgage lending. This speculation over house prices, the think tank said, has helped drive up prices and at the same time made the economy more vulnerable to a crisis, because it has reduced funds available for more productive investment, created regional inequalities with disproportionate growth in London and the South East, and “concentrated market power into the hands of a small number of large banks”.

[..] Grace Blakeley, IPPR research fellow, said: “Since the 1980s, the UK’s business model has rested on attracting capital from the rest of the world, which it has channelled into debt for UK consumers. The 2008 crisis proved that this is unsustainable. “We need to move towards a more sustainable growth model, one built on production and investment rather than debt and speculation. To do this, we must break the cycle of ever-rising house prices driving property speculation, crowding out investment in the real economy.”

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A confidence vote looks inevitable.

24 Hours of Brexit Mayhem (Ind.)

Theresa May is clinging on to power following the dramatic resignation of Boris Johnson and a bruising 24 hours of conflict with Tory Brexiteers. Mr Johnson became the third minister to quit in the space of a day, accusing Ms May of pursuing a Brexit that would lock Britain into “the status of colony”. In a scathing letter, he said her plans for negotiating with Europe decided at Chequers last week equated to going into battle with “white flags fluttering”. But despite the resignations and the looming threat of a “vote of no confidence”, Ms May survived the day and finished it with a swipe at Mr Johnson, in which she appeared to question his motives for quitting.

After David Davis left his job as Brexit secretary just before midnight on Sunday, speculation grew as to whether there would be a slew of resignations, bringing down the government. He had been followed by fellow Brexit minister Steve Baker, but it was not until 3pm on Monday, when it emerged that Mr Johnson was walking, that Ms May looked at her most precarious. It was claimed that Downing Street leaked news of his resignation before he could write his letter, which the prime minister’ aides guessed would be wounding. When it came it said: “Brexit should be about opportunity and hope. It should be a chance to do things differently, to be more nimble and dynamic, and to maximise the particular advantages of the UK as an open, outward looking global economy. “The dream is dying, suffocated by needles doubt.”

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“Instead of the Star Trek vision of boldly going where no imperial nostalgic society had gone before, this Brexit would not have enough thrust to get the UK out of the gravitational pull of the European Union”

Britain Has Gone To Huge Trouble To Humiliate Itself (Fintan O’Toole)

The best headline about British prime minister Theresa May’s short-lived triumph over the hard Brexiteers last Friday was undoubtedly the one on Pádraig Collins’s report in the Guardian: “Possum rescued after getting head stuck in Nutella jar”. Admittedly, Collins was actually reporting, not from Chequers, but from Brisbane, Australia. Yet the accompanying photograph was the perfect image of what May is trying to do. It showed the furry creature all curled up and immobilised with its head completely encased in a glass jar streaked with visible residues of sticky brown stuff. As a spokesman for the Australian RSPCA explained, the dumb animal “managed to get his head in the jar, but obviously couldn’t get it out”.

The rescuer put “towels around the possum so she could get him out of the jar without getting scratched by his claws”. The story saves me the trouble of thinking up a metaphor. The Brexiteers have their heads stuck in a jar of sticky brown stuff that seemed so sweet and enticing. May’s compromise deal and the White Paper she is still expected to publish this week are the towels wrapped round the Brexiteers’ claws so that their heads can be pulled out of the jar without her premiership getting scratched to death.

The only problem is that David Davis and Boris Johnson, having been successfully extracted, decided to bare their claws again. As any possum or two-year-old child will tell you, sticking your head inside a glass jar is quite a thrill. You get to see the world through a distorting lens that creates a comforting distance between you and reality. You can’t hear unwanted voices raising awkward questions. Brexit has so far been conducted through a glass darkly. It has been seen through glorious fantasies of imperial revival and layers of self-pity about imaginary oppression. What May has been attempting, very late in the day, is to force her more deluded colleagues to get their heads out of the jar and look directly at Brexit.

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The story is the two have been exposed to high dose of novichok. That is not possible; they would have died in instants.

Novichok In Wiltshire Death ‘Highly Likely’ From Batch Used On Skripals (G.)

Britain’s counter-terrorism chief has said it is highly likely the novichok that killed Dawn Sturgess in Wiltshire came from the same batch used four months earlier to attack a former Russian spy and his daughter at their Salisbury home. The Metropolitan police assistant commissioner Neil Basu also said the substance that led to Sturgess and her partner Charlie Rowley falling ill on Saturday was in a vessel or container when the couple came across it. Police have opened a murder investigation after Sturgess died in hospital on Sunday at 8.26pm. Basu said: “It is both shocking and utterly appalling that a British citizen has died having being exposed to a Novichok nerve agent.

“But make no mistake, we’re determined to find out how Dawn and her partner, Charlie Rowley, came into contact with such a deadly substance; and we will do everything we possibly can to bring those responsible to justice.” Basu said Sturgess and Rowley got a high dose of novichok after handling a container containing the nerve agent. It was most likely that the container police are hunting for was linked to the attack four months earlier on the Skripals. [..] “In the four months since the Skripals and Nick Bailey were poisoned, no other people besides Dawn and Charlie have presented with symptoms. Their reaction is so severe it resulted in Dawn’s death and Charlie being critically ill. This means they must have got a high dose. Our hypothesis is they must have handled the container we are now seeking.”

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“The carmaker blamed staffing shortages for the scandal..”

Nissan Says Emissions And Fuel Economy Tests Were Falsified (R.)

Nissan has said it has found evidence of misconduct relating to exhaust emissions and fuel economy measurements for 19 models sold in Japan. The Japanese carmaker said on Monday it had discovered the testing environments for emissions and fuel economy in final vehicle inspections at most of its factories in Japan were not in line with requirements, and inspection reports were based on altered measurements. “A full and comprehensive investigation of the facts … including the causes and background of the misconduct, is under way,” Nissan said. The problems were found during voluntary compliance checks following an improper vehicle inspection scandal last year.

In October, a recall of 1.2m vehicles was triggered after Nissan said uncertified inspectors had signed off on final checks for cars sold in Japan. The carmaker blamed staffing shortages for the scandal, which caused annual operating profit to slide. Nissan said the latest misconduct did not compromise the safety of the affected models, and mileage readings were in line with levels presented in product catalogues. It was in the process of compiling data for the GT-R sports car to confirm it satisfied safety standards. The carmaker said it would take appropriate action to prevent similar problems in future.

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Time to keep promises.

Trump Slams Pfizer After July 1 Drug Price Hikes (R.)

U.S. President Donald Trump on Monday took aim at Pfizer Inc and other U.S. drugmakers after they raised prices on some of their medicines on July 1, saying his administration would act in response. “Pfizer & others should be ashamed that they have raised drug prices for no reason.” Trump wrote in a post on Twitter on Monday. “We will respond!” Health and Human Services Secretary Alex Azar followed up with his own tweet saying that drugmakers who have raised prices have created a tipping point in U.S. drug pricing policy. “Change is coming to drug pricing, whether painful or not for pharmaceutical companies,” Azar wrote. Neither Trump nor Azar detailed what policy changes would be implemented to decrease prices.

Trump had said in May that some drug companies would soon announce “voluntary, massive” cuts in prices, but none have materialized yet. During his presidential campaign, he promised lower U.S. drug costs. Pfizer raised list prices on around 40 medicines earlier this month. Those include Viagra, cholesterol drug Lipitor and arthritis treatment Xeljanz, according to Wells Fargo. List prices do not include rebates and discounts drugmakers may offer. “The list price remains unchanged for the majority of our medicines. Our portfolio includes more than 400 medicines and vaccines. We are modifying prices for approximately 10 percent of these, including some instances where we’re decreasing the price,” Pfizer spokeswoman Sally Beatty told Reuters.

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Enough of this already. Stop it.

Judge Rejects Trump Request For Long-Term Detention Of Immigrant Children (R.)

A U.S. federal judge on Monday rejected the Trump administration’s request to allow long-term detention of illegal immigrant children, a legal setback for President Donald Trump’s push to detain immigrant families taken into custody at the U.S.-Mexico border. Los Angeles U.S. District Court Judge Dolly Gee dismissed as “dubious” and “unconvincing” the U.S. Justice Department’s proposal to modify a 1997 settlement known as the Flores Agreement, which says that children cannot be held in detention for long periods. The government made its request in June after public outcry over its policy of separating children from parents who entered the United States illegally.

A judge in a different case in San Diego ordered the government last month to reunite the families it had separated. The government asserted in its Flores filing that the San Diego ruling would necessitate longer-term detention of children, since that would be the only way to both reunite them with their parents and keep the parents incarcerated during their immigration proceedings. Gee rejected that argument. “Defendants advance a tortured interpretation of the Flores Agreement in an attempt to show that the … injunction permits them to suspend the Flores release and licensure provisions,” she wrote.

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“The solution to the problem will be to resettle these refugees in their countries..” “This can only happen when the conflicts raging in these countries are settled.”

Egypt Rejects Europe’s Intent To Set Up ‘Regional Disembarkation Centres’ (AW)

Egypt’s opposition to establishing camps for screening migrants heading to Europe has made the European Union’s “regional disembarkation centres” proposal seem even more implausible. Cairo’s stand has underscored the deep worries in the Egyptian administration about the country’s increasing refugee responsibilities, analysts said. “This is a burden Egypt shoulders alone, without any support from the international community,” said MP Ghada Agamy, a member of the Egyptian parliament’s Foreign Relations Committee.

Egypt said it would not be able to accommodate “regional disembarkation centres” for migrants trying to cross the Mediterranean to Europe just hours after European leaders reached a controversial migration deal that included refugee centres in North Africa and “controlled centres” in European countries. Egypt, Tunisia, Morocco and Algeria have rejected the idea of regional disembarkation centres. The Egyptian government said establishing refugee camps would violate the Egyptian constitution. Refugees, Egyptian parliament Speaker Ali Abdel A’al said, can live wherever they want in Egypt. “We do not establish camps here,” he said. Egyptian officials are concerned about Cairo’s ability to shoulder refugee-related burdens, analysts said, particularly at a time of economic transition.

[..] Instead of asking economically struggling countries to act as refugee hosts, European leaders need to solve the problems that cause these refugees to leave their countries in the first place, particularly the unrest that has engulfed many countries, Egyptian specialists said. “The solution to the problem will be to resettle these refugees in their countries,” said Youssef al-Metany, a refugee lawyer at local NGO Egyptian Network for International Law. “This can only happen when the conflicts raging in these countries are settled.”

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Zoe Konstantopoulou is the former president of the Hellenic parliament.

If You Love Greece, Help Us Get Rid Of Alexis Tsipras And His Zombie Party (G.)

Last week was the third anniversary of the 2015 referendum, in which the Greek people voted no to more austerity, and no to the violation of democracy by the creditors. The week before Alexis Tsipras, the prime minister who betrayed the brave no of the Greek people, visited London to present his capitulation to the troika of the European commission, the International Monetary Fund and the European Central Bank as an achievement.

Imagine how the British people would view a prime minister elected to end privatisation, and who instead privatised almost every piece of public property; who was elected to serve peace, and who instead facilitated military action against targets in Syria and agreed to sell weapons to countries accused of committing international crimes; who was elected to protect people’s homes, and who stood by while banks seized them, leaving people homeless; who was elected to serve democracy and the independence of his country, and who instead turned it over to the EU, the IMF and the ECB. This is what Tsipras did to the Greek people.

I was a Syriza MP and president of the Greek parliament during the seven months of the first Syriza government. When Tsipras signed the toxic third memorandum in 2015, I fought hard to protect our parliamentary procedures that he and the troika violated. In spite of continuous pressure, I refused to bend our democratic rules and accept more illegal debt for our people. Together with dozens of other Syriza MPs, I voted against the monstrous agreement. Tsipras then dissolved parliament prematurely to get rid of me and the dissenting MPs.

Three years on, his capitulation to the troika has proved the disaster many of us predicted. People’s lives have become unbearable. Youth unemployment has become the norm and an estimated 8% of the population has left in search of work. The minimum salary doesn’t pay the bills, and hundreds of thousands of families go without electricity for extended periods of time. This tragedy began in 2010, but Tsipras’s so-called left government has done everything to prove that it can implement austerity better than its predecessors. It even brags about exceeding the troika’s cruel targets in cuts and taxes.

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“..the landscape as demolition derby..”

When Collapse Goes Kinetic (Kunstler)

I suppose many who think about the prospect of economic collapse imagine something like a Death Star implosion that simply obliterates the normal doings of daily life overnight, leaving everybody in a short, nasty, brutish, Hobbesian free-for-all that dumps the survivors in a replay of the Stone Age — without the consolation of golden ages yet to come that we had the first time around. The collapse of our techno-industrial set-up has actually been going on for some time, insidiously and corrosively, without shattering the scaffolds of seeming normality, just stealthily undermining them. I’d date the onset of it to about 2005 when the world unknowingly crossed an invisible border into the terra incognito of peak oil, by which, of course, I mean oil that societies could no longer afford to pull out of the ground.

It’s one thing to have an abundance of really cheap energy, like oil was in 1955. But when the supply starts to get sketchy, and what’s left can only be obtained at an economic loss, the system goes quietly insane. In the event, popular beliefs and behavior have turned really strange. We do things that are patently self-destructive, rationalize them with doctrines and policies that don’t add up, and then garnish them with wishful fantasies that offer hypothetical happy endings to plot lines that do not really tend in a rosy direction. The techno-narcissistic nonsense reverberating through the echo-chambers of business, media, and government aims to furnish that nostrum called “hope” to a nation that simply won’t admit darker outcomes to the terrible limits facing humanity.

Thus, we have the Tesla saga of electric motoring to save the day for our vaunted way of life (i.e. the landscape as demolition derby), the absurd proposals to colonize distant, arid, frigid, and airless Mars as a cure for ruining this watery blue planet ideally suited for our life-form, and the inane “singularity” narratives that propose to replace grubby material human life with a crypto-gnostic data cloud of never-ending cosmic orgasm. The psychological desperation is obvious. Apparently, there are moments in history when flying up your own butt-hole is the most comforting available option.

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But how do you prove it?

As Trial Opens, Man Dying Of Cancer Blames Monsanto’s Roundup (AFP)

A lawyer for a California groundskeeper dying of cancer took aim at Monsanto Monday as a jury began hearing the lawsuit accusing the chemical giant of ignoring health risks of its top-selling weed killer Roundup. “For the past 40 years, Monsanto has known the primary ingredient in Roundup can produce tumors in lab animals,” attorney Brent Wisner told a California state court. A jury is hearing the case brought by Dewayne Johnson, a 46-year-old father of two. Diagnosed in 2014 with non-Hodgkin’s lymphoma, a cancer that affects white blood cells, Johnson used a Monsanto generic version of Roundup called “Ranger Pro” repeatedly in his job at a school in Benicia, California, after being promoted to groundskeeper in 2012.

In his opening statement, Wisner said Monsanto opted against warning consumers of the risks and that instead “they have fought science” by playing down the suspected link between the chemical herbicide and cancer. “Monsanto has gone out of its way to bully scientists and fight researchers,” he told the jury. The case in California Superior Court is the first trial in which Roundup is said to have caused cancer, a claim repeatedly denied by the chemical company. If Monsanto loses, the case could open the door to hundreds of additional lawsuits against the company recently acquired by German-based pharmaceutical and chemical group Bayer.

Johnson had little warning about the risks of Roundup, his lawyer said. “He was told you could drink it, it was completely non toxic,” Wisner said with his client sitting in the San Francisco courtroom. “You will hear testimony from him that he got drenched in it, repeatedly.” The lawyer said Johnson, who is between rounds of chemotherapy, “is actually on borrowed time, he is not supposed to be alive today.” A key to Johnson’s case will be convincing jurors that Monsanto’s pesticide — whose main ingredient is glyphosate — is responsible for the illness. Wisner contended glyphosate combined with an ingredient intended to help it spread over leaves in a cancer-causing “synergy.”

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Jun 272018
 
 June 27, 2018  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , , ,  


Édouard Vuillard In bed 1891

 

Judge Orders Families Reunited Within 30 Days (AP)
17 US States Sue Trump Administration Over Family Separation (Ind.)
Democrats See Major Upset As Socialist Beats Top-Ranking US Congressman (G.)
How Long Can The Federal Reserve Stave Off the Inevitable? — PCR
Market Drop Prompts Trump To Offer China A Trade War “Olive Branch” (ZH)
US Asset Prices Divorced From Economic Reality More Than Ever (GMM)
IMF Sounds The Alarm Over Junk Bonds (ZH)
France And Germany Will Block May’s Single Market Plan, Says Spain (G.)
Merkel Calls For Direct Deals Between Countries To Fix Migration Crisis (R.)
Misuse Of Opioids Is A ‘Global Epidemic’ -UN (G.)
One Football Pitch Of Forest Lost Every Second In 2017 (G.)
‘There Is No Oak Left’: Are Britain’s Trees Disappearing? (G.)
‘Green Gold’: Pakistan Plants Hundreds Of Millions Of Trees (AFP)

 

 

Reason. The mother and child reunion is only a motion away.

Judge Orders Families Reunited Within 30 Days (AP)

A judge in California has ordered U.S. border authorities to reunite separated families within 30 days. If the children are younger than 5, they must be reunified within 14 days of the order, issued Tuesday. U.S. District Judge Dana Sabraw in San Diego issued the order in a lawsuit by the American Civil Liberties Union. The lawsuit involves a 7-year-old girl who was separated from her Congolese mother and a 14-year-old boy who was separated from his Brazilian mother.

Sabraw also issued a nationwide injunction on future family separations, unless the parent is deemed unfit. More than 2,000 children have been separated from their parents in recent weeks and placed in government-contracted shelters. President Donald Trump last week issued an executive order to stop the separation of families and said parents and children will instead be detained together.

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The ruling above seems to cover this?

17 US States Sue Trump Administration Over Family Separation (Ind.)

Seventeen US states and Washington DC are suing Donald Trump’s administration over its family separation policy at the US border. The lawsuit was filed by 18 Democratic Attorneys General and attempts to force the administration to reunite the approximately 2,000 separated children with their families. California Attorney General Xavier Becerra said in a statement that the policy to detain children away from parents was a “heartless political manoeuvre”. Though Mr Trump signed an executive order last week declaring that families would no longer be separated upon illegal entry into the US, the lawsuit stated the executive order is “so vague and equivocal that it is unclear when or if any changes will actually be made”.

The order did not reverse or end the underlying “zero tolerance” policy announced by US Attorney General Jeff Sessions was not ended. Families can also now be indefinitely detained and the policy still makes seeking asylum in the US a crime. Per US immigration law, people wanting the protected status must enter the US before applying for it. It stated that “family unity” will be maintained “where appropriate and consistent with law and available resources”. “Child internment camps in America…the Trump Administration has hit a new low. President Trump’s indifference towards the human rights of the children and parents who have been ripped away from one another is chilling,” Mr Becerra said.

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The choice of headlines I’ve seen for this looks weird. Someone tweeted a list of corporations that donate to Crowley. Needed a dozen tweets to cover them. Ocasio beat the system. But watch out: the system has now woken up. They never expected to lose. The big guns will now step in. Next up: Cynthia Nixon vs Cuomo. If she can pull that off, we’re in business.

Democrats See Major Upset As Socialist Beats Top-Ranking US Congressman (G.)

Joe Crowley, a 10-term Democrat pegged as his party’s next leader in Congress, lost his party’s New York congressional primary to a 28-year-old socialist, in one of the biggest upsets in recent American political history. With 98% reporting, Alexandria Ocasio-Cortez had 57.5% and Crowley had 42.5%, in a majority minority district that included parts of Queens and the Bronx Ocasio-Cortez, a Puerto-Rican American and former Bernie Sanders volunteer, defeated Crowley in his re-election bid Tuesday night, after hitting the incumbent on his ties to Wall Street and accusing him of being out of touch with his increasingly diverse district.

Crowley, head of the Queens county Democratic party and the fourth-ranking Democrat in the House of Representatives, was considered to be Nancy Pelosi’s likely successor as House speaker if she stepped down. [..] Ocasio-Cortez ran a grassroots campaign and made a surprise visit to the Mexican border on the eve of the election to emphasize her call to abolish the Immigration and Customs Enforcement agency (ICE). In contrast, Crowley was unwilling to go that far, simply calling the agency “fascist”.

Crowley had expressed confidence about the race in private conversations and as one national Democratic strategist told the Guardian: “The Crowley team did not raise red flags or ask allies for help with his primary.” Prior to 2018, Crowley had not even faced a primary since 2004, years before his opponent was even eligible to vote. He had raised over $3m for his campaign, 10 times the amount his opponent had.

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Tariffs on US companies?

How Long Can The Federal Reserve Stave Off the Inevitable? — PCR

When are America’s global corporations and Wall Street going to sit down with President Trump and explain to him that his trade war is not with China but with them? The biggest chunk of America’s trade deficit with China is the offshored production of America’s global corporations. When the corporations bring the products that they produce in China to the US consumer market, the products are classified as imports from China. Six years ago when I was writing The Failure of Laissez Faire Capitalism, I concluded on the evidence that half of US imports from China consist of the offshored production of US corporations. Offshoring is a substantial benefit to US corporations because of much lower labor and compliance costs.

Profits, executive bonuses, and shareholders’ capital gains receive a large boost from offshoring. The costs of these benefits for a few fall on the many—the former American employees who formerly had a middle class income and expectations for their children. In my book, I cited evidence that during the first decade of the 21st century “the US lost 54,621 factories, and manufacturing employment fell by 5 million employees. Over the decade, the number of larger factories (those employing 1,000 or more employees) declined by 40 percent. US factories employing 500-1,000 workers declined by 44 percent; those employing between 250-500 workers declined by 37 percent, and those employing between 100-250 workers shrunk by 30 percent.

These losses are net of new start-ups. Not all the losses are due to offshoring. Some are the result of business failures” (p. 100). In other words, to put it in the most simple and clear terms, millions of Americans lost their middle class jobs not because China played unfairly, but because American corporations betrayed the American people and exported their jobs. “Making America great again” means dealing with these corporations, not with China. When Trump learns this, assuming anyone will tell him, will he back off China and take on the American global corporations?

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Mnuchin wants less agressive policies.

Market Drop Prompts Trump To Offer China A Trade War “Olive Branch” (ZH)

One day after the market tanked followed media reports that the Trump administration would pursue new initiatives to limit Chinese investments in US tech industries, on Tuesday the president suggested that he will ease off demands for such new restrictions, and will rely instead on a 1988 law being updated by Congress that authorizes the government to review foreign investments for national security problems. Speaking to reporters at the White House, Trump said that “we have the greatest technology in the world, people come and steal it. We have to protect that and that can be done through CFIUS,” or the Committee on Foreign Investment in the U.S., which traditionally has screened foreign investments to see whether they endanger national security.

Trump also said that the recent WSJ article reporting that the administration was planning two further initiatives, in addition to CFIUS, to prevent Beijing from obtaining advanced U.S. technology, “a bad leak…probably just made up.” Why is this stated policy important? Because according to the WSJ it would represent a potential “olive branch” for Trump in the escalating trade war with China, and a signal that the US is willing to break the tit-for-tat escalation: If Mr. Trump’s decision holds through June 30, when the new policies are scheduled to be announced, it would represent a significant backing away from threats the president has made against China and a possible olive branch to Beijing before the July 6 impositon of tariffs on $34 billion of Chinese goods.

Meanwhile, lawmakers who have worked on a CFIUS reform bill have also been arguing in administration meetings that additional investment restrictions weren’t necessary given changes being made to CFIUS. Separately, the report notes that relying mainly on CFIUS — if that is the final decision — would be a big victory for Treasury Secretary Steven Mnuchin, National Economic Council Director Larry Kudlow and others who have tried to tamp down the burgeoning trade battle with China.

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Obese tails.

US Asset Prices Divorced From Economic Reality More Than Ever (GMM)

You would never know it listening to the market cheerleaders but asset prices, both real and financial, are, once again, at extreme valuation levels relative to the trend economy. The valuation reality coupled with the prevailing, but false, “don’t worry” market narrative sets us up for another major financial crisis. A third major crisis in 20 years? These are only supposed to happen once in every 100 or 1,000 or 10,000 years, so say the rocket scientists. Blame it on fat obese tails. The chart below illustrates that household net worth, as measured by real and financial assets minus liabilities, which just hit a record high at around $102 trillion, is, once again, totally divorced from the economy.

Note that one of the reasons why the highest level U.S. policymakers missed the last financial crisis is because they were too focused on this indicator, which also hit a record high in Q3 2007. They failed, or chose not to see, the massive leverage as the root cause driving up assets prices. Their error was twofold: 1) not fully recognizing or believing the risk of asymmetric mark-to-market, where asset prices are variable, while liabilities remain fixed, and 2) not understanding the economy had morphed into a giant asset-driven feedback loop, where the wealth effect drives growth (both consumption and investment confidence), which drives asset prices, which drives the wealth effect. Wash, rinse, repeat.

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Well, how timely.

IMF Sounds The Alarm Over Junk Bonds (ZH)

Ever since the start of 2018, an odd divergence has emerged in credit markets, where Investment Grade bonds have seen their spreads leak progressively wider, hitting levels not seen in 2 years, while the bid for higher yielding, and much more risky, junk bond debt has been seemingly relentless, with high yield spreads near all time lows. To be sure, many reasons have been offered, with Bank of America suggesting that IG weakness is “due to supply pressures in an environment of reduced demand that began in March and extended through last week, plus the Italian situation, which is about systemic risks running through the global IG financial system.”

Meanwhile, it believes the strength in HY is mostly due to the lack of supply of higher yielding paper. Whatever the suggested reasons, however, the underlying causes are two: an environment of artificially low interest rates created by central banks, and unyielding, pardon the pun, investor euphoria. In other words: a multi-year credit boom. And while the Fed’s “macroprudential regulation team” appears to have zero problems with what is going on in the world of junk bonds, the IMF has sounded the alarm on the troubling developments in junk bond land in particular, and capital markets in general.

In its The Chart of the Week, the IMF Blog shows the impact of a bad credit boom – one which the fund defines as followed by slower economic growth or even a recession – on economic growth in the years that follow. But first, it ask a basic question: what makes for a bad boom? The IMF’s answer: it is fueled by excessive optimism among investors. When the economy is doing well and everybody seems to be making money, some investors assume that the good times will never end. They take on more risk than they can reasonably expect to handle.

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Really, guys, you should send her packing. The damage accelerates.

France And Germany Will Block May’s Single Market Plan, Says Spain (G.)

Theresa May’s plan to protect British industry by keeping the UK in a single market for goods without respecting the free movement of people after Brexit will be rejected by an “angry” France and Germany, despite some sympathy within the EU to Downing Street’s cause, Spain’s foreign minister has said. The new Spanish government would also block such a political fix, Josep Borrell told the Guardian, ahead of both a summit of leaders in Brussels and a summer tour by the prime minister of EU capitals during which May hopes to convince leaders of her economic case. Of those member states who might see value in a deal on single market access for goods without free movement, Borrell said: “They will not win the battle. They have not enough power. Germany will say no, France will say no, Spain will say no.”

The government has been rocked by a series of warnings from industry, from Airbus to BMW, that companies will move out of the UK unless preferential access to the single market can be secured in the negotiations. Ministers have openly squabbled over how seriously they should take the threats. The business secretary, Greg Clark, urged his cabinet colleagues to “listen with respect” and the health secretary, Jeremy Hunt, called Airbus’s warnings “completely inappropriate”. The prime minister is expected to publish a white paper on the UK’s vision of the future relationship, including a proposal for regulatory alignment on goods, for the benefit of UK industry and European-wide supply chains, shortly after a meeting of the cabinet at Chequers, the prime minister’s country retreat, on 6 July.

UBS survey of 600 companies spells out Brexit “dividend”:
– 35% of companies plan to reduce UK investment post-Brexit
– 41% plan to move a large amount of capacity out of UK
– 42% plan to shift capacity to euro zone

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Too late. No unity.

Merkel Calls For Direct Deals Between Countries To Fix Migration Crisis (R.)

German Chancellor Angela Merkel said she will seek direct deals with separate EU states on migration, conceding the bloc had so far failed to find a joint solution to the issue threatening her government. Sixteen EU leaders met for emergency talks in Brussels hoping to get a deal for the full summit of all 28 states on 28 to 29 June. Ms Merkel said the meeting produced “a lot of goodwill” to resolve differences, but was clear smaller agreements may produce better results. “There will be bilateral and trilateral agreements, how can we help each other, not always wait for all 28 members,” she said.

Since Mediterranean arrivals spiked in 2015, when more than a million refugees and migrants reached the bloc, EU leaders have been at odds over how to handle them. The feud has weakened their unity and undermined Europe’s Schengen free-travel area. Wealthy Germany is where the newly-arrived mostly end up and Merkel is under pressure to curb the numbers. Her coalition partner is pushing for firmer action that could break her government. The talks were “frank and open,” but “we don’t have any concrete consequences or conclusions,” Spanish Prime Minister Pedro Sanchez said. French President Emmanuel Macron offered his backing for Ms Merkel’s proposal , saying the solution should be “European” but it could just be several states together.

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But the profits!

Misuse Of Opioids Is A ‘Global Epidemic’ -UN (G.)

The misuse of pharmaceutical opioids is fast becoming a “global epidemic”, with the largest quantities being seized in African countries for the second year in a row, according to a UN report. While huge attention has been paid to the opioid crisis in the US – where the misuse of prescription drugs like fentanyl dominates – figures released by the United Nations Office on Drugs and Crime has revealed seizures in Africa of opioids now account for 87% of the global total. Unlike in the US, the seizures – concentrated in west, central and north Africa – have largely consisted of the drug tramadol, followed by codeine.

The figures were disclosed in the latest UN world drug report, which noted that opioids were the most harmful global drug trend, accounting for 76% of deaths where drug-use disorders were implicated. The report said that while fentanyl and its analogues remain a problem in North America, tramadol – used to treat moderate and moderate-to-severe pain – has become a growing concern in parts of Africa and Asia. The report added that the global seizure of pharmaceutical opioids in 2016 was 87 tonnes, roughly the same as the quantities of heroin impounded that year.

The figures on pharmaceutical opioids were rivalled by global cocaine manufacture, which the agency said had reached the highest level ever reported in 2016, with an estimated 1,410 tonnes produced. Most of the world’s cocaine comes from Colombia, but the report also showed Africa and Asia emerging as cocaine trafficking and consumption hubs. From 2016-17, global opium production also jumped by 65% to 10,500 tonnes, the highest estimate recorded by the agency since it started monitoring global opium production nearly 20 years ago.

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They convert greenhouse gases into oxygen.

One Football Pitch Of Forest Lost Every Second In 2017 (G.)

The world lost more than one football pitch of forest every second in 2017, according to new data from a global satellite survey, adding up to an area equivalent to the whole of Italy over the year. The scale of tree destruction, much of it done illegally, poses a grave threat to tackling both climate change and the massive global decline in wildlife. The loss in 2017 recorded by Global Forest Watch was 29.4m hectares, the second highest recorded since the monitoring began in 2001. Global tree cover losses have doubled since 2003, while deforestation in crucial tropical rainforest has doubled since 2008. A falling trend in Brazil has been reversed amid political instability and forest destruction has soared in Colombia.

In other key nations, the Democratic Republic of Congo’s vast forests suffered record losses. However, in Indonesia, deforestation dropped 60% in 2017, helped by fewer forest fires and government action. Forest losses are a huge contributor to the carbon emissions driving global warming, about the same as total emissions from the US, which is the world’s second biggest polluter. Deforestation destroys wildlife habitat and is a key reason for populations of wildlife having plunged by half in the last 40 years, starting a sixth mass extinction.

“The main reason tropical forests are disappearing is not a mystery – vast areas continue to be cleared for soy, beef, palm oil, timber, and other globally traded commodities,” said Frances Seymour at the World Resources Institute, which produces Global Forest Watch with its partners. “Much of this clearing is illegal and linked to corruption.” Just 2% of the funding for climate action goes towards forest and land protection, Seymour said, despite the protection of forests having the potential to provide a third of the global emissions cuts needed by 2030. “This is truly an urgent issue that should be getting more attention,” she said. “We are trying to put out a house fire with a teaspoon.”

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No, trees are not an industrial resource. They are so much more.

‘There Is No Oak Left’: Are Britain’s Trees Disappearing? (G.)

England is running out of oak. The last of the trees planted by the Victorians are now being harvested, and in the intervening century so few have been grown – and fewer still grown in the right conditions for making timber – that imports, mostly from the US and Europe, are the only answer. “We are now using the oaks our ancestors planted, and there has been no oak coming up to replace it,” says Mike Tustin, chartered forester at John Clegg and Co, the woodland arm of estate agents Strutt and Parker. “There is no oak left in England. There just is no more.” Earlier this month, the government appointed the first “tree champion”, who will spearhead its plans to grow 11 million new trees, and conserve existing forests and urban trees.

Sir William Worsley, currently chairman of the National Forest Company, has been given the task of overseeing trees in England and Wales, including England’s iconic national tree, and ensuring that trees are not felled unnecessarily. Worsley is a former chief of the Country Land and Business Association, which represents landowners and rural businesses. Trees were once fundamental to the British economy, from the days of Magna Carta, a large section of which concerned forestry rights, to the “Hearts of Oak” centuries of the empire-building Royal Navy, up to more recent times when millions of homes were needed, and the Forestry Commission was set up immediately after the First World War to grow the material to make them, while providing jobs for returning soldiers.

Today, forestry is a tiny business and only about 13% of the UK is covered in forest, a vast improvement on the 5% after the First World War, but far less than the European average of more than 30%.

Read more …

That’s the spirit.

‘Green Gold’: Pakistan Plants Hundreds Of Millions Of Trees (AFP)

The change is drastic: around the region of Heroshah, previously arid hills are now covered with forest as far as the horizon. In northwestern Pakistan, hundreds of millions of trees have been planted to fight deforestation. In 2015 and 2016 some 16,000 labourers planted more than 900,000 fast-growing eucalyptus trees at regular, geometric intervals in Heroshah – and the titanic task is just a fraction of the effort across the province of Khyber Pakhtunkhwa. “Before it was completely burnt land. Now they have green gold in their hands,” commented forest manager Pervaiz Manan as he displayed pictures of the site previously, when only sparse blades of tall grass interrupted the monotonous landscape.

The new trees will reinvigorate the area’s scenic beauty, act as a control against erosion, help mitigate climate change, decrease the chances of floods and increase the chances of precipitation, says Manan, who oversaw the revegetation of Heroshah. Residents also see them as an economic boost – which, officials hope, will deter them from cutting the new growth down to use as firewood in a region where electricity can be sparse. “Now our hills are useful, our fields became useful,” says driver Ajbir Shah. “It is a huge benefit for us.” Further north, in Khyber Pakhtunkhwa’s Swat, many of the high valleys were denuded by the Pakistani Taliban during their reign from 2006 to 2009.

Now they are covered in pine saplings. “You can’t walk without stepping on a seedling,” smiles Yusufa Khan, another forest department worker. The Heroshah and Swat plantations are part of the “Billion Tree Tsunami”, a provincial government programme that has seen a total of 300 million trees of 42 different species planted across Khyber Pakhtunkhwa.

Read more …

Jun 232018
 
 June 23, 2018  Posted by at 1:07 pm Finance Tagged with: , , , , , , , , , , , , , ,  


René Magritte Le Mal du Pays (Homesickness) 1940

 

The two most viral photographs of the ‘Trump Separation Scandal’ have now been debunked, or at the very least been proven to have been used ‘out of context’. This is a dangerous development, as are the reasons to use them the way they have been. Both pictures are of children who had not been separated from their mothers at all. But both were used to depict just that: a child being taken away from its mother.

What’s dangerous about this is, first, that those who spread the narrative regardless of the truth may next permit themselves to use images from entirely different locations or times to make their point. Yes, children have been taken from parents at US borders. And attention for that is warranted, very much so. But playing loose with the facts turns those facts into a mere narrative in which nobody can tell fact from fiction anymore.

First, a week ago already, I saw this on RT:

 

Debunked: Viral Image Of Crying, Caged Toddler ‘Detained By ICE’ Not What It Seems

A distressing image of a crying toddler locked in a barred cage after purportedly being detained by US immigration officials has gone viral – but despite online claims, it does not actually depict what has been alleged. The image, which shows a little boy crying in a cage as he looks out between its bars, was shared by activist journalist and undocumented migrant Jose Antonio Vargas as a comment on the Trump administration’s immigration crackdown on families.

In the same thread, Vargas admitted that he came across the photo on a friend’s timeline and was still looking for the original source. Nevertheless, the snap quickly went viral with Vargas’ post garnering more than 23,000 retweets and many others sharing the image across their own social media accounts.

 

Vargas explained that he shared the photo because when he was detained by ICE in McAllen, Texas in 2014, he encountered children who were locked up there. “It wasn’t okay then; it’s not okay now,” he wrote, adding that he’s been outraged about the incident for years.

It has since emerged that the picture was in fact not from a detention facility at all, and instead was taken at a protest against Trump’s immigration policies held on June 10 outside Dallas City Hall. The demonstration organized by Brown Berets de Cemanahuac was held to call out the policy of family separation and confining undocumented children.

Ergo: an activist journalist and undocumented immigrant makes it look as if a picture depicts something that in reality it did not. Note also that the article says he wanted to comment on the Trump immigration crackdown, because he has memories of the Obama immigration crackdown, when he saw children locked up. But then, hey, that’s social media, right? Anyone can say anything.

It’s different, though, when TIME Magazine uses such politics. And its editor-in-chief defends the use of the picture by saying it was the most visible symbol of something, even though he knew full well that the photo didn’t depict that something. That’s a mighty slippery scale. If they could have achieved the same effect with a picture of a overripe banana taken in the Pacific in the 1950’s, they probably would have used it. It’s the effect that counts, not the facts.

 

Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded

Two photos that went viral on social media depict scenes that are not directly related to the family separations taking place on the US-Mexico border since early May. The most prominent, of Honduran two-year-old Yanela Varela crying inconsolably, has become a global symbol of the separations – helping to attract more than $18 million in donations for a Texas non-profit called RAICES. The photograph was taken on June 12 in McAllen, Texas by John Moore, a Pulitzer Prize-winning photographer for Getty Images.

 

An online article about the picture, published by Time Magazine, initially reported the girl was taken from her mother, but was subsequently corrected to make clear that: “The girl was not carried away screaming by US Border Patrol agents; her mother picked her up and the two were taken away together.” Time Magazine nonetheless used the image of the sobbing child on its cover, next to an image of President Trump looming over her, with the caption “Welcome to America”. The head of Honduras’ Migrant Protection Office Lisa Medrano confirmed to AFP that the little girl, just two years old, “was not separated” from her family.

The child’s father also said as much. Denis Varela told the Washington Post that his wife Sandra Sanchez, 32, had not been separated from their daughter, and that both were being detained together in an immigration center in McAllen. Under fire for its cover – which was widely decried as misleading including by the White House – the magazine said it was standing by its decision. “The June 12 photograph of the 2-year-old Honduran girl became the most visible symbol of the ongoing immigration debate in America for a reason,” Time’s editor-in-chief Edward Felsenthal said.

 

Nassim Nicolas Taleb, of black swans and Fragility, has found the appropriate term for this ‘phenomenon’, and explains why it works so well that TIME apparently doesn’t care about the damage to its reputation caused by using photographs for such purposes.

 

Pedophrasty, Bigoteering, and Other Modern Scams

Pedophrasty Definition: Argument involving children to prop up a rationalization and make the opponent look like an asshole, as people are defenseless and suspend all skepticism in front of suffering children: nobody has the heart to question the authenticity or source of the reporting. Often done with the aid of pictures. [..] Pedophrasty is effective as it provides arguments to strike before the evidence is formed. People are moved into “doing something” Pedophrasts prey on our maternal (and paternal) instincts.

Pedophrasty has its most effects on actors, journalists and similar types who are intellectually insecure, deprived of critical judgment, and afraid of being classified as violators of some norm of political correctness. For instance, pedophrasty has been commonly used in the Syrian war by such propagandists as Julian Roepke continuously supplying the German public with pictures of dead children. Or the various lobbies hired by Saudi Barbaria (and allies), such as the Middle East Institute in Washington DC, to promote Sunni Islamist policies under the cover of “think tanks”.

The Nayirah testimony: a false congressional testimony by 15-year-old girl who provided only her first name, Nayirah (she turned out to be the daughter of the Kuwaiti ambassador to the U.S.) was a bit responsible into tipping the US into the war. Nayirah claimed that she had witnessed Iraqi soldiers take babies out of incubators a Kuwaiti hospital, and leave the babies to die. Nobody dared to question the veracity of her claims.

That’s what is dangerous: seeing a photo of a child in distress makes people halt their critical thinking. That’s also why such photos are used. They help build a narrative that doesn’t have to be factual to shock people. But at that point TIME becomes a fiction magazine; it’s where it leaves journalism behind.

The narrative also depends to a large extent on the singularity of Trump’s brutality compared to other presidents and nations’ leaders. It seeks to single him out as being extremely cruel. That narrative will fall to pieces going forward, and not only because the stories behind the photos have now been exposed.

First, here’s a look at what happened under earlier US presidents, in this case Obama, published by the ACLU in May 2018:

 

ACLU Obtains Documents Showing Widespread Abuse Of Child Immigrants In US Custody

Documents obtained by the American Civil Liberties Union featured in a new report released today show the pervasive abuse and neglect of unaccompanied immigrant children detained by U.S. Customs and Border Protection. The report was produced in conjunction with the International Human Rights Clinic at the University of Chicago Law School.

“These documents provide a glimpse into a federal immigration enforcement system marked by brutality and lawlessness,” said Mitra Ebadolahi, ACLU Border Litigation Project staff attorney. “All human beings deserve to be treated with dignity and respect regardless of their immigration status — and children, in particular, deserve special protection. The misconduct demonstrated in these records is breathtaking, as is the government’s complete failure to hold officials who abuse their power accountable. The abuse that takes place by government officials is reprehensible and un-American.”

The report is based on over 30,000 pages of documents dated between 2009 and 2014.

Then, what other ‘leaders’, who express their ‘disgust’ and worries at the Trump separation policies do at home. The Guardian yesterday:

 

Theresa May’s Brutal Family Separations Would Make Trump Blush

[..] as a British citizen I cannot, in good faith, reassure myself with that time-old mantra that we are somehow more civilised and less cruel or brutal than our cousins across the pond. Nor do I think that condemnation from our government can carry any real currency. Since long before anybody had heard the words “Make America great again”, splitting up families has been official policy in Theresa May’s Home Office – and it has been carried out with a brutality and on a scale that would make even President Trump blush.

The Children’s Commissioner has found that at least 15,000 children growing up in the UK live without a parent because the right of British citizens to reunite with a foreign spouse is limited by an unreasonable income threshold, an impossible complicated application system fraught with Home Office errors, and no legal aid for families to challenge incorrect decisions.

And the Sydney Morning Herald from December 2017:

 

Australia Is Wilfully Damaging The Health Of Children On Nauru To Make A Point – And It Is Appalling

When we visited Nauru as paediatric specialists three years ago, we were asked to see 30 of the 100 children being detained on the island. Among them was a six-year-old girl who had tried to kill herself and a two-year-old boy with such severe behaviour problems a doctor had prescribed anti-psychotic medicines. Their parents were in despair. They had fled persecution, trying to save their children from harm, but had ended up imprisoned on a remote island, without hope.

We left with the view that these were the most traumatised children we had ever consulted on, far worse than children we had seen in Australia, Africa, Asia or Europe. Three years later, 43 of those children remain on the island. Officially they are now free to move around, but reports of attacks by locals show Nauru is not safe and so they remain in the “Regional Processing Centre”.

In 2014, the Australian Human Rights Commission reported that children at this centre were deeply traumatised psychologically, and had even been abused. Their detention was harming them. When Australia introduced mandatory detention in 1992, it took 10 weeks on average to process an application for refugee status. Now it takes years. As the numbers of children in detention fall, the length of time in detention rises. This is deliberate: wilfully damaging children’s health to deter others from seeking asylum.

See, what TIME Magazine and others do, using pictures of crying children regardless of their actual context, may make for an initially appealing narrative, but in the end their approach only distracts from what really matters. Which is that children need to be with their mothers (and preferably fathers).

Just reporting the facts on this is not only enough, it’s the only way to report on it. Once you start making up stuff, you’re done, and the truth is done.

US immigration laws are clearly not working; so change them. ICE is a terrible organization that has attracted far too many sociopaths. Close it down. Child abuse as a tool to instill fear has been an international political tool for a very long time. Those are the things that should be making headlines. Turning this into yet another anti-Trump narrative, using crying children as shortcuts to people’s emotions, doesn’t work, or not for long.

This is not about Trump. Trying to make it about him is not going to help those children. And that’s what you want, right? Right?

 

 

Jun 232018
 


Henri Matisse The goldfish 1912

 

Greece Swaps Bailout Hell For Eternal Purgatory (R.)
Euro Is Here To Stay: German Finance Minister (R.)
Can You Think of Any Other Ways to Spend $716 Billion? (Taibbi)
Ike Was Right! (Bill Bonner)
Irish House Prices Sky-High Due To Finance Not Scarcity (Pettifor)
Trump Threatens 20% Tariff On European Union Cars (R.)
Social Security Benefits Buy 34% Less Than In 2000 (CNBC)
In 2010 Britons Stopped Getting Any Older. The Implications Are Huge (G.)
Airbus Raises Range Of Fears In Brutal Brexit Assessment (G.)
Trump’s Family Separation Scandal Reveals Every Species of Hypocrite (Taibbi)
Don’t Cry for Me, Rachel Maddow (Kunstler)
Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded (AFP)
Children In Custody At Border To Be Reunited With Families By End Of Day (CBS)
US Judge Says May Rule Next Week On Reuniting Migrant Children (R.)
Survivors Report 220 Migrants Drown Off Libya In Recent Days (R.)
Starving Seabirds On Remote Island Full Of Plastic (BBC)

 

 

A terrible deal.

Greece Swaps Bailout Hell For Eternal Purgatory (R.)

Greece is swapping bailout hell for eternal purgatory. Eight years after it first sought outside financial assistance Athens can at last support itself, helped by extra euro zone funds and debt relief. But it will have to maintain a tight budget for decades, while doubts over its debt sustainability will linger. The latest deal suits both European creditors and Greek Prime Minister Alexis Tsipras. With the country’s third bailout coming to an end in August, both sides wanted a clean exit, without a backstop facility. Euro zone countries recoiled at the idea of granting Greece more credit, while Tsipras wants to claim that the country is finally free of austerity. Both Ireland and Portugal ended their bailouts in this way.

But Greece still owes a hefty 180% of GDP, because official lenders refused to write off the debt. True, the euro zone has extended repayments over many decades. Still, the International Monetary Fund’s reluctance to describe the debt as sustainable made a smooth exit less certain. Hence the latest dollop of debt relief. Lenders have given Greece the last €15 billion of the bailout to build a cash buffer. They also extended their loans by 10 years, meaning Greece should not face large repayments until the 2030s. Creditors will also lower interest rates and transfer the profit on Greek bonds bought by the ECB as long as the country sticks to reform targets. The deal should make it possible for Greece to survive without further financial help for at least a decade.

But the country’s junk credit rating and the absence of a backstop means government bonds won’t be eligible as collateral for ECB loans. This will force banks to find other, more expensive sources of funding. The other question is whether Greek debt can be sustained without a default or further writedowns. If the government delivers on its promise to maintain a budget surplus before interest payments of over 3.5% of GDP – three times the euro zone average – until 2022, and 2.2% thereafter, the debt load will slowly fall. Yet Greece’s unemployment rate of 20% is more than twice as high as in the rest of the single currency area. And euro zone officials will still visit every quarter. The country has escaped its bailout hell, but is hardly free.

Read more …

Again, this is like a team owner stating publicly that he supports the coach 100%.

Euro Is Here To Stay: German Finance Minister (R.)

The euro is irreversible, German Finance Minister Olaf Scholz said in a newspaper interview to be published on Saturday when asked if the single currency will still be there in 10 years. “Yes, the euro is irreversible,” Scholz told the Rheinische Post. “It secures our common future in Europe.” He added that an initial blueprint to strengthen the euro zone agreed between Chancellor Angela Merkel and French President Emmanuel Macron during talks at the Meseberg retreat outside Berlin this week would shield the euro from crises. “With the Meseberg agreements we are further building the house of Europe,” he said. “It contains a sealed roof that withstands future storms and rainy days. We have a new momentum in Europe and this is thanks to President Macron.”

Read more …

Don’t question the military.

Can You Think of Any Other Ways to Spend $716 Billion? (Taibbi)

While the world continues to be transfixed over the gruesome images coming from the border, business went on as usual in Washington. Earlier this week, the Senate quietly passed the $716 billion “John S. McCain National Defense Authorization Act for Fiscal Year 2019.” The bill, which passed 85-10 in a massive show of bipartisan support, represents a considerable boost in defense spending across the board – roughly $82 billion just for next year. The annual increase by itself is bigger than the annual defense budget of Russia ($61 billion) and the two-year jump of over $165 billion eclipses the entire defense budget of China ($150 billion).

The bill is a major win for Trump, who has made no secret about his desire to push through giant increases in military spending. The legislation even sends the U.S. down the road to meeting the Trump administration’s lunatic goal of developing smaller, more “flexible” (read: usable) nuclear weapons, as it includes $65 million for the development of a new, lower-yield, submarine-launched nuke. But the problem with the defense bill, at least in terms of attracting coverage, is that it’s also a big win for almost every other major political constituency in Washington. Spending on defense lobbying has actually been dropping slightly in recent years, but that may only be because the opposition to defense spending has become so anemic that lobbyists don’t really need to bother anymore.

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“..the damage done by Germany’s hyperinflation of the early ’20s led to far more than just wiped-out mortgages and billion-dollar cigars.”

Ike Was Right! (Bill Bonner)

Our working hypothesis is that General Eisenhower was right. There were two big temptations to the American Republic of the 1950s; subsequent generations gave in to both of them. They spent their children’s and grandchildren’s money. Now, the country has a government debt of $21 trillion. That’s up from $288 billion when Ike left the White House. And they allowed the “unwarranted influence” of the “military/industrial complex” to grow into a monster. No president, no matter how good his intentions, can stop it. A corollary to our major hypothesis is that the rise of the Deep State (the military/industrial/social welfare/security/prison/medical care/education/bureaucrat/crony complex) was funded by the Fed’s fake-money system.

Now, investors, businesses, households, and the feds themselves have all been “faked out” by a fraudulent money system. None of them can survive a cutback in credit. For nearly 30 years, central banks have backstopped markets and flooded the world with liquidity. But last week, the Fed turned the screws a little further. It now targets a 2% Fed Funds Rate and claims to be on the path of “normalization.” And the ECB made it official, too; it hasn’t quite begun tightening, but it’s got its toolbox open. And command of the ECB work crew is set to change hands next year anyway, passing on to a German engineer.

The German psyche has been scarred by its awful experience in the last century. Even though today’s Germans didn’t live through it themselves, the entire country seems to have a race memory of it. Still preparing for hard times, the household savings rate in Germany is at least three times higher than in the sans souci U.S. Germany’s apocalypse, too, can be described in Eisenhower’s terms – too much debt (arising from World War I)… and too much influence in the hands of the military/industrial complex. Debt led to hyperinflation. But the damage done by Germany’s hyperinflation of the early ’20s led to far more than just wiped-out mortgages and billion-dollar cigars.

Read more …

Ireland and all the others.

Irish House Prices Sky-High Due To Finance Not Scarcity (Pettifor)

Economists regard the theory of supply and demand as nothing less than a “law” and as one of the fundamental principles governing “the economy”. Almost every economic event or phenomenon is considered the product of the interaction of the laws of supply and demand, argues The Concise Encyclopedia of Economics. The “law” is currently being invoked by those who believe the solution to the Irish housing crisis is to simply build more houses. It is an analysis echoed regularly by grateful developers and estate agents. But the “law” of supply and demand is a micro-economic concept and applicable only to the “economy” of individuals, households and firms.

The “economy” of a globalised country such as Ireland is, in stark contrast, a macro-economic concept, the result of analysing the aggregate activities of more than four million people operating within global markets for housing and other assets. As evidence of the flawed nature of this fundamental micro-economic theory, we only have to look at Ireland’s housing market in 2006 – the year in which the market boomed before imploding catastrophically. Irish home construction peaked in that year. In a country of just four million people, more than 90,000 homes were built. (By contrast the housing stock increased by just 8,800 between 2011 and 2016). And yet, despite this extraordinary increase in supply, and contrary to economic theory, prices in 2006 continued rising – by a whopping 11%.

Read more …

Just settle it amicably.

Trump Threatens 20% Tariff On European Union Cars (R.)

President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20% tariff on all U.S. imports of European Union-assembled cars. Trump posted his threat on Twitter the day European Union reprisals took effect against U.S. tariffs on European steel and aluminum. The EU targeted $3.2 billion in American goods exported to the 28-member bloc. “If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Trump wrote.

A month ago, the administration launched a probe into whether auto imports pose a national security threat. The United States currently imposes a 2.5% tariff on imported passenger cars from the European Union and a 25% tariff on imported pickup trucks. The EU imposes a 10% tariff on imported U.S. cars. German automakers Volkswagen, Daimler and BMW build vehicles at plants in the United States. Industry data shows German automakers build more vehicles in southern U.S. states that voted for Trump than they ship to the United States from Germany.

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Think medical bills.

Social Security Benefits Buy 34% Less Than In 2000 (CNBC)

If you feel like your Social Security check doesn’t stretch as far as it once did, there’s a likely explanation for it. Since 2000, the buying power of monthly benefits has fallen by more than a third, according to an annual report released Thursday by the Senior Citizens League, an advocacy group based in Alexandria, Virginia. In other words, the cost of goods and services common among retirees have collectively risen faster than the cost-of-living adjustment, or COLA, that Social Security recipients get every year. “People who recently retired might have seen only a [small] decrease in buying power,” said Mary Johnson, a policy analyst for the league. “But those retired for a long time are feeling the cumulative effect of this.”

About 47 million older Americans receive Social Security. Overall, the benefits comprise about a third of income among those age 65 or older, according to the Social Security Administration. The league’s annual report examines the costs that typically comprise household budgets of older Americans and compares their price change with annual COLAs. Based on those comparisons, the research found a 4% loss in Social Security buying power from January 2017 to January 2018 and a 34% decrease since 2000.

Read more …

Wonder if this is true only in Britain.

In 2010 Britons Stopped Getting Any Older. The Implications Are Huge (G.)

The most profound change to human life over the previous 100 years came to a halt in 2010. In the decades before it, life expectancy in Britain kept rising, with men, in particular, born in the 1920s and 1930s enjoying far longer and healthier lives than ever expected. This increase in lifespan has affected everything – from housing to health to pensions. It’s why we need to find ever greater sums for the NHS. It’s why the state pension age has had to go up. Arguably, it’s a big reason why house prices are so high – because people are living in them for longer. But the great leap forward in longevity has come to a shuddering halt.

An extraordinary analysis by the Office for National Statistics this week reveals that the trend line in longevity stopped in 2010, and has flatlined since. Why? Pick anything from austerity and cuts in NHS spending, to influenza outbreaks, obesity, diabetes, and even the rise of “multimorbidity” – where someone might have diabetes, heart disease and high blood pressure all at the same time. But the ONS did not try to answer the “why” question. It wanted to check if the statistics really do prove that longevity rises have come to a halt. And the depressing conclusion from its research is that, indeed they have. It found that the “breakpoint” in the trend towards better longevity began with males in the second quarter of 2009, with females following soon after.

Read more …

“The fear of “chaos at the borders” in 2020..”

Airbus Raises Range Of Fears In Brutal Brexit Assessment (G.)

Airbus hated Brexit from the off but, until now, it had confined itself to soft expressions of worry in public and harder lobbying behind the scenes. Its dramatic warning that it could stop investing in the UK is a radical departure from that position and carried a sting. The aircraft manufacturer did not merely say a no-deal outcome to Brexit talks “directly threatens Airbus’s future in the UK”. It also said an “orderly” Brexit, complete with a trade agreement and a transition period, would also be risky. In effect, the group will freeze investment in the UK until it can judge how a new set-up would work and how many extra costs its UK factories and research centres would bear.

John Longworth, the co-chair of Leave Means Leave campaign, accused Airbus of running a scare story and reheating Project Fear. Tariffs on aeronautical products are zero, he argued, and so “nothing will change” if the UK leaves the customs union. Yet he overlooked the detail of the Brexit assessment by Airbus, which barely mentioned tariffs. Instead, the worries were about the movement of employees between the UK and the EU, logjams in the supply chain and aircraft regulations. The most critical issue on that list is probably UK membership of the European Aviation Safety Agency (EASA), which certifies aircraft parts and runs safety checks.

In theory, the Civil Aviation Authority could do the job in the UK, as it once did, but Airbus doubts the body could assemble the expertise in time to provide a smooth transition. Norway is a non-EU member of EASA and so the UK, if it is prepared to accept the European court of justice as the legal authority behind EASA’s rulings, could also stay within. But a deal has not yet been struck, which is one of many reasons why Airbus is shouting that time is running short. Its supply chain frustrations will be shared by other large manufacturers with cross-border operations that run on a just-in-time basis to keep costs low. The fear of “chaos at the borders” in 2020, as Tom Williams, the Airbus executive in charge of the commercial aircraft division, put it, is real.

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“America’s manufacturing sector may be failing, but we still produce plenty of hypocrites.”

Trump’s Family Separation Scandal Reveals Every Species of Hypocrite (Taibbi)

John McCain, in Arizona receiving treatment for brain cancer, tweeted about Donald Trump’s barbarous immigration policy this week. “The administration’s current family separation policy is an affront to the decency of the American people, and contrary to principles and values upon which our nation was founded,” the senator wrote. Those comments bring to mind a commercial John McCain made eight years ago. At the time, he was facing a tough primary challenge from Tea Party Republican J.D. Hayworth. In the ad, McCain is seen walking along Arizona’s southern border with Pinal County Sheriff Paul Babeu, in the shadow of an enormous fence.

McCain starts tsk-tsking about the wave of crime pouring into his state. “Drug and human smuggling, home invasions, murder?” McCain asks. “We’re outmanned,” the sheriff says. “Of all the illegals in America, more than half come through Arizona.” McCain asks if they have “the right plan.” The sheriff says, “You bring troops, state, county and local law enforcement together.” “And complete the danged fence!” says McCain. [..] Trump’s policies on the border were and are monstrous. But those photos of children in captivity, which rightfully have been nearly as damaging to America’s reputation as the Abu Ghraib debacle, didn’t appear out of nowhere.

Those scenes are the latest in a long series of developments, under which politicians like McCain and Cruz and Dick Cheney, along with officials like Hayden, have gradually normalized the idea of human rights abuses as solutions to political problems. Now they’re all hiding behind someone else’s scandal. America’s manufacturing sector may be failing, but we still produce plenty of hypocrites.

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Democratic leadership has been AWOL for a long time.

Don’t Cry for Me, Rachel Maddow (Kunstler)

Actual political leadership among “the Resistance” is AWOL this week. Nancy Pelosi and Chuck Schumer failed to offer up any alternative legislative plan for sorting out these children differently. One can infer in the political chatter emanating from the Offendedness Cartel that immigration law is ipso-facto cruel and inhuman and that the “solution” is an open border. In theory, this might play to the Democratic Party’s effort to win future elections by enlisting an ever-growing voter base of Mexican and Central American newcomers. But it assumes that somehow these newcomers get to become citizens, with the right to vote in US elections — normally an arduous process requiring an application and patience — but that, too, is apparently up for debate, especially in California, where lawmakers are eager to enfranchise anyone with a pulse who is actually there, citizen or not.

Krugman of The Times really hit the ball out of the park today with his diatribe comparing US Immigration enforcement to the Nazis treatment of the Jews. As a person of the Hebrew persuasion myself, I rather resent the reckless hijacking of this bit of history for the purpose of aggrandizing the sentimentally fake moral righteousness of the Resistance. It actually diminishes the enormity of the Nazi campaign against European Jews. I daresay that commentary like Krugman’s will only serve to amplify a growing resentment of Jewish intellectuals in this country — including myself, increasingly the target of anti-Jewish calumnies and objurgations. You’d think that Mr. Trump had offered to blow up Ellis Island the way the Resistance is clamoring to pull down statues of Thomas Jefferson.

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That’s two in a row for using pictures out of context. Very damaging.

Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded (AFP)

Two photos that went viral on social media depict scenes that are not directly related to the family separations taking place on the US-Mexico border since early May. The most prominent, of Honduran two-year-old Yanela Varela crying inconsolably, has become a global symbol of the separations – helping to attract more than $18 million in donations for a Texas non-profit called RAICES. The photograph was taken on June 12 in McAllen, Texas by John Moore, a Pulitzer Prize-winning photographer for Getty Images. An online article about the picture, published by Time Magazine, initially reported the girl was taken from her mother, but was subsequently corrected to make clear that: “The girl was not carried away screaming by US Border Patrol agents; her mother picked her up and the two were taken away together.”

Time Magazine nonetheless used the image of the sobbing child on its cover, next to an image of President Trump looming over her, with the caption “Welcome to America”. The head of Honduras’ Migrant Protection Office Lisa Medrano confirmed to AFP that the little girl, just two years old, “was not separated” from her family. The child’s father also said as much. Denis Varela told the Washington Post that his wife Sandra Sanchez, 32, had not been separated from their daughter, and that both were being detained together in an immigration center in McAllen. Under fire for its cover – which was widely decried as misleading including by the White House – the magazine said it was standing by its decision. “The June 12 photograph of the 2-year-old Honduran girl became the most visible symbol of the ongoing immigration debate in America for a reason,” Time’s editor-in-chief Edward Felsenthal said.

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A mixed bag.

Children In Custody At Border To Be Reunited With Families By End Of Day (CBS)

Most of the immigrant children who’d been separated from their families and are still being held by U.S. Customs and Border Protection are expected to be reunited by the end of the day, a source with the Department of Homeland Security told CBS News. This does not reflect the greater number of children who are in the custody of the Department of Health and Human Services. That number was reported this week to be greater than 2,340. There will be a small number of children with Customs and Border Protection who will not be immediately reunited with their families. Reasons for delay may include if relationships can’t be confirmed or if authorities think there’s a risk to the child.

At the border, the government is trying to clear up who gets prosecuted and who does not. Confusion, however, hasn’t stopped border crossings, CBS News’ Mireya Villarreal reports. Shane McMahon’s client from El Salvador was charged with crossing into the U.S. illegally. He was separated from his 16-year-old son, and on Friday, those charges were suddenly dropped. “I think what’s happening is that everybody’s trying to figure out how the order applies to us and what to do with it,” McMahon said. The Trump administration says that nearly 500 children have been reunited with family. More than 1,800 remain separated from parents, who are desperate for answers.

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A case from February that could solve today’s issues.

US Judge Says May Rule Next Week On Reuniting Migrant Children (R.)

A federal judge said on Friday he could rule as soon as the middle of next week on a request to order the U.S. government to reunite thousands of immigrant children who were separated from their parents after illegally crossing the Mexico-U.S. border. While U.S. President Donald Trump bowed to political pressure on Wednesday and issued an executive order ending the separations, the administration has been silent on plans to reunite parents split from their children. More than 2,300 migrant children have been separated since the Trump administration began a “zero tolerance” policy toward illegal border crossings in early May.

At a court hearing on Friday, a lawyer for the American Civil Liberties Union pressed U.S. District Court Judge Dana Sabraw in San Diego to issue an injunction as soon as Friday evening to force the government to begin reuniting families. “Parents can’t find their children, they are not even speaking to their children. It’s a humanitarian crisis,” said Lee Gelernt, a lawyer for the ACLU, at Friday’s hearing. He asked the judge to order the government to reunite all children in 30 days, and in five days for children under the age of five. Gelernt also asked for an order barring separations.

[..] The judge peppered a government lawyer with questions about procedures for handling children separated from their parents and tracking by government agencies, and in general the government lawyer focused on arguments about legal procedure. The government has said in court papers that separation of children is a consequence of the lawful detention of the parent. The ACLU filed the case in February alleging the government violated the right to due process of two unidentified women, from Brazil and the Democratic Republic of Congo, when their children were removed from them.

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Europe outdoes Trump.

Survivors Report 220 Migrants Drown Off Libya In Recent Days (R.)

Survivors have reported that about 220 migrants drowned off the coast of Libya in the last few days while trying to reach Europe, putting the death toll this year on that route to more than 1,000, the United Nations said on Thursday. The U.N. refugee agency (UNHCR) said that as the summer season starts, the number of refugees and migrants attempting to cross the Mediterranean was expected to increase and it called for increased rescue operations. The Libyan coast guard has brought more than 8,000 people to disembarkation points along the coast this year, it said. Only five people survived the capsizing of a boat carrying 100 people on Tuesday, while the same day a rubber craft with 130 passengers sank, leading to 70 people drowning, UNHCR said.

On Wednesday a boat of refugees and migrants who were rescued reported that more than 50 people traveling with them had perished at sea, it said. “UNHCR is dismayed at the ever-growing numbers of refugees and migrants losing their lives at sea and is calling for urgent international action to strengthen rescue at sea efforts by all relevant and capable actors, including NGOs and commercial vessels, throughout the Mediterranean,” the agency said. Earlier, Libya’s coastguard picked up 443 African migrants on Thursday from three inflatable boats in trouble near its western coast, a spokesman said.

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Where’s the outrage? Why is there still no overall ban on one-use plastics? Why do I still see people walking around with plastic coffee cups?

Starving Seabirds On Remote Island Full Of Plastic (BBC)

New footage of the devastating impact of plastic pollution on wildlife has been captured by a BBC team. Seabirds are starving to death on the remote Lord Howe Island, a crew filming for the BBC One documentary Drowning in Plastic has revealed. Their stomachs were so full of plastic there was no room for food. The documentary is part of a BBC initiative called Plastics Watch, tracking the impact of plastic on the environment. The marine biologists the team filmed are working on the island to save the birds. They captured hundreds of chicks – as they left their nests – to physically flush plastic from their stomachs and “give them a chance to survive”.

The birds nest in burrows on Lord Howe Island, which is more than 600 kilometres off the east coast of Australia. While chicks wait in the burrow, the parents head out to sea and dive for small fish and squid to feed their offspring. “These birds are generalist predators,” explained marine biologist Jennifer Lavers who works with the shearwater colony. “They’ll eat just about anything they’re given. That’s what’s allowed them to thrive – a lack of pickiness. “But when you put plastic in the ocean, it means they have no ability to detect plastic form non-plastic, so they eat it.”

Parent birds unwittingly feeding plastic to their chicks means that the birds emerge from their burrows with stomachs filled with plastic, and with insufficient nutrition to enable them set out to sea and forage for themselves. But when the birds first head out of the burrow, the research team have been stepping in to help. “If the amount of plastic is not so significant, we use a process called levage, where we flush or wash the stomach – without harming the bird,” explained Dr Lavers. The BBC crew filmed the team working with individual chicks – using tubes to flush their stomachs with seawater and make them regurgitate the plastic.

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Jun 202018
 
 June 20, 2018  Posted by at 9:22 am Finance Tagged with: , , , , , , , , , ,  


Edward Hopper New York movie 1939

 

The Smart Money Gets Ready for the Next Credit Event (WS)
Global Debt Has Hit A High – Can Financial Regulators Cope? (Davies)
Stock Markets Roiled As US-China Trade Dispute Escalates (G.)
European Firms Say China Business ‘More Difficult’ (AFP)
Canada Legalises Recreational Marijuana Nationwide (Ind.)
Smearing A Dissident Journalist Is As Good As Killing Him (CJ)
“Delete Your Account” Warns Virtual Reality Founding Father (ZH)
1 In 3 UK Primary School Teachers Provide Pupils With Toothpaste, Soap (Ind.)
Merkel, Macron Agree On Eurozone Budget (CNBC)
EU To Consider Plans For Migrant Processing Centres In North Africa (G.)
EU Rebuked For €36 Billion Refugee Pushback Gambit (G.)
34,361 And Rising: Tallying Europe’s Migrant Bodycount (G.)
The Vanishing Of The Swifts (G.)

 

 

Scary.

The Smart Money Gets Ready for the Next Credit Event (WS)

As corporate indebtedness in the US has reached precarious heights, and as risks are piling up, in an environment of rising interest rates and a hawkish Fed, the smart money is getting ready. The smart money is preparing for the moment when the air hisses out of the exuberant junk-bond market, when liquidity dries up for over-indebted companies, and when their bonds collapse. The smart money is preparing for the arrival of “distressed debt” – it’s preparing now because these preparations include raising billions of dollars for their funds, and that takes some time. “Distressed debt” is defined as junk-rated debt that sports yields that are at least 10 percentage points above equivalent US Treasury yields.

Distressed-debt investors can make a killing by buying bonds for cents on the dollar during times of economic stress, of companies that they believe will make it through the cycle without defaulting. In this scenario, a distressed bond might sell for 40 cents on the dollar, and two years later, the company is still intact and the credit squeeze is resolved, and now the bond is worth face value. For those two years, the bond paid a huge yield to investors that bought at 40 cents on the dollar – and the profit might be 200% in capital gains and interest. The thing is: The junk-bond market has been booming. There’s no credit squeeze yet. And the riskiest end is flush as the “dumb money” is still chasing yield.

And for the smart money, there’s not much to pick at the moment; but down the road, the future looks bright. S&P Global tracks distressed debt in its US High Yield Corporate Distressed Bond Index. The index peaked in early July 2014, on the eve of the oil bust. Over the next 18 months, it plunged 56% as the oil bust was wreaking havoc on oil-and-gas bonds. But on February 11, 2016, the index bottomed out. New money began flowing into the oil-and-gas sector. Banks started lending again. The surviving bonds soared. And the index skyrocketed 113% in 28 months:

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Really? The IMF?

Global Debt Has Hit A High – Can Financial Regulators Cope? (Davies)

At the end of May, the International Monetary Fund launched its global debt database. For the first time, IMF statisticians have compiled a comprehensive set of calculations of public and private debt, country by country, constructing a time series stretching back to the end of the second world war. It is an impressive piece of work. The headline figure is striking: global debt has hit a new high of 225% of world GDP, exceeding the previous record of 213% in 2009. So, as the IMF points out, there has been no deleveraging at the global level since the 2007-08 financial crisis. In some countries, the composition of debt changed, as public debt replaced private debt in the post-crisis recession, but that shift has mostly stopped.

Are these large figures alarming? In aggregate terms, perhaps not. At a time when economic growth is robust almost everywhere, financial markets are relaxed about debt sustainability. Long-term interest rates remain remarkably low. But the numbers do tend to support the hypothesis that the so-called debt intensity of growth has increased: we seem to need higher levels of debt to support a given rate of economic growth than we did before. Perhaps that is partly because the growth in income and wealth inequality in developed countries has distributed spending power to those with a propensity to spend less than their income. That trend has levelled off recently, but the implications are still with us. It also seems that productivity growth has slowed, so a given quantum of investment generates less output than it used to do.

The IMF’s recommendation to governments is that they should fix the roof while the sun is shining: accumulate a fiscal surplus, or at least reduce deficits, in good times so that they are better prepared for the next downturn, which will surely come before too long. The current upturn is now quite mature. That puts the IMF on a collision course with the tax-cutting US administration and now with Italy’s new government. If the Italians’ grandiose plans for a minimum income and more public investment are implemented, they might soon find themselves in difficult discussions with the IMF. The team that has been in Athens for the past few years might soon be booked on a flight to Rome.

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Keep negotiating.

Stock Markets Roiled As US-China Trade Dispute Escalates (G.)

The trade dispute between the US and China escalated on Tuesday, with a senior Trump official accusing China of “theft” and Beijing accusing the US of blackmail. The news roiled global stock markets as investors feared that escalating tensions could trigger an international trade war. Donald Trump threatened to impose an additional $200bn in levies on Chinese goods on Monday evening, days after the US announced $50bn in tariffs aimed at punishing what the US administration sees as unfair trade practices. China has already said it will retaliate for last week’s move and said it would escalate its response if further tariffs were imposed.

In a call with reporters Peter Navarro, White House trade adviser and a longtime critic of China’s trade practices, said China had had numerous opportunities to address Washington’s concerns but had failed to do so. “Since China joined the World Trade Organisation in 2001, the working men and women of America have watched as more than 70,000 factories and millions of manufacturing jobs have moved offshore,” said Navarro. He called Trump’s plans’ “courageous” and “visionary” and said they were aimed at halting China’s plans to dominate the hi-tech industries of the future – a plan, known as China 2025, that Navarro said that would mean America “will have no economic future”.

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“As its economy matures, the longstanding inefficiencies in China’s business environment are rendered all the more glaring..”

European Firms Say China Business ‘More Difficult’ (AFP)

European companies complain they still face a tough business climate in China despite Beijing’s pledges of openness, with about half saying it has become tougher in the past year, according to a survey released Wednesday. The study comes as President Xi Jinping looks to portray the world’s number two as being at the forefront of the globalisation cause just as the United States appears to be stepping back from the world stage. Among the litany of complaints were the uncertain legal environment, higher cost of labour, regulatory headaches and the “Great Firewall” that censors much of the global internet. “As its economy matures, the longstanding inefficiencies in China’s business environment are rendered all the more glaring,” according to the report by the EU Chamber of Commerce in China.

Mats Harborn, the chamber’s president, echoed those concerns, telling journalists that “the regulatory environment is actually holding the economy back.” New cybersecurity regulations make it more costly to jump the firewall, requiring businesses to sign up for expensive government-approved virtual private networks that allow users to circumvent filters and access the global internet. Two-thirds of companies believe that censorship and blocking of certain sites has a negative impact on their business. This is the “great contradiction,” said Harborn. “We have China which claims itself a leader in globalisation, talking of the importance of integration, but the cybersecurity law is creating problems.”

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Unstoppable force by now. But do follow the money.

Canada Legalises Recreational Marijuana Nationwide (Ind.)

Canada has legalised the use of recreational marijuana nationwide, making it the first G7 country to do so. The Senate voted 52-29 on Tuesday to pass the Cannabis Act, which allows people over the age of 18 to grow, buy, and use the drug for recreational purposes. It also regulates the growth and sale of marijuana, putting strict limits on packaging and limiting home growth to four plants at a time. The bill passed the House of Commons earlier on Tuesday, and now goes to Prime Minister Justin Trudeau – an outspoken supporter of the legalisation effort – to decide when it will take effect.

The vote makes Canada the second country to legalise recreational marijuana nationwide, after Uruguay. It is the first of the world’s seven most advanced economies – also known as the G7 – to do so. Nine US states allow for recreational use, and several other G7 nations allow it for medical purposes. Medical marijuana has been legal in Canada since 2001.

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Wonder what happened at the UN human rights commission talk yesterday in Geneva.

Smearing A Dissident Journalist Is As Good As Killing Him (CJ)

As I write this, demonstrations around the world are taking place in protest of WikiLeaks editor Julian Assange’s arbitrary detention and silencing by the US-centralized power establishment that has been actively pursuing his destruction for over a decade. The demonstrations will be well-attended, but not a fraction as well-attended as they should be. They will receive international attention, but not a fraction as much attention as they should. This is because the manipulators and smear merchants who have made their careers paving the way for oligarchic agendas have been successful in killing off sympathy for the plight of Assange. As we discussed yesterday, sympathy is key for getting narratives to take hold in public consciousness.

This is why western corporate media will circulate pictures of dead children all day long when it’s in the interests of advancing longstanding imperialist agendas, but never when those children were killed by western weapons. If you can tug at someone’s heart strings while telling them a story, the story you tell them will slide right in with minimal scrutiny. And it works the other way, too: if you can prevent someone’s heart strings from being plucked while hearing about a legitimately heartbreaking story, you can prevent that story from taking hold. Kill all sympathy for a dissident journalist and you kill all belief in his side of the story.

And Assange’s side of the story is indeed devastating to the preferred narrative of the US-centralized empire. A journalist (yes, journalist, per definition) who publishes 100 percent authentic documents exposing the inner mechanics of power structures all over the world, who was forced to seek political asylum at the Ecuadorian embassy in London in order to avoid extradition by the same government which brutalized Chelsea Manning, is on its face a highly sympathetic story. And it does tremendous damage to the narrative that America and its close network of allies are freedom-loving democracies whose systems of government are nothing like those naughty, oppressive regimes they seek to topple.

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“When you watch the television the television isn’t watching you. When you see the billboard the billboard isn’t seeing you… ”

“Delete Your Account” Warns Virtual Reality Founding Father (ZH)

In a new explosive interview, Silicon Valley tech pioneer and creator of the virtual reality ‘avatar’ Jaron Lanier tells people to delete your social media accounts due to the strong correlation between persistent social media usage and a dramatic societal rise in depression, anger, and anxiety that he says is the result of internet-induced modified forms of behavior. The warning comes in the wake of his new book which details how the creators of social media and the early engineers behind the internet “foolishly laid the foundations for global monopolies.” Jaron Lanier is best known as a founding father of the field of virtual reality and throughout his polymath career has written extensively on human-computer interaction, including most recently in his book Ten Arguments for Deleting Your Social Media Accounts Right Now.

Lanier explained in a recent UK Channel 4 interview: “When you watch the television the television isn’t watching you. When you see the billboard the billboard isn’t seeing you… When you use these new designs — social media, search, YouTube — when you see these things, you’re being observed constantly and algorithms are taking that information and changing what you see next.” According to Lanier’s bio, he coined the term ‘Virtual Reality’ (VR) and in the early 1980s founded VPL Research, the first company to sell VR products. In the late 1980s he led the team that developed the first implementations of multi-person virtual worlds using head mounted displays, as well as the first “avatars,” and developed the first widely used software platform architecture for immersive virtual reality applications.

As he defiantly asserts on his personal website, Lanier himself has “no social media accounts at all and all purported ones are fake.” He’s elsewhere said that most internet and social media pioneers in Silicon Valley “have regrets right now” after perfecting what is essentially mass human behavioral engineering and that that internet addiction is not only ruining people’s lives but the political process as well. This is what I could call almost a stealthy addiction. It’s a statistical addiction. What it says is we will get the broad population to use the services a lot, we’ll get them hooked through a scheme of rewards and punishment, and the rewards are when you’re retweeted and the punishment is when you’re treated badly by others online, and then within that we’ll very gradually start to leverage that, to change them. It’s this very kind of stealthy manipulation of the population.”

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Inglan is a bitch.

1 In 3 UK Primary School Teachers Provide Pupils With Toothpaste, Soap (Ind.)

One in three teachers are providing pupils with basic hygiene products such as toothpaste and soap amid soaring child poverty rates, a new study shows. Eight in ten primary school teachers have said they had seen a rise in the numbers of children coming to school unwashed or not looking presentable in the last five years and have found themselves intervening at an increasing rate. A survey carried out by UK charity In Kind Direct also revealed nearly one in five (18 per cent) of teachers say they have to resort to doing this every single week, with the problem starkest in London – where 50 per cent do this weekly – and in the North East, where the figure stands at 29 per cent.

It comes as child poverty rates have surged in recent years, with one million more children in working households now growing up in poverty than did so in 2010, largely because of cuts to in-work benefits and public sector pay freezes. Nicola Finney, head teacher at St Paul’s Primary School in Stoke on Trent, told The Independent around 18 per cent – or nearly one in five – of her pupils’ families were receiving products from the school, as growing numbers of households are “falling on hard times”.

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And the other 17 must follow.

Merkel, Macron Agree On Eurozone Budget (CNBC)

Chancellor Angela Merkel said she and French President Emmanuel Macron agreed on Tuesday to create a euro zone budget charged with boosting investment in the currency bloc and promoting economic convergence between its 19 member states. “We are opening a new chapter,” Merkel said after talks with Macron on European reform ahead of a June 28-29 EU summit. She said euro zone reform was the toughest issue in their talks. “We are working to make sure that the euro zone budget will be used to strengthen investment, also with the aim of strengthening convergence within the euro zone,” she added.

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Like those in Libya you mean?

EU To Consider Plans For Migrant Processing Centres In North Africa (G.)

The EU is to consider the idea of building migrant processing centres in north Africa in an attempt to deter people from making life-threatening journeys to Europe across the Mediterranean, according to a leaked document. The European council of EU leaders “supports the development of the concept of regional disembarkation platforms”, according to the draft conclusions of an EU summit due to take place next week. The EU wants to look at the feasibility of setting up such centres in north Africa, where most migrant journeys to Europe begin. “Such platforms should provide for rapid processing to distinguish between economic migrants and those in need of international protection, and reduce the incentive to embark on perilous journeys,” says the document seen by the Guardian.

Although the plan is winning influential support, it faces political and practical hurdles, with one expert saying it is not clear how the EU would get foreign countries to agree to be “vassal states”. Migration is high on the agenda of the two-day summit, which opens on 28 June. EU leaders will attempt to reach a consensus on how to manage the thousands of refugees and migrants arriving each month. The German and French leaders, Angela Merkel and Emmanuel Macron, met near Berlin on Tuesday to agree on a common approach, amid fears in their camps that the European project is unravelling. Before the meeting France’s finance minister, Bruno Le Maire, said Europe was “in a process of disintegration. We see states that are turning inward, trying to find national solutions to problems that require European solutions.”

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It’s not about money, but that’s all they can think of.

EU Rebuked For €36 Billion Refugee Pushback Gambit (G.)

The European Union is to increase its spending in Africa by more than 20% over the next seven years to a minimum of €36bn in an attempt to reduce the number of migrants and refugees crossing the Mediterranean. But a succession of reports funded by the EU or written by leading MEPs say European efforts to stem the flow is characterised by misdirected finances, lack of accountability and repeated breaches of basic human rights, including an inability to undermine the business model of human trafficking, an industry worth as much as £35bn a year. Special concern has been expressed that EU funds are being used to give bonuses to the Italian-trained Libyan coastguard to force boats back to Africa.

The arrival of millions of refugees in Europe – and the deaths of thousands more attempting the crossing – has become the continent’s biggest policy headache, now threatening the stability of the German government and the cohesion of the EU. The biggest challenge is Libya, where deepening political chaos has led to more than 500,000 people crossing into Italy in recent years, hastening the election of a populist government in Rome that is now threatening to form an anti-migrant “axis of the willing” with like-minded central and eastern European countries.

Politicians are scrambling for a new formula not just to distribute the people who have reached Europe but also to return those whose asylum claims are refused. The EU is also searching for a credible means to reduce the incentive for people to come to Europe. The fate of mainstream social democratic and centrist parties in next spring’s European elections may rest on the outcome. A detailed examination of EU efforts to tackle the issue finds a “mismatch between the grandiloquent declarations and the action actually implemented on the ground”.

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The real number is much higher.

34,361 And Rising: Tallying Europe’s Migrant Bodycount (G.)

The vast majority of migrants who have died trying to reach Europe have drowned. Volunteers have logged more than 27,000 deaths by drowning since 1993, often hundreds at a time when large ships capsize. These account for nearly 80% of all the entries. The list points up the marked increase in drownings that occurred after 2014, when the conflict in Syria accelerated, adding to numbers from south Asia and sub-Saharan Africa. In 2013, it reports more than 900 deaths by drowning. By 2017 that number had increased to around 3,500. A wave of public sympathy for the plight of refugees in Europe was quickly displaced by a backlash against the rising number of arrivals in 2015 and 2016, when almost three million people claimed asylum in Europe.

The EU responded by trying to export the problem back to Africa, with a €2bn (£1.75bn) EU-Africa trust fund designed to encourage African countries to stop people making the journey to Europe. The figures show the impact of this policy shift: in 2014, there were around 1,700 deaths recorded in and off the coast of Africa ascribed to migrants trying to get to Europe; by 2017 this had almost doubled, while deaths in Europe halved over the same period. “Some would say there are fewer deaths in Europe, and the EU’s policy is working”, says Ann Singleton, an academic specialising in migration data at the University of Bristol. “But there’s so much that’s unknown. Deaths are less likely to be reported if they occur in remote areas of Africa, and the number of people are dying inland, or in Libyan detention camps, isn’t recorded.

“If you look at maps, it looks as though the Mediterranean is the most dangerous area of the world for migrant journeys. But we can never say if that’s true, because we simply don’t know what’s happening elsewhere,” says Singleton. For those who get to Europe, the danger is not over. The List records more than 500 deaths in the asylum process, detention centres, prisons and camps. Among this group, the most common cause of death is suicide.

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Swifts eat flying insects.

The Vanishing Of The Swifts (G.)

It is the most miraculous bird, the ultimate winged messenger, exploring our globe, spending its life on the breeze. Sickle-shaped wings silhouetted against the sky, the swift is the fastest of all birds in level flight and remains entirely airborne for 10 months, or more, feeding, sleeping and mating on the wing. These long-lived creatures can clock up 4 million miles, commuting between English summers and African winters. Something has changed though. June is erupting as gloriously as it ever did: roadsides are waving with oxeye daisies and blackbirds flute during the endless evenings. But summer is a shadow of its former self. The swifts aren’t here. Well, they are. Only not as we knew them. I heard a scream just now, felt that start of wonder, and glanced up. One swift. No – three, darting through the blue. Three birds.

It’s like returning to the place where you grew up and finding your old home bulldozed. Reality does not compute with the picture you remember. I knew the swift for its screaming parties, marvellous groups of 20 or 40 or 60 or uncountable numbers of birds racing together through the sky, flicking their wings, calling in apparent glee. But this bird is in freefall. A graph produced by the British Trust for Ornithology is terrifying: the British population declined by 51% between 1995 and 2015. And the rate of decline is increasing: down 24% in the five years to 2015. The decline of globalised animals is always global, and complicated. So the disappearance of other equally charismatic long-distance migrants such as nightingales, cuckoos and swallows is bound up in habitat loss or changes in Africa, as well as Britain, and climatic changes en route.

Living in roofs, swifts have also suffered from the conversion of derelict buildings, and our desire for more energy-efficient, impermeable homes. But the biggest cause of changes in animal populations is always food supply. And guess what? Swifts feed on flying insects. We are belatedly waking up to the global calamity that is the loss of insect life. The German study showing a 76% decline in flying insects since 1989 is no anomaly. In Britain, for instance, three-quarters of butterfly species have declined over 40 years, while moth abundance has fallen by more than 40% in the southern half of the country.

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Jun 192018
 
 June 19, 2018  Posted by at 12:07 pm Finance Tagged with: , , , , , , , , , , ,  


Paul Gauguin Why are you angry? 1896

 

Yes, you have every right to be outraged at the disgraceful treatment of children on America’s borders. But that does not give you the right to NOT be outraged by what America has done and is today still doing to children in, just to name a few places, Syria, Libya and Yemen. Be outraged, but don’t make it an echo chamber issue. Because if you do, you, too, are in a cage.

So if you see the wives of former presidents speak out about the child separation policies, ask yourself where they get the moral authority to speak out on such issues, after their husbands have bombed the crap out of many countries, killing many many children in the process. And don’t let’s get started about Hillary Clinton when she was Secretary of State.

Presently in Yemen, 20 million people depend on humanitarian aid, and the US are helping Saudi Arabia et al bomb the only port left through which that aid can reach them, to smithereens. 8.5 million Yemenis are already starving, and some 3 million of them are children. Where is your outrage over that?

Where is the outrage over the American and international treatment of Julian Assange, who has been in the Ecuador embassy in London for six years today? Where is it?

Don’t get coaxed into selective outrage by your news media, who like nothing better than to tell you what to be outraged by, and what not. If you allow that to happen, you have lost your freedom and your independence. Ask why they tell you a certain story at the moment they tell it. Ask why they tell it the way they do.

Yes, it has come to this. Every single story you read or hear needs to be scrutinized. Because there’s an agenda behind all of them, left, right or middle. And because the media have figured out that constantly driving you from one selective outrage to another is very profitable for them. Critical thought is not.

Yes, there are sociopaths in the Trump administration. But that’s nothing new. There have been sociopaths in every administration. It’s how our political systems work. Sh*t floats to the top.

Yes, US border policies have intensified. But whatever you think of that, migrants and refugees are not a new issue. Nor are the reasons why people flee their homes and communities. Whether it’s Africa or Central America, people flee because of what western governments, military and intelligence services have done to their homelands.

And until we stop doing that, they will keep coming. So much of our prosperity and power is derived directly from other people’s poverty and despair. So much of our wealth has been stolen from other people’s resources. If you want to be outraged at something or someone, start with yourself. Start thinking.

What is happening today is awful. But so many awful things happened in the past that you never showed outrage about. And yet these things are all inextricably linked. One leads to another.

America shouldn’t be outraged about Trump without being outraged about its entire political system, and all of its actors. Without that, outrage about Trump has no meaning, and will lead to nothing at all. Or rather, it will lead to a more divided country, full of people played for profit and political games.

The US invasion of Vietnam ended to a large extent because of protests in the streets. Perhaps that is what is needed once again. But the underlying issues, the ones that had led to the invasion in the first place, were not solved then. And that is what it is all about.

Nor is it an American problem per se. Europe is just as culpable. Children drowning, children in cages, what’s the difference, in the end it all comes from the same mindset. Which needs a radical reset. But what are the odds of that happening?

Our cultures are based on exploiting other peoples and nations, and then telling ourselves we deserve what we have. How are you going to change that? The only way to resolve the global refugee problem is to make sure people have a future where they are born. And the only thing we actually do is to make that impossible.

Yes, be outraged.

 

 

Jun 192018
 
 June 19, 2018  Posted by at 8:27 am Finance Tagged with: , , , , , , , , , , , ,  


Vittorio Matteo Corcos Sogni 1896

 

Threatened By The Truth – Julian Assange Anniversary (IE)
25,000 Flee As Fighting In Yemen Port City Hodeida Escalates (AP)
It’s Time To Get Enraged At What Western Imperialists Have Done To Syria (CJ)
Paul Tudor Jones Warns The Next Recession Will Be ‘Really Frightening’ (Y.)
Trump Threatens New Tariffs On $200 Billion In Chinese Goods (CNBC)
China Enters the Trade Trap (IICS)
Chasing Yield during ZIRP & NIRP Evidently Starved Human Brains of Oxygen (WS)
Why Germany Neither Can Nor Should Pay More To Save The Eurozone (Varoufakis)
Macron’s Euro Zone Reforms: Grand Vision Reduced To Pale Imitation (R.)
Hopeless European Millennials And The Populist Takeover (John Rubino)
Spain’s New Government To Remove Franco’s Remains From Mausoleum (AFP)
A Very British Disease (Coppola)
Thousands Of Public Buildings And Spaces In England Sold Off A Year (G.)
Coercion (Jim Kunstler)
Sharp Fall In Number Of People Seeking Asylum In EU (G.)

 

 

If you’re not outraged by Assange’s situation, you have no right to be outraged by anything else.

Threatened By The Truth – Julian Assange Anniversary (IE)

Today marks the sixth anniversary of Wikileaks founder Julian Assange’s effective house arrest in London. He cannot move around in public, because he fears he will be arrested and extradited to America — a daunting prospect, since a UN special rapporteur described Chelsea Manning’s treatment by that country’s justice system as torture. Assange is divisive. Hawks wish him nothing but misfortune and a stretch in jail. According to journalist John Pilger, a leaked official memo says: “Assange is going to make a nice bride in prison. Screw the terrorist. He’ll be eating cat food forever.” If you stand at the other end of the spectrum, Assange is a hero who revealed how our world really works.

Consequently, he has been relentlessly targeted. Hilary Clinton has contributed to this process, as Assange highlighted the Clintons’ links with Saudi Arabia and the multimillion donations that kingdom made to their foundation, after she, as secretary of state, sanctioned an $80bn Saudi arms deal. Assange remains, despite illegal efforts to revoke it, an Australian citizen, but he has not enjoyed the support a person who has not been charged with anything, much less convicted of anything, might expect from a democracy. These are indeed murky waters, but Assange’s ordeal reconfirms a truth: News is something someone, somewhere, does not want published. That’s why he is such a threat.

Read more …

Yes, the treatment of children on America’s borders is a disgrace. But don’t make it an echo chamber issue. Kids in Hodeida are much worse off. Where is the outrage?

25,000 Flee As Fighting In Yemen Port City Hodeida Escalates (AP)

The UN spokesman said on Monday that tens of thousands of residents have fled the fighting along Yemen’s western coastline, where Yemeni fighters backed by a Saudi-led coalition are engaged in fierce battles with Iranian-backed Houthi rebels. Stephane Dujarric, the spokesman for the UN secretary-general, told reporters on Monday that about 5,200 families, or around 26,000 people, have fled the fighting and sought safety within their own districts or in other areas in Hodeida governorate. ‘‘The number is expected to increase as hostilities continue,’’ he said. Emirati troops, along with irregular and loyalist forces in Yemen, have been fighting against Houthis for Hodeida since Wednesday.

Coalition warplanes rained missiles and bombs on Houthi positions near Hodeida airport, in the city’s south. The offensive for Hodeida has faced criticism from international aid groups, who fear a protracted fight could force a shutdown of the city’s port and potentially tip millions into starvation. About 70 percent of Yemen’s food enters via the port, as well as the bulk of humanitarian aid and fuel supplies. Around two-thirds of the country’s population of 27 million relies on aid, and 8.4 million are already at risk of starving.

Read more …

And there are more things you should be outraged by.

It’s Time To Get Enraged At What Western Imperialists Have Done To Syria (CJ)

Rumors are again swirling of an impending false flag chemical weapons attack in Syria, just as they did shortly before the highly suspicious Douma case in April. Warnings from Syrian and Russian intelligence, as well as US war ship movements and an uptick in US funding for the Al Qaeda propaganda firm known as the White Helmets, give these warnings a fair bit of weight. Since the US war machine has both a known regime change agenda in Syria and an extensive history of using lies, propaganda and false flags to justify military interventionism, there’s no legitimate reason to give it the benefit of the doubt on this one. These warnings are worth taking seriously.

So some people are understandably nervous. The way things are set up now, it is technically possible for the jihadist factions inside Syria and their allied imperialist intelligence and defense agencies to keep targeting civilians with chemical weapons and blaming the Assad government for them until they pull one off that is so outrageous that it enables the mass media to manufacture public support for a full-scale assault on Damascus. This would benefit both the US-centralized empire which has been plotting regime change in Syria for decades and the violent Islamist extremists who seek control of the region. It also creates the very real probability of a direct military confrontation with Syria’s allies, including Russia.

But the appropriate response to the threat of a world war erupting in Syria is not really fear, if you think about it. The most appropriate response to this would be unmitigated, howling rage at the western sociopaths who created this situation in the first place.

Read more …

No stabilizers.

Paul Tudor Jones Warns The Next Recession Will Be ‘Really Frightening’ (Y.)

Legendary global macro trader Paul Tudor Jones is warning that asset prices are too high. And furthermore, he’s concerned about what the next recession might look like. He shared his thoughts on Monday during a conversation with Goldman Sachs CEO Lloyd Blankfein as part of the firm’s “Talks at GS” series. The hedge fund billionaire, who rarely gives interviews or makes public comments on the markets, cautioned that across asset classes “you have to be thinking this is a highly dubious sustainable price.” Jones doesn’t think the low interest rates we have now due to easy monetary policy are sustainable over time. He said that interest rate policy is “crazy.” He further argued that the Trump administration’s stimulative fiscal policy isn’t sustainable either.

“You look at prices of stocks, real estate, anything,” he said. “We’re going to have to mean revert to a normal real rate of interest with a normal term premium that’s existed for 250 years. We’re going to have to get back to that. We’re going to have to get back to a sustainable fiscal policy and that probably means the price of assets goes down in the very long run.” In the short run, the market is “jacked up and ready to go,” he said. Blankfein added that it’s like “pouring lighter fluid on an already lit fire.” During the financial crisis, central banks had a lot of room to ease monetary policy and governments had more flexibility to push stimulative fiscal policy. Today, there’s less room and flexibility.

“The next recession is really frightening because we don’t have any stabilizers,” Jones said. “We’ll have monetary policy, which will exhaust really quickly, but we don’t have any fiscal stabilizers.”

Read more …

“Trump is going to have to find some way to back down and let China save face..”

Trump Threatens New Tariffs On $200 Billion In Chinese Goods (CNBC)

President Donald Trump has requested the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent. The new duties will go into effect “if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” the president said in a statement provided by the White House late on Monday. Beijing has pledged to fight back if Trump goes ahead with the new tariffs. U.S. stock index futures fell following the news, while Asian equity markets were mixed. It’s the latest development in escalating trade tensions between the world’s two largest economies.

On Friday, the U.S. announced a 25 percent tariff on up to $50 billion of Chinese products, prompting Chinese President Xi Jinping’s administration to respond witha 25 percent tariff on $34 billion of U.S. goods. “It’s one thing to retaliate with $50 billion here and $50 billion there but when the [U.S.] president trots out another $200 billion, that’s quite concerning,” Max Baucus, former U.S. ambassador to China under President Barack Obama, told CNBC. “This reminds me little bit of an old western … If there’s a gunfight trade war, somebody’s going to get hurt,” he continued: “Trump is going to have to find some way to back down and let China save face so that both sides can back down gradually and respectfully.”

Read more …

Democracy?

China Enters the Trade Trap (IICS)

Perhaps nobody knows what President Trump will do next, including President Trump, but right now it looks like he has successfully maneuvered China into a trade trap. The goal is to slow China’s economy such that military modernization slows and its economy cannot catch up with the United States. Meanwhile, implementation of this strategy is called “Beijing’s playbook” and the whole time President Trump speaks positively about Xi Jinping and China’s help in other areas. Bloomberg: Xi to Counter Trump Blow for Blow in Unwanted Trade War “The Chinese view this as an exercise in self-flagellation, meaning that the country that wins a trade war is the country that can endure most pain,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. China “thinks it can outlast the U.S. They don’t have to worry about an election in November, let alone two years from now.”

This is the mistake autocrats always make about Western governments and the United States. They view the messy and inefficient political system (intentionally designed that way to protect liberty) as a weakness. They think politicians care more about elections than anything else. They see the difficulty in reaching consensus as a weakness. However, they miss the fact that democratic governments enjoy greater legitimacy. If the U.S. reaches a majority in favor of confronting China on trade, then President Trump has the far stronger political hand. Confronting China on trade raises President Trump’s popularity. His base and independent voters favor this policy. Democrats oppose him because he is Trump, but they would lose votes if the only issue in November was “Confront China on trade, yes or no?”

Read more …

“..new issuance of Treasuries “will absorb such a large share of dollar liquidity that a crisis in the rest of the dollar bond markets is inevitable.”

Chasing Yield during ZIRP & NIRP Evidently Starved Human Brains of Oxygen (WS)

Let’s be clear: It’s not just Argentina. But Argentina is the most elegant example. The exodus of the hot money from emerging markets where cheap dollar-debts were used to fund pet projects and jack up leverage is – once again – in full swing. Cheap dollar-debt in emerging markets is an old sin that, like all old sins, is repeated endlessly. The outcome is always trouble. But during the act, it sure is a lot of fun for everyone. The exodus of the hot money is even gripping the non-basket-case emerging economies of Asia where it’s causing the worst indigestion since 2008.

Bloomberg: “Overseas funds are pulling out of six major Asian emerging equity markets at a pace unseen since the global financial crisis of 2008 – withdrawing $19 billion from India, Indonesia, the Philippines, South Korea, Taiwan, and Thailand so far this year.” While emerging markets shone in the first quarter, suggesting resilience to Federal Reserve tightening, that image has shattered over the past two months. With American money market funds now offering yields around 2% – where 10-year Treasuries were just last September – and prospects for more Fed hikes, the bar for heading into riskier assets has been raised.”

“It’s not a great set-up for emerging markets,” James Sullivan, head of Asia ex-Japan equities research at JPMorgan Chase, told Bloomberg. “We’ve still only priced in about two thirds of the US rate increases we expect to see over the next 12 months. So the Fed is continuing to get more hawkish, but the market still hasn’t caught up.” [..] “Dollar funding of emerging market economies has been in turmoil for months now,” Patel wrote – because yeah, the era of the cheap dollar is over, and investors should have figured that out two-and-a-half years ago when the Fed started hiking rates. But the market didn’t want to believe that the Fed would actually do it. And suddenly over the past two months, it downs on these geniuses that the Fed has actually been hiking rates and will continue to do so for some time.

Patel not only blamed the QE unwind but also the simultaneous and massive issuance of new Treasury debt by the US government to fund its ballooning deficits. This new issuance of Treasuries “will absorb such a large share of dollar liquidity that a crisis in the rest of the dollar bond markets is inevitable.”

Read more …

Excellent speech by Yanis. Read and learn. He may be the only one around with a real way to save the EU.

Why Germany Neither Can Nor Should Pay More To Save The Eurozone (Varoufakis)

[..] I wanted a Germany that was hegemonic and efficient, not authoritarian and caught up in a European Ponzi scheme. That was in 2013. Two years later, in March 2015, I wrote an article, while Greece’s finance minister, referring to the first and second bailout loans, of 2010 and 2012. Allow me to quote from it: “The fact is that Greece had no right to borrow from German – or any other European – taxpayers at a time when its public debt was unsustainable. Before Greece took on any loans, it should have initiated debt restructuring and undergone a partial default on debt owed to its private-sector creditors. But this “radical” argument was largely ignored at the time.

Similarly, European citizens should have demanded that their governments refuse even to consider transferring private losses to them. But they failed to do so, and the transfer was effected soon after. The result was the largest taxpayer-backed loan in history, provided on the condition that Greece pursue such strict austerity that its citizens have lost one-quarter of their incomes, making it impossible to repay private or public debts. The ensueing – and ongoing – humanitarian crisis has been tragic… Animosity among Europeans is at an all-time high, with Greeks and Germans, in particular, having descended to the point of moral grandstanding, mutual finger-pointing, and open antagonism. This toxic blame game benefits only Europe’s enemies.”

Read more …

More Europe at this point in time will only lead to more tension.

Macron’s Euro Zone Reforms: Grand Vision Reduced To Pale Imitation (R.)

When French President Emmanuel Macron laid out a sweeping vision for eurozone reform last September, he spoke of “rebuilding Europe”, with a common budget for the euro nations and a single minister to oversee it all. The proposals he will discuss when he sits down with German Chancellor Angela Merkel outside Berlin on Tuesday will be far less ambitious, with deep differences between the two European powerhouses. Many economists agree with Macron that fundamental reforms are needed to strengthen the eurozone and insulate the single currency — the most potent symbol of Europe’s integration — from future crises, like the 2010-13 sovereign debt contagion that nearly tore the euro apart.

But Merkel has limited room to act due to political pressure at home, and is always at pains to ensure France and Germany aren’t pushing ahead with plans that have no deep backing from the rest of the European Union. Macron and Merkel will discuss a separate budget for the 19 countries that share the single currency but much smaller than he wanted. Then there are gaps in opinion over a fund to calm bond markets in a crisis and a backstop for the banking system. “Things are going in the right direction, but the proposals we’re getting from the Germans aren’t sufficient,” said a French official who acknowledged there were deep differences between the two sides.

A German official said there were still big questions about what sort of agreement Tuesday’s meeting would produce on the budget for the euro zone. The official said Merkel’s recent political troubles over migration policy could mean she is less inclined to make concessions to the French leader. Besides the disagreement between France and Germany, it is also the nature of negotiations between the eurozone countries that grand ideas get chipped away at until a compromise is reached that satisfies all parties.

Read more …

“Where Germany has trading partners willing to borrow big to buy Mercedes and Beemers, the US has the world’s reserve currency, which acts as an unlimited credit card for our entitlement state and military/industrial empire.”

Hopeless European Millennials And The Populist Takeover (John Rubino)

Europe is frequently held up as an example of how the rest of the world should behave on a variety of issues. But this comparison misses at least two things: First, “Europe” is actually a lot of different countries in a lot of different situations. Second, much of what seems to work over there only does so because it’s being financed with ever-increasing amounts of debt. For countries, as for individuals, borrowing money is fun at first but beyond a certain point becomes debilitating, as interest payments begin to crowd out everything else. That’s where a growing number of Europe’s failed states now find themselves, with overly-generous pensions and overly-restrictive labor laws making it virtually impossible to run a functioning market-based economy.

The result: Fewer good jobs and more frustrated voters – especially young ones who have seen only the downside of the current system – and the resulting rise of populist political parties that recognize the problems without offering coherent solutions, thus guaranteeing even more chaos in the future. As Today’s Wall Street Journal notes, in Italy and Greece, nearly a third of young adults not only aren’t working but aren’t enrolled in school or training. What are they doing? Apparently just sitting around and stewing about life’s injustice. As for where they’re sitting and stewing, in Greece, Italy and Spain it’s now normal for adults all the way into their 30s to live with their parents, largely because they can’t find work that pays enough to afford a house, car and other requirements of independent life.

As for Germany, which looks great by comparison, keep in mind that a big part of its economic outperformance is due to other EU countries borrowing huge amounts of money to buy German exports. When the latter run out of money – a point which is clearly coming – Germany suffers twice, once when it loses important customers and again when its banks, having lent trillions of euros to Italy, Spain, et al, have to eat those losses. But bad-mouthing Europe should not be seen as implicit praise of the US. We, like Germany, have an advantage that’s both unfair and temporary. Where Germany has trading partners willing to borrow big to buy Mercedes and Beemers, the US has the world’s reserve currency, which acts as an unlimited credit card for our entitlement state and military/industrial empire.

Read more …

Starting to like Sanchez.

Spain’s New Government To Remove Franco’s Remains From Mausoleum (AFP)

Spain’s new Socialist government is determined to remove the remains of Francisco Franco from a vast mausoleum near Madrid and turn it into a place of “reconciliation” for a country still coming to terms with the dictator’s legacy. “We don’t have a date yet, but the government will do it,” Prime Minister Pedro Sanchez said late Monday during his first television interview since being sworn in on June 2 after toppling his conservative predecessor Mariano Rajoy in a confidence vote. He recalled that a non-binding motion approved last year in parliament called for Franco’s remains to be exhumed from the massive Valley of the Fallen mausoleum some 50 kilometres (30 miles) northwest of Madrid and the site turned into a “memorial of the victims of fascism”.

“Spain can’t allow symbols that divide Spaniards. Something that is unimaginable in Germany or Italy, countries that also suffered fascist dictatorships, should also not be imaginable in our country,” Sanchez added. Earlier on Monday Socialist party spokesman Oscar Puente said the mausoleum should be transformed into a “place of reconciliation, of memory, for all Spaniards, and not of apology for the dictatorship.” Franco ruled Spain with an iron fist from the end of the country’s 1936-39 civil war until his death in 1975, when he was buried inside a basilica drilled into the side of a mountain at the Valley of the Fallen, one of Europe’s largest mass graves.

Read more …

A history. “Simply provide everyone with a basic income so that they can afford to live, then let them get on with whatever they want to do.”

A Very British Disease (Coppola)

The desire to judge people’s motives rather than addressing their needs is a “British disease”. We have been suffering from it for hundreds of years, cycling endlessly through repeated cycles of generosity and harshness. Each cycle ends in public outrage and an abrupt reversal: but the memory eventually fades, and the disease reappears in a new form. In this post, I outline the tragic history of Britain’s repeated attempts to “categorise the poor”.

[..] worst of all, using rules and sanctions to compel the genuinely work-shy to work diverts attention and resources away from those who really need help. And it unfairly stigmatises the vast majority of those who are not working, or who are not working as many hours as we think they should, whether through unemployment, sickness or disability. Study after study has shown that in general, people want to work. The problem is that suitable jobs aren’t always available. And yet there remains a prevalent view, even among people who should know better, that people must be compelled to work, or to work harder, with harsh treatment. But today’s sanctions for those who won’t or can’t work are mild compared to the punishments of old: why should they be any more successful?

We would do better to concentrate our attention on helping those who genuinely want to work to find fulfilling, productive and well-paid jobs. And we should also stop trying to decide whether someone “deserves” social support. We have been trying to distinguish between the “deserving” and “undeserving” poor for eight hundred years, and we are no better able to make that judgement now than we were in the fourteenth century, or the sixteenth, or the nineteenth. It is time to give up this fruitless attempt to judge people’s motives. Simply provide everyone with a basic income so that they can afford to live, then let them get on with whatever they want to do.

Read more …

Next up: sell Parliament.

Thousands Of Public Buildings And Spaces In England Sold Off A Year (G.)

More than 4,000 public buildings and spaces in England are being sold off every year, with more than 7,000 others at risk over the next five years, a charity has said. Locality says the majority of the sites being offloaded by local authorities are sold to private developers for the highest price, forever lost to communities around them. The charity wants the government to create a £200m-a-year community ownership fund for the next five years to help preserve the buildings and spaces for the use of local people. Tony Armstrong, its chief executive, said: “This is a sell-off on a massive scale. We know that many of the buildings being lost have valuable community uses.

“Everyone of us can think of a local public building or outside space we love and use, from libraries to lidos and town halls to youth centres. They are owned by the public and they’re being sold off for short-term gain to fill holes in council budgets. “Many hundreds of local community groups are stepping up and fighting for community ownership. But they urgently need support and help with startup costs if they are to compete with the commercial developers.” The Great British Sell Off report is published on Tuesday and is based on freedom of information requests sent to all 353 local authorities in England. Locality received 55 responses on the number of buildings and spaces sold between the financial years 2012-13 and 2016-17, as well as 127 replies about sites identified as surplus over the next five years, extrapolating the results to obtain national totals.

Read more …

“..if human relations are solely about power, than exercising power over others is all that matters..”

Coercion (Jim Kunstler)

Mr. Peterson laid it out nicely: identity politics assigns everyone to ethnic, racial, and sexual groups, and all the human relations among them amount to never-ending battles for political power. Nothing else matters. Individuals especially don’t matter, only the group. And no group has abused its power more than European white men. This animating idea comes out of the mid-20th century “post-structural critical theorists” Jacques Derrida and Michel Foucault, whose Marxian views emerged conveniently at a time when women and non-white people were vying for departmental chairs in the college humanities and social science programs, and thus have two generations been indoctrinated.

Well, if human relations are solely about power, than exercising power over others is all that matters. Hence, the key to identity politics: it’s all about coercion, making others do your will by threat of force and force itself. These days, the main threat is depriving heretics and apostates of their livelihood. That’s what happened to Brett Weinstein at Evergreen U in Washington State last year, and to Jordan Peterson himself at the U of Toronto, when he objected loudly and publicly to a new Canadian federal law that sought to punish citizens who refused to use the new menu of personal pronouns for the rapidly multiplying new gender categories (e.g. ze, zir, they, xem, nem, hir, nir….)

Both Weinstein and Peterson refused to be coerced and found themselves inadvertently leading a movement against the pervasive, creeping coercion of our time — which has now spread from the campuses into corporate life, with the HR departments working overtime to enforce thought among employees, because company profits are at stake (e.g. Starbucks day-off for “diversity and inclusion training”).

Read more …

Somewhat curious that the big political problems start just as the numbers fall.

Sharp Fall In Number Of People Seeking Asylum In EU (G.)

Fewer people sought asylum in the European Union last year, although numbers remain higher than before the arrival of 1 million people in 2015 triggered a political crisis that continues to divide Europe. Showing a sharp drop in asylum claims, the latest report from the EU’s asylum office was published on Monday after emergency talks in the German government over asylum policy and a bitter standoff between EU nations over a migrant rescue ship that eventually docked in Spain after being banned from Italy and Malta. The EU’s asylum office counted 728,470 applications for international protection in 2017, a 44% reduction on the 1.3m applications the previous year.

More than 1 million people entered the EU in 2015, many fleeing the war in Syria. Syria, Iraq and Afghanistan remain the most frequent countries of origin for asylum seekers, accounting for 29% of all claims. The downward trend of asylum claims continued in the first four months of 2018, the EU asylum office said, although numbers have still not returned to pre-crisis levels. About 460,000 people applied for asylum in EU countries in 2013. The fall in asylum applications reflects a sharp drop in people making the hazardous journey over the eastern Mediterranean to Greece and the central Mediterranean to Italy, although there has been an increase in people travelling from west Africa to Spain, albeit from a lower base.

Germany continues to receive more applications for asylum than any other country in Europe, with 222,560 claims in 2017, folowed by Italy, France and Greece. The UK was in fifth place, with 33,780 applications, accounting for 4.6% of all EU asylum claims. But the backlog remains high: 954,100 claims are awaiting a decision, including 443,640 in Germany, according to the EU asylum office.

Read more …

Jun 162018
 
 June 16, 2018  Posted by at 9:08 am Finance Tagged with: , , , , , , , , , ,  


Paul Gauguin Nevermore 1897

 

Trump Sets Tariffs On $50 Billion In Chinese Goods; Beijing Strikes Back (R.)
Why The U.S.-China Trade Deficit Is So Huge (MW)
Wall Street Builds Immunity To Trade War Rhetoric (R.)
Nomi Prins: The Central Banking Heist Has Put The World At Risk (UH)
Some Of The ‘Most Systemically Important Banks’ In The World Are Tumbling (ZH)
Merger Mania (Lebowitz)
The Key Word In The Trump-Kim Show (Escobar)
Merkel’s Position As German Leader Under Threat Over Immigration Split (CNBC)
US Government Says 2,000 Child Separations At Mexico Border In 6 Weeks (R.)
French Police Cut Soles Off Migrant Children’s Shoes – Oxfam (G.)
In ‘Calais of Italy’ Tension Soars Over Migrant Crisis (AFP)
Greek Police Hunt Golden Dawn Lawmaker Faced with Charges of Treason (GR)

 

 

Negotiating.

Trump Sets Tariffs On $50 Billion In Chinese Goods; Beijing Strikes Back (R.)

U.S. President Donald Trump said he was pushing ahead with hefty tariffs on $50 billion of Chinese imports on Friday, and the smoldering trade war between the world’s two largest economies showed signs of igniting as Beijing immediately vowed to respond in kind. Trump laid out a list of more than 800 strategically important imports from China that would be subject to a 25 percent tariff starting on July 6, including cars, the latest hardline stance on trade by a U.S. president who has already been wrangling with allies.

China’s Commerce Ministry said it would respond with tariffs “of the same scale and strength” and that any previous trade deals with Trump were “invalid.” The official Xinhua news agency said China would impose 25 percent tariffs on 659 U.S. products, ranging from soybeans and autos to seafood. China’s retaliation list was increased more than six-fold from a version released in April, but the value was kept at $50 billion, as some high-value items such as commercial aircraft were deleted.

Read more …

Soybeans R Us.

Why The U.S.-China Trade Deficit Is So Huge (MW)

President Donald Trump will let tariffs on Chinese goods worth up to $50 billion take effect after talks between the two countries failed to appease White House demands on reducing huge U.S. trade deficits. The U.S. has run large deficits with China for years and in some cases no longer produces certain goods such as consumer electronics that are popular with Americans. It won’t be easy, and it might even be impossible, to reduce the gap much any time soon. In 2017, the U.S. posted a $375.6 billion deficit in goods with China.

Most glaring is the huge deficit in computers and electronics, but the U.S. is a net importer from China in most market segments except for agriculture. The U.S. is excluding Chinese-made cellphones and televisions from its tariffs. China has been a big buyer of American-grown soybeans and other crops. Planes made by Boeing also are a product in demand in China. What happens next? Trump has vowed to increase tariffs if China retaliates, but the Chinese promised to return the favor. A trade dispute between the two largest economies in the world could result in lasting damage to the global economy if it metastasizes.

Read more …

What happens when there is no price discovery.

Wall Street Builds Immunity To Trade War Rhetoric (R.)

Fears of tariffs and a potential global trade war have jostled U.S. stocks over the past few months, but there is a sense among investors that the market is taking the drum beat of rhetoric and statements more in stride. In the latest salvo, U.S. President Donald Trump announced hefty tariffs on $50 billion of Chinese imports on Friday, and Beijing threatened to respond in kind. But even as the developments threatened to ignite a trade war between the world’s two largest economies, the equity market largely shrugged it off. The benchmark S&P 500 index ended down only 0.1 percent on Friday.

That paled compared to losses earlier in the year that were sparked by fears of a U.S.-China trade war that would be detrimental to economic growth. “The market has gotten reasonably comfortably numb to this tariff stuff,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “They are becoming more accustomed to this being a first foray and negotiating tool.” The U.S. Customs and Border Protection is to begin collecting tariffs on an initial tranche of 818 Chinese product categories on July 6. “It’s kind of the cry-wolf syndrome,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “I think people fear the tariffs and the uncertainty about it, but think, ‘OK, this is just another negotiating point.’”

Read more …

“..a de facto heist that has enabled the most dominant banks and central bankers to run the world”.

Nomi Prins: The Central Banking Heist Has Put The World At Risk (UH)

Over the last decade, she tells me when we meet in London, “under the guise of QE, central bankers have massively overstepped their traditional mandates, directing the flow of epic sums of fabricated money, without any checks or balances, towards the private banking sector”. Since QE began, in the aftermath of the financial crisis, “the US Federal Reserve has produced a massive $4.5 trillion of conjured money, out of a worldwide QE total of around $21 trillion”, says Prins. The combination of ultra-low interest rates and vast monetary expansion, she explains, has caused “speculation to rage … much as a global casino would be abuzz if everyone gambled using everyone else’s money”.

Much of this new spending power, though, has remained “inside the system”, with banks shoring up their balance sheets. “So lending to ordinary firms and households has barely grown as a result of QE,” says Prins, “nor have wages or prosperity for most of the world’s population”. Instead, “the banks have gone on an asset-buying spree”, she explains, getting into her stride, “with the vast flow of QE cash from central banks to private banks ensuring endless opportunities for market manipulation and asset bubbles – driven by government support”. Prins describes “the power grab we’ve seen by the US Federal Reserve, the European Central Bank, the Bank of Japan and other central banks”.

Using QE, she argues, “these illusionists have altered the nature of the financial system and orchestrated a de facto heist that has enabled the most dominant banks and central bankers to run the world”.

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They run the world and they’re still failing. Follow the money.

Some Of The ‘Most Systemically Important Banks’ In The World Are Tumbling (ZH)

Since the Federal Reserve hiked rates, “big” US banks have dramatically underperformed “small” US banks, continuing a trend that has been going on since February… But it’s broader than that; this “big” bank blow-up is global. The stock prices of 16 of the most ‘Systemically Important Financial Institutions’ (SIFIs) in the world are now in bear market territory (down by 20% or more from their recent highs in dollar terms); and as the FT reports, this has caused Ian Hartnett, chief investment strategist at London-based Absolute Strategy Research, to issue his first “Black Swan” alert since 2009.

Of the 39 SIFIs, these are the 16 in bear market territory: Deutsche Bank, Nordea, ICBC, UniCredit, Crédit Agricole, ING, Santander, Société Générale, BNP Paribas, UBS, Agricultural Bank of China, AXA, Mitsubishi UFJ Financial Group, Bank of China, Credit Suisse and Prudential Financial. At some point, says Hartnett, central bankers will have to respond to bearish signals from almost half the global SIFIs, rather than continuing to tighten monetary policy: “The clue is in the name,” he said. “If these banks are supposed to be systemically important then policymakers ought to be watching them to see what is happening.” “The synchronised dips were a sign of global financial stress.”

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“..there has been $2 trillion in mergers in 2018, and its only June.”

Merger Mania (Lebowitz)

We have written numerous articles describing how cheap money and poorly designed executive compensation packages encourage corporate actions that may not be in the best interest of longer-term shareholders or the economy. The bottom line in the series of articles is that corporations, in particular shareholders and executives, are willing to forego longer term investment for future growth opportunities in exchange for the personal benefits of short-term share price appreciation. Buybacks and mergers, both of which are fueled by the Federal Reserve’s ultra-low interest rate policy have made these actions much easier to accomplish.

On the other hand, corporate apologists argue that buybacks are simply a return of capital to shareholders, just like dividends. There is nothing more to them. Instead of elaborating about the longer term ill-effects associated with buybacks or the true short-term motivations behind many mergers, the powerful simplicity of the following two graphs stands on their own. The first graph, courtesy Meritocracy, shows how mergers tend to run in cycles. Like clockwork, merger activity tends to peak before recessions. Not surprisingly, the peaks tend to occur after the Federal Reserve (Fed) has initiated a rate hike cycle. The graph only goes through 2015, but consider there has been $2 trillion in mergers in 2018, and its only June.

The following graph shows how corporate borrowing has accelerated over the last eight years on the back of lower interest rates. Currently, corporate debt to GDP stands at levels that accompanied the prior three recessions. There is a pattern here among corporate activities which seems similar to that which we see in investors. At the point in time when investors should be getting cautious and defensive as markets become stretched, they carelessly reach for more return. Based on the charts above, corporate executives do the same thing. The difference is that when an investor is careless, his or her net worth is at risk. A corporate executive on the other hand, loses nothing and simply walks away and frequently with a golden parachute.

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The statement does have substance.

The Key Word In The Trump-Kim Show (Escobar)

The Singapore joint statement is not a deal; it’s a statement. The absolutely key item is number 3: “Reaffirming the April 27, 2018, Panmunjom Declaration, the DPRK commits to work toward the complete denuclearization of the Korean Peninsula.” This means that the US and North Korea will work towards denuclearization not only in what concerns the DPRK but the whole Korean Peninsula. Much more than “…the DPRK commits to work toward the complete denuclearization of the Korean Peninsula”, the keywords are in fact “reaffirming the April 27, 2018, Panmunjom Declaration…” Even before Singapore, everyone knew the DPRK would not “de-nuke” (Trump terminology) for nothing, especially when promised just some vague US “guarantees”.

Predictably, both US neocon and humanitarian imperialist factions are unanimous in their fury, blasting the absence of “meat” in the joint statement. In fact there’s plenty of meat. Singapore reaffirms the Panmunjom Declaration, which is a deal between North Korea and South Korea. By signing the Singapore joint statement, Washington has been put on notice of the Panmunjom Declaration. In law, when you take notice of a fact, you can’t ignore it later. The DPRK’s commitment to denuclearize in the Singapore statement is a reaffirmation of its commitment to denuclearize in the Panmunjom Declaration, with all of the conditions attached to it. And Trump acknowledged that by signing the Singapore statement.

The Panmunjom Declaration stresses that: “South and North Korea confirmed the common goal of realizing, through complete denuclearization, a nuclear-free Korean Peninsula. South and North Korea shared the view that the measures being initiated by North Korea are very meaningful and crucial for the denuclearization of the Korean peninsula and agreed to carry out their respective roles and responsibilities in this regard. South and North Korea agreed to actively seek the support and cooperation of the international community for the denuclearization of the Korean Peninsula.”

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The risk is real.

Merkel’s Position As German Leader Under Threat Over Immigration Split (CNBC)

A split over immigration between Angela Merkel’s Christian Democratic Union (CDU) and its sister Christian Social Union (CSU) party is threatening to end her 12-year spell as Germany’s leader. Germany’s grand coalition government was formed in March after five months of political deadlock since an election the previous September. It resulted in Merkel’s fourth term as German chancellor. That vote saw a big upswing in support for the right-wing Alternative for Germany (AfD) party, who campaigned against Merkel’s open-door policy to refugees and migrants arriving from the Middle East and Africa.

Now the CSU, fearful of losing further support from its conservative base, is threatening to withdraw from the country’s grand coalition unless Merkel hardens her immigration stance. “My sources in Berlin say the situation is on a knife-edge right now, some are even giving it an 80 percent probability that Merkel will step down in the next two weeks,” said Nina Schick, director at political consultancy Rasmussen Global, in a telephone call to CNBC Friday. Schick, however, warned that writing Merkel off has long been a dangerous game. “The fundamental rule in German politics since 2006 is don’t underestimate Merkel,” she added.

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CUT IT OUT! Bunch of crazies.

US Government Says 2,000 Child Separations At Mexico Border In 6 Weeks (R.)

The government said on Friday that 1,995 children were separated from 1,940 adults at the U.S.-Mexico border between April 19 and May 31, as the Trump administration implements stricter border enforcement policies. The number represents a dramatic uptick from the nearly 1,800 family separations that Reuters reported had happened from October 2016 through February of this year. The official tally of separations is now nearly 4,000 children, not including March and the beginning of April 2018. In May, U.S. Attorney General Jeff Sessions announced a ‘zero tolerance’ policy in which all those apprehended entering the United States illegally would be criminally charged, which generally leads to children being separated from their parents.

The families were all separated so the parents could be criminally prosecuted, said a spokesman for the Department of Homeland Security, who declined to be named, on a call with reporters. “Advocates want us to ignore the law and give people with families a free pass,” said the official. “We no longer exempt entire classes of people.” The Department of Homeland Security did not immediately respond to a request to provide a breakdown of the age of children separated from their parents and held in custody, but the official said they do not separate babies from adults.

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I said: CUT IT OUT!

French Police Cut Soles Off Migrant Children’s Shoes – Oxfam (G.)

French border police have been accused of detaining migrant children as young as 12 in cells without food or water, cutting the soles off their shoes and stealing sim cards from their mobile phones, before illegally sending them back to Italy. A report released on Friday by the charity Oxfam also cites the case of a “very young” Eritrean girl, who was forced to walk back to the Italian border town of Ventimiglia along a road with no pavement while carrying her 40-day-old baby. The allegations, which come from testimony gathered by Oxfam workers and partner organisations, come two months after French border police were accused of falsifying the birth dates of unaccompanied migrant children in an attempt to pass them off as adults and send them back to Italy.

“We don’t have evidence of violent physical abuse, but many [children] have recounted being pushed and shoved or shouted at in a language they don’t understand,” Giulia Capitani, the report’s author, told the Guardian. “And in other ways the border police intimidate them – for example, cutting the soles off their shoes is a way of saying, ‘Don’t try to come back’.” Daniela Zitarosa, from the Italian humanitarian agency Intersos, said: “Police [officers] yell at them, laugh at them and tell them, ‘You will never cross here’. “Some children have their mobile phone seized and sim card removed. They lose their data and phonebook. They cannot even call their parents afterwards.”

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France’s role is not pretty. Macron’s criticism of Italy unveils it.

In ‘Calais of Italy’ Tension Soars Over Migrant Crisis (AFP)

Emmanuel Macron is not a welcome guest in the Italian border town of Ventimiglia, a flashpoint in Europe’s migration crisis. Residents are furious at the French president for charging Rome with “cynicism and irresponsibility” this week after it turned away a rescue boat carrying more than 600 asylum-seekers. “It’s bad what happened to the Aquarius (ship) but how dare Macron criticise Italy!” vented retired teacher Fulvia Semeria who volunteers for the Secours Catholique charity, a key aid group for migrants. “It’s unacceptable from a country that does nothing for migrants and even rejects them,” she said, calling his remarks “insulting and totally unfair”.

The pretty northern town at the gates of the French Riviera has received tens of thousands of asylum seekers pushed back by France since the eruption of Europe’s worst migration crisis three years ago. This is in addition to scores of desperate African refugees landing on its shores after undertaking the perilous journey across the Mediterranean. The influx has seen Ventimiglia dubbed the “Calais of Italy”, in reference to the French coastal town notorious for its sprawling migrant camps. [..] At least 16 migrants have died trying to cross from France into Italy since September 2016, falling off mountains, being hit by cars or electrocuted while hiding under train carriages.

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Pretty crazy. All over a name change.

Greek Police Hunt Golden Dawn Lawmaker Faced with Charges of Treason (GR)

A Golden Dawn lawmaker is on the run after Greece’s authorities issued an arrest warrant following his call in the parliament on Friday for the arrest of the country’s prime minister and president over the provisional ‘Macedonia’ name deal. According to reports, Konstantinos Barbarousis, who could face charges of high treason, escaped a police blockade late on Friday in the western region of Aetoloakarnania where he sought refuge. A huge police operation is under way to locate him and bring him to justice. Judicial authorities do not need Parliament’s approval to lift an MP’s immunity in the case of treason-related charges.

Speaking in Parliament, Barbarousis accused the government of “not legislating in the nation’s interests but in its own.” He called for a coup d’etat and asked on the Greek armed forces to “abide by their oath” and arrest Prime Minister Alexis Tsipras, Defense Minister Panos Kammenos and President Prokopis Pavlopoulos. His outburst led to his expulsion form the extremist party, as the speaker of the house barred any members of Golden Dawn speaking during the debate on a no-confidence motion against the government tabled after the Greece, FYROM agreement.

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