Nov 192018
 
 November 19, 2018  Posted by at 10:31 am Finance Tagged with: , , , , , , , , , , , , ,  


René Magritte Popular panorama 1926

 

Chinese Firms With Dollar Debts Are ‘Under Increasing Pressure’ (CNBC)
Tim Cook: Tech Regulation ‘Inevitable’ Because Free Market Isn’t Working (MW)
Trump Would Not Intervene If Whitaker Moves To Curtail Mueller Probe (R.)
The Ultimate Fake News (PL)
Brexit Transition Could Be Extended To 2022 – Barnier (G.)
May Told To Reveal Impact Of Brexit Plan On Economy (Ind.)
UK PM May Seeks Business Support For EU Deal (R.)
Jeremy Corbyn To Set Out Labour Alternative To PM’s Brexit Plan (G.)
Macron: Europe Must Unite To Prevent ‘Global Chaos’ (BBC)
The Eurozone Banks’ Trillion Timebomb (Lacalle)
Turkey Says Khashoggi Killers May Have Taken Body Parts Out Of Country (R.)
Sackler Family Face Mass Litigation, Criminal Investigations Over Opioids (G.)
China Expands Ban On Waste Imports (AFP)
Letter to Prime Minister Scott Morrison, Australia (Pamela Anderson)

 

 

Corporate defaults on the horizon.

Chinese Firms With Dollar Debts Are ‘Under Increasing Pressure’ (CNBC)

More Chinese companies could default on their debts issued in U.S. dollars, experts warn. They say that the rising cost of borrowing and a weakening Chinese yuan could see more firms fail to meet upcoming payments, as an increasing number of bonds mature in the next few years. Japanese bank Nomura said in a research note in early November that for the first 10 months of this year, defaults on Chinese offshore corporate dollar bonds — or OCDB — totaled $3.4 billion, compared with none last year. It expects more defaults to come over the next two years. So far, there’s little chance that increased pressure on offshore dollar repayment could trigger a broader crisis, but the situation should be closely monitored for spillover threats.

“I’m watchful over how these dollar debts will roll over in time,” Tai Hui at JP Morgan in Hong Kong, told reporters Thursday. Hui stressed that he currently sees no systemic risks, but noted that financial strains often begin in one area before spreading. “I think the government needs to be very mindful of some of these potential links,” he said, adding that the property sector should be foremost in mind. In its report dated Nov. 7, Nomura estimated that outstanding dollar-denominated Chinese corporate debt stood at about $751 billion in the third quarter. That’s more than double the amount at the end of 2015. It projected that an average of $33.3 billion of Chinese corporate dollar bonds will mature each quarter from the fourth quarter of 2018 to the end of 2020, sharply higher than the estimated $11 billion that matured in the third quarter of this year.

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When you think about it, that’s quite a statement.

Tim Cook: Tech Regulation ‘Inevitable’ Because Free Market Isn’t Working (MW)

Regulation of tech companies is coming, Apple Inc. Chief Executive Tim Cook says, because the free market “is not working.” “I’m a big believer in the free market. But we have to admit when the free market is not working. And it hasn’t worked here. I think it’s inevitable that there will be some level of regulation.” – Tim Cook, Apple CEO. “Generally speaking, I am not a big fan of regulation,” Cook told Axios in an interview for “Axios on HBO,” airing Sunday night, but “I think the Congress and the administration at some point will pass something,”

And Cook said tech companies should not be afraid of regulations. “This is not a matter of privacy versus profits, or privacy versus technical innovation. That’s a false choice,” he said. Cook told Axios that while he believes technology is not inherently good or bad, companies must be aware that their products can be misused. He also said that while Silicon Valley has embraced diversity in general, it “has missed it” when it comes to closing the gender gap.

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Time for Mueller to put his cards on the table.

Trump Would Not Intervene If Whitaker Moves To Curtail Mueller Probe (R.)

President Donald Trump said in an interview aired on Sunday he would not intervene if Matthew Whitaker, his acting U.S. attorney general, moved to curtail Special Counsel Robert Mueller’s investigation of Russian interference in the 2016 presidential election. In an interview with the “Fox News Sunday” program taped on Friday, Trump also said he probably would not agree to a sit-down interview with Mueller, who also is investigating whether the Republican president’s campaign conspired with Moscow and whether Trump has unlawfully sought to obstruct the probe.

Whitaker took over supervision of Mueller’s investigation on Nov. 7 after Trump appointed him as the chief U.S. law enforcement official to replace Jeff Sessions, who the president ousted. Whitaker, who Democrats have called a Trump “political lackey,” in the past criticized the scope of the Mueller probe and brought up the possibility of undermining it by slashing Mueller’s funding. Trump, in the interview, said he was unaware of Whitaker’s past statements about Mueller’s probe and that he would “not get involved” if Whitaker moved to curtail it. “It’s going to be up to him,” Trump told “Fox News Sunday” interviewer Chris Wallace. “I think he’s very well aware politically. I think he’s astute politically. … He’s going to do what’s right.”

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“..the question asked: Did Russia “tamper with vote tallies in order to get Donald Trump elected President?” There is no evidence –I repeat, none– that Russia “tampered with vote tallies.” To my knowledge, no one has claimed that Russia tampered with vote tallies.”

The Ultimate Fake News (PL)

Fake news is a serious problem in our political life. I’m not referring to a pathetically small number of Facebook ads bought by Russian provocateurs. I’m talking about the fake news that was paid for by the Hillary Clinton campaign and the Democratic National Committee; fabricated by Democratic Party-allied consultants; propagated by the FBI and the CIA; promoted by the broadcast networks, CNN, MSNBC, the New York Times, the Washington Post, and the Associated Press; trumpeted by pretty much every senior elected Democrat; and kept alive by the appalling Robert Mueller. The claim that the Trump campaign colluded with the Russians to “steal” the 2016 presidential election is the great fake news of our time. How successful have the Democrats been in propagating that myth? This survey by The Economist and YouGov suggests that they have been successful beyond their wildest dreams. First the numbers, then some observations.


click to enlarge

Note the question asked: Did Russia “tamper with vote tallies in order to get Donald Trump elected President?” There is no evidence–I repeat, none–that Russia “tampered with vote tallies.” To my knowledge, no one has claimed that Russia tampered with vote tallies. I am not aware of any plausible theory on which a foreign power could tamper with vote tallies. To say that Russia tampered with vote tallies is as credible as asserting that the moon is made of green cheese. And yet, two-thirds of Democrats say it is either “definitely true” (31%) or “probably true” (36%) that Russia tampered with vote tallies. Women are especially gullible; 48%, across all party lines, have fallen for this fake news. Sadly, 70% of blacks have bought it hook, line and sinker. The Northeast is the country’s most ignorant region, apparently: 47% of Northeasterners have fallen for the hoax.

So the Democrats, by their constant hysteria and innuendo, have convinced a large majority of their followers, and 42% of all Americans, of a palpable falsehood that was fabricated in order to assure Hillary Clinton’s election and then, when that effort failed, perpetuated in an attempt to cripple President Trump’s administration. Is this the most successful disinformation campaign in history? I don’t know. But in American history, I can’t think of a plausible rival. President Trump is right: fake news is a serious threat. By cynically selling an absurd lie to its followers, the Democratic Party has badly damaged confidence in our democracy.

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Which would add the two years at the back end that May lost at the front by doing nothing.

Brexit Transition Could Be Extended To 2022 – Barnier (G.)

Europe’s chief Brexit negotiator, Michel Barnier, has raised the prospect of the UK remaining under EU control until the end of 2022, a proposal that would cost billions and infuriate Tory Brexiters. At a special meeting with ambassadors from the EU’s 27 member states, Barnier floated the prospect of extending the Brexit transition until the end of 2022. His idea would allow an extra two years to negotiate a trading relationship, but means the UK would continue to follow EU rules and pay into its budget with no say for six and a half years after the 2016 vote to leave. Both sides have already agreed a transition period of 21 months, until the end of 2020, as well as the chance to extend once by mutual consent.

The length of the extension is still to be finalised by negotiators. The transition period, which the British government prefers to call the implementation period, would see the UK following all EU laws and European court of justice rulings, while having no ministers or MEPs in the EU decision-making process. Theresa May has previously suggested an extension of only a few months would be needed, but the EU is still waiting on the UK to make a formal proposal. Negotiations between the EU and UK were continuing on Sunday as Brexit talks entered a critical final week, ahead of a special summit on 25 November when both sides hope to seal the deal.

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There is an analysis and she refuses to publish it?

May Told To Reveal Impact Of Brexit Plan On Economy (Ind.)

Theresa May faces an embarrassing defeat over plans to force her into publishing data comparing Britain’s economic prospects under her Brexit deal to staying in the EU. Eleven Conservatives – including Jo Johnson, who resigned as a minister last week – have publicly signed up to the cross-party push, with the rebellion set to grow if it comes to a vote on Monday. The prime minister has so far refused to commit to releasing the analysis, which is likely to underline how remaining in the EU would deliver a more prosperous future for the country. Ms May meanwhile continued her media offensive to defend her Brexit plans, while eurosceptics pushed to raise enough support to trigger a vote of no confidence in the Conservative leader.

On Monday more than 70 MPs from six different parties will attempt to push through an amendment to the Finance Bill, which if passed would obligate Ms May to publish an economic impact assessment into the withdrawal deal she has agreed with the EU. The names include 11 Tories – the same number who rebelled the last time Ms May was defeated in the Commons on Brexit – who had backed Remain in 2016, many of whom now also support a new final say referendum on the outcome of Brexit.

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Business is so scared of a No-Deal Brexit they’ll sign up to almost anything by now.

UK PM May Seeks Business Support For EU Deal (R.)

British Prime Minister Theresa May will seek to win support from business leaders for her contentious draft European Union divorce deal on Monday as dissenters in her own party scrambled to trigger a leadership challenge. May has had a tumultuous few days since unveiling her deal on Wednesday last week, with several ministers, including her Brexit minister, resigning and some of her own members of parliament seeking to oust her. The British leader has vowed to fight on, on Sunday warning that toppling her risked delaying Britain’s EU exit, and has said the future partnership agreement will help ensure the government delivers on the 2016 Brexit vote. The EU is due to hold a summit to discuss the deal on Nov. 25.

May will defend her deal in a speech to the CBI business lobby group’s annual conference on Monday, saying Britain would embark on an intense week of Brexit negotiations to try to thrash out the details of its outline future relationship with the EU. “We now have an intense week of negotiations ahead of us in the run-up to the special European Council on Sunday,” May will say, according to advance extracts. “During that time I expect us to hammer out the full and final details of the framework that will underpin our future relationship and I am confident that we can strike a deal at the council that I can take back to the House of Commons.”

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His entire idea is to wait for May to fail?! Look, she can threaten a No-Deal, and that would entice people to sign up for her plan, not for a separate Labour one for which time may have run out anyway.

Jeremy Corbyn To Set Out Labour Alternative To PM’s Brexit Plan (G.)

Jeremy Corbyn will set out Labour’s “good Brexit plan” on Monday, saying that leaving the European Union must be the catalyst for a “radical programme of investment and real change” as the party steps up efforts to show it has an alternative to Theresa May’s approach. Speaking to business leaders at the CBI’s annual conference in London, which will also be addressed by the prime minister, Corbyn will claim May’s deal, published last week, would “leave the country in an indefinite halfway house without a real say over our future”. Instead, he will say, “a good Brexit plan for this country is not just about what can be negotiated with Brussels. It must also include a radical programme of investment and real change across our regions and nations.

“Brexit should be the catalyst to invest in our regions and infrastructure, bringing good jobs and real control to local communities and people.” His words are likely to infuriate those Labour MPs who believe the party’s stance should be to seek to block Brexit by pressing for a referendum on May’s deal – with the option of remaining in the EU on the ballot paper. Corbyn played down that suggestion on Sunday, telling Sky News’ Sophy Ridge: “It’s an option for the future, but it’s not an option for today. If there was a referendum tomorrow, what’s it going to be on, what’s the question going to be?” Asked how he might vote in such a referendum, Corbyn said, “I don’t know how I am going to vote, what the options would be at that time.”

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So unpopular at home he turns to saving the entire world.

Macron: Europe Must Unite To Prevent ‘Global Chaos’ (BBC)

France’s President Emmanuel Macron has called for closer ties between his country and Germany, saying Europe “has the obligation not to let the world slip into chaos”. Mr Macron is in Berlin for the country’s annual day of mourning for victims of war. In a speech to Germany’s parliament, he said Europe must not “become a plaything of great powers”. Mr Macron wants a more integrated EU, with a joint eurozone budget. He also wants Germany’s backing for a European Army, which he has said would reduce the bloc’s dependence on the US, and a new tax on internet tech giants.

German Chancellor Angela Merkel has expressed tentative support for some of these ideas, but others are controversial in Berlin. The French leader spoke of nationalist forces “with no memory”, and urged progressive forces to unite in an uncertain world. “There are too many powers that wish to thwart us, that interfere in our public debates, attack our liberal democracies and are trying to pit us against each other,” he said. “And in this global order, which we have to take very seriously, our strength – our true strength – lies in unity.” The French president acknowledged that unity could be “scary,” and would mean nations pooling their funds and decision-making – but then asked: “Is it better to remain locked at a standstill?”

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CoCos.

The Eurozone Banks’ Trillion Timebomb (Lacalle)

Disappointing earnings, rising risk in the eurozone as well as in their diversification markets such as emerging economies, weak net income margins and low return on tangible equity are factors that have contributed to the weak performance of European banks. Investors are rightly suspicious about consensus estimates for 2019 with expectations of double-digit EPS growth rates. Those growth rates look impossible in the current macroeconomic scenario. Eurozone banks have done a good job of strengthening their capital structure, reaching almost a one per cent per annum increase in Tier 1 core capital. The question is whether this improvement is enough.

Two factors weigh on sentiment: • More than EUR104 billion of risky “hybrid bonds” (CoCos) are included in the calculation of core capital • The total volume of Non-Performing Loans across the European Union is still at around EUR 900 billion, well above pre-crisis levels, with a provision ratio of only 50.7%, according to the European Commission. Although the ratio has declined to 4.4%, down by roughly 1 percentage point year-on-year, the absolute figure remains elevated and the provision ratio is too small. This is what I call the “one trillion eurozone timebomb”. One trillion euro risk when the MSCI Europe Bank index has a total market capitalization of around EUR790 billion.

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This doesn’t rhyme with the acid.

Turkey Says Khashoggi Killers May Have Taken Body Parts Out Of Country (R.)

The killers of Saudi journalist Jamal Khashoggi may have taken his dismembered body out of Turkey in luggage, Turkish Defence Minister Hulusi Akar was quoted as saying by broadcaster CNN Turk on Sunday. [..] Speaking at a panel as part of an international conference in Halifax, Canada, Akar said Khashoggi’s killers may have taken the journalist’s body parts out of Turkey in luggage. “One probability is that they left the country three to four hours after committing the murder. They may have taken out Khashoggi’s dismembered corpse inside luggage without facing problems due to their diplomatic immunity,” CNN Turk cited Akar as saying. .

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“..the Sacklers wholly own Connecticut-based Purdue Pharma..”

Sackler Family Face Mass Litigation, Criminal Investigations Over Opioids (G.)

Members of the multi-billionaire philanthropic Sackler family that owns the maker of prescription painkiller OxyContin are facing mass litigation and likely criminal investigation over the opioids crisis still ravaging America. Some of the Sacklers wholly own Connecticut-based Purdue Pharma, the company that created and sells the legal narcotic OxyContin, a drug at the center of the opioid epidemic that now kills almost 200 people a day across the US. Suffolk county in Long Island, New York, recently sued several family members personally over the overdose deaths and painkiller addiction blighting local communities. Now lawyers warn that action will be a catalyst for hundreds of other US cities, counties and states to follow suit.

At the same time, prosecutors in Connecticut and New York are understood to be considering criminal fraud and racketeering charges against leading family members over the way OxyContin has allegedly been dangerously over-prescribed and deceptively marketed to doctors and the public over the years, legal sources told the Guardian last week. “This is essentially a crime family … drug dealers in nice suits and dresses,” said Paul Hanly, a New York city lawyer who represents Suffolk county and is also a lead attorney in a huge civil action playing out in federal court in Cleveland, Ohio, involving opioid manufacturers and distributors.

[..] The Sackler name is prominently attached to prestigious cultural and academic institutions that have accepted millions donated by the family in the US and the UK. It is now inscribed on a lawsuit alleging members of the family “actively participated in conspiracy and fraud to portray the prescription painkiller as non-addictive, even though they knew it was dangerously addictive”

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The waste will move to poorer countries. Because imagine we’d produce less of it…

China Expands Ban On Waste Imports (AFP)

China will expand its ban on imports of solid waste, local media reported Monday, almost a year after its first curbs caused havoc in countries that sent their rubbish to the Asian giant. The regulatory action — which expands the prohibition to 32 categories of solid waste from the 24 banned last year — will go into effect from December 31, according to official news agency Xinhua, citing four Chinese government agencies. Newly banned product types include hardware, ships, auto parts, stainless steel waste and scrap, titanium and wood, Xinhua said. The initial ban caused worldwide problems as recyclers were cut off from their main market for waste material.

Globally, since 1992, 72 percent of plastic waste has ended up in China and Hong Kong, according to a study in the journal Science Advances. China bought up more than half of the scrap materials exported by the US last year — but that proportion has been falling with Beijing’s regulatory moves cutting down the types of waste Chinese companies could buy. China says the policy changes are in line with a new push to protect the environment. They suggest Beijing no longer wants to be the world’s trash can, or even its recycle bin. [..] Global plastic exports to China were forecast to fall from 7.4 million tonnes in 2016 to 1.5 million tonnes in 2018, while paper exports might tumble nearly a quarter, according to one researcher.

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It’s easy to ridicule Pamela Anderson as just a pair of boobs. So that’s what Australia’s PM does. That’s how Aussie politics works.

Letter to Prime Minister Scott Morrison, Australia (Pamela Anderson)

Dear Prime Minister Morrison, Your comments following my appeal to you on 60 Minutes were disappointing. You trivialized and laughed about the suffering of an Australian and his family. You followed it with smutty, unnecessary comments about a woman voicing her political opinion. We all deserve better from our leaders, especially in the current environment. Following the show, 60 Minutes canvassed the views of Australians online. People responded in their thousands, overwhelmingly – 92% of more than 7000 – in favour of bringing Julian home. Rather than making lewd suggestions about me, perhaps you should instead think about what you are going to say to millions of Australians when one of their own is marched in an orange jumpsuit to Guantanamo Bay – for publishing the truth. You can prevent this.

Julian Assange will soon face his Seventh Christmas isolated from family and friends, after 8 years of detention without charge. For six years he has been refused any access to fresh air, sunshine, exercise, or proper medical or dental care. In February 2016, the UN Working Group on Arbitrary Detention (WGAD) stated that his detention was unlawful. For the past seven months Mr. Assange has been denied the right to receive visitors, use internet or telecommunications. This Australian is not getting a fair go; his human rights are being openly violated. I am hopeful Australia now has a leader with strength and conviction enough to bring him home. Australia and the world are watching how you treat your citizen, your publisher, in dire need of help from his own government.

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


Paul Gauguin Christ in the garden of olives 1889

 

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

 

 

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

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

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

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

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

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

One Thing Unites Britain (O.)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Smearing M5S has become less easy.

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

Why Women Have Better Sex Under Socialism (G.)

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

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

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Nov 082018
 
 November 8, 2018  Posted by at 10:35 am Finance Tagged with: , , , , , , , , , , , ,  


Pablo Picasso Juan-Les-Pins 1920

 

White House Pulls CNN’s Jim Acosta’s Media Credentials (ZH)
Will Mueller Use “Constructive Discharge” To Challenge Sessions Replacement?
Big Investors Sue 16 Banks In US Over Currency Market Rigging (R.)
The United States Is Going Broke (Rickards)
Japan Machinery Orders Hit By Worst-Ever Slump In September (R.)
China October Exports Surprisingly Strong In Race To Beat US Tariffs (R.)
EU’s Vestager Says Probe Into Google AdSense Case Nearing End (R.)
Italy’s Enria Wins Race To Head ECB Banking Watchdog (R.)
The Making of an Opioid Epidemic (G.)
EU Backtracks On Total Ivory Ban (Ind.)

 

 

I could use any report about what happened yesterday, I’ll stick with Tyler Durden. Because everything I read from major news outlets is about freedom of the press being violated by Trump and his staff. I saw the press conference, and that was not my impression. After Jim Acosta has asked multiple questions, in antagonistic fashion, Trump said it was enough. Then Acosta tried to turn it into the Jim Acosta show.

Access to a president’s press-ops does not mean permission to be obnoxious, nor does it mean a journalist gets to set the rules, which the president would then have to abide by. You’ve had multiple questions, there are dozens of other reporters, that’s it for you. Refusing to hand over the mic at that point means denying your peers their own freedom of the press. Also of course, there’s history here: Acosta and CNN have been hounding Trump for over 2 years now. Not objectively, not impartial, but with an agenda. And now they get to play the victims again.

White House Pulls CNN’s Jim Acosta’s Media Credentials (ZH)

Following the disturbing behavior in this morning’s White House press conference, when a journalist from CNN refused to hand his mic back to a White House aide… White House spokesperson Sarah Sanders announced that CNN’s Jim Acosta has had his media credentials pulled: “President Trump believes in a free press and expects and welcomes tough questions of him and his Administration. We will, however, never tolerate a reporter placing his hands on a young woman just trying to do her job as a White House intern… This conduct is absolutely unacceptable. It is also completely disrespectful to the reporter’s colleagues not to allow them an opportunity to ask a question. President Trump has given the press more access than any President in history. ”

Sanders continued: “Contrary to CNN’s assertions there is no greater demonstration of the President’s support for a free press than the event he held today. Only they would attack the President for not supporting a free press in the midst of him taking 68 questions from 35 different reporters over the course of 1.5 hours including several from the reporter in question. The fact that CNN is proud of the way their employee behaved is not only disgusting, it‘s an example of their outrageous disregard for everyone, including young women, who work in this Administration. As a result of today’s incident, the White House is suspending the hard pass of the reporter involved until further notice.”

While some have questioned whether he “acosta’d her”, the CNN reporter has just confirmed it via tweet… “I’ve just been denied entrance to the WH. Secret Service just informed me I cannot enter the WH grounds for my 8pm hit” Shortly after the press briefing debacle, Rawstory reports that CNN President Jeff Zucker attempted to rally the network’s reporters… “I want you to know that we have your backs,” Zucker said a memo to employees that was obtained by The Hollywood Reporter. “That this organization believes fiercely in the protections granted to us by the First Amendment, and we will defend them, and you, vigorously, every time.” Although not even CNN probably expected this level of escalation. Which is why we wonder, how long before a) the rest of the press corps boycotts the White House briefings, and b) the hashtag #BringBackAcosta starts trending?

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Funny, I was doing a podcast with Jim Kunstler yesterday, and as soon as we finished there were the Acosta and Sessions events (would have been prominent material in our conversation). The Sessions firing was obvious well before the midterms. Whatever you think of it, Sessions left Trump in a hole when he first accepted the AG job and recused himself in the Mueller files right after. A dependable AG is crucial for any president, and even more for Trump, who’s been under investigation(s) from day one. There’s an assumption that Mueller will now be fired, but everyone understands that can only be done with solid reasoning. That the Mueller investigation should be wrapped up is clear to everyone except those who like it hanging over Trump’s head.

Will Mueller Use “Constructive Discharge” To Challenge Sessions Replacement?

Special Counsel Robert Mueller could use a legal concept known as “constructive discharge” to challenge the appointment of Matt Whitaker, the acting Attorney General, by arguing that Attorney General Jeff Sessions was forced out as opposed to voluntarily leaving, reports Bloomberg, citing a former federal prosecutor. “Mueller could argue in court that Trump effectively fired Sessions after months of verbal abuse, a legal concept known as a constructive discharge, said Renato Mariotti, a former federal prosecutor. Under the Federal Vacancies Reform Act, Trump can appoint an acting official without Senate confirmation if he replaces someone who has been incapacitated or resigned. It doesn’t apply if the previous official was fired.”-Bloomberg

Whitaker was appointed to run the DOJ after Sessions submitted his resignation Wednesday at Trump’s request. While Sessions had recused himself from the Trump-Russia probe, Whitaker will now control oversight of the investigation – a duty which has fallen on the shoulders of Deputy Attorney General Rod Rosenstein – despite the fact that he himself was involved in the FISA warrant process to spy on the Trump campaign. Sessions’ resignation letter begins with “At your request,” making it unambiguous that Trump fired him. “The question is whether he was constructively fired, which means he didn’t resign from his post,” Mariotti said. “I don’t know the answer as to how the courts would view that.”

Challenging Whitaker’s appointment “could be Mueller himself,” said Mariotti, adding “That would be one obvious person.” “Legal experts agree it would be difficult to remove Whitaker from a post he can hold for seven months under the law. He can’t be appointed permanently, and Trump said he would appoint someone at a later date.” -Bloomberg “It’s not clear whether a firing would allow Trump to appoint him as an interim,” said former federal prosecutor Barbara McQuade, who teaches law at the University of Michigan. If Sessions voluntarily resigned, “it’s permissible for Trump to make this interim appointment.”

“I don’t see any reason why Whitaker would not be the one to supervise the Mueller investigation and take it out of the hands of Rod Rosenstein,” she added. Rosenstein appeared at the White House on Wednesday for a previously unscheduled appointment. Meanwhile, Bloomberg notes that special counsels can be removed under the law for “misconduct, dereliction of duty, incapacity, conflict of interest, or for other good cause.” Whitaker is on record saying that if Mueller investigates the Trump family finances beyond anything to do with Russia, “that goes beyond the scope of the special counsel.”

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“..allegedly done through chat rooms with such names as “The Cartel,” “The Mafia” and “The Bandits’ Club,” through tactics with such names as “front running,” “banging the close,” “painting the screen” and “taking out the filth.”

Big Investors Sue 16 Banks In US Over Currency Market Rigging (R.)

A group of large institutional investors including BlackRock and Allianz’s Pacific Investment Management Co has sued 16 major banks, accusing them of rigging prices in the roughly $5.1 trillion-a-day foreign exchange market. The lawsuit was filed on Wednesday in the U.S. District Court in Manhattan by plaintiffs that decided to “opt out” of similar nationwide litigation that has resulted in $2.31 billion (£1.76 billion) of settlements with 15 of the banks. Those settlements followed worldwide regulatory probes that have led to more than $10 billion of fines for several banks, and the convictions or indictments of some traders. The banks being sued are: Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Japan’s MUFG Bank, Royal Bank of Canada, Royal Bank of Scotland, Societe Generale, Standard Chartered and UBS.

Investors typically opt out of litigation when they hope to recover more by suing on their own. The plaintiffs in Wednesday’s lawsuit accused the banks of violating U.S. antitrust law by conspiring from 2003 to 2013 to rig currency benchmarks including the WM/Reuters Closing Rates for their own benefit by sharing confidential orders and trading positions. This manipulation was allegedly done through chat rooms with such names as “The Cartel,” “The Mafia” and “The Bandits’ Club,” through tactics with such names as “front running,” “banging the close,” “painting the screen” and “taking out the filth.” “By colluding to manipulate FX prices, benchmarks, and bid/ask spreads, defendants restrained trade, decreased competition, and artificially increased prices, thereby injuring plaintiffs,” the 221-page complaint said.

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What can be done with gold.

The United States Is Going Broke (Rickards)

The Fed could actually cause inflation in about 15 minutes if it used it. How? The Fed can call a board meeting, vote on a new policy, walk outside and announce to the world that effective immediately, the price of gold is $5,000 per ounce. They could make that new price stick by using the Treasury’s gold in Fort Knox and the major U.S. bank gold dealers to conduct “open market operations” in gold. They will be a buyer if the price hits $4,950 per ounce or less and a seller if the price hits $5,050 per ounce or higher. They will print money when they buy and reduce the money supply when they sell via the banks. The Fed would target the gold price rather than interest rates.

The point is to cause a generalized increase in the price level. A rise in the price of gold from today’s roughly $1,230 per ounce to $5,000 per ounce is a massive devaluation of the dollar when measured in the quantity of gold that one dollar can buy. There it is — massive inflation in 15 minutes: the time it takes to vote on the new policy.

Don’t think this is possible? It’s happened in the U.S. twice in the past 80 years. The first time was in 1933 when President Franklin Roosevelt ordered an increase in the gold price from $20.67 per ounce to $35.00 per ounce, nearly a 75% rise in the dollar price of gold. He did this to break the deflation of the Great Depression, and it worked. The economy grew strongly from 1934-36. The second time was in the 1970s when Nixon ended the conversion of dollars into gold by U.S. trading partners. Nixon did not want inflation, but he got it. Gold went from $35 per ounce to $800 per ounce in less than nine years, a 2,200% increase. U.S. dollar inflation was over 50% from 1977-1981. The value of the dollar was cut in half in those five years.

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Abenomics keeps on giving…

Japan Machinery Orders Hit By Worst-Ever Slump In September (R.)

Japan’s core machinery orders tumbled by the most on record in September after a severe earthquake and typhoons disrupted business activity, with economists now also worried about a fall in overseas orders. The 18.3 percent slump in machinery orders far outpaced the median market estimate for a 10.0 percent decline and follows a 6.8 percent increase in August. September’s 12.5 percent decline in overseas machinery orders, the biggest such fall in more than two years, could signal sustained weakness in export demand. Japan’s economy is forecast to contract in July-September, and the machinery orders slump suggests any rebound in the following quarters is likely to be weak if exports and business investment lose momentum.

Manufacturers surveyed by the government expect core machinery orders to rise 3.6 percent in October-December after a 0.9 percent increase in July-September, but some economists worry this forecast is overly optimistic. “I was already expecting capital expenditure to be weak in July-September, but the fall in overseas orders makes me worried about demand from China,” said Hiroaki Muto, economist at Tokai Tokyo Research Center. “Japan’s economy will resume expansion from the fourth quarter, but I’m worried the pace of growth will wane.”

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Watch the rest of the year.

China October Exports Surprisingly Strong In Race To Beat US Tariffs (R.)

China reported much stronger-than-expected exports for October as shippers rushed goods to the United States, its biggest trading partner, racing to beat higher tariff rates due to kick in at the start of next year. Import growth also defied forecasts for a slowdown, suggesting Beijing’s growth-boosting measures to support the cooling economy may be slowly starting to make themselves felt. The upbeat trade readings from China offer good news for both those worried about global demand and for the country’s policymakers after the economy logged its weakest growth since the global financial crisis in the third quarter. October was the first full month after the latest U.S. tariffs on Chinese goods went into effect on Sept. 24, in a significant escalation in the tit-for-tat trade battle.

But analysts continue to warn of the risk of a sharp drop in U.S. demand for Chinese goods early in 2019, with all eyes now on whether presidents Donald Trump and Xi Jinping can make any breakthroughs on trade when they meet later this month. China’s exports rose 15.6 percent last month from a year earlier, customs data showed on Thursday, picking up from September’s 14.5 percent and beating analysts’ forecasts for a modest slowdown to 11 percent. “The strong export growth in October was buoyed by front-loading activities by exporters…,” said Iris Pang, Greater China Economist at ING in Hong Kong, noting the month is traditionally quieter due to long holidays. “We expect exports to remain strong towards the end of the year as businesses are afraid of a failure in the Trump-Xi meeting, which could lead to broader tariffs on more Chinese goods from the U.S.” Pang said.

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The edge of monoply.

EU’s Vestager Says Probe Into Google AdSense Case Nearing End (R.)

EU regulators are close to wrapping up their third case against Alphabet unit Google involving its AdSense advertising service, Europe’s antitrust chief said on Wednesday, suggesting the company may soon be hit with another hefty fine. The comments by European Competition Commissioner Margrethe Vestager come four months after she levied a record 4.34 billion euro ($5 billion) fine against Google for using its popular Android mobile operating system to block rivals. That followed a 2.4 billion euro fine imposed on the company last year after it thwarted rivals of shopping comparison websites. The European Commission in 2016 opened a third case when it accused Google of preventing third parties using its AdSense product from displaying search advertisements from Google’s competitors. Vestager can fine companies up to 10 percent of their global turnover for breaching EU rules.

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Europe’s finances in all Italian hands.

Italy’s Enria Wins Race To Head ECB Banking Watchdog (R.)

Italian Andrea Enria was picked on Wednesday to head the European Central Bank’s supervisory arm, overseeing a bloated, 21 trillion euro banking sector still troubled by a legacy of bad debt from the euro zone’s financial crisis. Defeating Ireland’s Sharon Donnery in a hotly-contested run-off, Enria will now head the Single Supervisory Mechanism, covering the euro zone’s 118 top lenders, with many still reeling from the last recession and facing new challenges from hacking to fintech. The ECB’s Governing Council selected Enria in a secret ballot, and his appointment must now be approved by the full European Parliament and relevant ministers.

Enria, who has chaired the London-based European Banking Authority since 2011, has played a major role in shaping the European Union’s new financial rulebook in the aftermath of the crisis. A former supervisor at the Bank of Italy and the ECB, he is viewed as politically neutral and ruffled some feathers at home for what was seen as an overly tough stance on unpaid bank loans and credit to small companies. “If approved by the Parliament and confirmed by the Council of the European Union, Mr Enria will succeed Danièle Nouy as Chair of the Supervisory Board on 1 January 2019,” the ECB said in a statement.

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Long read. The origins are curious. And extremely misguided. How can you deny that opium is addictive after seeing Britain’s opium trade laying siege to large swaths of China?

“One theory, promoted by Dr David Haddox, was that patients genuinely experiencing pain could not become addicted to opioids because the pain neutralised the euphoria caused by the narcotic…”

The Making of an Opioid Epidemic (G.)

Jane Ballantyne was, at one time, a true believer. The British-born doctor, who trained as an anaesthetist on the NHS before her appointment to head the pain department at Harvard and its associated hospital, drank up the promise of opioid painkillers – drugs such as morphine and methadone – in the late 1990s. Ballantyne listened to the evangelists among her colleagues who painted the drugs as magic bullets against the scourge of chronic pain blighting millions of American lives. Doctors such as Russell Portenoy at the Memorial Sloan Kettering Cancer Center in New York saw how effective morphine was in easing the pain of dying cancer patients thanks to the hospice movement that came out of the UK in the 1970s.

Why, the new thinking went, could the same opioids not be made to work for people grappling with the physical and mental toll of debilitating pain from arthritis, wrecked knees and bodies worn out by physically demanding jobs? As Portenoy saw it, opiates were effective painkillers through most of recorded history and it was only outdated fears about addiction that prevented the drugs still playing that role. Opioids were languishing from the legacy of an earlier epidemic that prompted President Theodore Roosevelt to appoint the US’s first opium commissioner, Dr Hamilton Wright, in 1908. Portenoy wanted to liberate them from this taint. Wright described Americans as “the greatest drug fiends in the world”, and opium and morphine as a “national curse”. After that the medical profession treated opioid pain relief with what Portenoy and his colleagues regarded as unwarranted fear, stigmatising a valuable medicine.

These new evangelists painted a picture of a nation awash in chronic pain that could be relieved if only the medical profession would overcome its prejudices. They constructed a web of claims they said were rooted in science to back their case, including an assertion that the risk of addiction from narcotic painkillers was “less than 1%” and that dosages could be increased without limit until the pain was overcome. But the evidence was, at best, thin and in time would not stand up to detailed scrutiny. One theory, promoted by Dr David Haddox, was that patients genuinely experiencing pain could not become addicted to opioids because the pain neutralised the euphoria caused by the narcotic. He said that what looked to prescribing doctors like a patient hooked on the drug was “pseudo-addiction”.

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Guess where most of the world’s ivory is traded? It’s very clear what Europeans want, but Brussels again simply slips them the finger.

EU Backtracks On Total Ivory Ban (Ind.)

Politicians and campaigners have expressed dismay that the European Union (EU) appears to be holding back on further restrictions on the continent’s ivory trade, despite enormous global pressure. Europe is the largest domestic market for ivory products in the world and research has demonstrated that illegally poached ivory often makes its way into the legal market. In 2017, the European Commission banned the export of raw ivory, but many still think the only way to make a dent in demand for products made of the material is to ban the domestic trade entirely. China, the US and the UK have already moved to halt such trade in an effort to make elephants a less lucrative target for poachers and to stamp out the corruption and organised crime the trade supports.

Despite the backing of African leaders and scores of European politicians, a new report outlining efforts to curb wildlife trafficking in Europe has removed a pledge to further restrict the trade. [..] Besides the consultation respondents calling for tougher rules, 32 African nations have joined together in calling for an EU-wide ban, including a complete shutdown of the domestic market. Further support has come from over 100 MEPs who wrote to the environment commissioner Karmenu Vella in July urging a total ban. Responding to the discrepancy between different versions of the report, chair of interest group MEPs for Wildlife, Catherine Bearder said: “The EU is a major transit point for illegal wildlife products being shipped to the Far East and other global destinations. Elephants are being pushed to the brink of extinction and for what? For useless trinkets the world doesn’t need.”

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Nov 062018
 
 November 6, 2018  Posted by at 10:24 am Finance Tagged with: , , , , , , , , ,  


Pablo Picasso Group of dancers. Olga Kokhlova is lying in the foreground 1919

 

What Happened To Stocks After Every Midterm Election Since World War II (MW)
Stocks Surge After Latest Rasmussen Poll Shows GOP Retaining The House (ZH)
US Intelligence: No Evidence Of Any Attempts To Tamper With Midterms (NBC)
US and China To Hold A Top-Level Security Dialogue On Friday (R.)
Exposing China’s Overseas Lending (Reinhart)
EU Lost Over €100 BIllion Due To Its Own Anti-Russia Sanctions – Lavrov (RT)
Eurozone Ministers Line Up Behind EU In Italy Budget Dispute (G.)
The Italian People Must Understand That Their Country Is At War (Gefira)
Australia’s Housing Downturn Could Spark Interest Rate Cut (ABC.au)
UN Investigates Extreme Poverty In UK (CNN)
American Bread & Circus (Mike Maloney)
Large Hydropower Dams ‘Not Sustainable’ (BBC)
US Supreme Court Allows Historic Kids’ Climate Lawsuit To Go Forward (Nature)

 

 

2019 as a great year for stocks as the Fed hikes rates? Hmmm..

What Happened To Stocks After Every Midterm Election Since World War II (MW)

[..] let’s steer clear of opinion and emotion. Instead, I want to focus solely on the facts that are relevant to you as an investor. As you’ll see, you don’t need to waste even one second worrying about which party will win on Tuesday. I was surprised by what we found. Since 1946, there have been 18 midterm elections. Stocks were higher 12 months after every single one. Every single one. That’s 18 for 18. Even though we’ve had every possible political combination in the past 72 years. Republican president with Democratic Congress. Democratic president with Republican Congress. Republican president and Congress. Democratic president and Congress.

Since 1946, stocks have risen an average of 17% in the year after a midterm. And if you measure from the yearly midterm lows, the results are even better. From their lows, stocks jumped an average of 32% over the next 12 months. For perspective, that’s more than double the average performance for stocks in all years. We’re also entering the third year of a presidential term, which is historically the strongest year for stocks. Take a look at this chart. You can see that the performance of stocks in the third year of a presidential term beats all other years by a long shot:

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“Rasmussen was the only major pollster in 2016 to predict a Trump victory..”

Stocks Surge After Latest Rasmussen Poll Shows GOP Retaining The House (ZH)

US equity markets ramped into the green as the final Rasmussen Reports Generic Congressional Ballot before Election Day shows Republicans edging ahead by one point… The latest Rasmussen Reports national telephone and online survey of Likely U.S. Voters finds that 46% would choose the Republican candidate if the elections for Congress were held today. 45% would vote for the Democrat. 3% prefer some other candidate, and six percent (6%) remain undecided. A week ago, Democrats held a 47% to 44% lead. This is the first poll showing a GOP lead, and it may matter: while often accused of bias, Rasmussen was the only major pollster in 2016 to predict a Trump victory; Rasmussen was also the only major pollster whose prediction was proven correct.

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So no stories afterward?!

US Intelligence: No Evidence Of Any Attempts To Tamper With Midterms (NBC)

U.S. intelligence officials have seen no evidence that any nation state is attempting to tamper with voting systems or election infrastructure ahead of tomorrow’s midterm election, intelligence officials told NBC News Tuesday. “There’s a lot of noise—we see the typical scanning and probing—but we can’t attribute it to any bad actors,” said one official briefed on the intelligence. U.S. officials also told NBC News that last week the White House was sent a top secret assessment of election security produced by a newly created interagency task force.

The assessment, created by NSA and U.S. Cyber Command specialists, also found no evidence that any foreign actors were working to infiltrate election infrastructure in the run up to Tuesday’s midterms, according to two sources with direct knowledge of the assessment. [..] In addition to reviewing possible threats, the task force members are taking an offensive posture, secretly communicating to known operatives in Russia and elsewhere that they are aware of their activities, sources said. A senior U.S. official described the communications with the suspected hackers as, “We know that you’re going to do this. Don’t do it!”

The task force, which was created in May, has built a database of hackers and trolls, as well as Russian government institutions and private entities that have been involved in the U.S., a senior intelligence official said. The assessment on potential election system tampering is consistent with what American officials have been saying publicly all year. They have sounded the alarm about foreign influence campaigns on social media––led by Russia, China and Iran––but they have seen no evidence that any foreign actor was gearing up to hack the vote.

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Mostly about trade? Or is it Iran?

US and China To Hold A Top-Level Security Dialogue On Friday (R.)

The United States and China will hold a delayed top-level security dialogue on Friday, the latest sign of a thaw in relations, as China’s vice president said Beijing was willing to talk with Washington to resolve their bitter trade dispute. The resumption of high-level dialogue, marked by a phone call last week between Presidents Donald Trump and Xi Jinping, comes ahead of an expected meeting between the two at the G20 summit in Argentina starting in late November. It follows months of recriminations spanning trade, U.S. accusations of Chinese political interference, the disputed South China Sea and self-ruled Taiwan.

China and the United States have both described last week’s telephone call between Xi and Trump as positive. Trump predicted he’d be able to make a deal with China on trade. In a concrete sign of the unfreezing, the U.S. State Department said Secretary of State Mike Pompeo, Defense Secretary Jim Mattis, Chinese politburo member Yang Jiechi and Defense Minister Wei Fenghe will take part in diplomatic and security talks later this week in Washington. China said last month the two sides had initially agreed “in principle” to hold the second round of diplomatic security talks in October but they were postponed at Washington’s request amid rising tensions over trade, Taiwan and the South China Sea.

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Over 100 countries borrowed from China. Mostly in USD.

Exposing China’s Overseas Lending (Reinhart)

Over the past 15 years, China has fueled one of the most dramatic and geographically far-reaching surges in official peacetime lending in history. More than one hundred predominantly low-income countries have taken out Chinese loans to finance infrastructure projects, expand their productive capacity in mining or other primary commodities, or support government spending in general. But the size of this lending wave is not its most distinctive feature. What is truly remarkable is how little anyone other than the immediate players – the Chinese government and development agencies that do the lending and the governments and state-owned enterprises that do the borrowing – knows about it.

There is some information about the size and timing of Chinese loans from the financial press and a variety of private and academic sources; but information about loans’ terms and conditions is scarce to nonexistent. Three years ago, writing about “hidden debts” to China and focusing on the largest borrowers in Latin America (Venezuela and Ecuador), I noted with concern that standard data sources do not capture the marked expansion of China’s financial transactions with the remainder of the developing world. Not much has changed since then.

While China in 2016 joined the ranks of countries reporting to the Bank for International Settlements, the lending from development banks in China is not broken down by counterparty in the BIS data. Emerging-market borrowing from China is seldom in the form of securities issued in international capital markets, so it also does not appear in databases at the World Bank and elsewhere. These accounting deficiencies mean that many developing and emerging-market countries’ external debts are currently underestimated in varying degrees. Moreover, because these are mostly dollar debts, missing the China connection leads to underestimating balance sheets’ vulnerability to currency risk.

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But … the Russians!

EU Lost Over €100 BIllion Due To Its Own Anti-Russia Sanctions – Lavrov (RT)

The EU is punishing itself for doing Washington’s bidding and sanctioning Russia, Russian Foreign Minister Sergey Lavrov said. However, while the restrictions policy does not harm the US, the EU suffers billions in losses. In an interview with the Spanish newspaper El País, Lavrov lamented the dismal state of EU-Russia relations, describing them as far from normal. The divisions are being fueled from across the pond, he said. “The mythical ‘Russian threat’ is forced upon the Europeans, primarily, from the outside,” Lavrov said. The main bone of contention between the EU and Russia –sanctions– were imposed by the European nations “on direct orders” from Washington.

With that said, the US has hardly felt any adverse effect from the policy it championed, unlike the EU. “Estimates of losses incurred by the EU states from the sanctions vary. According to some estimates, they might amount to over €100 billion. It’s important that European politicians understand this,” the minister said. Russia, which had to retaliate with tit-for-tat measures, is ready to lift the restrictions it imposed on European goods back in 2014. “We have spoken repeatedly about our readiness to abolish countermeasures,” Lavrov said. However, the EU must make the first step. “We hope that common sense will eventually prevail since, objectively speaking, the sanctions neither benefit Russia nor the EU,” the diplomat added.

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Get in line or else. That’s Brussels for you.

Eurozone Ministers Line Up Behind EU In Italy Budget Dispute (G.)

Several eurozone finance ministers have come out to back Brussels in a row with Italy’s populist government over a budget that has been deemed to break the rules of the common currency bloc.France’s finance minister, Bruno Le Maire, warned that the future of the euro was at stake as he urged the Italian government to reach an agreement with the European commission. “The wise path is the path of dialogue, exchange of views, to find the best solution for the eurozone as a whole, for the Italian government and for our common currency,” he said on Monday as he arrived at a meeting of eurozone finance ministers. “For what is at stake now is our common currency.” Italy doubled down on its refusal to change the budget, a week before a deadline to submit new plans to the European commission.

“No little letter will make us back down. Italy will never kneel again,” Italy’s powerful interior minister Matteo Salvini has said. Italian deputy prime minister Luigi di Maio told the Financial Times the rest of Europe should copy Italy’s expansionary public spending plans. “If the recipe works here, it will be said at a European level, we should apply the recipe of Italy to all other countries.” The commission rejected Italy’s draft 2019 budget last month – although other member states, including France and Germany, have broken the rules in the past without sanction. Italy must submit a new plan by 13 November and will hear Brussels’ verdict on 21 November, when the commission delivers an assessment on the budgets of all eurozone members.

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Not yet, I’d say.

The Italian People Must Understand That Their Country Is At War (Gefira)

To make the euro sustainable, the European financial elites want the Italians to reduce their spending and turn a budget deficit into a budget surplus. However, due to the country’s shrinking population the Italian budget deficit — as we have argued many times – can only increase. The European commission rejects the Italian budget because Rome wants to increase its debt far beyond the limit allowed by the ECB. “This is the first Italian budget that the EU doesn’t like,” wrote Deputy Prime Minister Luigi Di Maio on Facebook. “No surprise: This is the first Italian budget written in Rome and not in Brussels!” Matteo Salvini added: “This (the rejection of the Italian budget plan by the EU) doesn’t change anything.”. “They’re not attacking a government but a people. These are things that will anger Italians even more,” he said.

The country has entered a demographic winter and sustainable economic growth is simply impossible, at least for the foreseeable future. As is the case with the whole of Europe, the continent needs a plan to support an ageing and declining population. As if not aware of it, the Brussels-Frankfurt establishment only wants Italy to stick to their austerity program, i.e. decrease public spending and do away with the current Italian administration, which refuses to comply. To force Prime Minister Luigi Di Maio and Matteo Salvini out of office, the European Union will go to any lengths to destroy the Italian banking sector the way they did it in Greece and Cyprus. In 2015 Greece shut down its banks, ordering them to stay closed for six days, and its central bank imposed restrictions to prevent money from fleeing out of the country.

Jeroen Dijsselbloem, former head of the euro group, suggests that the financial markets should try to lower the value of the Italian bonds. A lower bond value will erode the capital of the Italian banks and make them insolvent. Mario Draghi, head of the ECB, warned last week that a recent sell-off of Italian government bonds was set to dent the capital of Italy’s banks which own about €375 billion worth of that paper. The remarks of the ECB’s chairman were carefully prepared as another deliberate attack on the Italian financial system. It is highly unusual for central bankers to warn the bank under their supervision against insolvency, at the same time trying to provoke a preemptive bank run.

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RBA has a third mandate: ensuring Australia’s economic prosperity and financial stability..

Australia’s Housing Downturn Could Spark Interest Rate Cut (ABC.au)

Our politicians now have what they have so publicly yearned for; more affordable housing. Real estate prices nationally are down 4.6 per cent year-on-year. The declines, however, are more pronounced in the two biggest cities, Sydney and Melbourne. And the slump is beginning to spread. According to real estate price monitoring firm CoreLogic, Sydney real estate has fallen 7.4 per cent during the past year — the biggest annual decline since 1990, when the economy was sliding into recession. Melbourne has dropped 4.7 per cent during the same period but the pace is accelerating and, just like Sydney, has begun to spread from high-end property into the suburbs with lower-priced housing also turning negative.

Perth, which took a hit as the mining boom unwound, is also back in decline, down a further 3.3 per cent in the past year. Hobart is the only state capital still experiencing boom times, with a 9.7 per cent lift. So far, and much to everyone’s relief, the price declines have been orderly. But after a year of consistent monthly falls in Sydney, the number of people — particularly first-home buyers — now facing significant capital losses are mounting. The main cause for the contraction on the demand side is that it now is much more difficult to raise finance. Banks simply refuse to lend the kind of money previously being thrown at housing.

[..] Unlike most central banks, our Reserve Bank has three mandates, or briefs, that it must maintain. The first is to ensure inflation remains steady and manageable. That’s pretty much the standard brief for every central bank. But the RBA also has to aim for full employment. Plus, it’s tasked with ensuring Australia’s economic prosperity and financial stability. Some would argue that’s an almost impossible mission. And it partly explains why it deliberately fired up the east coast housing boom — to absorb workers being laid off as the mining boom came to an end, even if it merely delayed the inevitable.

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The shame runs deep. Third world.

UN Investigates Extreme Poverty In UK (CNN)

The United Nations has launched an investigation into extreme levels of poverty in one of the richest countries in the world: the United Kingdom. Philip Alston, the UN special rapporteur on extreme poverty and human rights, starts a two-week fact-finding mission Monday, visiting some of the country’s poorest towns and cities to examine the effects of austerity measures on rising levels of hardship. Alston, known for his no-holds-barred critiques, will gather evidence on the impact that changes to welfare benefits and local government funding as well as the rising costs of living have had on British families.

“The Government has made significant changes to social protection in the past decade, and I will be looking closely at the impact that has had on people living in poverty and their realization of basic rights,” Alston said in a statement. “I have received hundreds of submissions that make clear many people are really struggling to make ends meet. [..] CNN reported in September that nearly 4 million children in the UK were living in households that struggle to afford fruit, vegetables and other foods conducive to healthy living, according to a report by the Food Foundation. The long-term policy of austerity in the UK has also had a disproportionate impact on women, according to the Equality and Human Rights Commission.

It has been nearly a decade since then-Prime Minister David Cameron committed to cut excessive government spending, declaring in 2009 that “the age of irresponsibility” was “giving way to the age of austerity.”

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Extremely well done.

American Bread & Circus (Mike Maloney)

Long-time Automatic Earth friend Mike Maloney is doing a long series called The Hidden Secrets of Money. This is episode 10 already, the Fall of Rome and the Fall of America. We have some catching up to do.

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Energy use produces waste. It can take many forms.

Large Hydropower Dams ‘Not Sustainable’ (BBC)

A new study says that many large-scale hydropower projects in Europe and the US have been disastrous for the environment. Dozens of these dams are being removed every year, with many considered dangerous and uneconomic. But the authors fear that the unsustainable nature of these projects has not been recognised in the developing world. Thousands of new dams are now being planned for rivers in Africa and Asia. Hydropower is the source of 71% of renewable energy throughout the world and has played a major role in the development of many countries.

But researchers say the building of dams in Europe and the US reached a peak in the 1960s and has been in decline since then, with more now being dismantled than installed. Hydropower only supplies approximately 6% of US electricity. Dams are now being removed at a rate of more than one a week on both sides of the Atlantic. The problem, say the authors of this new paper, is that governments were blindsided by the prospect of cheap electricity without taking into account the full environmental and social costs of these installations. More than 90% of dams built since the 1930s were more expensive than anticipated. They have damaged river ecology, displaced millions of people and have contributed to climate change by releasing greenhouse gases from the decomposition of flooded lands and forests.

[..] In the developing world, an estimated 3,700 dams, large and small, are now in various stages of development. The authors say their big worry is that many of the bigger projects will do irreparable damage to the major rivers on which they are likely to be built. On the Congo river, the Grand Inga project is expected to produce more than a third of the total electricity currently being generated in Africa. However, the new study points out that the main goal for the $80bn installation will be to provide electricity to industry. “Over 90% of the energy from this project is going to go to South Africa for mining and the people in the Congo will not get that power,” said Prof Moran.

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The threats are too new to be part of any constitution, so it becomes a matter of interpretation. That can work both ways.

US Supreme Court Allows Historic Kids’ Climate Lawsuit To Go Forward (Nature)

A landmark climate-change lawsuit brought by young people against the US government can proceed, the Supreme Court said on 2 November. The case, Juliana v. United States, had been scheduled to begin trial on 29 October in Eugene, Oregon, in a federal district court. But those plans were scrapped last month after President Donald Trump’s administration asked the Supreme Court to intervene and dismiss the case. The plaintiffs, who include 21 people ranging in age from 11 to 22, allege that the government has violated their constitutional rights to life, liberty and property by failing to prevent dangerous climate change.

They are asking the district court to order the federal government to prepare a plan that will ensure the level of carbon dioxide in the atmosphere falls below 350 parts per million by 2100, down from an average of 405 parts per million in 2017. By contrast, the US Department of Justice argues that “there is no right to ‘a climate system capable of sustaining human life’” — as the Juliana plaintiffs assert. Although the Supreme Court has now denied the Trump administration’s request to the dismiss the case, the path ahead is unclear. In its 2 November order, the Supreme Court suggested that a federal appeals court should consider the administration’s arguments before any trial starts in the Oregon district court.

[..] Although climate change is a global problem, lawyers around the world have brought climate-change-related lawsuits against local and national governments and corporations since the late 1980s. These suits have generally sought to force the sort of aggressive action against climate change that has been tough to achieve through political means. Many of the cases have failed, but in 2015, a citizen’s group called the Urgenda Foundation won a historic victory against the Dutch government. The judge in that case ordered the Netherlands to cut its greenhouse-gas emissions to at least 25% below 1990 levels by 2020, citing the possibility of climate-related damages to “current and future generations of Dutch nationals” and the government’s “duty of care … to prevent hazardous climate change”. A Dutch appeals court upheld the verdict last month.

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 October 31, 2018  Posted by at 9:59 am Finance Tagged with: , , , , , , , , , , ,  


Francisco Goya Witches’ Sabbath 1798

 

US Calls For Yemen Ceasefire, Peace Talks ‘In The Next 30 Days’ (AFP)
Erdogan Urges Saudi Prosecutor To Find Out Who Ordered Khashoggi Hit (AFP)
Housing Market Now ‘Reminds Me Of 2006′ – Robert Shiller (MW)
China Debt Bomb Ready to Explode (Rickards)
China Factory Growth Weakest In Over 2 Years, Export Orders Slump Deepens (R.)
Ray Dalio Hails Paul Volcker As ‘The Greatest Man’ He Knows (MW)
The Monster Mash (Kunstler)
No-Deal Brexit Would Trigger Lengthy UK Recession – S&P (G.)
Welcome to the Jungle (Escobar)
After Germany’s Merkel Comes Chaos (John Rubino)
Ocean Shock (Reuters)

 

 

Both Mattis and Pompeo, a coordinated effort. 30 days seems ambitious, but MbS doesn‘t have much leverage left.

US Calls For Yemen Ceasefire, Peace Talks ‘In The Next 30 Days’ (AFP)

The United States called Tuesday for a ceasefire and peace talks in Yemen, as the Saudi-led military coalition sent more than 10,000 new troops toward a vital rebel-held port city ahead of a new assault. Pentagon chief Jim Mattis said the US had been watching the conflict “for long enough,” adding that Saudi Arabia and the United Arab Emirates, which are in a US-backed coalition fighting Shiite Huthi rebels, are ready for talks. “We have got to move toward a peace effort here, and we can’t say we are going to do it some time in the future,” Mattis said at the US Institute of Peace in Washington. “We need to be doing this in the next 30 days.”

He said the US is calling for all warring parties to meet with United Nations special envoy Martin Griffiths in Sweden in November and “come to a solution.” US-Saudi ties have cooled in recent weeks after the murder of journalist Jamal Khashoggi, a prominent critic of the conservative kingdom, that has also tarnished the image of Crown Prince Mohammed bin Salman. Saudi Arabia and its allies intervened in the conflict between embattled Yemeni President Abedrabbo Mansour Hadi, whose government is recognized by the United Nations, and the Huthis in 2015. Nearly 10,000 people have since been killed and the country now stands at the brink of famine, with more than 22 million Yemenis — three quarters of the population — in need of humanitarian assistance.

[..] US Secretary of State Mike Pompeo called for an end to all coalition air strikes in Yemen’s populated areas. “The time is now for the cessation of hostilities, including missile and UAV (drone) strikes from Huthi-controlled areas into the Kingdom of Saudi Arabia and the United Arab Emirates,” Pompeo said in a statement. “Subsequently, coalition air strikes must cease in all populated areas in Yemen.”

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Body still not found.

Erdogan Urges Saudi Prosecutor To Find Out Who Ordered Khashoggi Hit (AFP)

Turkish President Recep Tayyip Erdogan on Tuesday called on Saudi Arabia’s chief prosecutor to find out who ordered the murder of journalist Jamal Khashoggi, and not spare “certain people” in his investigation. “Who sent these 15 people? As Saudi public prosecutor, you have to ask that question, so you can reveal it,” Erdogan said, referring to the 15-man team suspected of being behind the hit. “Now we have to solve this case. No need to prevaricate, it makes no sense to try to save certain people,” he told reporters in Ankara. Khashoggi was killed after entering the Saudi consulate in Istanbul on October 2 to obtain paperwork ahead of his upcoming wedding. His body has not yet been found.

[..] Erdogan said that during the talks Fidan requested the 18 suspects be sent to Turkey for trial, as the killing took place in Istanbul. The Istanbul prosecutor’s office last week prepared a written request for the extradition of the 18 suspects “involved in the premeditated murder”, the justice ministry said, but Riyadh rejected Ankara’s request. Erdogan also urged Saudi Foreign Minister Adel al-Jubeir to explain who the “local co-conspirators” were that were reportedly given Khashoggi’s body after his death. “Again either the Saudi foreign minister or the 18 suspects must explain who the local co-conspirators are. Let’s know who this co-conspirator is, we can shed further light. We cannot let this subject end mid-way.”

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Only this time it’s global.

Housing Market Now ‘Reminds Me Of 2006′ – Robert Shiller (MW)

Famed housing-watcher Robert Shiller said Tuesday that the weakening housing market reminded him of the last market top, just before the subprime housing bubble burst, slashing prices by nearly a third and costing millions of Americans their homes. Home price gains moderated again in the most recent version of the closely-watched housing index that bears his name, which was released Tuesday, and Shiller, a Nobel Prize-winning economist, told Yahoo Finance that such data shows “a sign of weakness.” Housing pivots take more time than those in the stock market, Shiller said. Still, “the housing market does have a momentum component and we’re seeing a clipping of momentum at this time.”

When a startled reporter reminded Shiller that 2006 predated the greatest financial crisis in a lifetime, the Yale economist acknowledged that any correction would likely be far less severe. “The drop in home prices in the financial crisis was the most severe drop in the U.S. market since my data begin in 1890,” Shiller said. “It could be that we’re primed to repeat it because it’s in our memory and we’re thinking about it but still I wouldn’t expect something as severe as the Great Financial Crisis coming on right now. There could be a significant correction or bear market, but I’m waiting and seeing now.”

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Foreign reserves runnning out.

China Debt Bomb Ready to Explode (Rickards)

The great Chinese growth slowdown has been proceeding in stages for the past two years. The reason is simple. Much of China’s “growth” (about 25% of the total) has consisted of wasted infrastructure investment in ghost cities and white elephant transportation infrastructure. That investment was financed with debt that now cannot be repaid. This was fine for creating short-term jobs and providing business to cement, glass and steel vendors, but it was not a sustainable model since the infrastructure either was not used at all or did not generate sufficient revenue. China’s future success depends on high-value-added technology and increased consumption. But shifting to intellectual property and the consumer means slowing down on infrastructure, which will slow the economy.

In turn, that means exposing the bad debt for what it is, which risks a financial and liquidity crisis. China started to do this last year but quickly turned tail when the economy slowed. Now the economy has slowed so much that markets are collapsing. But doesn’t China have over $1 trillion of reserves to prop up its financial system? On paper, that’s true. But in reality, China is “short” U.S. dollars. The Chinese may have $1.4 trillion of U.S. Treasury securities in its reserve position, but they need those assets possibly to bail out their banking system or defend the yuan. Meanwhile, the Chinese banking sector, which in many ways is an extension of the state, owes $318 billion in U.S. dollar-denominated deposits of commercial paper.

From a bank’s perspective, borrowing in dollars is going short dollars because you need dollar assets to back up those liabilities if the original lenders want their money back. For the most part, the banks don’t have those assets because they converted the dollar to yuan to prop up local real estate Ponzis and local corporations. There’s not much left over to bail out the corporate, individual and real estate sectors. This is all part of a global “dollar shortage” attributable to Fed tightening, both in the forms of higher rates but also a reduction in base money. A dollar shortage seems implausible in a world where the Fed printed $4.4 trillion. But while the Fed was printing, the world borrowed over $70 trillion (on top of prior loans), so the dollar shortage is real. The math is inescapable.

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Everyone’s going to call on Beijing to come to the rescue.

China Factory Growth Weakest In Over 2 Years, Export Orders Slump Deepens (R.)

China’s manufacturing sector in October expanded at its weakest pace in over two years, hurt by slowing domestic and external demand, in a sign of deepening cracks in the economy from an intensifying trade war with the United States. Anxiety about China’s cooling growth and its likely drag on the global economy have vexed financial markets recently, and Wednesday’s official Purchasing Managers’ Index (PMI) indicates more stress for investors through coming months. The official PMI – which gives global investors their first look at business conditions in China at the start of the last quarter of the year – fell to 50.2 in October, the lowest since July 2016 and down from 50.8 in September.

It was a touch above the 50-point mark that separates growth from contraction for a 27th straight month, but undershot the 50.6 forecast in a Reuters poll. The latest reading suggests a further loss of momentum in the world’s second-biggest economy, and the deteriorating environment for businesses could prompt more policy support from Beijing on top of a raft of recent initiatives. “All the numbers from China’s PMI release today confirm a broad-based decline in economic activity,” said Raymond Yeung, chief economist for China at ANZ in a client note, adding that conditions for the private sector is “much worse” than headline data suggested. “Besides an expected reserve requirement ratio (RRR) cut next January, we expect future supportive policy actions to be measured. The government’s priority is to avoid a financial blow-up.”

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Not hard to be better than The Oracle, Bernanke and Yellen. But where was Volcker when these three went off the rails?

Ray Dalio Hails Paul Volcker As ‘The Greatest Man’ He Knows (MW)

Those weighty words of praise were tweeted out Tuesday by Ray Dalio, founder of hedge-fund behemoth Bridgewater Associates. Dalio’s social-media nod to the former Fed chair coincides with the release of Volcker’s memoir, “Keeping at It: The Quest for Sound Money and Good Government.”

In his new book, Volcker says he’s worried about the impact of money in politics and argues that the U.S. is devolving into a plutocracy. “We face a huge challenge in this country to restore a sense of public purpose and of trust in government,” he wrote in the book. “It will require critically needed reforms in our political processes and leaders who can restore and preserve a consensus upon which our great democracy can depend.” Volcker, 91, served as Fed chair from 1979 until 1987, and he’s widely credited for stopping runaway inflation during that time. He was also chairman of the Economic Recovery Advisory Board under Obama from 2009 to 2011.

Dalio wasn’t the only one to give Volcker some love in light of his memoir. Martin Wolf of the Financial Times is also a big fan, saying that he’s “the greatest man I have known,” because “he is endowed to the highest degree with what the Romans called virtus (virtue): moral courage, integrity, sagacity, prudence and devotion to the service of country.” Wolf said “the pinnacle of Volcker’s career” was when he achieved something many thought impossible: he slew inflation. “Great credit is due to Jimmy Carter, who appointed him, and Ronald Reagan, who supported him. But Volcker did it, despite great criticism,” Wolf explained. “The costs were huge. But he was right: it had to be done.”

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“And if it happens that the Dems don’t prevail, and don’t manage to get their hands on the machinery of congress — then what?”

The Monster Mash (Kunstler)

The Democratic Party war on white people and their dastardly privilege has been the theme all year long, with its flanking movement against white men especially and super-especially the hetero-normative white male villains who rape and oppress everybody else. Anyway, that’s the strategy du jour. I’m not persuaded that it’s going to work so well in the coming election. The party could not have issued a clearer message than “white men not welcome here.” Very well, then, they’ll vote somewhere else for somebody else. And if it happens that the Dems don’t prevail, and don’t manage to get their hands on the machinery of congress — then what?

For one thing, a lot of people get indicted, especially former top officers from various glades of the Intel swamp. It shouldn’t be a surprise, given the numbers of them already called before grand juries and fingered by inspectors general. But it may be shocking how high up the indictments go, and how serious the charges may be: sedition… treason…? These midterm election may bring the moment when the Democratic Party finally blows up, at least enough to sweep away the current coterie of desperate idiots running it. It’s time to shove the crybabies offstage and allow a few clear-eyed adults to take the room, including men, yes even white men. And let all the shrieking, clamoring, marginal freaks return to the margins, where they belong.

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That recession is now certain, deal or not. Even in case of a deal, 1000s of documents must be signed. A deal will not mean a return to BAU.

No-Deal Brexit Would Trigger Lengthy UK Recession – S&P (G.)

Britain’s economy will suffer rising unemployment and falling household incomes that would trigger a recession should Theresa May fail to secure a deal to prevent the UK crashing out of the European Union next year, according to analysis by the global rating agency Standard & Poor’s. Property prices would slump and inflation would spike to more than 5% in a scenario that S&P said had become more likely in recent months following deadlock with Brussels over a post-Brexit deal. In a warning that included a possible downgrade to the UK’s credit rating, which would bring with it an increase in the Treasury’s borrowing costs, S&P said it still expected both sides in the Brexit talks to come to an agreement before next March, when the UK is scheduled to leave the European Union.

But it warned that the chance of a “no-deal” Brexit had risen in recent months to such an extent that it needed to warn international investors about the potential challenges ahead. [..] S&P Global Ratings credit analyst Paul Watters, said: “Our base-case scenario is that the UK and the EU will agree and ratify a Brexit deal, leading to a transition phase lasting through 2020, followed by a free trade agreement. “But we believe the risk of no deal has increased sufficiently to become a relevant rating consideration. This reflects the inability thus far of the UK and EU to reach agreement on the Northern Irish border issue, the critical outstanding component of the proposed withdrawal treaty.”

Coming only a day after the chancellor said the failure to secure a deal would force him to hold an emergency budget, S&P’s analysis joins a welter of independent reports that forecast that a split from the EU without a deal will deal a serious blow to the prospects of the UK economy. Last month rival agency Moody’s said the risks to the British economy had “risen materially” in recent months.

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If you think Trump’s scary, this guy’s in a league of his own.

Welcome to the Jungle (Escobar)

It’s darkness at the break of (tropical) high noon. Jean Baudrillard once defined Brazil as “the chlorophyll of our planet”. And yet a land vastly associated worldwide with the soft power of creative joie de vivre has elected a fascist for president. Brazil is a land torn apart. Former paratrooper Jair Bolsonaro was elected with 55.63 percent of votes. Yet a record 31 million votes were ruled absent or null and void. No less than 46 million Brazilians voted for the Workers’ Party’s candidate, Fernando Haddad; a professor and former mayor of Sao Paulo, one of the crucial megalopolises of the Global South. The key startling fact is that over 76 million Brazilians did not vote for Bolsonaro. His first speech as president exuded the feeling of a trashy jihad by a fundamentalist sect laced with omnipresent vulgarity and the exhortation of a God-given dictatorship as the path towards a new Brazilian Golden Age.

French-Brazilian sociologist Michael Lowy has described the Bolsonaro phenomenon as “pathological politics on a large scale”. His ascension was facilitated by an unprecedented conjunction of toxic factors such as the massive social impact of crime in Brazil, leading to a widespread belief in violent repression as the only solution; the concerted rejection of the Workers’ Party, catalyzed by financial capital, rentiers, agribusiness and oligarchic interests; an evangelical tsunami; a “justice” system historically favoring the upper classes and embedded in State Department-funded “training” of judges and prosecutors, including the notorious Sergio Moro, whose single-minded goal during the alleged anti-corruption Car Wash investigation was to send Lula to prison; and the absolute aversion to democracy by vast sectors of the Brazilian ruling classes.

That is about to coalesce into a radically anti-popular, God-given, rolling neoliberal shock; paraphrasing Lenin, a case of fascism as the highest stage of neoliberalism. After all, when a fascist sells a “free market” agenda, all his sins are forgiven.

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My old buddy John Rubino is right, but the story’s bigger than this. Merkel’s been given far too much power.

After Germany’s Merkel Comes Chaos (John Rubino)

After a long, initially-successful run promoting European integration and mass immigration, German Chancellor Angela Merkel saw the bottom fall out of her political fortunes this year. This week she stepped down as leader of the formerly-dominant Christian Democrat party and promised not run again when her term as Chancellor ends in 2021. What happens next is almost certain to be chaotic, as the following chart (courtesy of this morning’s Wall Street Journal) makes clear. Note that in August of 2017 the two least popular parties were the far right Alternative for Germany (blue line) and the far left Greens (green line). In the ensuing 14 or so months AfG’s support rose from single digits to around 17% while the Greens rocketed from the bottom of the pack to 20%.

If you didn’t know what these two parties stood for you might think, “Fine, they’re new and interesting, so let them form a coalition and govern for a while.” Unfortunately they’re more likely to kill each other in street fights than work together, since the former want closed borders and free markets while the latter want increased regulation and unlimited immigration. The alternative to an AfG/Green coalition then becomes some combination of the remaining, more centrist (by European standards at least) parties. But the biggest of those parties – Merkel’s Christian Democrats and their coalition partner Social Democrats – are in freefall, precisely because of what they’ve done while in power. So there appears to be no way to put these puzzle pieces together to produce a stable government.

And – here’s where things get truly scary – a stable Germany under Merkel’s bland but firm hand has been the only thing holding the European Union and eurozone together. If Germany descends into internal turmoil without a coherent government to push the Italys and Hungarys around, European populists/nationalists will fill the resulting vacuum. Borders will be re-imposed within and without the EU, national government budgets – already above EU deficit limits in many cases – will explode. Already-debilitating debts will keep rising, and the ECB will be forced to bail out Italy for sure and probably several other member states after that.

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Intro to an elaborate series of reports by Reuters, kudos for the effort. Fish have moved north and deeper, leaving entire communities without their proteins.

Ocean Shock (Reuters)

To stand at the edge of an ocean is to face an eternity of waves and water, a shroud covering seven-tenths of the Earth. Hidden below are mountain ranges and canyons that rival anything on land. There you will find the Earth’s largest habitat, home to billions of plants and animals – the vast majority of the living things on the planet. In this little-seen world, swirling super-highway currents move warm water thousands of miles north and south from the tropics to cooler latitudes, while cold water pumps from the poles to warmer climes. It is a system that we take for granted as much as we do the circulation of our own blood. It substantially regulates the Earth’s temperature, and it has been mitigating the recent spike in atmospheric temperatures, soaking up much of human-generated heat and carbon dioxide.

Without these ocean gyres to moderate temperatures, the Earth would be uninhabitable. In the last few decades, however, the oceans have undergone unprecedented warming. Currents have shifted. These changes are for the most part invisible from land, but this hidden climate change has had a disturbing impact on marine life – in effect, creating an epic underwater refugee crisis. Reuters has discovered that from the waters off the East Coast of the United States to the coasts of West Africa, marine creatures are fleeing for their lives, and the communities that depend on them are facing disruption as a result. As waters warm, fish and other sea life are migrating poleward, seeking to maintain the even temperatures they need to thrive and breed.

The number of creatures involved in this massive diaspora may well dwarf any climate impacts yet seen on land. In the U.S. North Atlantic, for example, fisheries data show that in recent years, at least 85 percent of the nearly 70 federally tracked species have shifted north or deeper, or both, when compared to the norm over the past half-century. And the most dramatic of species shifts have occurred in the last 10 or 15 years. Fish have always followed changing conditions, sometimes with devastating effects for people, as the starvation that beset Norwegian fishing villages in past centuries when the herring failed to appear one season will attest. But what is happening today is different: The accelerating rise in sea temperatures, which scientists primarily attribute to the burning of fossil fuels, is causing a lasting shift in fisheries.

Read more …

Oct 242018
 
 October 24, 2018  Posted by at 9:18 am Finance Tagged with: , , , , , , , , , , ,  


Paul Gauguin Fatata te Miti (By the sea) 1892

 

The Stock Market Faces ‘Unlimited Downside Risk,’ Warns Veteran Trader (MW)
Former Fed Chairman Paul Volcker Thinks ‘We’re In A Hell Of A Mess’ (CNBC)
Trump Says Saudi Crown Prince Could Have Been Involved In Khashoggi Killing (G.)
How Congress Can Force Trump’s Hand On Saudi Sanctions (CNBC)
Trump Has “Strongest Negotiating Position Ever” With China – Kyle Bass (ZH)
China Talks Up Stock Market Amid Concerns About Share-Backed Loans (CNBC)
A “Blue Wave” in Midterm Elections? Not So Fast (Rickards)
It’s Too Late To Prepare UK Borders For No-Deal Brexit – Watchdog (Ind.)
UK Could Be Forced To Charter Ships To Bring In Food And Supplies (Ind.)
Ecuador Likely To Turn Assange Over To US – Ex-President Correa (RT)
Ecuador Won’t Help Assange Leave UK Embassy Safely – Foreign Minister (RT)

 

 

In the absence of price discovery you get unlimited.

The Stock Market Faces ‘Unlimited Downside Risk,’ Warns Veteran Trader (MW)

The stock market opened with a resounding thud on Tuesday morning, as the Dow Jones, at one point, had shed more than 500 points. The S&P 500 and the Nasdaq Composite endured even harder hits, down more than 2% each. So, you must positioning yourself for that tasty bounce we’ve grown accustomed to over the course of this stubborn bull market. Well, don’t, warns J.C. Parets, the technical analyst behind the All Star Charts blog. “There is unlimited downside risk in the market right now and I don’t think it’s being respected,” he wrote. “It’s not until afterwards that they ask, ‘what happened?’” When the bottom falls out, that’s when the blaming begins.

“The Fed, the Trump, the ebola, or whatever excuse du jour is being regurgitated on the various media outlets,” Parets wrote. “The only one to blame is ourselves.” He pointed to several divergences that should make clear to investors just how precarious the market situation is at these current levels. The first one is what we’re seeing in this chart of the S&P vs. the rest of the world. “The divergence is telling,” Parets explained in his blog post. “The last time we saw this was at the 2015 market top.”

Another divergence we haven’t seen since the 2015 top, and, before that, the 2007 top, is the relationship between consumer staples and the broader market. “When stocks fall, staples get a sympathy bid and outperform due to that very same lower beta and their defensive qualities,” Parets said. “With new highs in stocks, bulls want to see new lows in relative strength for staples. That’s a normal environment. It’s when they diverge that it is evidence of something changing.”

And finally, Parets took a look at what Dow Theory is telling us. This idea here is that when either industrial or transportation stocks make new highs, it’s important for the other to follow. When that confirmation doesn’t come, there’s cause for concern. “We saw these divergences lead to collapses in 2000, 2007 and more recently a severe selloff in 2015,” Parets wrote. “You can see that with new highs in the Dow this month, transports put in a lower high, typical behavior at market tops.”

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Mostly critical of the Fed, of which he was the chair.

Former Fed Chairman Paul Volcker Thinks ‘We’re In A Hell Of A Mess’ (CNBC)

Former Federal Reserve Chairman Paul Volcker, who has reached legend status in the world of central banking, isn’t optimistic about current conditions. When Volcker looks around now, he sees “a hell of a mess in every direction,” including a lack of basic respect for government institutions, a current Fed that seems to be following a completely arbitrary benchmark and a “swamp” in Washington run by plutocrats. “At least the military still has all the respect. But I don’t know, how can you run a democracy when nobody believes in the leadership of the country?” Volcker asks New York Times columnist and CNBC “Squawk Box” co-anchor Andrew Ross Sorkin in a column for the newspaper’s DealBook section.

“Tall Paul” is most known for willfully taking the country into recession in the early 1980s to finally defeat the inflation that had been strangling the economy. Since then, he’s lent his name to the “Volcker rule” part of banking reform legislation that restricts risk-taking at big Wall Street institutions. In a book set for release Oct. 30, Volcker laments the current state of conditions, particularly the monied interests eating away at the system of governing. “There is no force on earth that can stand up effectively, year after year, against the thousands of individuals and hundreds of millions of dollars in the Washington swamp aimed at influencing the legislative and electoral process,” he writes, according to Sorkin.

Volcker, in ailing health but not short of opinions, also seems unhappy with the Fed itself. Though it’s unusual for former chairmen to comment on Fed matters, Volcker said there appears to be no “theoretical justification” for its 2 percent inflation target. He said the Fed is just one of the institutions in which people have lost confidence. And he also dispels with the myth that presidents historically haven’t tried to influence interest rates. Recounting a 1984 meeting he had with former President Ronald Reagan, then-chief of staff James Baker flatly told Volcker, “The president is ordering you not to raise interest rates before the election.” “I was stunned,” Volcker said.

Read more …

Developing as I expected. Adapting as evidence comes in.

Trump Says Saudi Crown Prince Could Have Been Involved In Khashoggi Killing (G.)

Donald Trump has said for the first time that Saudi crown prince Mohammed bin Salman could have been involved in the operation to kill dissident journalist Jamal Khashoggi noting that “the prince is running things over there” in Riyadh. The comments, in an interview with the Wall Street Journal, appeared to mark a shift in the president’s view of Khashoggi’s murder on 2 October in the Saudi consulate in Istanbul. He has hitherto appeared to take Saudi royal denials of involvement at face value. But on a day the state department announced it would sanction Saudi officials implicated in the writer’s death, the president appeared to give the benefit of the doubt to King Salman but not necessarily to his powerful son.

Asked about the crown prince’s possible involvement, Trump said: “Well, the prince is running things over there more so at this stage. He’s running things and so if anybody were going to be, it would be him.” Trump told the Wall Street Journal he had closely questioned Prince Mohammed about Khashoggi’s murder, posing questions repeatedly and “in a couple of different ways”. “My first question to him was, ‘Did you know anything about it in terms of the initial planning’,” Trump said. Prince Mohammed replied that he didn’t, Trump said. “I said, ‘Where did it start?’ And he said it started at lower levels.” Asked if he believed the denials, the president paused for several seconds. “I want to believe them. I really want to believe them,” he said.

Twenty-one Saudis will have their US visas revoked or be made ineligible for US visas over the journalist’s killing, the state department announced, as the Trump administration struggled to regain the initiative amid the uproar over a murder that has thrown the US-Saudi alliance into question. Mike Pompeo, the US secretary of state, said other measures were being considered, including sanctions: “These penalties will not be the last word on the matter from the United States. “We’re making very clear that the United States does not tolerate this kind of ruthless action to silence Mr Khashoggi, a journalist, through violence,” Pompeo said. “Neither the President nor I am happy with this situation.”

Read more …

For now, they’re in no position to force anything. They’re in recess. By the time they come back the situation will have changed a lot.

How Congress Can Force Trump’s Hand On Saudi Sanctions (CNBC)

As the world awaits the truth, or something close to it, about Saudi journalist Jamal Khashoggi’s killing inside the Saudi consulate in Istanbul, one of the Gulf’s most stalwart security relationships hangs in a precarious position. Congress and the White House have sharply different views on how to approach the diplomatic crisis, now in its third week. Legislators are loudly calling for sanctions on weapons sales on Saudi Arabia and a robust response if the government in Riyadh is proven to have been behind Khashoggi’s death. But while President Donald Trump has expressed his desire to get to the bottom of the case, he’s appeared more reluctant to punish his allies in the kingdom, whose support is vital in carrying out his agenda to isolate Iran and keep oil prices stable ahead of the November midterm elections.

[..] a former U.S. national security official with extensive experience in the Gulf, who preferred to remain anonymous due to the sensitivity of the situation, warned that after the midterm elections, the mood toward the Saudis would be much more aggressive than in the past. Whatever the election’s outcome, “I think either way there will be a more skeptical — if not hostile — relationship with Saudi Arabia in the legislature,” the former official said. “And the relatively free hand that the administration gave is going to be a little more constrained. “The Saudis are very lucky that Congress is in recess for campaigning — if Congress were in session there would be hearings, and they would not be good hearings.”

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“$40 trillion worth of credit, somewhere between 40 and 50, no one knows, in a system with only a couple trillion dollars’ worth of equity..”

Trump Has “Strongest Negotiating Position Ever” With China – Kyle Bass (ZH)

The Trump administration needs to level the playing field on trade, Bass said, and “it looks like they are doing so.” And it certainly helps that Trump’s trade push, while initially reviled by globalists in both parties, has since won the reluctant support of both Democrats and Republicans as the US economy has largely escaped any serious repercussions so far. But ultimately, the arbiter of government money and influence over the domestic economy is the yuan-dollar exchange rate. And as the yuan sinks, foreign ownership of Chinese assets is falling as the PBOC runs “a structural and more permanent” current-account deficit with the rest of the world as the US continues to institute trade barriers.

“So they can change a lot of things domestically, but their – the arbiter of the Chinese plan is their cross rate or their exchange rate with the rest of the world. China Inc.’s working capital account is now going South because they’re running what we believe to be a structural and more permanent deficit on the current account. And so, ie, their working capital, their dollar balance whether it’s dollars, euros, yen or pounds, it’s mostly dollars.” All of this instability risks toppling the mountain of bad debt upon which China’s economic growth in recent years has depended. Already, corporate defaults have surged in 2018 to the highest level on record.

With all of these factors at play, China is running what Bass described as “the largest financial experiment the world has ever seen.” “And they’ve got, you know, $40 trillion worth of credit, somewhere between 40 and 50, no one knows, in a system with only a couple trillion dollars’ worth of equity. And so China is running the largest financial experiment the world has ever seen. And the economic tides have turned negative for them. If you notice the narrative amongst the United States, it’s actually a bipartisan narrative whereby you’re seeing both sides of the aisle pushing back on China taking advantage of the US.”

Read more …

Financial innovation.

China Talks Up Stock Market Amid Concerns About Share-Backed Loans (CNBC)

A flurry of comments from Chinese officials over the last few days have been aimed at pledging support for private businesses with financing problems, as Beijing seeks to ease fears of a sell-off in stocks. The worry is that a drop in stock prices would force the selling of shares used as collateral, and lead to further market declines in China. In one of Beijing’s latest interventions, the Securities Association of China announced Monday night that 11 securities firms will form a $100 billion yuan ($14.5 billion) asset management plan to take some pressure off “share pledges” for companies with good development prospects.

In share pledge financing, companies use a percentage of their equities as collateral to obtain loans. If the stock price falls far below a level that was agreed upon, the lender will sell the shares to obtain funds, leading to the destabilization of equity markets. Despite Beijing’s latest move and other recent measures to support local businesses, stocks closed sharply lower Tuesday, giving back some gains from the rally in the previous two sessions. [..] The prevalence of share pledges is partly the result of Beijing’s own actions. Chinese banks prefer to lend to state-owned enterprises, while the government continues to crack down on shadow banking — the primary alternative for private businesses. As a result, many Chinese companies, especially small and mid-sized businesses, have turned to share pledges.

Read more …

I don’t see it either. And Rickards is right about media coverage of Trump.

A “Blue Wave” in Midterm Elections? Not So Fast (Rickards)

Tuesday, Nov. 6, is the date of the U.S. midterm elections that will determine control of the U.S. House of Representatives and U.S. Senate. The outcome of those contests will determine whether Trump is allowed to finish his term or not (see below for more on that, and which outcome is most likely). Let’s dive in… Whatever you think of Trump personally, we all know how the mainstream media treat Donald Trump. The coverage from The Washington Post, The New York Times, NBC and other outlets is relentlessly and exclusively negative. The media campaign against Trump is not normal bias; it’s more like a political jihad. Trump gets no credit for reducing unemployment, cutting taxes, boosting growth, achieving a breakthrough with North Korea, defeating ISIS and standing up to the dictators in Syria and Venezuela.

Meanwhile, Trump is hammered continually on the bogus Russia collusion story while Robert Mueller is cheered on in his fishing expedition into Trump’s personal finances and unrelated problems of Trump associates. The mainstream pundits are predicting a “blue wave” that will put the Democrats in control of the House of Representatives and lead directly to impeachment proceedings early in 2019. That’s been the mainstream narrative for months. Basically, the idea is that Democratic voters are more motivated than Republican voters because their hatred of Trump is more powerful than support for Trump among Republican voters. The Kavanaugh confirmation process only inflamed Democratic passions even further and should help the turnout.

Read more …

It’s too late for many things.

It’s Too Late To Prepare UK Borders For No-Deal Brexit – Watchdog (Ind.)

Britain has left it too late to prepare its borders for a no-deal Brexit, which would be a gift for organised criminals and chaotic for traders, the UK’s spending watchdog warns Theresa May today. Only one of 12 new “critical systems” is likely to be ready after planning was undermined by “political uncertainty and delays in negotiations”, the National Audit Office (NAO) has concluded. The failure would open up “weaknesses or gaps in the enforcement regime” which “organised criminals and others are likely to be quick to exploit”, its highly-critical report says. And the problem will be made worse by the UK losing full access to EU security databases after Brexit, which police chiefs have already warned will weaken the fight against crime.

Meanwhile, firms would be hit with delays for goods crossing the border while rogue operators would escape tax and regulatory checks, the report predicts. Diane Abbott, Labour’s shadow home secretary, seized on the findings as “painting a damning picture on the government’s lack of security preparation for Brexit”. She said: “The British people will never forgive this government if its in-fighting and political jockeying led them to neglect border security and the international co-operation needed to tackle serious, organised crime and terrorism.” And the Federation of Small Businesses said ministers were living in “dreamland” if they believed the ability to track and examine goods at the border would be in place for leaving the EU next March.

Read more …

No-deal Brexit will be disastrous, much more than anyone realizes. Everything still looks normal, after all.

UK Could Be Forced To Charter Ships To Bring In Food And Supplies (Ind.)

The UK could be forced to charter ships to bring in supplies in the event of a no-deal Brexit, ministers have been warned. The cabinet was briefed on plans for alternatives if new customs controls in France block the Dover-Calais route, potentially causing chaos in the English Channel, according to the Financial Times. Transport secretary Chris Grayling reportedly discussed the possibility of hiring entire ships, or securing cargo space in vessels, to bring food, medicines and other supplies in through alternative ports. David Lidington, the cabinet office minister, told his colleagues the Dover-Calais route could only run at a maximum of 25 per cent of its capacity under a no-deal scenario.

A department for transport spokesperson said: “We remain confident of reaching an agreement with the EU, but it is only sensible for government and industry to prepare for a range of scenarios. “We are continuing to work closely with partners on contingency plans to ensure that trade can continue to move as freely as possible between the UK and Europe.” Labour MP David Lammy, who is pushing for Britain to stay in the European Union, said: “Brexit has become like a declaration of war on ourselves. Emergency ships will be chartered for food and medicine if we leave the EU with no deal. “But at least when we’re using ration books and running out of drugs, we’ll have taken back control.”

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Not the first time Correa says this.

Ecuador Likely To Turn Assange Over To US – Ex-President Correa (RT)

The Ecuadorian government might eventually hand the Wikileaks co-founder Julian Assange to Washington even though it is legally obliged to protect him, former Ecuadorian president Rafael Correa told RT. “I believe they are going to turn over Assange to the US government,” Correa, who was leading the Latin American country at the time when it granted the Wikileaks co-founder asylum, told RT, calling the policy of the current Ecuadorian government “a shame.” “The Ecuadorian state has to protect Assange’s rights, he is not just an asylum [seeker]; he is a citizen,” Correa said. Granted Ecuadorian citizenship back in 2017, Assange is now supposed to be protected by the Ecuadorian constitution. But the current government is too desperate for Washington’s favor, Correa believes.

The Wikileaks co-founder might be a bargaining chip in an agreement between the Ecuadorian authorities and US Vice President Mike Pence, who visited the Latin American country and met with President Lenin Moreno earlier this year. Quito’s behavior shows that it has “absolutely submitted” to Washington without actually earning any favor, Correa said. His comments came a week after two US lawmakers called on Moreno to “hand Assange over to the proper authorities,” calling him “a dangerous criminal and a threat to global security.” In the letter, representatives Eliot Engel (D-NY) and Ileana Ros-Lehtinen (R-FL) spoke about the US willingness “to move forward in collaborating” with Moreno’s government, mulling enhanced economic cooperation and development aid from the US. They portrayed Assange as an obstacle on the way to a bright future together for the two nations.

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Wondering why his lawyers sued Ecuador. Who sues their host? Looks like they know something’s afoot.

Ecuador Won’t Help Assange Leave UK Embassy Safely – Foreign Minister (RT)

Ecuador will not help Julian Assange leave the UK, the country’s foreign minister said, claiming its only duty was to look after the WikiLeaks founder’s “well-being” after Assange sued them for restricting his rights and freedoms. Ecuadorian FM Jose Valencia told Reuters that Ecuador was not responsible for helping Assange leave the London embassy safely, even though the Inter-American Court on Human Rights recently found them responsible for protecting him from US extradition. UK authorities are poised to apprehend Assange should he step outside the building. Assange accused the Ecuadorian government of violating his rights after they drew up a “Special Protocol” barring him from speaking about politics or involving himself in the political affairs of other countries.

The list of restrictions runs to nine pages and permits authorities to confiscate the property of visitors, who must be approved in advance, submit their social media profiles, and turn over the make, model, serial and IMEI numbers of their mobile devices. The conditions added insult to injury with a threat to turn Assange’s cat over to a shelter if he fails to clean up after it adequately. The cat has been Assange’s only companion during nearly seven months in which the Ecuadorian government has kept him cut off from the outside world, jamming his phone lines, scrambling wifi signals, and banning almost all visitors. The “Special Protocol” also states that Ecuador will cease paying for Assange’s food, medical care, laundry, and all but the most basic needs on December 1.

Between this deadline, the limitations on his speech, and the Foreign Minister’s statement, the government appears to be stepping up the pressure to force Assange to leave on his own. In July, the Inter-American Court on Human Rights ruled that Ecuador must protect Assange from US extradition. The ruling came just weeks after a meeting between Ecuadorian President Lenin Moreno and US VP Mike Pence during which they were rumored to have reached an agreement regarding handing over the WikiLeaks founder.

Read more …

Oct 192018
 
 October 19, 2018  Posted by at 1:04 pm Primers Tagged with: , , , , , , , , , , , ,  


M. C. Escher Meeting (Encounter) 1940

 

It’s no surprise that China has its own plunge protection team -but why were they so late?-, nor that Beijing blames its problems on Trump’s tariffs. GDP growth was disappointing at 6.5%, but who’s ever believed those almost always dead on numbers? It would be way more interesting to know what part of that growth has been based on debt and leverage. But that we don’t get to see.

So we turn elsewhere. How about the Shanghai Composite Index? It may not be a perfect reflection of the Chinese economy, no more than the S&P 500 is for the US, but it does raise some valid and curious questions.

Borrowing from Wolf Richter, here are some stats and a graph::
• Lowest since November 27, 2014, nearly four years ago
• Down 30% from its recent peak on January 24, 2018, (3,559.47)
• Down 52% from its last bubble peak on June 12, 2015 (5,166)
• Down 59% from its all-time bubble peak on October 16, 2007 (6,092)
• And back where it had first been on December 27, 2006, nearly 12 years ago.

 

 

The first thing I thought when I saw that was: how on earth is it possible that in an economy that’s supposedly been growing 6%+ for a decade, stocks have gone nowhere at all? And obviously the role of the Shanghai index is different from that of the S&P, the DAX or the FTSE, but at the alleged Chinese growth rate, the economy would have almost doubled in size in 10 years. And none of that is reflected in stocks?

 

 

And if you think Shenzhen is a better barometer of ‘real’ China, Tyler Durden had this graph yesterday. Not the same as Shanghai, but similar for sure.

 

 

But other aspects of the Chinese economy are perhaps more interesting, I think. China’s mom and pop are not typically in stocks. In the Zero Hedge article I took that graph from, there is also this:

“There’s a liquidity crisis in the stock market, and pledged shares are again starting to sound the alarm,” said Yang Hai, analyst at Kaiyuan Securities. [..] The fear is that if Beijing does nothing, the self-reinforcing liquidation is only set to get worse: with $603 billion of shares pledged as collateral for loans – or 11% of China’s market capitalization, – traders are increasingly concerned that forced sellers will tip the market into a downward spiral.

[..] China in June told brokerages to seek approval before selling large chunks of stock that have been pledged as collateral for loans, while the top financial regulator in August warned the industry that it’s closely watching corporate stock pledges. Neither of those warnings appears to have generated the desired outcome, and the result is that two-thirds of Shenzhen Composite stocks are now at 52-week lows or worse.

[..] what are investors to do in this time of panicked selling? Why demand more bailouts of course, like begging the National Team to step in and rescue them (just like in the housing market): “If there are no real policies to cure the array of problems and ailments in our market, no one will be willing to take the risk,” said Hai. “Authorities keep saying that there is room for more polices, but where are they?”

“It’s high time the state stepped in,” said Dong Baozhen, a fund manager at Beijing Tonglingshengtai Asset Management. “The national funds cannot just sit on the sidelines and watch this atmosphere of extreme pessimism.”

It’s this clamoring for the state to come to the rescue of people who are losing money that would appear to define China today, where there is a stock market and housing market, and many ‘investors’ making lots of money, but where the mentality still seems to lurk back to days of old whenever things don’t only go up in a straight line.

There was another report recently of people demonstrating outside a property developer’s office because the firm had lowered purchase prices by 30%. Those that had paid full price now stood to lose that 30%. This happens frequently, and it can get violent. Mom and pop are not in stocks, they are in real estate:

Property accounts for roughly 70 per cent of urban Chinese families’ total assets – a home is both wealth and status. People don’t want prices to increase too fast, but they don’t want them to fall too quickly either,” said Shao Yu, chief economist at Oriental Securities.

The Chinese are thinking about leaders from Deng Xiao Ping to Xi Jinping that it’s great if they steer the country in a direction where everyone can get rich, but when things go awry, it’s still Beijing’s task to solve the problems if and when they occur. I would expect the same kind of thing in many western countries where people have borrowed heavily into housing bubbles, I don’t see mass foreclosures in Sweden, Denmark, Holland, but bailouts of people who grossly overpaid.

But the Chinese go a step further in their demands from central government. And that is an enormous problem for Xi going forward. One crucial facet of all this is psychological: when people count on being bailed out by their government, they will take much more risk, borrow more, with higher leverage etc. If you allow people things like pledging shares to buy more shares, or homes, and shares fall, you have an issue.

China’s well-known for companies buying each other’s shares to appear viable. It’s also known for local governments borrowing heavily from shadow banks in order for party officials to look as if they’re performing real well.

Now of course, if Beijing keeps on presenting all those growth numbers that look so solid, it’s asking for it. Moreover, the Party has lost control over the shadow banks, and it couldn’t act to regain that control if it wanted. It could initiate a program to forgive debt owed to national banks, but what’s owed to the shadows will have to be paid. We’re talking many trillions.

The Party has let the shadows in, because it made its own debt numbers look so much better. But when this whole debt balloon, on which so much of the GDP growth has rested, and the roads to nowhere and empty apartment blocks and cities, starts to pop, who are the Chinese going to turn to? For that matter, who is Xi going to turn to?

Yes, much of the western wealth has turned into a mirage, but in that respect, too, China has done what we did in a fraction of the time. Trump’s tariffs may play a role in a slowdown, but wait until the western economies deflate their debt bubbles and stop buying much of China’s products.

Bubbles vs balloons, that seems a proper way to phrase this. And for better or for worse, Jerome Powell is hiking interest rates. There’s your Needles and Pins.

 

 

Oct 192018
 
 October 19, 2018  Posted by at 9:12 am Finance Tagged with: , , , , , , , , , ,  


Paul Gauguin Horsemen on the beach 1902

 

Implosion of Stock Market Double-Bubble in China Hits New Lows (WS)
Trump Trade War Forces Beijing To Retreat From Its Anti-Debt Battle (CNBC)
Italy’s Debt Crisis Thickens (DQ)
Italian Bond Yields Spike To 4-Year Highs As EU Slams New Budget Plan (CNBC)
EU Leaders Ready To Help May Sell Brexit Deal To Parliament (G.)
Tory MP Calls UK Government ‘A Shitshow’ (Ind.)
Greens Surge Across Europe As Centre-Left Flounders (G.)
Male Birds Can Be Good Singers Or Good Looking, But Not Both (NS)
Jurors Urge Judge To Uphold Monsanto Cancer Ruling (G.)
World’s Smallest Porpoise Faces Extinction (AFP)
Microplastics Found In 90% Of Table Salt (NatGeo)

 

 

Tomorrow is a travel day, no posts.

 

 

Up a bit this morning, plunge protection, but Shanghai down 30% for the year. Stocks are not Xi’s worst fear, though, the housing market is, along with debt. And you wonder how this is possible with all the GDP growth numbers.

Implosion of Stock Market Double-Bubble in China Hits New Lows (WS)

Today, the Shanghai Composite Index dropped another 2.9% to 2,486.42. In the bigger picture, that’s quite an accomplishment:

• Lowest since November 27, 2014, nearly four years ago
• Down 30% from its recent peak on January 24, 2018, (3,559.47)
• Down 52% from its last bubble peak on June 12, 2015 (5,166)
• Down 59% from its all-time bubble peak on October 16, 2007 (6,092)
• And back where it had first been on December 27, 2006, nearly 12 years ago.

The chart of the Shanghai Stock Exchange Composite Index (SSE) shows the 2015-bubble and its implosion, followed by a rise from the January-2016 low, which had been endlessly touted in the US as the next big buying opportunity to lure US investors into the China miracle. Investors who swallowed this hype got crushed again:

Over the longer view, the implosion is even more spectacular. Today’s close puts the SSE back where it had first been nearly 12 years ago, on December 27, 2007. This dynamic has created a double-bubble and a double-implosion, with every recovery rally in between getting finally wiped out. The index is now down 59% from its all-time high in October 2007, the super-hype era in the run-up to the Beijing Olympics. It is not often that a stock market of one of the largest economies in the world is whipped into two frenetically majestic bubbles that implode back to levels first seen 12 years earlier – despite inflation in the currency in which these stocks are denominated.

Read more …

Betcha China’s foreign reserves are dwindling.

Trump Trade War Forces Beijing To Retreat From Its Anti-Debt Battle (CNBC)

Just as China started to come to grips with the scale of its massive debt accumulation, the impact of the trade war with the U.S. is forcing a retreat. One expert said that could prove “disastrous” for the country’s economy. Years of big-ticket investment projects helped spur double-digit growth in China’s GDP, sending the country into position as the world’s second-largest economy — trailing only the United States. The price tag, however, was a mountain of debt that needed to be drawn down as authorities refashioned growth to a more sustainable model. The plan has been to base the more mature economy on the increasing spending power of China’s rising consumer class rather than old-fashioned investments in infrastructure.

But the trade war is denting China’s economic growth and forcing a rethink in debt reduction — known as deleveraging — as authorities look for ways to juice the economy to make up for hits resulting from U.S. President Donald Trump’s tariffs on Chinese exports. Economists increasingly see future tariffs as likely to apply to all shipments from China to the United States, meaning Beijing is set to even further loosen financial taps. That’s already been seen in the form of cuts to reserve requirement ratios for banks, which set the amount of funds they must keep on hand. The recent moves mean banks have more money to lend out, stimulating the economy with more debt.

Read more …

To what extent is this Brussels teaching Rome a lesson?

Italy’s Debt Crisis Thickens (DQ)

Italy’s government bonds are sinking and their yields are spiking. There are plenty of reasons, including possible downgrades by Moody’s and/or Standard and Poor’s later this month. If it is a one-notch downgrade, Italy’s credit rating will be one notch above junk. If it is a two-notch down-grade, as some are fearing, Italy’s credit rating will be junk. That the Italian government remains stuck on its deficit-busting budget, which will almost certainly be rejected by the European Commission, is not helpful either. Today, the 10-year yield jumped nearly 20 basis points to 3.74%, the highest since February 2014. Note that the ECB’s policy rate is still negative -0.4%:

But the current crisis has shown little sign of infecting other large Euro Zone economies. Greek banks may be sinking in unison, their shares down well over 50% since August despite being given a clean bill of health just months earlier by the ECB, but Greece is no longer systemically important and its banks have been zombies for years. Far more important are Germany, France and Spain — and their credit markets have resisted contagion. A good indicator of this is the spread between Spanish and Italian 10-year bonds, which climbed to 2.08 percentage points last week, its highest level since December 1997, before easing back to 1.88 percentage points this week.

Much to the dismay of Italy’s struggling banks, the Italian government has also unveiled plans to tighten tax rules on banks’ sales of bad loans in a bid to raise additional revenues. The proposed measures would further erode the banks’ already flimsy capital buffers and hurt their already scarce cash reserves. And ominous signs are piling up that a run on large bank deposits in Italy may have already begun.

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So far the government is sticking to its plans.

Italian Bond Yields Spike To 4-Year Highs As EU Slams New Budget Plan (CNBC)

Italian sovereign debt yields hit fresh multi-year highs Friday morning, as investors grow cautious over lending to the embattled government after it unveiled new budget plans. Ten-year and 30-year bond yields — yields have an inverse relationship to a bond’s price — hit their highest levels since early 2014, according to Reuters, just hours after the European Union warned of rule breaches in Italy’s draft budget. Investors have shown concerns over Italy’s 2019 budget, which was officially sent to the EU this week for analysis. The anti-establishment and partly right-wing government in Italy plans to increase public spending in the country, sticking with campaign pledges before the general election in March this year.

There are strong concerns that the fiscal plan will derail the reduction of the country’s debt pile — which is the second largest in the euro zone, totaling 2.3 trillion euros ($2.6 trillion). Italy’s prime minister has defended its free-spending budget this week, after officials in Brussels criticized the plans and labelled it an unprecedented breach of the EU’s budgetary rules.

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Picked up the graph apart from the article. It says exactly why there won’t be a deal: it’s not possible.

EU Leaders Ready To Help May Sell Brexit Deal To Parliament (G.)

EU leaders are preparing to back Theresa May in building a “coalition of the reasonable” in the UK parliament, in a desperate bid to avoid a no-deal Brexit. Following what has been described by diplomats as a “call for help” by the prime minister at a crunch summit in Brussels, the German chancellor, Angela Merkel, stressed that the EU had to pursue “all avenues” to find a deal that can get through the Commons.“I think where there is a will there is a way,” she said. Jean-Claude Juncker, the European commission president, said: “It will be done.” He is understood to have told EU leaders that May needed “help” to sell a deal in parliament.

While ruling out major concessions, Emmanuel Macron, the French president, said it was clear that the roadblock to a deal did not lie in Brussels. A potential agreement had been derailed on Sunday when Dominic Raab, the Brexit secretary, made an unscheduled visit to Brussels to inform the EU’s chief negotiator, Michel Barnier, that May could not get an agreement past her cabinet or the DUP, on whose votes her government relies.

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A bit of honesty.

Tory MP Calls UK Government ‘A Shitshow’ (Ind.)

A Tory MP has labelled the government “a shitshow” and said he would not vote Conservative. Johnny Mercer, a former army officer, claimed his party was being run by “technocrats and managers” and labelled Theresa May’s Brexit plan a sign of a “classic professional politician”. He vowed to launch a “serious shit-fight” to stop the UK heading “towards the edge of the cliff”. The Plymouth Moor View MP launched the astonishing attack on his own party as he voiced concerns that it no longer shared his values. He told The House magazine: “The party will never really change until you have somebody who is leading the party who has won a seat and knows what it’s like to go out every weekend and advocate for what you just voted for that week.

“We’ve lost this ability to fight, to scrap for what we believe in. Until we get that art back – ultimately our core business as politicians is winning elections. That is our basic core business. “We’ve lost focus on that for some very good, very capable but ultimately technocrats and managers. That’s not what Britain’s about.” [..] in a shock admission, he said that, were he not an MP, he would not vote for the Conservatives. Asked how the Johnny Mercer who left the military in 2012 would vote now, he said: “I wouldn’t go and vote. “Just being honest, I wouldn’t vote. Of course I wouldn’t, no.” He added: “There’s no doubt about it that my set of values and ethos, I was comfortable that it was aligned with the Conservative Party. I’m not as comfortable that that’s the case any more.”

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The political center vanishes everywhere.

Greens Surge Across Europe As Centre-Left Flounders (G.)

In conservative Bavaria, the Greens doubled their vote in state elections to become the second largest party. In Belgium’s local elections they achieved record scores of more than 30% and finished first in several Brussels districts, and runners-up overall. In Luxembourg’s general election they increased their tally of MPs by 50%. The elections in three countries last weekend suggest that as Europe’s historic mainstream parties plummet in the polls and struggle to see off the far right’s challenge, for liberal-minded voters the Greens look like an answer. Offering a pro-EU stance, a humane approach to migration and clear positions on issues such as climate change, biodiversity and sustainability, Green parties in several countries are now polling higher nationally than the traditional centre-left.

“They represent a clear place where people can go who are frustrated with the traditional mainstream parties but who don’t like the far right,” said Alexander Clarkson, a lecturer in European studies at King’s College London. “They offer a very clear counter-model to the positions and arguments of parties like Germany’s AfD. Also they’ve been around for a while now, more than 40 years, and they’ve governed responsibly both locally and regionally. They kind of look like the adults in the room.”

In Germany, where the Greens partner parties from the centre-right to the hard-left in nine of the 16 state governments, recent national polling put the party ahead of the centre-left SPD, Angela Merkel’s coalition partner, with a 17%-plus share of the vote, compared with 8.9% in last year’s federal election. In the Netherlands, the GreenLeft party boosted its representation from four to 14 MPs in elections last year and has advance further since then, from 9% to a second-placed 18% in the polls.

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Fun research.

Male Birds Can Be Good Singers Or Good Looking, But Not Both (NS)

The call of a male peacock is no pleasure to listen to, but its splendid tail means it doesn’t matter. Now an analysis of more than 500 species shows that this is a common trade-off in the bird world: the best lookers aren’t the most talented singers, while the best vocalists aren’t as easy on the eye. Sexual selection is an evolutionary process that shapes traits that animals use to attract mates, and birds are well known to resort to elaborate songs and flashy feathers in the name of reproduction. To investigate which species use which traits, Christopher Cooney at the University of Oxford and his colleagues collected the songs of 518 species, and compared these with their feather colours.

In particular, they looked at how much feathers differed between the males and females of each species – a sign that sexual selection has influenced their plumage. They found that birds in which one sex has more showy plumage than the other tend to have less interesting, more monotonous songs. In species in which the males and females more closely resemble each other, the males sing longer songs over a larger range of musical notes. The reason why bird evolution favours one trait over the other is unclear. It might be that birds living in dense forests with lower visibility rely more on their songs instead of colour to attract mates, but Cooney’s analysis didn’t find any relationship between sexually selected traits and habitat.

Instead, his team think that mate-attracting traits are costly to develop, so a species tends to evolve only one. Alternatively, once one attractive trait has begun to emerge, it may simply be pointless to develop a second.

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“Why do we have a jury system if the judge can just toss it out?”

Jurors Urge Judge To Uphold Monsanto Cancer Ruling (G.)

Jurors who ruled that Monsanto caused a dying man’s cancer are fighting to uphold their landmark $289m verdict, publicly urging a judge not to overturn their decision in a groundbreaking trial. Four California jurors told the Guardian that they were shocked and angry to learn that the judge overseeing their trial had moved to throw out their unanimous verdict, which said the agrochemical corporation failed to warn consumers that its popular weedkiller product posed health risks. The ruling in August, which sparked concerns across the globe about the Roundup herbicide, included $250m in punitive damages to the plaintiff, Dewayne “Lee” Johnson, who has terminal cancer.

But San Francisco superior court judge Suzanne Bolanos stunned campaigners and jurors last week when she issued a tentative ruling on Monsanto’s appeal motion, saying she would likely grant a new trial due to the “insufficiency of the evidence”. “I was just gobsmacked and outraged. I was astonished,” Robert Howard, juror No 4, said in an interview on Thursday. “Why do we have a jury system if the judge can just toss it out?” Bolanos hasn’t yet made a final ruling, leading to an unusual public plea from the jurors and mounting pressure on the judge in recent days. Some jurors said they became emotionally invested in the trial and now felt it was their duty to advocate for their decision and fight for Johnson to receive his award.

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The list is endless. They’re all leaving.

World’s Smallest Porpoise Faces Extinction (AFP)

The near-extinct vaquita marina, the world’s smallest porpoise, has not yet disappeared from its habitat off the coast of Mexico, a research team said Wednesday after spotting six of them. The vaquita has been nearly wiped out by illegal fishing in its native habitat, the Gulf of California, and the World Wildlife Fund (WWF) warned in May that it could go extinct this year. But “all hope is not lost” for saving the species after the recent sightings, said Lorenzo Rojas of the International Committee for the Recovery of the Vaquita (CIRVA), presenting the researchers’ findings. In an 11-day study conducted in late September and early October, marine scientists spotted six vaquitas, including a calf.

The team emphasized that the study was not a full population estimate, which they will present in January after further research. In the last full population estimate, carried out in 2017, CIRVA found there were only 30 vaquitas left. Known as “the panda of the sea” for the distinctive black circles around its eyes, the vaquita has been decimated by gillnets used to fish for another species, the also endangered totoaba fish. The totoaba’s swim bladder is considered a delicacy in China and can fetch up to $20,000 on the black market. Hollywood star Leonardo DiCaprio and Mexican billionaire Carlos Slim have thrown their backing behind the campaign to save the vaquita.

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Select your salt wisely.

Microplastics Found In 90% Of Table Salt (NatGeo)

Microplastics were found in sea salt several years ago. But how extensively plastic bits are spread throughout the most commonly used seasoning remained unclear. Now, new research shows microplastics in 90 percent of the table salt brands sampled worldwide. Of 39 salt brands tested, 36 had microplastics in them, according to a new analysis by researchers in South Korea and Greenpeace East Asia. Using prior salt studies, this new effort is the first of its scale to look at the geographical spread of microplastics in table salt and their correlation to where plastic pollution is found in the environment. “The findings suggest that human ingestion of microplastics via marine products is strongly related to emissions in a given region,” said Seung-Kyu Kim, a marine science professor at Incheon National University in South Korea.

Salt samples from 21 countries in Europe, North and South America, Africa, and Asia were analyzed. The three brands that did not contain microplastics are from Taiwan (refined sea salt), China (refined rock salt), and France (unrefined sea salt produced by solar evaporation). The study was published this month in the journal Environmental Science & Technology. The density of microplastics found in salt varied dramatically among different brands, but those from Asian brands were especially high, the study found. The highest quantities of microplastics were found in salt sold in Indonesia. Asia is a hot spot for plastic pollution, and Indonesia—with 34,000 miles (54,720 km) of coastline—ranked in an unrelated 2015 study as suffering the second-worst level of plastic pollution in the world.

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Oct 102018
 
 October 10, 2018  Posted by at 9:34 am Finance Tagged with: , , , , , , , , , , ,  


Paul Klee Angelus Novus 1920 (see last article)

 

Trump “Doesn’t Like What The Fed Is Doing” (ZH)
Chinese Yuan Could Reach A Record Low Against The Dollar (MW)
China’s (Non-Government) Business Survey Collapses As Trade War Strikes (ZH)
Chinese Firms Now Hold Stakes In Over A Dozen European Ports (NPR)
UK Public Finances Are Among Weakest In The World – IMF (G.)
IMF Warns Italy Not To Breach EU Spending Rules In Next Budget (G.)
Bank of England Warns EU Over Brexit Risk To Financial Stability (G.)
One Good Thing About Brexit: Leaving Disgraceful EU Farming System (Monbiot)
UK Fracking Rules On Earthquakes Could Be Relaxed (G.)
Shell CEO: Mass Reforestation Needed To Limit Temperature Rises To 1.5C (G.)
Florida Panhandle Bracing for Category 4 Hit from Michael (WU)
The Emergency Brake (Sperber)

 

 

Sorry, but I see nothing other than Trump reaffirming the Fed’s independence.

Trump “Doesn’t Like What The Fed Is Doing” (ZH)

With the dollar spiking and rates surging to 7 years highs, President Trump doubled down on his criticism of the Fed and on his way to a rally in Iowa, said the Federal Reserve is moving too fast with interest rates increases, dismissing concerns about inflation. “I don’t like what the Fed is doing”, Trump told reporters at the White House. “I think we don’t have to go as fast” on rate hikes. “I like low interest rates,” Trump said. Trump also said that rates are too high because there’s no inflation, but said that he has not talked to Chair Powell about it because he doesn’t want to get involved. Trump’s comments echoed prior criticisms of the Fed.

When the Fed announced its third increase of the year in September, Trump said he was “not happy” about it. Trump has publicly criticized the Fed’s interest-rate increases on several occasions, breaking with more than two decades of White House tradition of avoiding comments on “independent” monetary policy. Some commented that this is another sly move by the president to preemptively shift blame on the Fed chair ahead of what may be a turbulent 2019 when rates are expected to keep rising, potentially resulting in a sharp slowdown in the economy and/or a stock market crash.

Separately, hours after Nikki Haley announced her departure as US ambassador to the UN, Trump said he would consider Goldman’s Dina Powell for the post. “Dina is certainly a person I would consider,” Trump told reporters at the White House on the way to board the presidential helicopter as he embarked on a trip to Iowa. But he added there are others he would also consider. Earlier CNBC reported that Dina Powell, a Goldman Sachs exec and Trump’s former deputy national security advisor, has had discussions with senior members of the administration about possibly replacing Nikki Haley as U.S. ambassador to the United Nations.

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Manipulation?

Chinese Yuan Could Reach A Record Low Against The Dollar (MW)

The pressure on China’s currency continues to mount as the world’s second-largest economy shows more signs of slowing and traders bet that the dollar will soon buy a record amount of yuan in the offshore market. As the country returned to work on Monday after the Golden Week holiday, the People’s Bank of China cut the Reserve Ratio Requirement, the percent of deposit liabilities owed to its customers banks are required to hold, for the fourth time this year. While that may spur banks to lend more, it sent the Chinese yuan another leg lower, moving toward its August low against the greenback and in sight of the psychological 7.00 level. A move through 7.00 would be a record low in offshore trading.

The yuan has already posted six straight monthly declines against the dollar, including a drop of 0.6% in September. The slide in the yuan comes as the economy shows more signs of slowing. A closely watched economic activity indicator, the official Purchasers Manufacturing Index, fell to 52 in September, from 52.2 in August, according to Wei Yao, an economist at Société Générale. Magnifying concerns around the Chinese economy was a steeper-than-expected drop in China’s foreign-exchange holdings during September, to $3.087 trillion. A decline in the country’s reserves raises concerns that the PBOC could not defend the yuan in should a large amount of money flee the country.

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“For most, business has never been worse.”

China’s (Non-Government) Business Survey Collapses As Trade War Strikes (ZH)

As China returns from its Golden Week vacation, it is not just its currency and stock market that is collapsing… As Bloomberg reports, an indicator produced by a Beijing-based business school in the style of the closely-watched purchasing managers index plunged last month, adding to concerns about the slowing economy and raising the question of whether business conditions may be worse than official statistics show. The index is based on a survey of CKGSB students and graduates who are executives at companies operating in China. The respondents represent around 300 privately-owned small and mid-sized enterprises across several sectors of the economy.

“Most surveyed companies are now experiencing unprecedented difficulties and have become increasingly pessimistic about business prospects for the next six months,” Li Wei, the economics professor at CKGSB who oversees the survey, said in a commentary accompanying the September survey results. “For most, business has never been worse.”

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Next up: military presence?

Chinese Firms Now Hold Stakes In Over A Dozen European Ports (NPR)

In the past decade, Chinese companies have acquired stakes in 13 ports in Europe, including in Greece, Spain and, most recently, Belgium, according to a study by the OECD. Those ports handle about 10 percent of Europe’s shipping container capacity. It is part of China’s 21st Century Maritime Silk Road, which aims to better connect the country to commercial hubs in Africa, Asia, Europe and Oceania. China is the European Union’s biggest source of imports and its second-largest export market, adding up to more than $1 billion in trade per day. And sea shipping outweighs rail or air freight. But this is about more than just moving cargo, analysts say. President Xi Jinping’s new silk road, named after the ancient trade route, has sped up China’s advance toward becoming a superpower of the seas, spreading not just commercial ships but naval power and influence to more and more areas of the world.

For instance, Chinese investments in the ports of Djibouti, Sri Lanka and Pakistan have been followed by Chinese naval deployments. While there are no public plans to turn European ports into Beijing’s military bases, Chinese warships have already paid a friendly visit to Greece’s Piraeus port. This all raises a slew of questions about issues ranging from military defense to labor conditions. “The main issue is for Europe to decide how it wants to deal with China’s influence,” says Frans-Paul van der Putten, a China expert at the Netherlands Institute of International Relations. “What degree of China’s influence is unavoidable and acceptable especially in sectors such as ports?”

[..] COSCO, with the world’s fourth-largest container shipping fleet, is leading the charge in Europe, beginning with Piraeus. In 2016, after years of investment, the company bought a majority stake in the Piraeus Port Authority in a concession agreement that runs until at least 2052. It is now in charge of container terminals, cruise ship piers and ferry quays. “A few years ago, when COSCO first became involved in Greece, the European view was it was good because Greece was in a lot of financial difficulties and at least someone wanted to invest there,” van der Putten says. “Piraeus was not a top-ranking port. People in Brussels thought it wouldn’t have a lot of significance.”

Today, about 20 million passengers go through Piraeus each year. Since COSCO’s takeover, it has become the fastest-growing port in the world, according to the industry news outlet Seatrade Maritime. COSCO’S chief executive in Piraeus, Capt. Fu Cheng Qui, says he wants to make it the largest in the Mediterranean.

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“corporation liabilities from zero in 2007 to 189% of GDP in 2008..”

UK Public Finances Are Among Weakest In The World – IMF (G.)

Britain’s public finances are among the weakest in the world following the 2008 financial crash, according to a fresh assessment of government assets and liabilities by the IMF. The Washington-based lender said a health check on the wealth of 31 nations found almost £1tn had been wiped off the wealth of the UK’s public sector – equivalent to 50% of GDP – putting it in the second weakest position, with only Portugal in a worse state. In calculations that combine measures of wealth and stress tests that mimic those applied to the banking sector, the IMF said the bailout of UK banks and the growth of Britain’s public sector pension liabilities were significant factors in the UK’s low ranking.

The tests are an effort by the IMF to show the balance of assets and liabilities in relation to a nation’s overall income to judge how well governments are prepared for economic shocks. Norway ranked as the most secure nation with a war chest built on its publicly held oil wealth, in contrast to the UK, which allowed private sector companies to extract North Sea oil reserves and spent the tax revenues during the 1980s and 1990s. The Gambia, Uganda and Kenya rank above the UK because while they have smaller assets and liabilities than Britain, they have a higher net wealth relative to GDP.

Cruder measures taking a snapshot of a country’s assets and liabilities showed Italy and Greece, which were excluded from the broader tests, fared worse than the UK. Barbados was another country with a lower rating. But most other countries were in a better position relative to their national income, the IMF said. [..] The report said: “The United Kingdom balance sheet expanded massively during the crisis. Most of the expansion in the balance sheet was the result of large-scale financial sector rescue operations that resulted in reclassification of the rescued private banks into the public sector. [This] increased (non–central bank) public financial corporation liabilities from zero in 2007 to 189% of GDP in 2008, with similar [falls] in financial assets.”

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Austerity still rules. Sovereignty, not so much.

IMF Warns Italy Not To Breach EU Spending Rules In Next Budget (G.)

The International Monetary Fund has thrown its weight behind Brussels in its battle with Italy’s coalition government over plans to increase the indebted country’s borrowing in its next budget. The Washington-based lender of last resort, which is holding its annual conference in Bali this week, warned Rome to abide by the EU’s financial rulebook or risk a rebellion by investors that could trigger a debt default. Italy’s populist coalition is targeting a deficit of 2.4% of GDP next year, tripling the previous government’s target, as it pledges more spending despite a huge debt pile, which at about 130% of GDP is the biggest in the eurozone behind Greece.

Brussels has rejected the idea of Italy running a larger budget deficit – the gap between income from taxes and government spending – than previously planned over the next three years. Rome is due to submit its draft budget by 15 October to the EU commission, the bloc’s executive arm, which will check whether it is in line with EU rules. The government has said it wants to use a spending boost to kickstart investment and consumer spending to fuel growth. The IMF’s chief economist, Maurice Obstfeld, said it was important to maintain the confidence of international money markets, especially when the risks of an escalating trade war and a damaging no-deal Brexit were rising.

The IMF’s intervention could prove significant while both sides seek allies in the budget battle as it is considered an important ally by governments as they seek to persuade electorates that debt-fuelled spending could lead to a collapse in confidence and rising borrowing costs. Obstfeld said EU rules that prevented governments adding to already sky-high levels of debt to GDP should be maintained in the current unstable economic climate.

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Only £70 trillion in derivatives?!

Bank of England Warns EU Over Brexit Risk To Financial Stability (G.)

The Bank of England has issued its strongest warning yet to the EU that its lack of adequate planning for Brexit has created growing risks for almost £70tn of complex financial contracts. Threadneedle Street said the bloc had made only limited progress to protect the financial system and time was running out, with little more than six months before the UK is due to leave the EU. Stressing the urgency of the situation in a statement from its financial policy committee, the Bank said: “In the limited time remaining, it is not possible for companies on their own to mitigate fully the risks of disruption to cross-border financial services.”

Without action, the contracts governing the financial derivatives – currently sold across the UK-EU border by banks to companies looking to protect themselves from movements in interest rates and changes in global markets – could be rendered illegal the moment Britain leaves, it warned. EU firms have about £69tn of outstanding derivatives contracts that are handled through a process known as “clearing” in the UK, while as much as £41tn mature after Britain exits the EU in March 2019. In a corner of the finance industry worth more than three times the overall value of the EU economy, the process of clearing derivatives involves banks organising their trades through a central third-party organisation – known as a clearing house – which takes on the risk of either party defaulting.

Clearing has become increasingly important since the financial crisis as the EU introduced rules forcing banks to trade greater volumes via clearing houses, with the idea of improving transparency and to avoid the confusion of banks going bust with complex webs of contracts with multiple parties – as was the case in 2008. EU-authorised clearing houses must handle EU banks’ trades, but UK organisations such as the London Stock Exchange’s LCH handle the bulk of business and could fall outside the rules in the event of a hard Brexit. As much as 90% of EU firms’ interest rate swaps – one of the most common types of financial derivative – are cleared in the UK.

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Don’t think I’ve ever understood how this got so out of hand.

One Good Thing About Brexit: Leaving Disgraceful EU Farming System (Monbiot)

I’m a remainer, but there’s one result of Brexit I can’t wait to see: leaving the EU’s common agricultural policy. This is the farm subsidy system that spends €50bn (£44bn) a year on achieving none of its objectives. It is among the most powerful drivers of environmental destruction in the northern hemisphere. Because payments are made only for land that’s in “agricultural condition”, the system creates a perverse incentive to clear wildlife habitats, even in places unsuitable for farming, to produce the empty ground that qualifies for public money. These payments have led to the destruction of hundreds of thousands of hectares of magnificent wild places across Europe.

It is also arguably the most regressive transfer of public money in the modern world. Farmers are paid by the hectare for owning or using land; so the more you have, the more you get. While in the UK benefits for poor people are capped at £20,000 (outside London), these benefits for the rich are uncapped. Some landowners receive £1m or more. You don’t even have to live in the EU to take this money: you just have to own land here. Among the benefit tourists sucking up public funds in the age of austerity are Russian oligarchs, Saudi princes and Texas oil barons.

It is hard to discern any just principle behind an occupational qualification for receiving public money. Some farmers are poor, but seldom as poor as rural people who have no land, no buildings and no jobs. Why should one profession be supported when others aren’t? Yet even farmers have been hurt by these payments. European subsidies have helped turn farmland into a speculative honeypot, making it highly attractive to City financiers. The price of land has more than doubled since payments by the hectare were introduced, pushing it out of reach of most farmers. By reinforcing economies of scale, these subsidies have driven out small farmers and accelerated the consolidation of land ownership.

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Craziest headline in ages.

UK Fracking Rules On Earthquakes Could Be Relaxed (G.)

Rules designed to halt fracking operations if they trigger minor earthquakes could be relaxed as the shale industry begins to expand, the UK energy minister, Claire Perry, has said. A series of small tremors seven years ago prompted tough regulations that mean even very low levels of seismic activity now require companies to suspend fracking. The shale gas firm Cuadrilla plans to start fracking near Blackpool this week if it can see off a last-minute legal challenge on Thursday. If seismic sensors detect anything above 0.5 magnitude on the Richter scale – far below what people can feel at the surface – the company would have to stop and review its operations.

But Perry has told a fellow Conservative MP that the monitoring system was “set at an explicitly cautious level … as we gain experience in applying these measures, the trigger levels can be adjusted upwards without compromising the effectiveness of the controls”. The comments were made in a letter to Kevin Hollinrake, the MP for Thirsk and Malton, whose constituency has several prospective fracking sites. The letter was obtained by Greenpeace’s investigative unit, Unearthed. Hollinrake, who is pro-fracking if it can be done safely, told the Guardian: “We’d need to be very careful about any revision to the regulations put in place. I’d want to understand why we were doing that and take plenty of evidence. We certainly wouldn’t want to see those rules being relaxed now.”

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Or close down your business?

Shell CEO: Mass Reforestation Needed To Limit Temperature Rises To 1.5C (G.)

The boss of Shell has said a huge tree-planting project the size of the Amazon rainforest would be needed to meet a tougher global warming target, as he argued more renewable energy alone would not be enough. Ben van Beurden said it would be a major challenge to limit temperature rises to 1.5C (equivalent to a rise of 2.7F), which a landmark report from the UN’s climate science panel has said will be necessary to avoid dangerous warming. “You can get to 1.5C, but not by just by pulling the same levers a little bit harder, because they are being pulled roughly as fast and and as hard as we are currently imagining. What we think can be done is massive reforestation. Think of another Brazil in terms of rainforest: you can get to 1.5C,” he told an oil and gas industry audience in London.

“It’s not what some people sometimes think: we’ll just do a little bit more solar, a bit more wind and we’ll get there,” he added. Reforestation is seen as essential in the scenarios outlined this week by the UN’s intergovernmental panel on climate change, if the world is to restrict warming to 1.5C. But Van Beurden stressed that meeting the challenge would be an uphill battle, because while it was “technically about doable”, it would not be commercially viable without changes to government policies and regulation. “Already to get to less than 2C will be [a] quite unimaginable, unprecedented scale of collaboration. Getting to 1.5C is a major challenge on top of it,” he said.

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Florida Panhandle has never seen a Cat 4 storm make landfall since records began 167 years ago.

Florida Panhandle Bracing for Category 4 Hit from Michael (WU)

Just hours away from an expected Wednesday afternoon landfall, Hurricane Michael became ever stronger and more organized on Tuesday night over the eastern Gulf of Mexico. Michael’s high winds, torrential rain, and very large storm surge were pushing briskly toward the Florida Panhandle and the Big Bend region just to the east, the areas in line to experience the worst impacts. Update (2 am EDT Wednesday): Michael has been upgraded to Category 4 strength as of 2 am EDT, with top sustained winds of 130 mph. Some additional strengthening is possible before landfall.

Satellite images of Michael’s evolution on Tuesday night were, in a word, jaw-dropping. A massive blister of thunderstorms (convection) erupted and wrapped around the storm’s eye, which has taken taking a surprisingly long time to solidify. A layer of dry air several miles above the surface being pulled into Michael from the west may have been one of the factors that kept Michael from sustaining a classic, fully closed eyewall (see embedded tweet below). A closed eyewall is normally a prerequisite for a hurricane to intensify robustly, but somehow Michael managed to reach Category 3 status without one.

[..] If Michael reaches the coast with top winds of at least 130 mph (minimal Category 4 strength), it will be the strongest hurricane landfall ever recorded in the Florida Panhandle, as well as along most of Florida’s Gulf Coast—all the way from the Alabama border to Punta Gorda—in records going back to 1851.

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See the painting at the top of this Debt Rattle.

The Emergency Brake (Sperber)

Because we seem to be living through a stretch of history in which history is threatening to extinguish history itself, an examination of the 20th century philosopher and critic Walter Benjamin’s concept of the angel of history, and his interrelated notion of the emergency brake, may point to a way. Evoked by the Swiss artist Paul Klee’s watercolor Angelus Novus, Benjamin introduced the figure of the angel of history in his final essay, “Theses on the Philosophy of History.”Appearing with its face “turned toward the past,” hurtling backward through space by “a storm blowing from paradise,” the angel is unable to close its wings and determine its own movement. Overpowered by this storm, it can do little more than watch impotently as catastrophic wreckage (the manifestation of history and progress) piles up at its feet.

That is, caught in the storm blowing from paradise, the storm of history is preventing the angel from doing what it desires to do. But just what does it desire? As Benjamin writes: the angel “would like to stay, awaken the dead, and make whole what is smashed.” Although prevented from doing so by the storm of progress that determines (and undermines) its flight, the angel’s utopian desire is to repair the world – not in order to restore paradise (a longstanding tendency of utopian messianism), but, rather, to restore life and autonomy to a social world destroyed by the coercive and destructive forces of history and ideology. While the angel desires this, however, the ecocidal storm (the bulldozer of progress, as the Supreme Court Justice William O. Douglas phrased the world-ravaging forces of history and technology) is far too powerful.

This is where the messianic notion of the emergency brake enters the picture – rupturing history and releasing its utopian essence. As Benjamin famously put it in his essay’s paralipomena; “Marx said that revolutions are the locomotive of world history. But perhaps things are very different. It may be that revolutions are the act by which the human race traveling in the train applies the emergency brake.” That is, the emergency brake would stop the “bulldozer of progress,” would cut off the ecocidal storm of history, and thereby allow the revolutionary potential of the angel (and humanity) to realize itself.

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Oct 082018
 
 October 8, 2018  Posted by at 9:18 am Finance Tagged with: , , , , , , , , , , , , ,  


Paul Gauguin The Great Buddah 1897

 

ACT NOW IDIOTS (BBC)
World Must Take ‘Unprecedented’ Steps To Avert Worst Of Global Warming (R.)
Energy Sector’s Carbon Emissions To Grow For Second Year Running (G.)
Clouds Gather Over The IMF’s Paradise (O.)
US Inflation Is The World’s Most Important Economic Variable (CNBC)
Ron Paul: US Barreling Towards A Stock Market Plunge Of At Least 50% (CNBC)
China Stocks Return From Holiday, Tumble 3% As PBOC Eases Bank Rates (MW)
FBI’s Smoking Gun: Redactions (Solomon)
Italy’s Di Maio Predicts ‘Political Earthquake’ For European Union (RT)
Salvini Resists Germany’s Plans To Send Migrants Back To Italy (RT)
Austerity Is The Wrong Prescription For The World’s Wellbeing (G.)
Greece ‘to Claim €280 Billion’ in War Reparations from Germany (GR)
‘The World Is Against Them’: New Era Of Cancer Lawsuits Threaten Monsanto (G.)

 

 

Sure, but do what? Has anyone defined that?

ACT NOW IDIOTS (BBC)

It’s the final call, say scientists, the most extensive warning yet on the risks of rising global temperatures. Their dramatic report on keeping that rise under 1.5 degrees C states that the world is now completely off track, heading instead towards 3C. Staying below 1.5C will require “rapid, far-reaching and unprecedented changes in all aspects of society”. It will be hugely expensive, the report says, but the window of opportunity is not yet closed. After three years of research and a week of haggling between scientists and government officials at a meeting in South Korea, the Intergovernmental Panel on Climate Change (IPCC) has issued a special report on the impact of global warming of 1.5C.

The critical 33-page Summary for Policymakers certainly bears the hallmarks of difficult negotiations between climate researchers determined to stick to what their studies have shown and political representatives more concerned with economies and living standards. Despite the inevitable compromises, there are some key messages that come through loud and and clear. “The first is that limiting warming to 1.5C brings a lot of benefits compared with limiting it to 2 degrees. It really reduces the impacts of climate change in very important ways,” said Prof Jim Skea, who is a co-chair of the IPCC.

“The second is the unprecedented nature of the changes that are required if we are to limit warming to 1.5C – changes to energy systems, changes to the way we manage land, changes to the way we move around with transportation.” “Scientists might want to write in capital letters, ‘ACT NOW IDIOTS’, but they need to say that with facts and numbers,” said Kaisa Kosonen, from Greenpeace, who was an observer at the negotiations. “And they have.” The researchers have used these facts and numbers to paint a picture of the world with a dangerous fever, caused by humans. We used to think if we could keep warming below 2 degrees this century then the changes we would experience would be manageable.

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The IPCC’s estimates have been off by a large margin. Political pressure?

World Must Take ‘Unprecedented’ Steps To Avert Worst Of Global Warming (R.)

Society would have to enact “unprecedented” changes to how it consumes energy, travels and builds to meet a lower global warming target or it risks increases in heat waves, flood-causing storms and the chances of drought in some regions as well as the loss of species, a U.N. report said on Monday. Keeping the Earth’s temperature rise to only 1.5 degrees Celsius (2.7 degrees Fahrenheit) rather than the 2C target agreed to at the Paris Agreement talks in 2015, would have “clear benefits to people and natural ecosystems,” the United Nations Intergovernmental Panel on Climate Change (IPCC) said on Monday in a statement announcing the report’s release.

The IPCC report said at the current rate of warming, the world’s temperatures would likely reach 1.5C between 2030 and 2052 after an increase of 1C above pre-industrial levels since the mid-1800s. Keeping the 1.5C target would keep the global sea level rise 0.1 meter (3.9 inches) lower by 2100 than a 2C target, the report states. That could reduce flooding and give the people that inhabit the world’s coasts, islands and river deltas time to adapt to climate change.

The lower target would also reduce species loss and extinction and the impact on terrestrial, freshwater and coastal ecosystems, the report said. “There were doubts if we would be able to differentiate impacts set at 1.5C and that came so clearly. Even the scientists were surprised to see how much science was already there and how much they could really differentiate and how great are the benefits of limiting global warming at 1.5 compared to 2,” Thelma Krug, vice-chair of the IPCC, told Reuters in an interview. “And now more than ever we know that every bit of warming matters,” Krug said.

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And after all the big words, here is reality.

Energy Sector’s Carbon Emissions To Grow For Second Year Running (G.)

Carbon emissions from the energy sector are on track to grow for the second year running, in a major blow to hopes the world might have turned the corner on tackling climate change. Preliminary analysis by the world’s energy watchdog shows the industry’s emissions have continued to rise in 2018, suggesting that an increase last year was not a one-off. The finding comes as the world’s leading climate scientists issue a landmark report on whether the world can meet a tougher global warming target, of limiting temperature rises to 1.5C.

Dr Fatih Birol, the executive director of the International Energy Agency (IEA), told the Guardian: “When I look at the first nine months of data, I expect in 2018 carbon emissions will increase once again. This is definitely worrying news for our climate goals. We need to see a steep decline in emissions. We are not seeing even flat emissions.” Emissions largely flatlined in 2014–16 after climbing for decades, raising hopes that global action on climate change was beginning to turn the tide – but in 2017 they grew by 1.4%.

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Silliest metaphor ever? “..while it is tempting to sail alone, countries must resist the siren call of self-sufficiency – because as the Greek legends tell us, that leads to shipwreck..”

Clouds Gather Over The IMF’s Paradise (O.)

On Tuesday, the [IMF] will update its World Economic Outlook and has already warned that the effects of rising debt and trade wars are affecting the global projections. Last week, the IMF’s head, Christine Lagarde, said the outlook “has become less bright”, despite projections during the summer that there would be 3.9% growth for 2018 and 2019. [..] Adding to Lagarde’s comments, there were warnings last week in the IMF’s global financial stability report, which said there was a risk of another financial meltdown because both governments and regulators have failed to put in place needed reforms to protect the system. Lagarde said that while expansion of the global economy was running at its fastest rate in seven years, there were signs of slowdown.

In September, factory activity dropped as a result of changes in trading with the US – and Donald Trump did not escape (admittedly veiled) criticism. The growing use of trade barriers had resulted in a drop in imports and exports, Lagarde said, and investment and manufacturing output had also been hit. Trump has consistently championed unilateral trade deals in an effort to further his “America First” agenda. “History shows that, while it is tempting to sail alone, countries must resist the siren call of self-sufficiency – because as the Greek legends tell us, that leads to shipwreck,” said Lagarde. Also central to the concerns about the future of the global economy are debt levels, currently well above those seen at the time of the 2008 crash. The IMF warned that there was a risk that unregulated parts of the financial system could trigger a panic.

The rise of unregulated “shadow banks” and the lack of restrictions on insurers and asset managers were pinpointed as concerns – as was the growth of global banks to a scale larger than 2008 and the fear that they are again “too big to fail”. Lagarde has said she is concerned that the total value of global debt has risen by 60% in the last 10 years to reach an all-time high of £139tn. As central banks in more advanced economies raised interest rates, attracting investors back to them, she said, developing countries were suffering. “That process could become even more challenging if it were to accelerate suddenly. It could lead to market corrections, sharp exchange rate movements, and further weakening of capital flows.”

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I think perhaps it’s that 1.5ºC one?!

US Inflation Is The World’s Most Important Economic Variable (CNBC)

U.S. inflation is the world’s most important economic variable. That proposition is explained by its corollary: Rising inflation is the only problem the U.S. Federal Reserve cannot solve by increasing its money supply. The Fed can deal with structural problems in credit markets by means of enhanced supervision, regulatory provisions and, all else failing, by open-ended lending in cases of systemic threats to the financial system’s stability. But none of those measures are applicable to situations of accelerating inflation and a deteriorating outlook for the value of fixed-income assets. That is a problem the Fed must address with sustained liquidity withdrawals, increasing credit costs and the ensuing growth recession of the U.S. economy.

[..] U.S. inflation has reached a point in an accelerating economy where the Fed needs to step in with a prompt and credible action to anchor inflation expectations. Markets are signaling that such measures are long overdue. The Fed is now well beyond the stage where it could think of fine tuning the economic activity in an environment of stable costs and prices. The U.S. economy is moving along at twice the rate of its noninflationary growth potential. That is unsustainable. As in the past, the restoration of American price stability will lead to a growth recession of unknown amplitude and duration.

The global reach of the dollar, and of the American financial system, are direct and powerful channels through which the Fed’s rising interest rates will affect demand, output and employment in the rest of the world. Those who think that they can avoid the impact of U.S. monetary policies should think again. The dollar remains an irreplaceable linchpin to the international monetary system. And that’s the way it will be for the foreseeable future. There is simply no viable alternative to the dollar’s global role as a unit of account, a means of payment, a transactions currency and a store of value.

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The name is Bonds. Sovereign bonds.

Ron Paul: US Barreling Towards A Stock Market Plunge Of At Least 50% (CNBC)

Ron Paul believes the bond trading pits are giving investors a dire message about the state of the nation’s economy. According to the former Republican Congressman from Texas, the recent jump in Treasury bond yields suggest the U.S. is barreling towards a potential recession and market meltdown at a faster and faster pace. And, he sees no way to prevent it. “We’re getting awfully close. I’d be surprised if you don’t have everybody agreeing with what I’m saying next year some time,” he said last Thursday on CNBC’s “Futures Now.”

His remarks came as the benchmark 10-Year Treasury yield, which moves inversely to its price, rallied to seven year highs, intensifying fears over rising inflation. It may be beneficial for personal savings accounts, but it could deliver irrevocable damage to those in adjustable mortgages, or for auto buyers looking to finance a new vehicle. “It can be pretty well validated by looking at monetary history that when you inflate the currency, distort interest rates and live beyond your means and spend too much, there has to be an adjustment,” he said. “We have the biggest bubble in the history of mankind.”

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The world’s fastest growing economy for years now needs stimulus.

China Stocks Return From Holiday, Tumble 3% As PBOC Eases Bank Rates (MW)

Chinese stocks led weaker action across Asia markets on Monday, as traders returned to work after a weeklong holiday, brushing aside the latest rate cut by the People’s Bank of China. Chinese stocks returned from the Golden Week holiday with opening declines of 2% after last week’s wide selling in Asia and a U.S.-listed benchmark of mainland companies falling nearly 5%. The major indexes in both Shanghai and Shenzhen were last down around 3%. On Sunday, the PBOC made a one percentage-point cut in banks’ reserve-requirement ratios. The central bank was widely expected to cut the metric again before year-end amid ongoing stimulus efforts.

But Monday was expected to be an up-and-down day as investors try and price in not just what’s happened so far this month but also what continues to lie ahead on the trade front. “This monetary policy tweak is the fourth in 2018 and despite the weakening Yaun and the Feds embarking on a more aggressive rate hike tangent than expected, suggests the Pboc are putting their greatest energies behind stimulating the flagging economy as opposed to the U.S.-China trade wars or Fed policy for that matter,” said Stephen Innes, head of trading APAC, at OANDA. A survey of China’s service sector came in mixed, with the sector expanding at a faster pace in September, but a subindex of employment abruptly contracted, falling to its lowest level since March 2016.

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Declassify!

FBI’s Smoking Gun: Redactions (Solomon)

To declassify or not to declassify? That is the question, when it comes to the FBI’s original evidence in the Russia collusion case. The Department of Justice (DOJ) and the FBI have tried to thwart President Trump on releasing the evidence, suggesting it will harm national security, make allies less willing to cooperate, or even leave him vulnerable to accusations that he is trying to obstruct the end of the Russia probe. Before you judge the DOJ’s and FBI’s arguments — which are similar to those offered to stop the release of information in other major episodes of American history, from the Bay of Pigs to 9/11 — consider Footnote 43 on Page 57 of Chapter 3 of the House Intelligence Committee’s report earlier this year on Russian interference in the 2016 presidential election.

Until this past week, the footnote really had garnered no public intrigue, in part because the U.S. intelligence community blacked out the vast majority of its verbiage in the name of national security before the report was made public. From the heavy redactions, all one could tell is that FBI general counsel James Baker met with an unnamed person who provided some information in September 2016 about Russia, email hacking and a possible link to the Trump campaign. Not a reporter or policymaker would have batted an eyelash over such a revelation. Then, last Wednesday, I broke the story that Baker admitted to Congress in an unclassified setting — repeat, in an unclassified setting — that he had met with a top lawyer at the firm representing the Democratic National Committee (DNC) and received allegations from that lawyer about Russia, Trump and possible hacking.

It was the same DNC, along with Hillary Clinton’s presidential campaign, that funded the unverified, salacious dossier by a British intel operative, Christopher Steele, that became a central piece of evidence used to justify the FBI surveillance of the Trump campaign in the final days of the election And it was the same law firm that made the payments for the dossier research so those could be disguised in campaign spending reports to avoid the disclosure of the actual beneficiaries of the research, which were Clinton and the DNC. And it was, in turns out, the same meeting that was so heavily censored by the intel agencies from Footnote 43 in the House report — treated, in other words, as some big national security secret.

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He might well be right.

Italy’s Di Maio Predicts ‘Political Earthquake’ For European Union (RT)

The bloc may expect a “political earthquake” after the 2019 European Parliament election, Italy’s Deputy Prime Minister Luigi Di Maio warned. Di Maio said he believes that what happened in Italy after the general election in March 4, when the popular vote brought an unlikely coalition of two anti-establishment parties to power, will happen in the whole Europe. The pro-EU centrist parties shrank significantly as a result of the latest Italian parliamentary elections. With the plebiscite that is scheduled for May next year “there will be a political earthquake at the European level,” Di Maio, who is also the Minister of Economic Development and the head of the Five Star Movement (M5S), stated. “All the rules will change,” the Italian high-ranking politician promised.

The Italian government and the EU authorities are at loggerheads over Rome’s targeted budget deficit at 2.4 percent of the GDP that exceeds the limits set by the EU. Rome believes that the forthcoming elections would favor the opponents of austerity. “The Europe of bankers, founded on mass immigration and economic insecurity, keeps on threatening and insulting Italians and their government? Relax, in six months 500 million voters will fire them. We keep going,” Italian Interior Minister Matteo Salvini said.

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“Rome fears that Germany might eventually attempt to send back to Italy as many as 40,000 people..”

Salvini Resists Germany’s Plans To Send Migrants Back To Italy (RT)

Rome has still not reached an agreement with Berlin on the repatriation of asylum seekers who had first registered in Italy, Interior Minister Matteo Salvini said, vowing to close airports to German flights transferring refugees. “If someone in Berlin or Brussels thinks of dumping dozens of migrants in Italy via unauthorized charter flights, they should know that there is not and there will be no airport available,” Salvini said in a statement, adding that Italy will “close the airports” just as it earlier closed its ports to NGO vessels carrying migrants rescued in the Mediterranean. His sharp statement comes in response to the rumors first circulated by the Italian La Repubblica daily that Germany plans to speed up repatriation procedures ahead of the regional elections in the state of Bavaria, the home state of the Interior Minister Horst Seehofer.

The first charter flight carrying asylum seekers from Germany to Italy is reportedly scheduled for Tuesday, October 9, the media reported. Other media reports set the date of the flight on Thursday, October 11. Germany’s refugee and migration agency, the BAMF, allegedly already sent “dozens of letters” to the would-be repatriates informing them about the planned transfers to Italy, according to La Repubblica. Earlier, the German dpa news agency also said that such a flight is scheduled for “the coming days.” This information, however, was neither confirmed nor denied by the German authorities. Rome fears that Germany might eventually attempt to send back to Italy as many as 40,000 people, who arrived there from the southern European country, the Italian media report.

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“The country’s death rate had risen by about 5.6% in the decade running up to the first bailout in 2010 but then jumped by 17.6% in the six years that followed.”

Austerity Is The Wrong Prescription For The World’s Wellbeing (G.)

Greece, which endured a slump longer and deeper than the Great Depression in the US, was forced by the so-called troika of the IMF, the EU and the ECB to cut health expenditure at a time when other European countries were raising theirs. Under Greece’s bailout, health spending fell from 9.8% of GDP in 2008 to 8.1% in 2014, a time when national output was contracting rapidly. The country’s death rate had risen by about 5.6% in the decade running up to the first bailout in 2010 but then jumped by 17.6% in the six years that followed. The rate rose three times faster than the rate in Western Europe overall.

[..] The troika’s austerity programme helped French and German banks avoid losses on their loans but at the expense of a rising Greek death rate. That has resulted in 50% less public hospital funding in 2015 than 2009, hospitals being left without basic supplies, the long-term unemployed stripped of their health insurance and those on low pay finding drugs more expensive because of a 20% cut in the minimum wage. The number of individuals with unmet healthcare needs has nearly doubled since 2010, with a considerable fraction reporting cost as the main reason for not receiving the recommended healthcare services.

Greece is not short of healthcare expertise. It has the second highest number of doctors per 1,000 people in the EU but that medical workforce has been forced to watch impotently as the health system has descended into chaos and people have died when they could have been saved. For the past eight years, Greece has been used in a laboratory experiment to test out a theory. The evidence from the report in the Lancet could hardly be clearer. Austerity kills.

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Not a chance, but kudos for trying.

Greece ‘to Claim €280 Billion’ in War Reparations from Germany (GR)

Greece is about to launch a campaign to claim €280 billion ($323 billion) in war reparations from Germany, reports Der Spiegel. The German magazine notes that as long as Greece was dependent on EU support, Prime Minister Alexis Tsipras had avoided raising the issue. But now, after the end of the third bailout program, Athens is ready to take initiatives to claim the money, it says. The issue is resurfacing a few days before the official visit of Germany’s President Frank-Walter Steinmeier to Athens where he will meet the President of the Republic Prokopis Pavlopoulos and Tsipras. Der Spiegel says it is no coincidence that the two highest ranking Greek politicians have both raised the issue in the last few days.

It marks the beginning of a long campaign, which, according to the German magazine, will start in November. The Greek Parliament will endorse an audit report ready since August 2016, according to which Greece is entitled to €269.5 billion of repairs from the Second World War. In addition, Greece demands the repayment of a €10.3 billion occupation loan. The report remained under wraps throughout the last two years, but Tsipras seems ready to bring it back to the surface and start a campaign for war reparations, says Der Spiegel. In the second phase, Greece intends to present its arguments at world organizations such as the European Parliament, the European Council, and the UN.

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8,700 plaintiffs.

‘The World Is Against Them’: New Era Of Cancer Lawsuits Threaten Monsanto (G.)

[Dewayne Johnson’s] award of $289m, which included $250m in punitive damages, is a game-changer for the 46-year-old, who will leave behind a wife and three children. But Monsanto is fighting to keep it from him. “It’s a big red flag for the company,” said Jean M Eggen, professor emerita at Widener University Delaware Law School: “It brings more people out who might not otherwise sue.” Roughly 8,700 plaintiffs have made similar cases in state courts across the country, alleging that exposure to glyphosate-based herbicides led to various types of cancer. The impact could be huge if Monsanto continues to fight and lose in jury trials, and an accumulation of wins could force the company to consider settling with plaintiffs. “It could become very costly,” said Eggen, comparing the fight to the tobacco industry, which aggressively fought cases in court but eventually decided settlements were the best option. “It’s really a business decision.”

Monsanto may ultimately consider changing the labels to warn consumers about cancer risks and work to settle with consumers who have had high exposures, said Lars Noah, University of Florida law professor: “It’s sort of a wake-up call that their strategy was unrealistic.” Of the thousands of cases, there are more than 10 trials on track to start in 2019 and 2020, with court battles ramping up in California, Montana, Delaware, Kansas City and St Louis (where Monsanto is headquartered). Farmers, gardeners, government employees, landscapers and a wide range of others have alleged that Monsanto’s products sickened them or killed their loved ones. “This is a tremendous number of trials for one year and will allow plaintiffs to get critical evidence in front of juries – evidence not seen before,” said the attorney Aimee Wagstaff.

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