Dec 172020
 December 17, 2020  Posted by at 6:56 pm Finance Tagged with: , , , , , , , , ,  4 Responses »

Filothei Skitzi Human puzzle on COVID19 days 2020



I know, I know, I’ve been largely silent about most “usual suspect topics” lately, other than in the Debt Rattles, but I must admit, those topics have been draining me, along with the full lockdown here in Greece. I understand why politicians want to do lockdowns, but I also understand why they shouldn’t.

Lockdowns drain life out of societies and communities, and there’s no guarantee that this life will ever come back. As I wrote earlier today, when we wake back up, the world will have changed beyond recognition. And we cannot NOT ask if that is worth the price we pay.

A vaccine is hurriedly being promoted and rolled out that is drowning in question marks, while skipping much of what is considered normal in vaccine development. As things like vitamin D, HCQ and ivermectin are cast in a media cloud of doubt, though there are no such questions about them. Vaccine: no time for research. Everything else: years more research needed.

As for the other main topic in recent months, the US elections, all I see is people calling each other traitors and seditionists planning coups, and that has gone too far now. Let the legal process play out and the dice roll, and stop the clickbaiting propaganda. People are getting hurt.

In that light, I’d much prefer to write about better and happier things, and the Monastiraki kitchen in Athens is certainly one of those. It’s Christmas time, a time you’re supposed to care about, and for, people. I told you I’d have an update, and here it is. I think I’ll let the photos do most of the talking this time.


First of all, things haven’t gotten any easier out there. The lockdown, the police and the homeless are a strange combination. 100 people gathering to wait for a meal is no longer acceptable. So now the team have to go look for many of them. That takes time, because some are quite far away, but at least they know where to find most. These are crazy days, and everyone’s just simply trying their best.

I told you about the Greek athletes’ Love Van initiative last time, and they delivered: tons of winter coats and blankets and sleeping bags and shoes. It was plain to see that the police were standing by wondering what their orders were, but decided that denying people a warm coat was not in their job prescription. It was a wonderful little mess and anarchy for the hour it lasted, though.

But there is always the lingering fear that we, or everyone, might get arrested, or fined €300 each. There are still plenty regular kitchen volunteers who don’t come in because of that fear. They simply don’t have that kind of money.




In reaction to my November 20 article Automatic Earth in Athens November 2020, our very very generous readers donated some €3,000. That is inevitably an estimate because of the way Paypal donations work. I used to take the approximate amount in US dollars, and presume those were euros. But that was when the exchange rate was $1.10 or lower. Today, it’s $1.22.

And that’s not all. Paypal takes a percentage of every donation (2-4%?!), and then more when the dollars are converted to euros (their rate is over $1.26 right now). We could apply for charity status, but then we would have to 1) set up a separate account for the kitchen and 2) be registered as a charity in either the US or EU, which requires a ton of paperwork, rules, regulations, obligations.

We’re not going to do that, for much of the same reasons we won’t register the kitchen as an NGO. We want to be independent. Even if that costs some money. I’ll continue to round off everything in favor of the kitchen, and pay the difference myself, as long as it is somewhat reasonable.




On to happier tidings. The private space I told you about where the cooking takes place now is a small stone yard without a roof.



And since it rains in winter sometimes, we decided to buy one of those big umbrellas you see outside bars and restaurants, it seems the only way to get some shelter while cooking. They’re €200. I said we’ll use €100 from the donations, and I’ll pay the other half. That way we involve all of you to an extent, in day-to-day operations. Maybe we’ll even need two, but we’ll tackle that as the time comes.



Also, I purchased our first new €1,000 batch of supermarket checks (50x€20) on Tuesday, paid for with your fresh donations (Filothei and I are both painfully camera-shy, but the Acropolis in the background more than makes up for that ;-):



And Filothei did a big shopping trip with the checks yesterday:





What I didn’t know last time is that the kitchen still has a pretty solid amount of staples in storage, oil, pasta, tomato paste etc. That takes away some of the pressure, and it will be needed.




And then of course, wouldn’t you know, the crew decided they’re going to add a second day every week to cook. Purely led by increased demand and need. Not a huge surprise, that need is everywhere, just look at US and UK foodbanks. But we will still need to find a way to fund it. Nudge nudge wink wink. Someone like Filothei just says: we will do what must be done, whereas I then say: and how are we going to do that? You know, at €240 per meal? You just doubled the costs…

And still I’m pretty sure we indeed will make it happen, just because we have to. We must find a way, and therefore we will, with your help. And a bit of good cheer goes a long way:



Those Santa hats are brilliant, they change the entire mood and picture. As do these facemasks for the homeless, made by girls who themselves are too “vulnerable” healthwise to come in, but still want to contribute. I love those things:



Same goes for the winterhats (can you say “tuque”?)



As the cherry on the pie, and because everyone deserves a real Christmas, especially if they live on the streets, and very especially in a lockdown, we’re going to hand all our clients a big package of sweets for the festive season.



And then if you’ll allow me, I’ll repeat my last paragraph of the November 20 article, With one main difference: twice the meals will mean twice the costs, by and large. But hey, it’s Christmas. The time when miracles come true!

Sure, I’m a little apprehensive about January and February, with the Christmas hope and spirit gone, and temperatures dipping, but I also know that 4 days from now, the days will start getting longer again in our hemisphere.



Most of you will know the drill of this by now: any Paypal donations ending in $0.99 or $0.37 go straight to the Monastiraki kitchen, while other donations go to the Automatic Earth -which also badly needs them, especially for Christmas-. (Note: a lot of Automatic Earth donations also went to the kitchen the past month).

I dislike few things more than asking people for money, even though the Automatic Earth now runs primarily on donations, and there’s some sweet justice in that as well, in depending on people’s appreciation of what we do, instead of ad revenues.

But I cannot do this on my own right now. To get through the winter in one piece, the Monastiraki kitchen will realistically need about €1,500-2,000 per month. I don’t have that to spare. So I’m calling on you. Unashamedly, because I know there is no reason to be ashamed of the cause.

I love all you people, and I’m sorry I can’t thank you all individually who have supported -and still do- the Monastiraki kitchen and the Automatic Earth all this time, and I ask you to keep on doing just that. The details for donations on Paypal and Patreon, for both causes, are in the top of the two sidebars of this site. Could not be much easier.

Love you. Thank you. This kitchen would not exist without you, these people would not get fed.




We try to run the Automatic Earth on donations. Since ad revenue has collapsed, you are now not just a reader, but an integral part of the process that builds this site.

Click at the top of the sidebars for Paypal and Patreon donations. Thank you for your support.



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Nov 122020
 November 12, 2020  Posted by at 7:28 pm Finance Tagged with: , , , , , , , , ,  7 Responses »

Pablo Picasso Dans l’atelier 1954



“There is nothing in Afghanistan worth the life of a single American soldier.”

– Douglas Macgregor


I’m having a bit of a problem finding the right format for this essay. I want to highlight a whole number of quotes, but I also would like you to read the original setting they came from. Please bear with me.

CNN: “A Pentagon spokesman confirmed Wednesday that retired Army Col. Douglas Macgregor “will be serving as a Senior Advisor to the Acting Secretary of Defense. Mr. MacGregor’s decades of military experience will be used to assist in the continued implementation of the President’s national security priorities.”

Also CNN: “Macgregor once advocated for the use of lethal force against unarmed migrants [..] and has made a litany of racist comments.”

I must admit even my encyclopedic brain had never heard of Macgregor, and I’m sure most of you hadn’t either, but I’m taking a liking to the man. “The use of lethal force against unarmed migrants” sounds bogus off the bat, that’s “Putin eats babies” territory, and accusing someone of “a litany of racist comments” without naming even one, doesn’t do it for me either.

And even then. The man wants to bring US troops home. Oh wait, but that’s why you accuse him of all these unsubstantiated “facts”. Gotcha. What I do know is for instance this Nov 6 2019 interview Macgregor did with Tucker Carlson, in which he sounds like a reasonable yet worried man. And while opinions may differ on how big of a threat drug cartels may be to the US, his view appears to have its merit.



Macgregor Nov 6 2019 interview with Tucker Carlson



But then the press come in. We can’t have troop withdrawals (though a vast majority of Americans wants to bring the troops home). So let’s start by labeling Macgregor “divisive”. What does that mean? That he doesn’t agree with “official” military policy. What is that policy? Warmongering. Keeping troops in Afghanistan for 18 years. If Biden ever becomes president, will he bow to that policy and start sending US troops back in?

This here is from Axios. And all I can think is: what ever happened to journalism? My comments below.

Divisive Pentagon Hire May Rush Troop Withdrawals Before Trump’s Exit

President Trump’s newly installed acting Pentagon chief is bringing on a senior adviser in a sign the administration wants to accelerate the withdrawal of U.S. troops from the Middle East before the end of his presidency in January, three people familiar with the move told Axios. A senior administration official says a wave of firings at the Pentagon and the hiring of Ret. Army Col. Douglas Macgregor is in part a settling of Trump’s personal scores — but senior White House officials also have made clear “they want them more publicly to talk about getting out of Afghanistan by the end of the year.” Trump, who ran in 2016 on a promise to bring U.S. troops home, is frustrated with the slow pace of withdrawing troops from the Middle East, another senior administration official said.

The president has told advisers on numerous occasions he wants troops home from Afghanistan by Christmas.In a 2019 interview with Fox’s Tucker Carlson, Macgregor said he would advise the president to get out of Afghanistan “as soon as possible,” including removing the U.S. embassy from Kabul, and that talking to the Taliban was unnecessary. Macgregor also said the U.S. needs to pull its troops out of Syria immediately and America had no national interest there. He said, “We need to listen very carefully to the Iranians … find out what their interests are and look for areas where we can cooperate” and that the U.S. needs to “turn the operational control of the [Korean] Peninsula militarily over to President Moon and the Koreans.”

The Pentagon, in a statement to Axios, confirmed Macgregor has been hired as a senior adviser to acting Defense Secretary Christopher Miller. It said Macgregor’s “decades of military experience will be used to assist in the continued implementation of the President’s national security priorities.” Since Joe Biden became president-elect, Trump has refused to concede the race — but he’s also moved rapidly this week to fire top officials in the Pentagon’s civilian leadership. That includes Mark Esper, as well as the former Defense secretary’s chief of staff and other high-level officials in charge of intelligence and policy. He is replacing them with those perceived as loyal to him.

Macgregor, a decorated combat veteran, is a Trump loyalist and regular Fox News commentator. He’s known for his questioning of conventional Army leadership and decision-making , including strategies in Iraq and Afghanistan, as well as his extreme rhetoric about Muslims and undocumented immigrants. He was passed over earlier this year for the Pentagon’s top policy job amid reports Esper had concerns about him.



Let’s see:

the hiring of Ret. Army Col. Douglas Macgregor is in part a settling of Trump’s personal scores

Personal scores as in how and what? As in not wanting to accept his own failed effort to bring the troops home, the effort that’s been frustrated for four years running now? And that he may be trying to correct as we speak?

Trump, who ran in 2016 on a promise to bring U.S. troops home, is frustrated with the slow pace of withdrawing troops from the Middle East

Of being frustrated by being frustrated with the pace at which his orders and wishes as commander in chief have been executed?

The president has told advisers on numerous occasions he wants troops home from Afghanistan by Christmas.

How, pray tell, is that not a good thing? Why on earth would you want to present it as such? Asking for 320 million friends.

Since Joe Biden became president-elect, Trump has refused to concede the race

Biden is not the president-elect. Not one single state has so far certified its election results. It is bogus and you know it. Cut the nonsense. You have no clothes on.

He’s known for his questioning of conventional Army leadership and decision-making

Isn’t that part of a healthy process, that you question “official” policies which put the lives of young Americans at risk, that you do that every single moment of every single day, because those lives are precious and valuable? In my book, this is a big plus for the man. As it should be for every single American.

He was passed over earlier this year for the Pentagon’s top policy job amid reports Esper had concerns about him.

And that’s why Esper is gone. He was one more wrong choice Trump was led into. And yeah, Trump shares the blame for that.



Moving on to CNN’s comment on the Macgregor nomination. Mostly the same as that from Axios, with some added BS. Again, my comments below:

Trump Administration Installs Advocate For Quick Afghanistan Withdrawal At Pentagon

An ardent opponent of the US military’s presence in Afghanistan who once called for the use of lethal force against illegal immigrants and has made a litany of racist comments has been made a senior adviser at the Pentagon. A Pentagon spokesman confirmed Wednesday that retired Army Col. Douglas Macgregor “will be serving as a Senior Advisor to the Acting Secretary of Defense. Mr. MacGregor’s decades of military experience will be used to assist in the continued implementation of the President’s national security priorities.” Macgregor’s appointment is the latest in a series of sweeping changes at the Pentagon that has put defense officials on edge and fueled a growing sense of alarm among military and civilian officials, who are concerned about what could come next.

Four senior Pentagon officials have been fired or have resigned since Monday, including Defense Secretary Mark Esper who was fired in a tweet by President Donald Trump, Esper’s chief of staff and the top officials overseeing policy and intelligence. The moves will likely only add to the sense of chaos within the Pentagon following Trump’s firing of Esper, which came two days after his Democratic opponent, Joe Biden, was projected as the winner of the presidential election — a conclusion that Trump has refused to accept. Esper was replaced by Christopher Miller, the director of the National Counterterrorism Center.

Those who assumed new roles included controversial retired Brig. Gen. Anthony Tata, who moved into the Pentagon’s top policy role, taking over the duties of James Anderson, who resigned Tuesday, according to another US defense official. Macgregor has been a vocal opponent of the US military’s mission in Afghanistan and has called for a total withdrawal of US troops and the American Embassy despite the continued presence of terrorist groups there.

Knowledgeable sources told CNN’s Jake Tapper on Tuesday that the White House-directed purge at the Defense Department may have been motivated by the fact Esper and his team were pushing back on a premature withdrawal from Afghanistan that would be carried out before the required conditions on the ground were met, and other pending security issues.

US military officials have long stressed that the US withdrawal from Afghanistan is conditions based, with those conditions including the Taliban’s breaking its ties to al Qaeda and making progress in peace talks with the Afghan government, two conditions that have yet to be met. But despite the lack of progress, the Trump administration has already substantially reduced US troops in the country by more than 50%, bringing the number of US military personnel there down to about 4,500, the lowest levels since the earliest days of the post 9/11 campaign.

Trump’s national security adviser, Robert O’Brien, has advocated for a more accelerated withdrawal from Afghanistan irrespective of conditions on the ground, something made more feasible by the installation of White House loyalists in senior defense posts. He has also called for an immediate end to the US military effort in Syria, where a small number of US troops back the Kurdish-led Syrian Democratic Forces in their fight against ISIS.

Macgregor once advocated for the use of lethal force against unarmed migrants to deter illegal immigration from Mexico and Central America. He was nominated by Trump this summer to be the ambassador to Germany but faced fierce opposition for his remarks uncovered by CNN’s KFILE. KFILE reviewed dozens of radio and television interviews with Macgregor and found he often demonized immigrants and refugees. He warned Mexican cartels were “driving millions of Mexicans with no education, no skills and the wrong culture into the United States, placing them essentially as wards of the American people.” He repeatedly advocated instituting martial law at the US-Mexico border and to “shoot people” if necessary.

He has also called for an immediate end to the US military effort in Syria, where a small number of US troops back the Kurdish-led Syrian Democratic Forces in their fight against ISIS. He also said that Eastern Ukrainians are “Russians” on the Russian state-controlled TV network RT in 2014 after Russia tried to annex Crimea and began an ongoing war with Ukraine over the territory — positions not supported by the European Union and United States.

He lamented that the US government intervened against Serbian forces, who engaged in ethnic cleansing and war crimes, during the Kosovo War in the 1990s to “put, essentially, a Muslim drug mafia in charge of that country.”

Yeah, Bill Clinton’s intervention in former Yugoslavia was a highlight of US politics and intervention for the good of all mankind.



Again, let’s see:

An ardent opponent of the US military’s presence in Afghanistan who once called for the use of lethal force against illegal immigrants and has made a litany of racist comments

Pretty sure he was talking about the cartels, not unarmed people. But yeah, prove me wrong. And let’s see some of those racist comments.

Macgregor has been a vocal opponent of the US military’s mission in Afghanistan and has called for a total withdrawal of US troops and the American Embassy despite the continued presence of terrorist groups there.

Oh, get a life. It’s been 18 years and dick all has been accomplished. The country has always only ever been the CIA’s opium factory, providing the funds for its most secretive operations. You will find it in the thesaurus under “bottomless pit”.

the White House-directed purge at the Defense Department may have been motivated by the fact Esper and his team were pushing back on a premature withdrawal from Afghanistan

Again, yes, exactly. Why would a president leave someone in place whose policies contradict his own, who refuses to follow his orders?

US military officials have long stressed that the US withdrawal from Afghanistan is conditions based

Yeah, sure, and who decides what those conditions are? They themselves do. But there is still only one commander in chief.

despite the lack of progress, the Trump administration has already substantially reduced US troops in the country by more than 50%

That is, the progress towards the military’s “conditions”, not the progress towards their commander-in-chief’s goal of bringing the troops home.

Trump’s national security adviser, Robert O’Brien, has advocated for a more accelerated withdrawal from Afghanistan irrespective of conditions on the ground

Like him already.

Macgregor once advocated for the use of lethal force against unarmed migrants to deter illegal immigration from Mexico and Central America.

That’s quite a slanderous accusation if you have no examples. All I’ve seen is his comments on drug cartels who push people into the US.

He also said that Eastern Ukrainians are “Russians”

Oh, now we’re getting into Russiagate. How convenient. Why don’t we ask the Eastern Ukrainians themselves how they feel, or, you know, look at their history?

He lamented that the US government intervened against Serbian forces, who engaged in ethnic cleansing and war crimes, during the Kosovo War in the 1990s to “put, essentially, a Muslim drug mafia in charge of that country.”

And just like that, he’s right again. Coincidence, or you think maybe he understands more than you do, and has more knowledge of the whole shebang? You know, being a 30-year veteran an all that? Or would you rather put your faith into a “journalist” at Axios or CNN?

Me, personally, I think about the families of the US troops stationed in the Middle East, and who want nothing more than to have their young loved ones home for Christmas. Alive and in one piece. Douglas Macgregor and Donald Trump may yet make that happen. But you have bigger interests and vistas in mind, you want to say?




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Click at the top of the sidebars for Paypal and Patreon donations. Thank you for your support.



Tucker Macgregor Afghanistan

Macgregor Tucker May 1 2018



Support the Automatic Earth in virustime, election time, all the time. Click at the top of the sidebars to donate with Paypal and Patreon.


Dec 252018

Rembrandt van Rijn The Adoration of the Magi 16xx


I still had some things I didn’t talk about in Sunday’s Trump Derangement International, about how the European press have found out that they, like the US MSM, can get lots of viewers and readers simply by publishing negative stories about Donald Trump. The US president is an attention magnet, as long as you only write things about him designed to make him look bad.

The Guardian is only too happy to comply. They ran a whole series of articles on Sunday to do juts that: try to make Trump look bad. Note that the Guardian editorial team that okayed the articles is the same as the one that allowed the fake Assange/Manafort one, so their credibility is already shot to pieces. It’s the magic triangle of today’s media profits: spout non-stop allegations against Russia, Trump and Julian Assange, and link them when and where you can. It doesn’t matter if what you say is true or not.


Anyway, all the following is from the Guardian, all on December 23. First off, Adam Gabbatt in New York, who has painstakingly researched how Trump’s businesses, like Trump Tower and the Trump store, don’t appear to have sufficiently (as per him) switched from Happy Holidays to Merry Christmas. Sherlock Holmes would have been proud. A smash hit there Adam, bring out the handcuffs.


Trump’s ‘Merry Christmas’ Pledge Fails To Manifest

During Donald Trump’s presidential campaign he talked often about his determination to win one particular war. A war that had been raging for years, he said. Specifically: the war on Christmas. But despite Trump’s repeated claims that “people are saying Merry Christmas again” instead of the more inclusive “happy holidays”, there are several places where the Christmas greeting is absent: Trump’s own businesses.

The Trump Store, for example. Instead of a Christmas gift guide – which surely would be more in keeping with the president’s stated desire for the phrase to be used – the store offers a holiday gift guide. “Shop our Holiday Gift Guide and find the perfect present for the enthusiast on your list,” the online store urges. “Carefully curated to celebrate the most wonderful time of year with truly unique gifts found only at Trump Store. Add a bow on top with our custom gift wrapping. Happy Holiday’s!”

The use of the phrase “Happy Holiday’s” [sic] in Trump marketing would seem particularly egregious. The long-standing “War-on-Christmas” complaint from the political right is that stores use the phrase “Happy Holidays”, rather than specifically mentioning the Christian celebration. It is offered as both an example of political correctness gone mad, and as an effort to erase Christianity from the US.

It’s just, I think that if Trump had personally interfered to make sure there were Merry Christmas messages all around, you would have remarked that as president, he’s not allowed to be personally involved in his businesses. But yeah, you know, just to keep the negativity going, it works, no matter how fluffy and hollow.


Second, still on December 23, is Tom McCarthy for the Guardian in New York. Who talks about Robert Mueller’s phenomenal successes. Mueller charged 34 people so far. In a case that involves “this complexity which has international implications, aspects relying on the intelligence community, complicated cyber components”. It really says that.

And yes, that’s how many people view this. What do they care that Mueller’s original mandate was to prove collusion between the Trump campaign and ‘Russians’, and that he has not proven any collusion at all so far, not even with 34 people charged? What do they care? It looks like Trump is guilty of something, anything, after all, and that’s all the circus wants.


Robert Mueller Has Enjoyed A Year Of Successes … 2019 Could Be Even Stronger

One measure of special counsel Robert Mueller’s prosecutorial success in 2018 is the list of former top Donald Trump aides brought to justice: Michael Cohen pleaded guilty, a jury convicted Paul Manafort, a judge berated Michael Flynn. Another measure is the tally of new defendants that Mueller’s team charged (34), the number of new guilty pleas he netted (five) and the amount of money he clawed back through tax fraud cases ($48m).

Yet another measure might judge Mueller’s pace compared with previous independent prosecutors. “I would refer to it as a lightning pace,” said Barb McQuade, a University of Michigan law professor and former US attorney. “In a case of this complexity which has international implications, aspects relying on the intelligence community, complicated cyber components – to indict that many people that quickly is really impressive work.”

But there’s perhaps a more powerful way to measure Mueller’s progress in his investigation into Russian interference in the 2016 US election and links between Moscow and the Trump campaign; that’s by noticing how the targets of his investigation have changed their postures over the course of 2018, from defiance to docility – or in the case of Trump himself, from defiance to extreme, hyperventilating defiance.

In reality, you would be at least as correct if you would claim that Robert Mueller’s investigation has been an abject failure. Not one iota of collusion has been proven after 20 months and $20 million in funds have been used. And any serious investigation of Washington’s culture of fixers and lobbyists would land at least 34 people who have committed acts that border on or over illegality. And in a matter of weeks, for a few hundred bucks.


Third, still on December 23, is Julian Borger in Washington, who’s been elected to convey the image of chaos. Trump Unleashed, says our modern day Shakespeare. With Jim Mad Dog Mattis characterized as “.. the last independently minded, globally respected, major figure left in the administration”... Again, it really says that.

Because woe the man who tries to bring US troops home, or even promises to do so a few days before Christmas. For pulling out America’s finest, Donald Trump is being portrayed as something eerily close to the antichrist. That truly is the world on its head. Bringing troops home to their families equals chaos.

Look, guys, if Trump has been guilty of criminal behavior, the US justice system should be able to find that out and convict him for it. But that’s not what this is about anymore. A million articles have been written, like these ones in the Guardian, with the sole intention, evidence being scarce to non-existent, of smearing him to the extent that people see every subsequent article in the light of a man having previously been smeared.


Chaos At Home, Fear Abroad: Trump Unleashed Puts Western World On Edge

The US stumbled into the holiday season with a sense of unravelling, as a large chunk of the federal government ground to a halt, the stock market crashed and the last independently minded, globally respected, major figure left in the administration announced he could no longer work with the president. The defense secretary, James Mattis, handed in his resignation on Thursday, over Donald Trump’s abrupt decision to pull US troops out of Syria.

On Saturday another senior official joined the White House exodus. Brett McGurk, the special envoy for the global coalition to defeat Isis and the US official closest to America’s Kurdish allies in the region, was reported to have handed in his resignation on Friday. That night, senators flew back to Washington from as far away as Hawaii for emergency talks aimed at finding a compromise on Trump’s demand for nearly $6bn for a wall on the southern border, a campaign promise which has become an obsession.

Now look at the next headline, December 23, Graeme Wearden, Guardian, and ask yourself if it’s really Trump saying he doesn’t agree with the rate hikes that fuels the fears, or whether it’s the hikes themselves. And also ask yourself: when Trump and Mnuchin both deny reports of Trump firing Powell, why do journalists keep saying the opposite? Because they want to fuel some fears?

From where I’m sitting, it looks perfectly logical that Trump says he doesn’t think Powell’s decisions are good for the US economy. And it doesn’t matter which one of the two turns out to be right: Trump isn’t the only person who disagrees with the Fed hikes.

The main suspect for 2019 market turmoil is the inevitable fallout from the Fed’s QE under Bernanke and Yellen. And there is something to be said for Powell trying to normalize rates, but there’s no doubt that may hasten, if not cause, turmoil. Blaming it on Trump not agreeing with Jay Powell is pretty much as left field as it gets.


White House Attacks On Fed Chair Fuel Fears Of Market Turmoil In 2019

Over the weekend, a flurry of reports claimed Donald Trump had discussed the possibility of firing the Federal Reserve chairman, Jerome Powell. Such an unprecedented move would trigger further instability in the markets, which have already had their worst year since the 2008 crisis. US officials scrambled to deny Trump had suggested ousting Powell, who was appointed by the president barely a year ago.

The Treasury secretary, Steven Mnuchin, tweeted that he had spoken to the president, who insisted he “never suggested firing” Powell, and did not believe he had the right to do this. However, Trump also declared – via Mnuchin – that he “totally disagrees” with the Fed’s “absolutely terrible” policy of raising interest rates and unwinding its bond-buying stimulus programme, piling further pressure on the US’s independent central bank.

And now, in the only article in the Guardian series that’s December 24, not 23, by Victoria Bekiempis and agencies, the plunging numbers in the stock markets are Trump’s fault, too.


Trump ‘Plunging Us Into Chaos’, Democrats Say, As Markets Tank And Shutdown Persists

Top Democrats have accused Donald Trump of “plunging the country into chaos” as top officials met to discuss a growing rout in stock markets caused in part by the president’s persistent attacks on the Federal Reserve and a government shutdown. “It’s Christmas Eve and President Trump is plunging the country into chaos,” the two top Democrats in Congress, House speaker nominee Nancy Pelosi and Senate minority leader Chuck Schumer, wrote in a joint statement on Monday. “The stock market is tanking and the president is waging a personal war on the Federal Reserve – after he just fired the Secretary of Defense.”

Trump criticized the Federal Reserve on Monday, describing it as the “only problem” for the US economy, even as top officials convened the “plunge protection team” forged after the 1987 crash to discuss the growing rout in stock markets. The crisis call on Monday between US financial regulators and the US treasury department failed to assure markets, and stocks fell again amid concern about slowing economic growth, the continuing government shutdown, and reports that Trump had discussed firing Federal Reserve chairman Jerome Powell.

The last one is from one Jonathan Jones, again December 23, again for the Guardian. And it takes the top award in the narrative building contest.

Again, the Guardian editorial team that okayed this article is still the same as the one that allowed the fake Assange/Manafort one, an editorial team that sees no problem in making things up in order to smear people. To portray Trump, Assange and anyone who’s had the misfortune of being born in Russia as suspicious if not outright criminal.

But look at what Jones has to say, and what Guardian editor-in-chief Kathy Viner and her ilk allowed and pressured him to say. He wants to have a say in how Trump should dress (seasonal knitwear), he evokes the image of Nazi architect Albert Speer for no reason at all, and then it’s a matter of mere inches until you arrive at Trump as a king, an emperor, an inner tyrant.

“He’s in a tuxedo!”, Like that’s a bad thing for Christmas. “She’s in white!”. Oh dear, call the pope. If both Trumps would have put on Christmas sweaters in front of a fire, the writer would have found something negative in that.


Trump Portrait: You Couldn’t Create A Creepier Yuletide Scene If You Tried

The absence of intimacy in the Trumps’ official Christmas portrait freezes the heart. Can it be that hard to create a cosy image of the presidential couple, perhaps in front of a roaring hearth, maybe in seasonal knitwear? Or is this quasi-dictatorial image exactly what the president wants to project? Look on my Christmas trees, ye mighty, and despair! If so, it fuels suspicions that it is only the checks and balances of a 230-year-old constitution that are keeping America from the darkest of political fates. You couldn’t create a creepier Yuletide scene if you tried. Multiple Christmas trees are currently a status symbol for the wealthy, but this picture shows the risks.

Instead of a homely symbol of midwinter cheer, these disciplined arboreal ranks with their uniform decorations are arrayed like massed soldiers or colossal columns designed by Albert Speer. The setting is the Cross Hall in the White House and, while the incumbent president cannot be held responsible for its architecture, why heighten its severity with such rigid, heartless seasonal trappings? Everything here communicates cold, empty magnificence. Tree lights that are as frigid as icicles are mirrored in a cold polished floor. Equally frosty illuminations are projected on the ceiling. Instead of twinkling fairy magic, this lifeless lighting creates a sterile, inhuman atmosphere.

You can’t imagine kids playing among these trees or any conceivable fun being had by anyone. It suggests the micromanaged, corporate Christmas of a Citizen Kane who has long since lost touch with the ordinary, warm pleasures of real life. In the centre of this disturbing piece of conceptual art stand Donald and Melania Trump. He’s in a tuxedo, she’s wearing white – and not a woolly hat in sight. Their formal smartness adds to the emotional numbness of the scene. Trump’s shark-like grin has nothing generous or friendly about it. He seems to want to show off his beautiful wife and his fantastic home rather than any of the cuddly holiday spirit a conventional politician might strive to share at this time.

It begs a question: how can a man who so glaringly lacks anything like a common touch be such a successful “populist”? What can a midwestern voter find in this image to connect with? Perhaps that’s the point. After more than two centuries of democracy, Trump is offering the US people a king, or emperor. In this picture, he gives full vent to his inner tyrant. If this portrait contains any truth about the state of America and the world, may Santa help us all.

I realize that you may be tired of the whole story. I realize you may have been caught in the anti-Trump narrative. And I am by no means a Trump fan. But I will keep on dragging you back to this. Because the discussion should not be based on a handful of media moguls not liking Trump. It should not be based on innuendo and smear. If Trump is to be convicted, it must be on evidence.

And there is no such evidence. Robert Mueller has charged 34 people, but none with what his mandate was based on, none with Russia collusion. This means that the American political system, and democracy itself, is under severe threat by the very media that are supposed to be its gate keepers.


None of this is about Trump, or about whether you like him or not, or even if he’s a shady character or not. Instead, it’s about the influence the media have on how our opinions and ideas about people and events are being shaped on a daily basis.

And once you acknowledge that your opinions of Trump, Putin et al, even without any proof of a connection between them, are actively being molded by the press you expect to inform you about the truth behind what goes on, you will have to acknowledge, too, that you are a captive of forces that use your gullibility to make a profit off you.

If our media need to make up things all the time about who’s guilty of what, because our justice systems are incapable of that, then we have a problem so enormous we may not be able to overcome it in our present settings.

Alternatively, if we trust our justice systems to deliver true justice, we don’t need a hundred articles a day to tell us how Trump or Putin are such terrible threats to our world. Our judges will tell us, not our journalists or media who are only in it for a profit.

I can say: “let’s start off 2019 trying to leave prejudice behind”, and as much as that is needed and you may agree with me, it’s no use if you don’t realize to what extent your views of the world have been shaped by prejudice.

I see people reacting to the star writer at Der Spiegel who wrote a lot about Trump, being exposed as a fraud. I also see people trying to defend Julian Assange from the Guardian article about his alleged meetings with Paul Manafort, that was an obvious big fat lie (the truth is Manafort talked to Ecuador to help them ‘sell’ Assange to the US).

But reacting to the very obvious stuff is not enough. The echo chamber distorts the truth about Trump every single day, and at least six times on Sunday, as this essay of mine shows. It’s just that after two years of this going on 24/7, it is perceived as the normal.

Everyone makes money dumping on the Donald, it’s a proven success formula, so why would the Guardian and Der Spiegel stay behind? They’d only hurt their own bottom line.

It has nothing to do with journalism, though, or news. It’s smear and dirt, the business model of the National Enquirer. That’s how far our once truthful media have fallen.



Dec 252018
 December 25, 2018  Posted by at 10:28 am Finance Tagged with: , , , , , , , , , , , ,  5 Responses »

Caravaggio Nativity with St. Francis and St. Lawrence 1600


The Stock Market Just Booked Its Ugliest Christmas Eve Plunge — Ever (MW)
Japan’s Nikkei Drops 5% After Wall Street Slide Deepens (CNBC)
US Crude Plunges 6.7%, Settling At 18-Month Low At $42.53 (CNBC)
‘The Worst Is Yet To Come’: Experts Say Global Bear Market Coming (CNBC)
In Defense of the Fed (Stephen S. Roach)
Trump, Annoyed By Resignation Letter, Pushes Out Mattis Early (R.)
Mnuchin Holds Calls With Heads Of America’s 6 Biggest Banks Amid Shutdown (F.)
Facebook Is The ‘Biggest Concern’ Among The FAANGs (CNBC)
China Won’t Resort To Massive Monetary Stimulus Next Year – PBOC (CNBC)
Gatwick Drones Pair ‘No Longer Suspects’ (BBC)
Gatwick Police Say They Cannot Discount Possibility There Was No Drone (Ind.)
‘Home Alone’: Bored Trump Tweets Up Storm During Christmas Shutdown (RT)



Bette Davis and Joan Crawford were not each other’s biggest fans



I kid you not: plenty people are blaming this on Trump, too.

The Stock Market Just Booked Its Ugliest Christmas Eve Plunge — Ever (MW)

Never mind finding coal in your stocking for the holidays. Wall Street investors scored a rare — and unwanted — gift this year. The S&P 500 index fell by 2.7% Monday, marking the first session before Christmas that the broad-market benchmark has booked a loss of 1% or greater — ever. That statistic has been confirmed by Dow Jones Market Data, which said the largest decline in the index on the trading day before Christmas was Dec. 23 in 1933.

The Dow Jones Industrial Average finished down 653 points, or 2.9%, representing its worst decline on the session prior to Christmas in the 122-year-old blue-chip gauge’s history. Check out the table below from Dow Jones Market Data:

U.S. stock indexes ended trading at 1 p.m. Eastern Time on Christmas Eve and will be closed on Christmas. The current dynamic in the market has it set for its worst monthly and yearly decline in about a decade, amid nagging concerns that the Federal Reserve is normalizing interest rates too rapidly, and that a continuing tariff dispute between China and the U.S. could devolve and help lead to a domestic recession, as international economies are already demonstrating signs of a slowdown. Also stoking anxiety was a tweet from Treasury Secretary Steven Mnuchin to assess the health of the banking system, which has raised some questions about liquidity among those institutions that had not previously been raised. Treasury officials insist that the calls to bank executives were just a routine checkup.

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The ongoing success of Abenomics.

Japan’s Nikkei Drops 5% After Wall Street Slide Deepens (CNBC)

Japan’s Nikkei retreated to a 20-month low on Tuesday after a slide on Wall Street deepened with a series of unnerving U.S. political developments. The Nikkei share average ended the day down 5.01 percent at 19,155.74 after brushing its lowest since late April 2017. The day’s performance put the index well into bear market territory — off more than 20 percent since its October high. Japan’s broader Topix closed 4.88 percent lower at 1,415.55 after touching 1,412.90, its weakest since November 2016.

Meanwhile, in China, the Shanghai Index posted losses of more than 2 percent by mid-day, but then gained some ground back into the afternoon. Chinese sectors lost ground across the board, led by financial shares and energy firms as oil prices slumped. So far this year, the Shanghai stock index is down about 24 percent. Those Asia moves followed Wall Street stocks extending their steep sell-off on Monday, with the S&P 500 down nearly 15 percent so far this month, as investors were rattled by the U.S. Treasury secretary’s convening of a crisis group and by other political developments.

Many financial markets in Asia, Europe and North America are closed on Tuesday for Christmas Day. “Negative sentiment has replaced logic, as is often the case during a sell-off. A third of the selling is induced by panic, another third by loss-cutting and the remaining third by speculators trying to make a profit from the market rout,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo. “The sell-off is triggered almost entirely by developments in the U.S. markets, rather than by negative factors unique to the domestic market.”

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Oil swings too much to be safe.

US Crude Plunges 6.7%, Settling At 18-Month Low At $42.53 (CNBC)

U.S. crude plunged nearly 7 percent on Monday, hitting its lowest levels in a year and half, as the oil market fell in tandem with equities amid deepening turmoil in Washington DC. The Dow Jones Industrial Average plummeted more than 600 points, while the S&P 500 closed in bear market territory. Both stock indexes were buffeted by headlines out of Washington, including a government shutdown and President Donald Trump’s reported desire to fire Federal Reserve chair Jerome Powell over the central bank’s interest rate increases.

The selling in global risk assets on Christmas Eve deepened a nearly three-month slide in oil prices. From peak to trough, U.S. crude has fallen nearly 45 percent from its 52-week high at the start of October. Brent has fallen as much as 42 percent over the same period. “For now, there’s no place to hide in any of these markets. Oil’s being taken down with the stock market and the negative sentiment that’s sweeping across really everything, and for now the downward pressure is going to persist,” John Kilduff, founding partner at energy hedge fund Again Capital told CNBC’s “Closing Bell” on Friday.

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The so-called experts see themselves as mighty smart when all they’ve done is suck from the fed’s trough. Humbug!

‘The Worst Is Yet To Come’: Experts Say Global Bear Market Coming (CNBC)

Volatility on Wall Street has led shares across the globe on a wild ride in recent months, resulting in a number of stock markets dipping into bear territory. That’s set to worsen in the new year, experts told CNBC on Monday. Bear markets — typically defined as 20 percent or more off a recent peak — are threatening investors worldwide. In the U.S., the Nasdaq Composite closed in a bear market on Friday and the S&P 500 entered one on Monday. Globally, Germany’s DAX and China’s Shanghai Composite have also entered bear market levels. Major market risks remain, experts said. The Federal Reserve is likely to continue raising interest rates and worries about a global economic slowdown — made worse by a trade war between the U.S. and China — are mounting.

“I would love to be more optimistic but i just don’t see too many positives out there. I think the worst is yet to come next year, we’re still in the first half of a global equity bear market with more to come next year,” Mark Jolley, global strategist at CCB International Securities, told CNBC’s “Squawk Box.” For Jolley, the big risk lies in the credit markets. With the Fed projecting another two interest rate hikes in 2019, companies will find it increasingly difficult to service their debt causing some to default or get downgraded, he said. Such weakness in the credit markets will spill over to stocks, noted Jolley. “My core scenario will be a credit event, which will further weigh on equity markets, which will definitely weigh on high growth sectors like tech,” he said.

More generally, investors have fewer reasons to be optimistic now because the Fed tightening monetary policy means there will be less money for investments, said Vishnu Varathan, head of economics and strategy at Mizuho Bank. “There is really no conviction for markets to buy back because they’re not sure this is the bottom, and so they are thinking this is the proverbial falling knives,” Varathan told CNBC’s “Squawk Box.”

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The Fed spent the past 10 years making sure its member banks kept on making indecent amounts of money. And now they need to be defended?

In Defense of the Fed (Stephen S. Roach)

I have not been a fan of the policies of the US Federal Reserve for many years. Despite great personal fondness for my first employer, and appreciation of all that working there gave me in terms of professional training and intellectual stimulation, the Fed had lost its way. From bubble to bubble, from crisis to crisis, there were increasingly compelling reasons to question the Fed’s stewardship of the US economy. That now appears to be changing. Notwithstanding howls of protest from market participants and rumored unconstitutional threats from an unhinged US president, the Fed should be congratulated for its steadfast commitment to policy “normalization.”

It is finally confronting the beast that former Fed Chairman Alan Greenspan unleashed over 30 years ago: the “Greenspan put” that provided asymmetric support to financial markets by easing policy aggressively during periods of market distress while condoning froth during upswings. Since the October 19, 1987 stock-market crash, investors have learned to count on the Fed’s unfailing support, which was justified as being consistent with what is widely viewed as the anchor of its dual mandate: price stability. With inflation as measured by the Consumer Price Index averaging a mandate-compliant 2.1% in the 20-year period ending in 2017, the Fed was, in effect, liberated to go for growth.

And so it did. But the problem with the growth gambit is that it was built on the quicksand of an increasingly asset-dependent and ultimately bubble- and crisis-prone US economy. Greenspan, as a market-focused disciple of Ayn Rand, set this trap. Drawing comfort from his tactical successes in addressing the 1987 crash, he upped the ante in the late 1990s, arguing that the dot-com bubble reflected a new paradigm of productivity-led growth in the US. Then, in the early 2000s, he committed a far more serious blunder, insisting that a credit-fueled housing bubble, inflated by “innovative” financial products, posed no threat to the US economy’s fundamentals. As one error compounded the other, the asset-dependent economy took on a life of its own.

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Someone better collect some pieces on Mattis from 2 years ago. Won’t look anything like the sainthood declarations he’s getting today.

Trump, Annoyed By Resignation Letter, Pushes Out Mattis Early (R.)

U.S. President Donald Trump on Sunday said he was replacing Defense Secretary Jim Mattis two months earlier than had been expected, a move officials said was driven by Trump’s anger at Mattis’ resignation letter and its rebuke of his foreign policy. On Thursday, Mattis had abruptly said he was quitting, effective Feb. 28, after falling out with Trump over his foreign policy, including surprise decisions to withdraw all troops from Syria and start planning a drawdown in Afghanistan. Trump has come under withering criticism from fellow Republicans, Democrats and international allies over his decisions about Syria and Afghanistan, against the advice of his top aides and U.S. commanders.

The exit of Mattis, highly regarded by Republicans and Democrats alike, added to concerns over what many see as Trump’s unpredictable, go-it-alone approach to global security. Trump said Deputy Defense Secretary Patrick Shanahan would take over on an acting basis from Jan. 1. In announcing his resignation, Mattis distributed a candid resignation letter addressed to Trump that laid bare the growing divide between them, and implicitly criticized Trump for failing to value America’s closest allies, who fought alongside the United States in both conflicts. Mattis said that Trump deserved to have a defense secretary more aligned with his views.

Trump, who tweeted on Thursday that Mattis was “retiring, with distinction, at the end of February,” made his displeasure clear on Saturday by tweeting that the retired Marine general had been “ingloriously fired” by former President Barack Obama and he had given Mattis a second chance.

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The only interesting question: why go public with something so ordinary?

Mnuchin Holds Calls With Heads Of America’s 6 Biggest Banks Amid Shutdown (F.)

No need to panic. That was the message Treasury Secretary Steven Mnuchin sought to convey after holding unscheduled Sunday afternoon calls with the heads of the largest banks in America, Jamie Dimon of JPMorgan, Brian Moynihan of Bank of America, Michael Corbat of Citigroup, Tim Sloan of Wells Fargo, David Solomon of Goldman Sachs and James Gorman of Morgan Stanley. In a statement released by Treasury, Mnuchin said these CEOs confirmed “markets continue to function properly.” These bankers also assured Mnuchin their firms have the liquidity to fund themselves and their lending activities, and reported no clearance or margin issues on their trades, Treasury said.

A decade ago, such calls and terse press releases were routine Sunday events as Treasury officials, the Federal Reserve, and bank heads worked together to stem the worst financial panic since the Great Depression. This time, however, Mnuchin’s unusual efforts come amid a growing economy where credit is flowing freely. Instead of a financial panic, his comments seemed aimed at market concerns coming from political turmoil in Washington.

On Monday, Mnuchin will convene a call with the President’s Working Group on financial markets “to discuss coordination efforts to ensure normal market operations,” bringing together the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, the Commodities Futures Trading Commission, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Commission.

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They’re all grossly overvalued.

Facebook Is The ‘Biggest Concern’ Among The FAANGs (CNBC)

One industry analyst has sounded the alarm on Facebook, calling the company the “biggest concern” among the so-called FAANG stocks. “The digital economy operates on trust, and they’ve broken trust on so many levels,” Ray Wang, principal analyst and founder at Silicon Valley-based Constellation Research, told CNBC’s “Squawk Box” on Monday. The FAANG stocks consist of Silicon Valley tech giants Facebook, Amazon, Apple, Netflix and Google-parent Alphabet.

Wang said many of Facebook’s trust woes have been “centralized” around Chief Operating Officer Sheryl Sandberg, who was in the spotlight after a New York Times report in mid-November about the executive and the social media company’s internal operations. The Times report came on the back of a series of scandals and incidents which have mired Facebook in controversy and sent its stock sinking in 2018. As of its last close after extended hours trade on Dec. 21, the company’s stock price was more than 40 percent off its 52-week high. Asked about the possibility of Sandberg departing from Facebook, Wang said it was “in the rumor category.”

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China’s afraid of the exchange rate.

China Won’t Resort To Massive Monetary Stimulus Next Year – PBOC (CNBC)

China will not resort to “flood-like” stimulus in monetary policy next year, although it will consider more cuts as needed to reserves held at commercial banks, local media quoted a central bank adviser as saying in a report on Tuesday. The Chinese economy will face downward pressure in 2019, while the pace of growth will gradually stabilize, the 21st Century Business Herald quoted Sheng Songcheng, an advisor to the People’s Bank of China (PBOC), as saying. “Monetary policy will remain prudent and won’t be a ‘flood.’ Otherwise, funds will likely flow into the property sector again,” Sheng was quoted as saying by the state-backed newspaper.

There remains room for further cuts in banks’ reserve requirement ratios (RRRs), and Sheng does not recommend broad-based reductions in interest rates, it said. China will bolster support next year for its economy, the world’s second-largest, by cutting taxes and keeping liquidity ample, the official Xinhua news agency said after last week’s Central Economic Work Conference, an annual closed-door gathering of party leaders and policymakers. [..] On exchange rates, the central bank adviser said China should defend the yuan at the key seven-per-dollar level. “The key threshold of seven per dollar is very important. If the yuan weakens past that crucial point, the cost of stabilizing the exchange rate will be greater,” Sheng was quoted as saying.

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The level of incompetence is sobering.

Police tell BBC News they “cannot discount the possibility that there may have been no drone at all”.

Gatwick Drones Pair ‘No Longer Suspects’ (BBC)

A man and woman arrested in connection with drone sightings that grounded flights at Gatwick Airport have been released without charge. The 47-year-old man and 54-year-old woman, from Crawley, West Sussex, had been arrested on Friday night. Sussex Police said there had been 67 reports of drone sightings – having earlier cast doubt on “genuine drone activity”. Det Ch Supt Jason Tingley said no footage of a drone had been obtained. And he said there was “always a possibility” the reported sightings of drones were mistaken.

However, he later confirmed the reported sightings made by the public, police and airport staff from December 19 to 21 were being “actively investigated”. “We are interviewing those who have reported these sightings, are carrying out extensive house-to-house inquiries, and carrying out a forensic examination of a damaged drone found near the perimeter of the airport.” Det Ch Supt Tingley said it was “a working assumption” the device could be connected to their investigation, but officers were keeping “an open mind”.

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‘We are working with human beings saying they have seen something..’ Cue 150,000 ruined holidays.

Gatwick Police Say They Cannot Discount Possibility There Was No Drone (Ind.)

Detectives investigating the Gatwick drone attacks which caused three days of chaos for passengers say it is possible there never were any drones. Police do not have any footage of the flying machines at the airfield and are relying on accounts from witnesses and the discovery of a damaged device. The revelation by Detective Chief Superintendent Jason Tingley came after the couple arrested by Sussex Police on Friday night were released without charge. Asked about speculation there never was a drone, he said: “Of course, that’s a possibility. We are working with human beings saying they have seen something. “Until we’ve got more clarity around what they’ve said, the detail – the time, place, direction of travel, all those types of things – and that’s a big task.”

Mr Tingley said one of the “working theories” was that the damaged drone found close to the airport in Sussex was responsible for causing the disruption. “Always look at it with an open mind, but actually it’s very basic common sense that a damaged drone, which may have not been there at a particular point in time has now been seen by an occupier, a member of the public, and then they’ve told us, ‘we’ve found this’. “Then we go and forensically recover it and do everything we can at that location to try and get a bit more information.” [..] Gatwick Airport has offered a £50,000 reward through Crimestoppers for information leading to the arrest and conviction of those responsible for the chaos.

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It doesn’t matter what anybody does, Trump still hoards the attention.

‘Home Alone’: Bored Trump Tweets Up Storm During Christmas Shutdown (RT)

With the US government shut down due to the dispute over funding President Donald Trump’s border wall, and his family in Florida, the chief executive has chosen to spend the Christmas holiday taking potshots at critics on Twitter. Funding for about a quarter of US government services ran out on Friday at midnight, as Senate Democrats refused to endorse a House funding bill that would’ve given Trump $5.7 billion for the border wall. Trump was supposed to celebrate Christmas at Mar-a-Lago with his family, but elected to stay in the White House instead, tweeting up a storm.

Trump tweeted twenty times on Thursday, as the shutdown loomed. He continued posting on Friday (ten), Saturday (seven) and Sunday (eight), then ramped up the schedule on Monday, with ten tweets by the early afternoon. In addition to his usual complaints about “Fake News” and Democrats, Trump has also taken aim at the Federal Reserve, praised Saudi Arabia, and dismissed Washington’s envoy to the anti-ISIS coalition as an “Obama appointee” who gave Iran $1.8 billion “in CASH” as part of the “horrific” nuclear deal. He also complained, tongue firmly in cheek, about being “all alone (poor me) in the White House waiting for the Democrats to come back and make a deal on desperately needed Border Security.”

Though Trump’s Twitter tirades usually trigger the trolls, that last one brought up a multitude of call-backs to the president’s cameo in 1992’s Christmas comedy ‘Home Alone 2: Lost in New York.’

Read more …

Aug 122018
 August 12, 2018  Posted by at 1:21 pm Finance Tagged with: , , , , , , , , , , , , ,  4 Responses »

Henri Matisse View of Nôtre Dame 1914


Recep Tayyip Erdogan became Prime Minister of Turkey in 2003. His AKP party had won a major election victory in 2002, but Erdogan was banned from political office until his predecessor Gül annulled the ban. Which he had gotten in 1997 for reciting an old poem to which he had added the lines “The mosques are our barracks, the domes our helmets, the minarets our bayonets and the faithful our soldiers….”

The Turkish courts of the time saw this as “an incitement to violence and religious or racial hatred..” and sentenced him to ten months in prison (of which he served four in 1999). The courts saw Erdogan as a threat to the secular Turkish state as defined by Kemal Ataturk, the founder of modern Turkey in the 1920’s. Erdogan is trying to both turn the nation towards Islam and at the same time not appearing to insult Ataturk.

The reality is that many Turks today lean towards a religion-based society, and no longer understand why Ataturk insisted on a secular(ist) state. Which he did after many years of wars and conflicts as a result of religious -and other- struggles. Seeing how Turkey lies in the middle between Christian Europe and the Muslim world, it is not difficult to fathom why the ‘father’ of the country saw secularism as the best if not only option. But that was 90 years ago.

And it doesn’t serve Erdogan’s purposes. If he can appeal to the ‘silent’ religious crowd and gather their support, he has the power. To wit. In 2003, one of his first acts as prime minister was to have Turkey enter George W.’s coalition of the willing to invade Saddam Hussein’s Iraq. As a reward for that, negotiations for Turkey to join the EU started. These are officially still happening, but unofficially they’re dead.

In 2014 Erdogan finally got his dream job: president. Ironically, in order to get the job, Erdogan depended heavily on the movement of scholar and imam Fethullah Gülen, who, despite moving to Pennsylvania in 1999, still had (has?) considerable influence in Turkish society. Two years after becoming president, Erdogan accused Gülen of being the mastermind behind a ‘failed coup’ in 2016, after which tens of thousands of alleged Gülenists were arrested, fired, etc.


Fast forward to the past week. Donald Trump imposed tariffs on Turkey, ostensibly because Erdogan refuses to free an American pastor. The result was a god-almighty drop in the Turkish lira. Analysts at Goldman Sachs said if it reached 7:1 vs the USD, it would be game over for Turkish banks. It got to 6.8:1 before falling back to 6.4:1. And without support from China or the IMF, it would indeed appear the game’s up.

With a stronger dollar, investors’ urge to have their money in emerging markets fades away. And with Turkey being the ugliest horse in the EM factory (perhaps after Argentina, but that’s a whole different story), it’s only logical it would be the first emerging market to see foreign investment disappear. It’s the easiest thing in the world, and It looks something like this:

Here, Turkey’s the main outlier. Tyler Durden’s comment: “as JPMorgan showed 2 months ago, Turkey faces a secondary threat in addition to its gaping current account deficit: a massive and growing debt load. If foreign buyers of Turkish debt go on strike, or if Turkey is unable to rollover near-term maturities, watch how quickly the currency crisis transforms into a broad economic collapse.”



This next graph from the IIF shows how much debt Turkey has, and in which sectors. Not much household debt, which is positive, but a monster non-financial corporate debt, which is definitely not. NOTE: Hungary is no. 2 on this one, but look at the graph above, and you see that while Turkey has a current account DEFICIT and RISING external debt, Hungary has a current account SURPLUS and FALLING external debt. Don’t do the apples and oranges thing! Also note that Argentina’s debt is almost all government (bonds)

Along that same line, I saw Tom Luongo today compare Turkey anno now to Russia in 2014/15, but Moscow’s USD and EUR debt is about 25%, while Turkey’s is at 70%. it’s a very bad comparison. Russia has had sanctions for ages, and it’s and plenty time to adapt its economy to them. They have to hold some USD and Treasury’s, but they’re largely fine. Turkey is not.



The third graph is useful because it depicts what currencies countries’ non-financial sectors have borrowed in. Again, Turkey is an outlier, this time in its USD exposure.



And unsurprisingly, we have EU banks exposed to Turkey. What’s wrong with BBVA? What’s wrong with Draghi?



But this is easy stuff. We know all this, or we could have. Turkey has been splurging on debt at least ever since Erdogan became PM 15 years ago. He bought his popularity to a large extent with large scale infrastructure projects, without letting on the country -and its corporate sector- were financing the projects with money borrowed from abroad (he built a $100 million, 1000-room palace for himself as well).

Where I think it gets really interesting, and I’ve been keeping away a bit from what others have written the past few days, is in what Erdogan knows about this, and how long he’s known how dire the situation is, and what he’s planning to do next. Because if he knows how bad things are, and he has it for a while, he may well have orchestrated the recent fall-out with Trump et al, to use it as a political tool.

What Erdogan needs is someone to blame for his collapsing economy. And also, if he can get it, a bail-out from somewhere anywhere. Problem with the bail-out thing is, no matter what option might be available, and it’s only might be, he will be forced to relinquish a lot of the central control he’s carefully built up through constitution amendments etc.

His -maybe- options are the IMF, Russia and China. The IMF equals America, and even if they feel a loan to Istanbul is better than an outright collapse, they will take his control over the central bank away, and probably much more – austerity on steroids.

Russia might want to assist, if only to get Turkey away from NATO, which Putin sees as a growing threat now it keeps approaching his borders ever more. Greece is presently in an angry spat with Moscow because the latter is trying to frustrate the Macedonia name deal that the US has been encouraging, which would lead to Macedonia NATO membership, and even more NATO troops right on Russian borders.

But Putin hasn’t forgotten Erdogan shooting down a Russian jet fighter in 2015, and you can bet he will avenge that ‘incident’. He’s at best ambivalent about supporting Erdogan, but he recognizes the potential advantages. Then again, he also recognizes the pluses of letting Turkey slide into a position where Erdogan will be forced out and the secular state reinstated. Russia doesn’t want more Muslim states on its borders anymore than it wants more NATO. Suffice it to say Putin’s watching closely. And he’s got his moves ready.

China sees things differently; it can of course appreciate the potential of Turkey as a strategic gem, if only for its Belt and Road Initiative, but Beijing can also see the potential problems. It’s easier -and much cheaper- to buy up Greek assets for that same purpose -and for pennies on the dollar- now that the EU and US have forced the country’s economy to slide into third world territory. Still if Erdogan gets desperate enough, XI may yet jump in. But Erdogan will not be an independent actor anymore, in his own country. Xi does not dole out Christmas gifts.


On Saturday, Erdogan -again- summoned Turks to bring home their foreign funds and to change all dollars and euros and bonds for lira. That may seem strange -and it probably is- because the first reaction is for people to do the exact opposite as long as the lira is plunging. But it appeals to that same religious sentiment that he has founded his entire political power on. Without it, he’s done anyway.

His approach now is to blame someone else for Turkey’s economic problems. Which is nonsense for anyone who has the valid details, but remember, his gutting of the press after the alleged ‘coup’ two years ago has left precious little information available to the Turkish people.

Erdogan has said he will look for other friends than the US. As detailed above, that will not be easy unless he’s prepared to give up substantial amounts of his power. He’s not prepared for that. It’s much easier for him, let alone advantageous, to claim there’s an economic war against Turkey being leveled. And he wouldn’t even be 100% wrong.

Thing is, to prevent the latest escalation, all he would have had to do was to release an American pastor. The fact that he didn’t is perhaps more telling than anything in all this. He’s looking for someone, come country, some organization perhaps, to present as an enemy to the Turkish people.

Since I’ve spent a lot of time in Athens in the past few years, I wouldn’t be surprised if Turkey, whose jetfighters’ violations of Greek air space have become so routine not even the Greek press tries to keep track, would invade, and claim ownership of, some Greek islands in the Aegean Sea, even if they’re just some uninhabited rocks, to whip up nationalist sentiment back home.

Recep Tayyip has long seen this coming. His economy is collapsing, his currency is collapsing, so he’ll focus on what’s left: Turkey’s strategic position on the map, its NATO membership, the negotiations for EU membership, and most of all the support of the Muslim contingent in Turkey that solidifies his power.

I don’t really want to make any historical comparisons, they appear obvious enough. Suffice it to say this ain’t over by a long shot, and it could lead to big trouble.

And don’t let’s forget that Turkey presently hosts millions of Syrian refugees. Erdogan can just buy a bunch of dinghies (he can still afford that) and cause absolute chaos in Greece and the EU.

Who’s going to be buying lira’s on Monday?



Dec 242017
 December 24, 2017  Posted by at 5:47 pm Finance Tagged with: , , , , , , , , , ,  5 Responses »

Walter Hege Caryatid overlooking the city of Athens 1930


Christmas is the time when the western world makes a doomed attempt to remember a story whose meaning it has long forgotten, and still claim the story as its own every single time, every single year, claim it as its foundation, the foundation of the principles that guide its societies, its politics and its religion.

Western countries, whether they’re predominantly Catholic or Protestant, label themselves Christian, after Jesus Christ, a man their holy scriptures say is/was the Son of their God, and after his teachings, his sermons and the example his own life is supposed to have been for all his followers. Turn the other cheek, help those in need, don’t judge.

But as we celebrate Jesus’ birth at the time of winter solstice, and we acknowledge that he and his parents, Joseph and Maria, were refugees driven into exile, and the only place the birth could take place was a manger far away from their home, we lose out on the connection to our savior from the very first moment.

Because we sit in our warm and cosy homes, surrounded by meals worthy of kings, and presents worthy of princes and princesses, while frail forms and emaciated children are fainting at our doors. While we are quite aware that whatever Jesus meant to say 2000 years ago, and some of that may have been lost over time, one thing we do know is that he didn’t mean this.

There’s no way he meant for us to, two millennia down the road, to look at present day refugees driven into exile far away from home, just like he and his parents were, and not lift a finger to help them. So when politicians like UK PM Theresa May say in their Christmas messages to their nations that they should “take pride in their Christian heritage”, that’s not just empty rhetoric, it’s hollow.

But as long as religion still sells, and there are many countries where it does, perhaps nowhere more than the US, politicians will quote Jesus and do the opposite of what he actually said according to the bible, and all without blinking once. The thirst for power over others does strange things to people, and our societies are still fully unprepared for that, and we still hear them say one thing and do another, and we still believe what they say. We’re suckers for snake oil.


Actual clergymen and other people of real faith may be somewhat different from politicians and their flocks, but as long as the Vatican remains opulently rich and clad in gold while Catholics and others around the world live in die in misery, perhaps we should question the link between Jesus and the church, the very link the latter base their entire authority on.

Perhaps, as well, we should question any and all claims of being ‘God’s own country’ made by any and all nations who send their best and bravest to go and kill the best and bravest of other nations for the sake of religion, resources or empire. Nothing of that has anything to do with Jesus.

And perhaps we should look for Jesus not in the people who talk about him, but in those who act like him, and like he told his contemporaries to act. And yeah, that takes me to Greece, and the Automatic Earth for Athens fund.


Not in any kind of presumptuous way, mind you, certainly not when it comes to me, but I have met quite a few people who seem to understand Jesus much better than most politicians and church leaders do, they just don’t talk about it, they do it. That much must have become clear through the past 2,5 years and 13-14 articles (for links, see bottom of this article) that I’ve written about them.

The reason I haven’t written much on the topic over the past 9 months or so comes down pretty much to growing pains, for lack of a better term. In my view, my friend Konstantinos and his social kitchen project, O Allos Anthropos (the Other Human), had become too dependent on Automatic Earth readers for donations, which is not a healthy situation for anyone involved.

I didn’t want to continually ask our readers for more money, and O Allos Anthropos needed to find other sources for fund-raising. The problem is that is easier said than done, for multiple reasons. If you have no experience when it comes to fund-raising, it’s hard to know where to start, and it’s hard to organize yourselves to do it. And then you end up broke, as O Allos Anthropos is right now.

Still, I think they could have tried a bit harder, but then, it’s not about me. It’s about the people we help, the refugees and homeless. If you follow my essays at the Automatic Earth a little, you will know that the situation for both groups (and sometimes they’re the same people) is still deteriorating at a rapid pace. And as much as the Greek people are willing to help, most of them are getting poorer fast as well.

Between ever more and higher taxes on the one hand, and ever more cuts to wages and pensions on the other, a recovery of the Greek economy slips further away and out of view by the day, taking people’s ability to take care of the very poorest out with it. And in this case, too, politicians are not going to lend a helping hand unless they see political gain in it.


Greek Minister for Migration Yiannis Mouzalas recently said he could not exclude the possibility that refugees would die on the Greek islands this winter. He’s had two years to do just that, though. That’s enough time to run out of excuses to blame the situation on anyone else. But he’s right: people will probably die there this winter.

There are thousands living in summer tents with no heating, surrounded by wet mud and sheer misery, and with sanitation facilities that provide no privacy and are dirtier than many a manger in a stable could be. If anything, they make one think of Joseph and Mary all over again; just worse, probably. The EU reportedly has spent $1.4 billion on the situation so far, and this is the result.

Mouzalas was nominated for the Council of Europe’s human rights commissioner, and it was no big surprise he didn’t get the job. Though with the example of Saudi Arabia chosen to head a key UN human rights panel, anything is possible.


There is no way that it’s impossible to build adequate facilities for some 20,000 refugees and migrants with $1.4 billion. If that doesn’t work, and it hasn’t, one can only conclude that various parties involved, the EU, the Greek government, and the alphabet soup of NGOs operating in Greece, don’t see these facilities as their no. 1 priority. Thing is, who’s going to call them on it, and what good would that do?

The only priority the EU has when it comes to refugees is to keep them out; the politicians in power in member states read the polls and see their voters don’t want refugees in their countries. So they fund armies and detention camps in Libya etc., where people are sold for $400 or so in open slave markets. And then they talk about Christian values.

Greece has been completely swamped and torn apart by the issue, granted, but that doesn’t mean Mouzalas and Tsipras et al couldn’t have done -and do- a lot more to guarantee at least minimal human dignity to those stuck, if not incarcerated, on the islands. There are hundreds if not thousands of underage children, women, sick people, elderly, stuck in conditions not even the ass and the oxen were in 2,000 years ago.

There’s no way that’s the best we can do. It’s an utter disgrace that shames any and all Christian values, and the man they were named after.

O Allos Anthropos cannot solve these issues, all it can so is help where it can. First, feed the homeless Greeks and refugees in the cities, especially Athens. Then, make life more bearable for those hardest hit by both their circumstances and the way the political classes and the humanitarian-industrial complex deal with them.

And in the end that’s perhaps the only thing we can do: not try and launch huge movements and sweep away a status quo, but work on a small scale, a human scale, human-to-human. Work on a Jesus scale, rather than a Church scale. I know, there are many churches that do help where they can, but that too is most effective where the scale is smallest.



Konstantinos has taken O Allos Anthropos to Bodrum in Turkey this summer, a place where many thousands of Syrians and other refugees are now held up instead of sailing to the Greek islands. These people have nowhere to go, Greece is largely off limits – though the numbers crossing are increasing again- while in the countries they fled, the west is fighting for prominence instead of helping them rebuild.

We will not solve this problem, or at least it will take many years, and the needs of the worst-off, both Greeks and refugees, are immediate. The only way we have to save the world, or make it a better place, is one person at a time. Everyone who tries to do anything on a larger scale fails miserably.

So that’s what we’ll do. Konstantinos and I, and all the other people involved. One person at a time. We can only do that with your help tough. So once again, please be generous this Christmas. Do that spirit honor. Let’s make 2018 a good year for everyone who needs help to make it one.



For donations to Konstantinos and O Allos Anthropos, the Automatic Earth has a Paypal widget on our front page, top left hand corner. On our Sales and Donations page, there is an address to send money orders and checks if you don’t like Paypal. Our Bitcoin address is 1HYLLUR2JFs24X1zTS4XbNJidGo2XNHiTT. For other forms of payment, drop us a line at Contact • at • TheAutomaticEarth • com.

To tell donations for Kostantinos apart from those for the Automatic Earth (which badly needs them too!), any amounts that come in ending in either $0.99 or $0.37, will go to O Allos Anthropos. Every penny goes where it belongs, no overhead. Guaranteed. It’s a matter of honor.


Please give generously.



A list of the articles I wrote so far about Konstantinos and Athens.

June 16 2015

The Automatic Earth Moves To Athens

June 19 2015

Update: Automatic Earth for Athens Fund

June 25 2015

Off to Greece, and an Update on our Athens Fund

July 8 2015

Automatic Earth Fund for Athens Makes First Donation

July 11 2015

AE for Athens Fund 2nd Donation: The Man Who Cooks In The Street

July 22 2015

AE Fund for Athens: Update no. 3: Peristeri

Nov 24 2015

The Automatic Earth -Finally- Returns To Athens

Dec 25 2015

Help the Automatic Earth Help the Poorest Greeks and Refugees

Feb 1 2016

The Automatic Earth is Back in Athens, Again

Mar 2 2016

The Automatic Earth for Athens Fund Feeds Refugees (Too)

Aug 9 2016

Meanwhile in Greece..

Nov 28 2016

The Other Human Needs Your Help This Christmas

Dec 21 2016

The Automatic Earth in Greece: Big Dreams for 2017

Mar 23 2017

The Automatic Earth Still Helps Greeks and Refugees



Konstantinos and a happy refugee



Dec 242017
 December 24, 2017  Posted by at 10:03 am Finance Tagged with: , , , , , , , , ,  2 Responses »

Jules Bastien-LePage The annunciation to the shepherds 1875


Yes, Virginia, There Is A ‘Santa Rally’ (Roberts)
Homelessness In England Rises By 75% Among Vulnerable Groups Since 2010 (G.)
Ten Years In, Nobody Has Come Up With A Use For Blockchain (Hackernoon)
Varoufakis: Bitcoin is The Perfect Bubble, Blockchain A Great Solution (Wired)
Japan Births Plunge To Lowest Level Ever Recorded (ZH)
China Raging Against the Dying of the Light (Hamilton)
US Tax Cut and Rate Hikes Threaten China Currency (Schmid)
Italy’s Ruling PD Slides Further In Polls As Election Nears (R.)
How Sea Shepherd Lost Battle Against Japan’s Whale Hunters In Antarctic (G.)
Climate Change In The Land Of Santa Claus (Ind.)



Santa = faith in the good of mankind. As is Jesus. Still, hard to rhyme with copious dinners while others starve in the dark and cold, and $900 spent on gifts on average per American. That can’t be it.

Yes, Virginia, There Is A ‘Santa Rally’ (Roberts)

Eight-year-old Virginia O’Hanlon wrote a letter to the editor of New York’s Sun, and the quick response was printed as an unsigned editorial Sept. 21, 1897. The work of veteran newsman Francis Pharcellus Church has since become history’s most reprinted newspaper editorial, appearing in part or whole in dozens of languages in books, movies, and other editorials, and on posters and stamps


I am 8 years old.
Some of my little friends say there is no Santa Claus.
Papa says, ‘If you see it in THE SUN it’s so.’
Please tell me the truth; is there a Santa Claus?


“VIRGINIA, your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe except they see. They think that nothing can be which is not comprehensible to their little minds. All minds, Virginia, whether they be men’s or children’s, are little. In this great universe of ours, man is a mere insect, an ant, in his intellect, as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.

Yes, VIRGINIA, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! how dreary would be the world if there were no Santa Claus? It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished.

Not believe in Santa Claus! You might as well not believe in fairies! You might get your papa to hire men to watch in all the chimneys on Christmas Eve to catch Santa Claus, but even if they did not see Santa Claus coming down, what would that prove? Nobody sees Santa Claus, but that is no sign that there is no Santa Claus. The most real things in the world are those that neither children nor men can see. Did you ever see fairies dancing on the lawn? Of course not, but that’s no proof that they are not there. Nobody can conceive or imagine all the wonders there are unseen and unseeable in the world.

You may tear apart the baby’s rattle and see what makes the noise inside, but there is a veil covering the unseen world which not the strongest man, nor even the united strength of all the strongest men that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and view and picture the supernal beauty and glory beyond. Is it all real? Ah, VIRGINIA, in all this world there is nothing else real and abiding.

No Santa Claus! Thank God he lives, and he lives forever. A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood.”

Read more …

Do they know it’s Christmas time at all?

Homelessness In England Rises By 75% Among Vulnerable Groups Since 2010 (G.)

Homelessness among people with mental and physical health problems has increased by around 75% since the Conservatives came to power in 2010, and there has been a similar rise in the number of families with dependent children who are classed as homeless. According to official figures collated by the Department for Communities and Local Government, the number of homeless households in England identified by councils as priority cases because they contain someone who is classed as vulnerable because of their mental illness, has risen from 3,200 in 2010 to 5,470 this year. Over the same period, the number of families with dependent children – another priority homeless group identified by councils – has increased from 22,950 to 40,130.

The number of homeless households with a family member who has a physical disability has increased from 2,480 to 4,370. After a week in which the prime minister has come under renewed attack over homelessness, housing charities have called on the government to urgently build more affordable housing and reverse a squeeze on benefits which has left vulnerable people unable to pay their rents. “With homelessness soaring, it is no surprise that the number of vulnerable groups – including families with children – who are having to turn to their council for help is on the rise,” said Polly Neate, chief executive of charity Shelter.

“As wages stagnate, rents continue to rise and welfare is cut, many people are struggling to keep a roof over their head. Eviction is now the number one cause of homelessness. “Our services across the country are seeing an increase in the number of people with multiple and complex needs, and we think this may be because other services are failing to provide the help that people need. The solution to our housing crisis must be to urgently build more affordable homes and, in the short term, end the freeze on housing benefit that is increasingly pushing people over the precipice into homelessness.”

Read more …

Shaking the tree.

Ten Years In, Nobody Has Come Up With A Use For Blockchain (Hackernoon)

Everyone says the blockchain, the technology underpinning cryptocurrencies such as bitcoin, is going to change EVERYTHING. And yet, after years of tireless effort and billions of dollars invested, nobody has actually come up with a use for the blockchain – besides currency speculation and illegal transactions. Each purported use case – from payments to legal documents, from escrow to voting systems – amounts to a set of contortions to add a distributed, encrypted, anonymous ledger where none was needed. What if there isn’t actually any use for a distributed ledger at all? What if, ten years after it was invented, the reason nobody has adopted a distributed ledger at scale is because nobody wants it?

The original intended use of the blockchain was to power currencies like bitcoin – a way to store and exchange value much like any other currency. Visa and MasterCard were dinosaurs, everyone proclaimed, because there was now a costless, instant way to exchange value without the middleman taking a cut. A revolution in banking was just the start& governments, unable to issue currency by fiat anymore, would take a back seat as individual citizens transacted freely outside any national system. It didn’t take long for that dream to fall apart. For one thing, there’s already a costless, instant way to exchange value without a middleman: cash. Bitcoins substitute for dollars, but Visa and MasterCard actually sit on top of dollar-based banking transactions, providing a set of value-added services like enabling banks to track fraud disputes, and verifying the identity of the buyer and seller.

It turns out that for the person paying for a product, the key feature of a new payment system – think of PayPal in its early days – is the confidence that if the goods aren’t as described you’ll get your money back. And for the person accepting payment, basically the key feature is that their customer has it, and is willing to use it. Add in points, credit lines, and a free checked bag on any United flight and you have something that consumers choose and merchants accept. Nobody actually wants to pay with bitcoin, which is why it hasn’t taken off.

Read more …

Crypto vs democracy: “To Varoufakis, money is inherently political. The decisions regarding whether money is produced or not, how it is distributed and who receives it, all have significant political consequences, benefiting certain social groups over others.”

Varoufakis: Bitcoin is The Perfect Bubble, Blockchain A Great Solution (Wired)

While acknowledging the limitations of bitcoin and other technical solutions to political problems, Varoufakis does see potential in blockchain technologies. For him, “the algorithm that operates behind bitcoin, caught my attention right from the beginning. I consider this to be a remarkable technology. As early as 2012, Varoufakis was toying with ideas for using blockchain to help solve Europe’s financial woes. By the time he was appointed Finance Minister of Greece in 2015, within days his anti-austerity programme was met with the direct threat from the Troika to close Greece’s banks. With no banking system, the country would grind to a halt. To counter this threat, Varoufakis devised an audacious plan to keep Greece’s financial system operating. Effectively Varoufakis proposed creating an alternative, peer-to-peer payments system based on the blockchain.

This would disintermediate the financing they were receiving from the Troika and from the money markets. But with no money coming from the Troika, Varoufakis would need to create a parallel payments system, that would leverage the tax that all citizens and companies of Greece need to pay, as a new form of money. This is what he would eventually brand, “fiscal money.” To understand how fiscal money works, imagine that a pharmaceutical company in Greece is owed money by the state. Due to the constraints of the crisis, it may take years to pay the company in normal central bank euros. However what if there was an alternative option? What if the Greek State created a reserve account for the company under its tax file number, in which it placed tax credits of one million euros? This IOU could then also be used by the company to pay other organisations and individuals within the country.

One of the most disruptive aspects of this unrealised plan, was to enable the state to borrow directly from citizens and vice versa. In effect, Varoufakis was attempting to use new digital technologies, such as blockchain, to cut out the European lending authorities and build new lending relationships between citizens, companies and the state. The risk this system faced was the threat of corruption and the subsequent decline in public trust of authorities, something that Varoufakis admits is “in very limited supply” in a country like Greece. For example, what if Greek authorities abused these tax credits and began to distribute this new fiscal money to close allies and friends? This is where Varoufakis saw blockchain’s potential. “If the payments system was based on the blockchain, this would allow the combination of anonymity but perfect transparency, regarding the total aggregate size of the transactions of the currency….blockchain would overcome the trust problem as we know it.”

Read more …

Japan and China suffer the same fate: aging populations.

Japan Births Plunge To Lowest Level Ever Recorded (ZH)

Back in 2013 we asked “Why Have Young People In Japan Stopped Having Sex?” And while that might sound like nothing more than a clever headline intended for The Onion, it was prompted by a very serious survey conducted by the Japan Family Planning Association which found that 45% of Japanese women aged 16-24 and 25% of men were “not interested in or despise sexual contact”…a growing trend that has revealed itself via the nation’s persistently declining birth rates. In fact, “celibacy syndrome” has become of such great concern for the Japanese government that it is considered a bit of a looming national catastrophe….a catastrophe that seems to be getting worse at an accelerating rate. According to data released today by Japan’s Ministry of Health, Labor and Welfare, child births in Japan will drop to just 941,000 in 2017, the lowest since data first started being recorded in 1899, and nearly 65% below the peak birth rate from the late 1940’s.

Read more …

China is building “..a housing bubble for a population that is never coming..”

China Raging Against the Dying of the Light (Hamilton)

China’s working age population is clearly defined as those aged 16 to 50 years old for females (55 for “white collar” females) and 16 to 60 years old for males. China mandates retirement at these outer age limits. Perhaps of some interest should be that this working age population peaked in 2011 and has been declining since. This decline will continue indefinitely as China has a collapsing childbearing population (detailed HERE), net emigration (outflow), and a still decidedly negative birthrate. There is no evidence to believe the working age declines will abate any decade soon. As the chart below shows, China’s potential workforce will be shrinking indefinitely…and by 2030 China’s potential workforce will be over 100 million fewer than the 2011 peak (an 11% decline)…and only further down from there..

China has one of the youngest average retirement ages in the developed world. On average, according to a recent study (HERE), Chinese leave the work force by age 55 compared to age 63 in the US (Norway has the latest average departure at age 67). So, perhaps China will be raising the retirement age to curb the ballooning 60+yr/old population entering retirement (chart below…chart shows retirement population, 55+ females and 60+ males)? More on that later..

Comparing the working age population versus the 60+yr/old population (chart below…again, showing the 55+ females, 60+ males). A shrinking potential workforce since peaking in 2011 and a rapidly growing elderly population.

[..] While China’s GDP and energy consumption have led the world, they have not responded in kind to China’s debt explosion and exponentially more will be necessary to continue to show “growth”. Over a third and perhaps half of all the debt has been mal-invested in a housing bubble for a population that is never coming. What comes next isn’t going to be good for China nor the rest of the world as China looks to flood a depopulating nation with new debt only creating more housing overcapacity…China will look to beat the Japanese at the debt game.

Read more …

Outflows are by no means over.

US Tax Cut and Rate Hikes Threaten China Currency (Schmid)

Seven was the line in the sand. But the Chinese yuan never crossed that line vis-à-vis the U.S. dollar. It only crept up to 6.96 yuan per dollar on Dec. 16, 2016, before starting an impressive comeback, down to 6.5 in the middle of this year. Last year was a bad one for the Chinese economy. Growth was slow, and the world was worried China would finally land the hard way, as many have been predicting for years. And more than GDP growth or any other metric, the Chinese currency was the barometer of whether China could keep things stable – stability is the mantra of the ruling communist regime – or suffer a crisis of debt deflation. If it declined in value, it meant citizens and companies were moving money out of the country in droves because they didn’t believe in the Chinese dream anymore. So another measure of how bad things had gotten in the second-largest economy of the world was capital outflows.

According to the Institute of International Finance (IIF), a record $725 billion left China in 2016, putting pressure on the currency and the Chinese interbank market. All these factors have changed in favor of the dollar in the last quarter, and it’s going to be hard for China to compete. Trying to stem the tide, the central bank sold record amounts of foreign currency. Chinese foreign exchange reserves, $4 trillion at the peak in 2014, went down to $3 trillion, and analysts started to question whether this was enough to finance the world’s largest trading economy. Then, miraculously in time for the 2017 National Congress of the Communist Party, all of this stopped. The yuan never went above 7, the exchange reserves never went below 3 trillion, and capital outflows subsided thanks to draconian regulations making it harder for individuals and companies to move money out of the country.

Read more …

Beppe all the way.

Italy’s Ruling PD Slides Further In Polls As Election Nears (R.)

Italy’s ruling Democratic Party (PD), hit by internal divisions and a banking scandal, is continuing to slide in opinion polls, with a new survey on Saturday putting it more than six points behind the anti-establishment 5-Star Movement. The survey by the Ixe agency, commissioned by Huffington Post Italia, comes just days before parliament is expected to be dissolved to make way for elections in March. It gives the center-left PD just 22.8% of voter support, down almost five points in the last two months, compared with 29.0% for 5-Star, which has gained almost two points in the same period. Silvio Berlusconi’s center-right Forza Italia (Go Italy!) is given 16.2%, with its right-wing allies the Northern League and Brothers of Italy on 12.1% and 5.0% respectively.

This bloc is expected to win most seats at the election but not enough for an absolute majority, resulting in a hung parliament. With the PD’s support eroding in virtually all opinion polls, several political commentators have speculated that its leader Matteo Renzi may choose or be forced to announce he will not be the party’s candidate for prime minister at the election. Renzi has given no indication so far he will take this step. The PD has split under his leadership, with critics complaining he has dragged the traditionally center-left party to the right. Breakaway groups united this month to form a new left-wing party called Free and Equal (LeU), which now has 7.3% of support, according to Ixe. The PD’s popularity seems to have also been hurt by a parliamentary commission looking into the collapse of 10 Italian banks in the past two years.

Read more …

What kills faith in mankind.

How Sea Shepherd Lost Battle Against Japan’s Whale Hunters In Antarctic (G.)

A fleet of Japanese ships is currently hunting minke whales in the Southern Ocean. It is a politically incendiary practice: the waters around Antarctica were long ago declared a whale sanctuary, but the designation has not halted Japan’s whalers, who are continuing a tradition of catching whales “for scientific research” in the region. In the past, conservation groups such as Sea Shepherd have mounted campaigns of harassment and successfully blocked Japan’s ships from killing whales. But not this year. Despite previous successes, Sea Shepherd says it can no longer frustrate Japan’s whalers because their boats now carry hardware supplied from military sources, making the fleet highly elusive and almost impossible to track. As a result the whalers are – for the first time – being given a free run to kill minke in the Southern Ocean.

“We have prevented thousands of whales from being killed in the past and we have helped ensure that the quota of minkes that Japan can take now is much lower than in the past,” said Peter Hammarstedt, a Sea Shepherd captain. “But they have put such resources into this year’s whaling that we cannot hope to find their fleet and stop them. It is simply a matter of us not wasting our own resources. We have other battles to fight.” Japan is not the only nation to hunt whales. Norway has a commercial operation in its own waters, for example. But what infuriates conservationists is that Japan is hunting and killing whales in a conservation zone, the Southern Ocean whaling sanctuary, that surrounds Antarctica. Japan claims that it does so only for scientific purposes.

“Essentially, they are exploiting a loophole in the rules – introduced in the 80s – that govern the banning of commercial whaling,” said Paul Watson, the founder of Sea Shepherd. Originally Japan set out to catch more than 900 minkes every year, as well as 50 humpbacks and 50 fin whales. However, its fleet was rarely able to reach these quotas because of actions by groups like Sea Shepherd. “We physically got in between the whalers and the whales and stopped the latter being killed,” said Hammarstedt. “One year we stopped Japan getting all but 10% of its quota. Their ships were nearly empty when they got back home.”

Read more …

The further north the larger the differences.

Climate Change In The Land Of Santa Claus (Ind.)

Lapland occupies a happy space in the popular imagination as a winter wonderland, occupied by reindeer, elves and Father Christmas. The real life Lapland, however, is increasingly facing up to the grim reality of global warming. Besides being the name of Swedish and Finnish provinces, Lapland is the English name for a region largely above the Arctic Circle that stretches across the north of Norway, Sweden, Finland and Russia. Research has revealed the disproportionate impact of climate change in the Arctic, where temperatures are currently rising at double the rate of the global average. The far north is bearing the brunt of global warming, and, as much of Lapland’s population relies on its polar climate for their livelihoods, the effects are starting to be felt.

Rovaniemi, the administrative capital of the Finnish province of Lapland, has done a good job of capitalising on the region’s Christmas-themed reputation. It is the self-proclaimed “Official Hometown of Santa Claus”, where the man himself can be visited 365 days a year. However, with his official residence there only constructed in 1950, Santa Claus is a relative newcomer to Lapland. The wider region is the ancient home of the indigenous Sami people, who refer to it as Sapmi. Owing to its remote location and freezing temperatures, much of Lapland remains relatively pristine wilderness, and it is this wilderness that provides the Sami with space to practise their ancient tradition of reindeer herding. As temperatures rise and begin to disrupt the unspoiled environment, the future prosperity of all Lapland’s inhabitants – from the Sami to Santa Claus – is at risk.

Dr Stephanie Lefrere first came to Finnish Lapland 18 years ago to study reindeer behaviour. Since then, she has observed dramatic changes in the region’s weather patterns, and subsequent effects on its wildlife. “In my very first fieldwork, 300km (186 miles) above the Arctic Circle, it was 20°C below zero on 31 October – really the Arctic feeling by the end of October,” she said. “We don’t have that any more. “Recently there have been ‘black Christmases’ with no snow at all in the southern part of Finland.” Decades of work in the region have cemented her view that climate change is having far-reaching effects on Lapland’s environment, affecting animal migratory routes, habitats and behaviour. “I became worried as a scientist, and also as an individual who is fascinated by the Arctic,” said Dr Lefrere.

Sami culture is based around reindeer, but only a fraction still keep their animals due to environmental change (Getty)

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

Bill Watterson is God


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



Got to love this angle.

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

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

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

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

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That’s still some serious losses.

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

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

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

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

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

ETH and BCH in trouble too…

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

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

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Fed flying blind.

Gold Only Safe Asset Left – David Stockman (USAW)

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

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

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

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The tax bill is not one-dimensional.

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

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

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

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

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It’ll get messier than subprime housing.

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

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

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

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

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

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

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

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

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

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

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

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

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

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China exports Ponzi and overcapacity.

China’s Creditor Imperialism (PS)

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

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

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

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

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

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

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

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

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The government in charge of the bubble.

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

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

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

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

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The incompetence is painful.

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

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

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

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You sure that you want to victimize the victims?

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

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

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

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Real values.

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

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

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

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Dec 062017
 December 6, 2017  Posted by at 9:28 am Finance Tagged with: , , , , , , , , , , ,  6 Responses »

Balthus Therèse dreaming 1938


Just How Big Could The Next Correction Be? (Roberts)
Second Canadian Mortgage Lender Crashes After Admitting Mortgage Fraud (ZH)
Toronto Housing Prices Fall Amid Growing Pool of Homes for Sale (BBG)
Plunder Capitalism (Paul Craig Roberts)
‘We Can’t Go On Like This’: Resignation In EU As Brexit Talks Stutter (G.)
Theresa May Faces New Brexit Revolt From Boris Johnson (BBG)
Most Brits Still Want Brexit But Expect It All to End Badly (BBG)
Juncker Seeks Greater Commission Control over Eurozone (Spiegel)
What Now? (Jim Kunstler)
The Premature Delisting of the Yellowstone Grizzly Bear (CP)
Greek Pension Cuts To Hit 70% Since The Start Of The Bailouts (K.)
Aid Groups Warn Of Looming Emergency At Greek Asylum Centres (G.)
Europe’s Migrant Crisis: Millions Still to Come (Kern)
US Homeless Population Rises For The First Time Since The Great Recession (G.)
Nearly 130,000 British Children To Wake Up Homeless This Christmas (Ind.)



From a larger article by Lance, This is Nuts. A 40% crash is starting to sound like a lowball.

Just How Big Could The Next Correction Be? (Roberts)

Just how big could the next correction be? As stated above, just a correction back to the initial “critical support” set at the 2016 lows would equate to a 29.1% decline. However, the risk, as noted above, is that a correction of that magnitude would begin to trigger margin calls, junk bond defaults, blow up the “VIX” short-carry and trigger a wave of automated selling as the algorithms begin to sell in tandem. Such a combination of events could conceivably push markets to either strong support at the previous two bull market peaks or to support at the 2011 peak which coincides with the topping formations of 2000 and 2007. Such a correction would entail either a 41.1% to 49.2% decline.

I won’t even mention the remote, but real, possibility of a nearly 75% retracement to the previous lows of the last two “bear markets.” That can’t happen you say? It wouldn’t even match the decline following the 1929 crash of 85%. Furthermore, as technical analyst J. Brett Freeze, CFA, recently noted: “The Wave Principle suggests that the S&P 500 Index is completing a 60-year, five-wave motive structure. If this analysis is correct, it also suggests that a multi-year, three-wave corrective structure is immediately ahead. We do not make explicit price forecasts, but the Wave Principle proposes to us that, at a minimum, the lows of 2009 will be surpassed as the corrective structure completes.” Anything is possible.

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Behing every bubble there is fraud.

Second Canadian Mortgage Lender Crashes After Admitting Mortgage Fraud (ZH)

Back in April/May, Canada’s biggest mortgage lender, Home Capital Group, crashed its way into the headlines, coming clean over its balance sheet-full of liar loans, suffered a bank run, and was forced to take emergency liquidty from taxpaying pensioners, and was eventually bailed out by good old Warren Buffett. “Probably nothing…”

Well just when everyone though that crisis was over, a second cockroach in the Canadian mortgage bubble fiasco just emerged… Laurentian Bank of Canada fell the most in almost nine years after reporting it found customer misrepresentations on some mortgage loans it sold to another firm.

Echoing problems that almost sunk Home Capital Group, Bloomberg reports that: An audit “identified documentation issues and client misrepresentations” with some mortgages from its B2B Bank unit that were sold to a third-party firm, the lender said Tuesday in its annual report. Laurentian said it will repurchase about C$89 million ($70 million) of those mortgages in the first quarter, or 4.9% of such loans sold to the firm. It will buy back an additional C$91 million of mortgages “inadvertently” sold to the firm, also in the first quarter. Just as we saw with Home Capital, the CEO initially shrugged it off as immaterial: “This is largely a documentation and securitization-eligibility issue,” Chief Executive Officer Francois Desjardins said in a call with analysts. “It is not material for the bank, its operations, its funding nor its capital. We have worked to change processes to ensure that this issue is resolved.”

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Toronto Housing Prices Fall Amid Growing Pool of Homes for Sale (BBG)

Canada’s largest housing market continues to see prices fall amid a widening pool of homes for sale, though there are signs the correction is beginning to lure in some new buyers. The Toronto Real Estate Board’s benchmark home price index fell for the sixth consecutive month, down another 0.4% from October. The index has fallen 8.8% since May – the largest six-month decline in the history of data back to 2000. For the first time since 2009, the average price of a home sold in Toronto – at C$761,757 ($600,991) in November – failed to surpass levels from a year earlier.

Toronto’s housing market, dubbed one of the riskiest housing bubble cities by UBS, has slumped over the past few months amid government rules and harsher mortgage guidelines aimed at curbing demand. That’s coincided with a sharp increase in supply with new listings up 37% from a year earlier. [..] Toronto realtors sold 7,374 units in November. While that’s down 13% from a year earlier, the number is one of the highest readings for the month over the past decade. The correction in Toronto’s housing market has been primarily in Toronto’s detached market, where average prices surpassed C$1.2 million earlier this year. The price index for single family detached homes is down 12% since May. The condominium price index is little changed from record levels earlier this year.

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“..the tax cut edges us closer to revolution resulting from complete distrust of government..”

Plunder Capitalism (Paul Craig Roberts)

I deplore the tax cut that has passed Congress. It is not an economic policy tax cut, and it has nothing whatsoever to do with supply-side economics. The entire purpose is to raise equity prices by providing equity owners with more capital gains and dividends. In other words, it is legislation that makes equity owners richer, thus further polarizing society into a vast arena of poverty and near-poverty and the One%, or more precisely a fraction of the One% wallowing in billions of dollars. Unless our rulers can continue to control the explanations, the tax cut edges us closer to revolution resulting from complete distrust of government. The current tax legislation drops the corporate tax rate to 20%. This means that global corporations registered in the US will be taxed at a lower income tax rate than a licensed practical nurse making $50,000 per year.

The nurse, if single, faces in 2017 a 25% marginal tax rate on all income over $37,950. A single person is taxed at a rate of 33% on all income above $191,651. 33% was the top tax rate extracted from medieval serfs, and approaches the tax rate on US 19th century slaves. Such an upper middle class income as $191,651 sounds extraordinary to most Americans, but it is so far from the multi-million dollar annual incomes of the rich as to be invisible. In America, it is the shrinking middle and upper middle class incomes that bear the burden of income taxation. The rich with their capital gains from their equity holdings are taxed at 15%. Even single individuals who earn between $1 and $9,325 are taxed at 10% on their pittance.

The neoliberal economists who are the shills for the rich, Wall Street, and the Banks-Too-Big-Too-Fail claim, erroneously, that by cutting the corporate income tax rate to 20% all sorts of offshored profits will be brought back to the US and lead to a booming economy and higher wages. This is absolute total nonsense. The money won’t come back, because it is invested abroad where labor costs are lower, if invested at all instead of buying back the corporation’s stock or buying other existing companies. After 20 years of offshoring US manufacturing and professional tradable skills and the incomes associated with the jobs, who is going to invest in America? The American population has no income with which to purchase the goods and services from new investment, and the American population’s credit cards are maxed out.

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“We have to treat the UK political system like a rotten egg..”

‘We Can’t Go On Like This’: Resignation In EU As Brexit Talks Stutter (G.)

Theresa May has less than a week to salvage a Brexit deal that would open the way to trade talks before the end of the year, amid increasing signs of impatience within the EU over her handling of the process. EU negotiators expect the prime minister to return to Brussels very soon, but have said time is running out to strike a deal at a European summit next week. “The show is now in London,” said the chief spokesman of the European commission president, Jean-Claude Juncker. “We stand ready here in the commission to resume talks with the United Kingdom at any moment in time when we get the sign that London is ready.” While the next “final” deadline for stage one has not been defined publicly, several EU sources said the deal would have to be struck by the end of the week, with either Friday or Sunday as the last resort.

One EU ambassador told the Guardian the failure to reach a deal on Northern Ireland was a microcosm of a wider problem. “At root the problem is that [May] seems incapable of making a decision and is afraid of her own shadow,” the source said. “We cannot go on like this, with no idea what the UK wants. She just has to have the conversation with her own cabinet, and if that upsets someone, or someone resigns, so be it. She has to say what kind of trading relationship she is seeking. We cannot do it for her, and she cannot defer forever.” For weeks, European officials have walked a tightrope between sticking to the EU’s tough negotiating stance and seeking to avoid action or words that could destabilise the fragile May government. “We have to treat the UK political system like a rotten egg,” said one EU source in the run-up to Monday’s talks, suggesting that if “the realities of the world” dawned too soon, the British government could become more fragile.

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Cats in a sack.

Theresa May Faces New Brexit Revolt From Boris Johnson (BBG)

Prime Minister Theresa May is facing a revolt from inside her Cabinet over her plan to keep U.K. regulations aligned with the European Union after Brexit, a split that threatens to undermine her hopes of breaking the deadlock in negotiations. Efforts to rescue Brexit talks from an embarrassing breakdown on Monday prompted fresh divisions in the U.K. Cabinet on Tuesday, as leading Brexit-backers challenged the prime minister just days before a key deadline in talks. Brexit Secretary David Davis told Parliament he wanted the whole country to remain close to EU economic regulations after the split, a move that could have helped unblock talks that broke down over the issue of the Irish border.

Keeping the whole U.K. close to EU regulation would make it easier to avoid a border on the island of Ireland without putting up a new barrier between Northern Ireland and the rest of the U.K. The prospect of a border within the U.K. is a red line for the Northern Irish party that keeps Theresa May in power in London. Foreign Secretary Boris Johnson and Environment Secretary Michael Gove, who together led the Brexit campaign in last year’s referendum, raised concerns about the plan, according to people familiar with the matter. The ministers believe the proposals threaten to dilute Brexit and Johnson raised his fears during a meeting of May’s Cabinet on Tuesday. Part of the Brexit narrative in the last 18 months has been that the split will allow the U.K. to break free from EU rules and chart its own course with free-trade deals around the world.

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“What’s clear, is that May will be blamed for any failure.”

Most Brits Still Want Brexit But Expect It All to End Badly (BBG)

British voters increasingly think Brexit is being mishandled. But that doesn’t mean they’re turning their backs on the idea of abandoning the EU – just on Prime Minister Theresa May’s Conservative government. A report by the National Centre For Social Research published Wednesday found that 52% of people believe the country will get a bad deal, compared to 37% in February, a month before May began divorce proceedings. Even before this week’s embarrassing breakdown, only one in five Brits said the government was handling the talks well. Among those supporting Brexit, 61% thought May was conducting talks badly. The survey of 2,200 people was completed in October, before reports that May was increasing the amount of money she was willing to pay to leave and also before the recent dramatic turn of events that has May at the mercy of a Northern Irish ally.

The findings speak to the sense of disconnect between how the population feels about a process they triggered with the 2016 referendum – and the political realities of a fragile government riven with divisions and bogged down in increasingly technical negotiations. The survey found little change in people’s attitude to Brexit itself. [..] this suggests that rather than regretting their vote, Leave supporters are coming to see it as a good idea badly implemented, something that could help Jeremy Corbyn’s opposition Labour Party. While Britons wonder what is going on – and perhaps even why leaving needs to be so complicated – the EU gave May until the end of the week to deliver a solution to an intractable problem – how to avoid a hard border in Ireland after Northern Ireland leaves the bloc along with the rest of the U.K.

Britain needs to provide an answer that satisfies all sides to move on to trade. What’s clear, is that May will be blamed for any failure. She set the clock for Britain’s exit in March 2019 and was relying on a summit next week to get EU leaders to allow discussions to begin on commerce, as well as a grace period to give businesses time to adapt.

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Merkel blinking will have far reaching repercussions. But Europeans don’t want more centralization.

Juncker Seeks Greater Commission Control over Eurozone (Spiegel)

Jean-Claude Juncker never lets others outshine him if he spots an opportunity to give the European project a boost. And that goes for friends and enemies alike. Indeed, the European Commission president has now come up with a project that not only transgressions the mandate given him by the leaders of the European Union member states, but also pits him against all the Eurozone finance ministers as well. Juncker was supposed to reach an agreement with finance ministers from the common currency area on proposals for deepening European integration he will present at the forthcoming EU summit later this month. Plans for greater EU integration are currently in vogue, a trend started by French President Emmanuel Macron, who presented his ideas for a better Europe two days after the German election in late September.

But instead of getting the finance ministers on board, Juncker has embarked on an ego trip. On Wednesday, the Commission is to present its plan without any input from the finance ministers whatsoever. The Eurogroup of 19 Eurozone finance ministers met in Brussels on Monday and on Tuesday it was the turn of Ecofin, which represents the EU finance ministers, but officially neither group was consulted on the Commission’s plans. “The entire approach is a disaster,” one participant complained. And because the national experts had no input, it’s unlikely that EU heads of state and government will do more than simply take note of Juncker’s proposals. The timing is an expression of rivalry between the Commission and the EU member states when it comes to questions relating to theeconomic and currency union. And the finance ministers aren’t likely to be impressed with the content, either. After all, the Commission’s proposals are designed to increase its own influence at the expense of the member states.

But there is more at stake than just a few bruised Brussels egos. The clash over competencies between European institutions risks torpedoing the French president’s drive for reform. For the first time in years, the French have seized the opportunity to once again set the tone in the EU. Yet, their call to arms is being met with hardly any response. Germany is preoccupied with forming a new government – and nothing much happens in Brussels without Chancellor Angela Merkel. Juncker, though, does not want to stand accused of wasting the chance to implement reforms. His central idea is to turn the EU bailout fund, the European Stability Mechanism, into an EU institution.

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How much longer for Mueller now the WSJ has called for his head?

What Now? (Jim Kunstler)

“Contact with Russians.” Grown men and women, doubling and re-doubling down on a political fantasy, repeat this prayer hour after hour on the cable channels and Web waves as if trying to exorcise a nation possessed by the unholy hosts of Hell. But such vicars of the news as Wolf Blitzer, Rachel Maddow, Chuck Todd, and Dean Baquet (of The New York Times) only shove the country closer to a cliff of constitutional crisis. To a certain class of people — a class that includes a lot of Intellectuals-Yet-Idiots, as Nassim Taleb has dubbed them — President Donald Trump is a figure of supernatural malignity who must be ousted at all costs. I did not vote for Donald Trump and I do not admire him; but I rather resent the dishonesty that is being marshaled against him, especially the mis-use of judicial procedure and the mendacious propagandizing of the nation in service to that end.

This is what it comes down to: General Mike Flynn, designated National Security Advisor, conferred with Russian Ambassador Sergey Kislyak after the 2016 election about two pressing matters: a vote in the UN orchestrated against Israel, and sanctions imposed against Russia by outgoing President Obama on December 28, two weeks before the inauguration. Both these matters could be viewed as bits of mischief designed deliberately to create foreign policy problems for the incoming administration. Flynn’s discussions with Ambassador Kislyak amounted to what are called “back channel talks.” These informal, probing communications occur all the time and everywhere in American foreign policy, especially the transitional months every four or eight years when a new president comes in. They are necessarily secret because they concern issues of high sensitivity.

Every incoming presidential staff in my lifetime (going back to Dwight Eisenhower) has conducted back-channel talks with foreign diplomats in order to directly assess where things stand, minus public posturing and bloviating. And so that is what Mike Flynn did, as incoming National Security Advisor, after an eight-year run of worsening relations with Russia under Obama that Trump publicly pledged to improve. And now he’s been charged with lying to the FBI about it. Which raises some enormous and troubling questions well beyond the simple charge, questions that suggest a US government at war against itself.

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What’s America without grizzlies?

The Premature Delisting of the Yellowstone Grizzly Bear (CP)

The Fish and Wildlife Service (FWS) has decided to delist the Yellowstone grizzly bears, removing them from the protection afforded by the Endangered Species Act (ESA). And state wildlife agencies in Wyoming and Montana are anxious to start sport hunting the bears. If you follow environmental politics, it is very clear why industries like the oil and gas industry, livestock industry and timber industry and the politicians they elect to represent their interests are anxious to see the bear delisted. Without ESA listing, environmentally destructive practices will have fewer restrictions, hence greater profits at the expense of the bear and its habitat. Delisting is opposed by a number of environmental groups [..] Conspicuously absent from the list of organizations opposing delisting is the Greater Yellowstone Coalition.

Proponents of delisting, including the FWS, argue that with as many as 700 grizzlies in the Greater Yellowstone Ecosystem, thus ensuring the bears are now safe from extinction. Seven hundred bears may sound like a big number. But this figure lacks context. Consider that the Greater Yellowstone Ecosystem is nearly 28 million acres in total area. That is nearly the same acreage as the state of New York. Now ask yourself if 700 bears spread over an area the size of New York sounds like a lot of bears? Many population ecologists believe 700 bears is far too small a number of animals to ensure long-term population viability. Rather than hundreds, we need several thousand bears.

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But politicians talk of growth.

Greek Pension Cuts To Hit 70% Since The Start Of The Bailouts (K.)

The next batch of pension cuts, voted through in the last couple of years and set to come into force within the next two years, will take total losses for pensioners since the start of the bailout period in 2010 up to 70%. A recent European Commission report on the course of Greece’s bailout program revealed that the reforms passed since 2015 will slash up to 7% of the country’s GDP up to 2030. The United Pensioners network has made its own calculations and estimates that the impending cuts will exacerbate pensioners’ already difficult position, with 1.5 million of them threatened with poverty. The network argues that when the cuts expected in 2018 and 2019 are added to those implemented since 2010, the reduction in pensions will reach 70%.

Network chief Nikos Hatzopoulos notes that “owing to the additional measures up until 2019, the flexibility in employment and the reduction of state funding from 18 billion to 12 billion euros, by 2021, one in every two pensioners will get a net pension of 550 euros [per month]. If one also takes into account the reduction of the tax-free threshold, the net amount will come to 480 euros.” Pensioners who retired before 2016 stand to lose up to 18% of their main and auxiliary pensions, while the new pensions to be issued based on the law introduced in May 2016 by then minister Giorgos Katrougalos will be up to 30% lower.

More than 140,000 retirees on low pensions will see their EKAS supplement decrease in 2018, as another 238 million euros per year is to be slashed from the budget for benefits for low income pensioners. The number of recipients will drop from 210,000 to 70,000 in just one year. There will also be a reduction in new auxiliary pensions (with applications dating from January 2015), a 6% cut to the retirement lump sum, and a freeze on existing pensions for another four years, as retirees will not get the nominal raise they would normally receive based on the growth rate and inflation.

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A few hundred have been moved, but thousands more must be.

Aid Groups Warn Of Looming Emergency At Greek Asylum Centres (G.)

Humanitarian groups have warned of a looming emergency on Greece’s eastern Aegean islands, the day after residents converged on Athens in protest at policies that have seen thousands of migrants and refugees marooned in reception centres. A surge in arrivals from neighbouring Turkey has seen numbers soar with officials speaking of a four-fold increase in men, women and children seeking asylum on Chios, Kos, Leros, Lesbos and Samos. Conditions are deteriorating in the vastly overcrowded camps in a situation that Médecins Sans Frontières (MSF) on Wednesday warned was “beyond desperate”. “In Lesbos, entire families who recently arrived from countries including Syria, Afghanistan and Iraq are packed into small summer tents, under the rain and in low temperatures struggling to keep dry and warm,” said Aria Danika, MSF’s project coordinator on the island.

“In our mental health clinic we have received an average of 10 patients with acute mental distress every day, including many who tried to kill themselves or self-harm. The situation on the island was already terrible. Now it’s beyond desperate.” Demonstrators – led by delegations of officials from Chios, Lesbos and Samos – gathered in the Athens sunshine on Tuesday to demand that the government move people out of camps. “Action has to be taken now, before it is too late,” said Panos Pitsios, president of the town council of Mytilene, Lesbos’s capital. “We are heading towards an eruption, a situation that is on the verge of getting out of control.”

The strategy of stranding migrants and refugees in remote camps where tensions have also mounted between rival ethnicities has also been condemned by human rights groups. Organisations increasingly fear that unless asylum seekers are transferred to the mainland where facilities are less crowded and better equipped, thousands could be left out in the cold as winter approaches.

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Biblical proportions.

Europe’s Migrant Crisis: Millions Still to Come (Kern)

The African Union-European Union (AU-EU) summit, held in in Abidjan, Côte d’Ivoire, on November 29-30, 2017, has ended in abject failure after the 55 African and 28 European leaders attending the event were unable to agree on even basic measures to prevent potentially tens of millions of African migrants from flooding Europe. Despite high expectations and grand statements, the only concrete decision to come out of Abidjan was the promise to evacuate 3,800 African migrants stranded in Libya. More than six million migrants are waiting in countries around the Mediterranean to cross into Europe, according to a classified German government report leaked to Bild. The report said that one million people are waiting in Libya; another one million are waiting in Egypt, 720,000 in Jordan, 430,000 in Algeria, 160,000 in Tunisia, and 50,000 in Morocco.

More than three million others who are waiting in Turkey are currently prevented from crossing into Europe by the EU’s migrant deal with Turkish President Recep Tayyip Erdogan. The former head of the British embassy in Benghazi, Joe Walker-Cousins, warned that as many as a million migrants from countries across Africa are already on the way to Libya and Europe. The EU’s efforts to train a Libyan coast guard was “too little and too late,” he said. “My informants in the area tell me there are potentially one million migrants, if not more, already coming up through the pipeline from central Africa and the Horn of Africa.” The President of the European Parliament, Antonio Tajani, said that Europe is “underestimating” the scale and severity of the migration crisis and that “millions of Africans” will flood the continent in the next few years unless urgent action is taken.

In an interview with Il Messagero, Tajani said there would be an exodus “of biblical proportions that would be impossible to stop” if Europe failed to confront the problem now: “Population growth, climate change, desertification, wars, famine in Somalia and Sudan. These are the factors that are forcing people to leave. “When people lose hope, they risk crossing the Sahara and the Mediterranean because it is worse to stay at home, where they run enormous risks. If we don’t confront this soon, we will find ourselves with millions of people on our doorstep within five years. “Today we are trying to solve a problem of a few thousand people, but we need to have a strategy for millions of people.”

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US Homeless Population Rises For The First Time Since The Great Recession (G.)

America’s homeless population has risen this year for the first time since the Great Recession, propelled by the housing crisis afflicting the west coast, according to a new federal study. The study has found that 553,742 people were homeless on a single night this year, a 0.7% increase over last year. It suggests that despite a fizzy stock market and a burgeoning gross domestic product, the poorest Americans are still struggling to meet their most basic needs. “The improved economy is a good thing, but it does put pressure on the rental market, which does put pressure on the poorest Angelenos,” said Peter Lynn, head of the Los Angeles homelessness agency. The most dramatic spike in the nation was in his region, where a record 55,000 people were counted. “Clearly we have an outsize effect on the national homelessness picture.”

Ben Carson, secretary of the Department of Housing and Urban Development, which produced the report, said in a statement: “This is not a federal problem – it’s everybody’s problem.” Advocates who have witnessed the homelessness crisis unfold since it emerged in the early 1980s are grimly astonished by its persistence. “I never in a million years thought that it would drag on for three decades with no end in sight,” said Bob Erlenbusch, who began working in Los Angeles in 1984. The government mandates that cities and regions perform a homeless street count every two years, when volunteers fan out everywhere from frozen parks in Anchorage to palm-lined streets in Beverly Hills and enumerate people by hand. Those numbers are combined with the total staying in shelters and temporary housing. The tally is considered a crucial indicator of broad trends, but owing to the difficulties involved it is also widely regarded as an undercount.

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There is neither a valid reason nor a justification for this. It’s simply a lack of basic values.

Nearly 130,000 British Children To Wake Up Homeless This Christmas (Ind.)

Nearly 130,000 children in Britain will wake up homeless and in temporary accommodation this Christmas as child homelessness reaches a 10-year high, new research shows. The number of youngsters who will be spending the festive period in temporary accommodation such as B&Bs and hostels – often with a single room for the whole family and no kitchen – is up 7% on last year, amounting to an additional 8,000 children, according to a report by charity Shelter. Interviews carried out by the charity reveal a quarter of families in temporary accommodation have no access to a kitchen, with many having to eat meals on the bed or floor of their room. The vast majority live in a single room, with more than a third of parents saying they have to share a bed with their children.

An analysis of government figures by Shelter shows that one in every 111 children is currently homeless in the UK, with at least 140 families becoming homeless every day. In England, where the highest number of families are placed into B&Bs, 45% stay beyond the six-week legal limit. The report also lays bare the psychological turmoil experienced by families living in these cramped conditions for often long periods of time, with three-quarters of parents saying their children’s mental health had been badly affected by living in such settings.

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Nov 182017
 November 18, 2017  Posted by at 9:58 am Finance Tagged with: , , , , , , , , , , , ,  4 Responses »

Henri Cartier Bresson Juvisny, France 1938


Consumers Are Both Confident And Broke (John Rubino)
You Have Been Warned (Lance Roberts)
Norway Plan to Sell Off $35 Billion in Oil, Gas Stocks Rattles Markets (BBG)
The World’s Biggest Wealth Manager Won’t Touch Bitcoin (BBG)
Trump’s Saudi Scheme Unravels (Alastair Crooke)
Saudi ‘Corruption’ Probe Widens: Dozens Of Military Officials Arrested (ZH)
Hariri Arrives in Paris With Family Amid Saudi-Iran Tensions (BBG)
Qatar Says It Has US Backing in Lingering Gulf Crisis (BBG)
House Prices Aren’t The Issue – Land Prices Are (G.)
ECB Denies EU Auditors Access To Information On Greek Bailouts (EuA)
Greek Pensioners Forced To Return ‘Social Dividend’ (K.)
UK Considers Tax On Single-Use Plastics To Tackle Ocean Pollution (G.)
Irish Catholic Priest Urges Christians To Abandon The Word Christmas (G.)



Powerful graph from Bob Prechter.

Consumers Are Both Confident And Broke (John Rubino)

Elliott Wave International recently put together a chart (click here or on the chart to watch the accompanying video) that illustrates a recurring theme of financial bubbles: When good times have gone on for a sufficiently long time, people forget that it can be any other way and start behaving as if they’re bulletproof. They stop saving, for instance, because they’ll always have their job and their stocks will always go up. Then comes the inevitable bust. On the following chart, this delusion and its aftermath are represented by the gap between consumer confidence (our sense of how good the next year is likely to be) and the saving rate (the portion of each paycheck we keep for a rainy day). The bigger the gap the less realistic we are and the more likely to pay dearly for our hubris.

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“Prior to 2000, debt was able to support a rising standard of living..” Two decades later, it can’t even maintain the status quo. That’s what you call a breaking point.

You Have Been Warned (Lance Roberts)

There is an important picture that is currently developing which, if it continues, will impact earnings and ultimately the stock market. Let’s take a look at some interesting economic numbers out this past week. On Tuesday, we saw the release of the Producer Price Index (PPI) which ROSE 0.4% for the month following a similar rise of 0.4% last month. This surge in prices was NOT surprising given the recent devastation from 3-hurricanes and massive wildfires in California which led to a temporary surge in demand for products and services.

Then on Wednesday, the Consumer Price Index (CPI) was released which showed only a small 0.1% increase falling sharply from the 0.5% increase last month.

This deflationary pressure further showed up on Thursday with a -0.3 decline in Export prices. (Exports make up about 40% of corporate profits) For all of you that continue to insist this is an “earnings-driven market,” you should pay very close attention to those three data points above. When companies have higher input costs in their production they have two choices: 1) “pass along” those price increase to their customers; or 2) absorb those costs internally. If a company opts to “pass along” those costs then we should have seen CPI rise more strongly. Since that didn’t happen, it suggests companies are unable to “pass along” those costs which means a reduction in earnings. The other BIG report released on Wednesday tells you WHY companies have been unable to “pass along” those increased costs.

The “retail sales” report came in at just a 0.1% increase for the month. After a large jump in retail sales last month, as was expected following the hurricanes, there should have been some subsequent follow through last month. There simply wasn’t. More importantly, despite annual hopes by the National Retail Federation of surging holiday spending which is consistently over-estimated, the recent surge in consumer debt without a subsequent increase in consumer spending shows the financial distress faced by a vast majority of consumers. The first chart below shows a record gap between the standard cost of living and the debt required to finance that cost of living. Prior to 2000, debt was able to support a rising standard of living, which is no longer the case currently.

With a current shortfall of $18,176 between the standard of living and real disposable incomes, debt is only able to cover about 2/3rds of the difference with a net shortfall of $6,605. This explains the reason why “control purchases” by individuals (those items individuals buy most often) is running at levels more normally consistent with recessions rather than economic expansions.

If companies are unable to pass along rising production costs to consumers, export prices are falling and consumer demand remains weak, be warned of continued weakness in earnings reports in the months ahead. As I stated earlier this year, the recovery in earnings this year was solely a function of the recovering energy sector due to higher oil prices. With that tailwind now firmly behind us, the risk to earnings in the year ahead is dangerous to a market basing its current “overvaluation” on the “strong earnings” story.

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Another way to push up prices?

Norway Plan to Sell Off $35 Billion in Oil, Gas Stocks Rattles Markets (BBG)

Norway’s proposal to sell off $35 billion in oil and natural gas stocks brings sudden and unparalleled heft to a once-grassroots movement to enlist investors in the fight against climate change. The Nordic nation’s $1 trillion sovereign wealth fund said Thursday that it’s considering unloading its shares of Exxon Mobil, Royal Dutch Shell and other oil giants to diversify its holdings and guard against drops in crude prices. European oil stocks fell. Norges Bank Investment Management would not be the first institutional investor to back away from fossil fuels. But until now, most have been state pension funds, universities and other smaller players that have limited their divestments to coal, tar sands or some of the other dirtiest fossil fuels. Norway’s fund is the world’s largest equity investor, controlling about 1.5% of global stocks. If it follows through on its proposal, it would be the first to abandon the sector altogether.

“This is an enormous change,” said Mindy Lubber, president of Ceres, a non-profit that advocates for sustainable investing. “It’s a shot heard around the world.” The proposal rattled equity markets. While Norwegian officials say the plan isn’t based on any particular view about future oil prices, it’s apt to ratchet up pressure on fossil fuel companies already struggling with the growth of renewable energy. Norway’s Finance Ministry, which oversees the fund, said it will study the proposal and will take at least a year to decide what to do. The fund has already sold off most of its coal stocks. “People are starting to recognize the risks of oil and gas,” said Jason Disterhoft of the Rainforest Action Network, which pushes banks to divest from fossil fuels.

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From the biggest wealth fund to the biggest wealth manager.

The World’s Biggest Wealth Manager Won’t Touch Bitcoin (BBG)

UBS, the world’s largest wealth manager, isn’t prepared to make portfolio allocations to bitcoin because of a lack of government oversight, the bank’s chief investment officer said. Bitcoin has also not reached the critical mass to be considered a viable currency to invest in, UBS’s Mark Haefele said in an interview. The total sum of all cryptocurrencies is “not even the size of some of the smaller currencies” that UBS would allocate to, he said. Bitcoin has split investors over the viability of the volatile cryptocurrency and UBS is among its critics. Bitcoin capped a resurgent week by climbing within a few dollars of a record $8,000 on Friday. Still, events such as a bitcoin-funded terrorist attack are potential risks which are hard to evaluate, he said.

“All it would take would be one terrorist incident in the U.S. funded by bitcoin for the U.S. regulator to much more seriously step in and take action, he said. “That’s a risk, an unquantifiable risk, bitcoin has that another currency doesn’t.” While skeptics have called bitcoin’s rapid advance a bubble, it has become too big an asset for many financial firms to ignore. Bitcoin has gained 17% this week, touching a high of $7,997.17 during Asia hours before moving lower in late trading. The rally through Friday came after bitcoin wiped out as much as $38 billion in market capitalization following the cancellation of a technology upgrade known as SegWit2x on Nov. 8.

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Former (and current?!) TAE contributor Alastair Crooke draws his conclusions.

Trump’s Saudi Scheme Unravels (Alastair Crooke)

Aaron Miller and Richard Sokolsky, writing in Foreign Policy, suggest “that Mohammed bin Salman’s most notable success abroad may well be the wooing and capture of President Donald Trump, and his son-in-law, Jared Kushner.” Indeed, it is possible that this “success” may prove to be MbS’ only success. “It didn’t take much convincing”, Miller and Sokolski wrote: “Above all, the new bromance reflected a timely coincidence of strategic imperatives.” Trump, as ever, was eager to distance himself from President Obama and all his works; the Saudis, meanwhile, were determined to exploit Trump’s visceral antipathy for Iran – in order to reverse the string of recent defeats suffered by the kingdom.

So compelling seemed the prize (that MbS seemed to promise) of killing three birds with one stone (striking at Iran; “normalizing” Israel in the Arab world, and a Palestinian accord), that the U.S. President restricted the details to family channels alone. He thus was delivering a deliberate slight to the U.S. foreign policy and defense establishments by leaving official channels in the dark, and guessing. Trump bet heavily on MbS, and on Jared Kushner as his intermediary. But MbS’ grand plan fell apart at its first hurdle: the attempt to instigate a provocation against Hezbollah in Lebanon, to which the latter would overreact and give Israel and the “Sunni Alliance” the expected pretext to act forcefully against Hezbollah and Iran.

Stage One simply sank into soap opera with the bizarre hijacking of Lebanese Prime Minister Saad Hariri by MbS, which served only to unite the Lebanese, rather than dividing them into warring factions, as was hoped. But the debacle in Lebanon carries a much greater import than just a mishandled soap opera. The really important fact uncovered by the recent MbS mishap is that not only did the “dog not bark in the night” – but that the Israelis have no intention “to bark” at all: which is to say, to take on the role (as veteran Israeli correspondent Ben Caspit put it), of being “the stick, with which Sunni leaders threaten their mortal enemies, the Shiites … right now, no one in Israel, least of all Prime Minister Benjamin Netanyahu, is in any hurry to ignite the northern front. Doing so, would mean getting sucked into the gates of hell”.

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Targeting the military means MbS does not feel safe. How desperate is he?

Saudi ‘Corruption’ Probe Widens: Dozens Of Military Officials Arrested (ZH)

After jailing dozens of members of the royal family, and extorting numerous prominent businessmen, 32-year-old Saudi prince Mohammed bin Salman has widened his so-called ‘corruption’ probe further still. The Wall Street Journal reports that at least two dozen military officers, including multiple commanders, recently have been rounded up in connection to the Saudi government’s sweeping corruption investigation, according to two senior advisers to the Saudi government. Additionally, several prominent businessmen also were taken in by Saudi authorities in recent days. “A number of businessmen including Loai Nasser, Mansour al-Balawi, Zuhair Fayez and Abdulrahman Fakieh also were rounded up in recent days, the people said. Attempts to reach the businessmen or their associates were unsuccessful.”

It isn’t clear if those people are all accused of wrongdoing, or whether some of them have been called in as witnesses. But their detainment signals an intensifying high-stakes campaign spearheaded by Saudi Arabia’s 32-year-old crown prince, Mohammed bin Salman. There appear to be three scenarios behind MbS’ decision to go after the military: 1) They are corrupt and the entire process is all above board and he is doing the right thing by cleaning house; 2) They are wealthy and thus capable of being extorted (a cost of being free) to add to the nation’s coffers; or 3) There is a looming military coup and by cutting off the head, he hopes to quell the uprising. If we had to guess we would weight the scenarios as ALL true with the (3) becoming more likely, not less.

So far over 200 people have been held without charges since the arrests began on November 4th and almost 2000 bank accounts are now frozen, which could be why, as The Daily Mail reports, Saudi prince and billionaire Al-Waleed bin Talal has reportedly put two luxury hotels in Lebanon up for sale after being detained in his country during a corruption sweep. The Saudi information ministry previously stated the government would seize any asset or property related to the alleged corruption, meaning the Savoy hotel could well become the state property of the kingdom. ‘The accounts and balances of those detained will be revealed and frozen,’ a spokesman for Saudi Arabia’s information ministry said. ‘Any asset or property related to these cases of corruption will be registered as state property.’

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France and Germany play completely different roles. Hariri has said he will return to Lebanon by Wednesday.

Hariri Arrives in Paris With Family Amid Saudi-Iran Tensions (BBG)

Saad Hariri arrived in France with his family amid mounting concern that his country, Lebanon, may once again turn into a battleground for a showdown between Saudi Arabia and Iran. The Lebanese prime minister and his family were invited to France by President Emmanuel Macron. French officials say they can’t say how long Hariri will stay. On Saturday, Macron and Hariri will meet at noon for talks, following which the Lebanese leader and his family will have lunch at the Elysee Palace. Hariri, 47, hasn’t returned to Lebanon since his shock resignation announcement from Saudi Arabia on Nov. 4, which sparked fears of an escalating regional conflict between the kingdom and Iran. The Saudi government has denied accusations it was holding Hariri against his will. The kingdom recalled its ambassador to Germany in response to comments made by Foreign Minister Sigmar Gabriel.

Hariri weighed in on the spat, suggesting that Gabriel has accused the kingdom of holding him hostage. “To say that I am held up in Saudi Arabia and not allowed to leave the country is a lie. I am on the way to the airport, Mr. Sigmar Gabriel,” he said on Twitter. In limited public comments and on Twitter, Hariri has sought to dispel speculation that Saudi Arabia asked him to resign because he wouldn’t confront Hezbollah, an Iranian-backed Shiite Muslim group that plays a key role in Lebanon’s fragile government. The group is considered a terrorist organization by countries including Israel and the U.S., and it has provided crucial military support to President Bashar al-Assad’s regime in Syria’s war.

Macron, who met with Saudi Arabia Crown Prince Mohammed bin Salman in Riyadh, said last week that the two agreed that Hariri “be invited for several days to France.” He also reiterated France’s pledge to help protect Lebanon’s “independence and autonomy.” Hariri will be welcomed in France “as a friend,” Foreign Minister Jean-Yves Le Drian said a press conference in Riyadh on Thursday after meeting with Saudi authorities. French officials have said they still regard Hariri as Lebanon’s prime minister since the country’s president, Michel Aoun, rejected his resignation on the grounds that it must be handed over on Lebanese soil.

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And if you weren’t confused enough yet, there’s this:

Qatar Says It Has US Backing in Lingering Gulf Crisis (BBG)

Qatar’s foreign minister said the tiny emirate has U.S. backing to resolve the ongoing crisis with a Saudi-led alliance, but the country is also prepared should its Gulf Arab neighbors make military moves. The Trump administration is encouraging all sides to end the dispute and has offered to host talks at the Camp David presidential retreat, but only Qatar has agreed to the dialogue, Foreign Minister Sheikh Mohammed Al-Thani said Friday. Four countries in the Saudi-led bloc severed diplomatic and transport links with Qatar in June, accusing it of backing extremist groups, a charge Doha has repeatedly denied. Saudi Arabia closed Qatar’s only land border. Sheikh Mohammed said he will meet Secretary of State Rex Tillerson next week after having talks this week with Senate Foreign Relations Committee chairman Bob Corker and ranking member Ben Cardin as well as other congressional leaders.

“The Middle East needs to be addressed as the top priority of the foreign policy agenda of the United States,” he told reporters in Washington on Friday. “We see a pattern of irresponsibility and a reckless leadership in the region, which is just trying to bully countries into submission.” The Middle East has been a key foreign policy issue for the Trump administration, with much of it centered around support for the Saudis. The White House has backed the kingdom’s “anti-corruption” campaign that has ensnared top princes and billionaires once seen as U.S. allies, it has provided support for the Saudis in their war in Yemen and it has been muted in criticism of the crisis sparked when Lebanon’s prime minister unexpectedly resigned this month while in Saudi Arabia. Meanwhile, mediation attempts by Kuwait and the U.S. have failed to settle the spat with the Saudi-led bloc and Qatar.

Sheikh Mohammed accused Saudi Arabia of interfering in other countries’ affairs, citing the resignation of Lebanese Prime Minister Saad Hariri as an example of the oil-rich kingdom’s overreach and warning that other countries could be next. Asked about the prospect of the Saudi-led bloc taking military action, Sheikh Mohammed said though Qatar hopes that won’t happen, his country is “well-prepared” and can count on its defense partners, including France, Turkey, the U.K. and the U.S., which has a base in Qatar. “We have enough friends in order to stop them from taking these steps,” but “there is a pattern of unpredictability in their behavior so we have to keep all the options on the table for us,” he said. On the U.S. military presence, “if there is any aggression when it comes to Qatar, those forces will be affected,” he added.

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There is nothing secret about land tax. Nor is it anything new. It can be implemented tomorrow morning.

House Prices Aren’t The Issue – Land Prices Are (G.)

While reporting on the recent court case where controversial landlord Fergus Wilson defended (but lost) his right to refuse to let to Indians and Pakistanis, I learned something about how he’s now making money. He is now far from being Britain’s biggest buy-to-let landlord. He’s down to 350 homes, from a peak of 1,000. And what’s he doing with the cash made from sales? Buying agricultural land close to Kent’s biggest towns. One plot he bought for £45,000 is now worth, he boasted, £3m with development permission. And therein lies the reason why we have a housing crisis.

As long ago as 1909, Winston Churchill, then promoting Lloyd George’s “people’s budget” and its controversial measures to tax land, told an audience in Edinburgh that the landowner “sits still and does nothing” while reaping vast gains from land improvements by the municipality, such as roads, railways, power from generators and water from reservoirs far away. “Every one of those improvements is effected by the labour and the cost of other people … To not one of those improvements does the land monopolist contribute, and yet by every one of them the value of his land is sensibly enhanced … he contributes nothing even to the process from which his own enrichment is derived.”

When Britain’s post-war housebuilding boom began, it was based on cheap land. As a timely new book, The Land Question by Daniel Bentley of thinktank Civitas, sets out, the 1947 Town and Country Planning Act under Clement Attlee’s government allowed local authorities to acquire land for development at “existing use value”. There was no premium because it was earmarked for development. The New Towns Act 1946 was similar, giving public corporation powers to compulsorily purchase land at current-use value. The unserviced land cost component for homes in Harlow and Milton Keynes was just 1% of housing costs at the time. Today, the price of land can easily be half the cost of buying a home..

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Democracy in 2017.

ECB Denies EU Auditors Access To Information On Greek Bailouts (EuA)

The European Central Bank (ECB) challenged an attempt by the European Court of Auditors (ECA), the watchdog of EU finances, to examine the Bank’s role in the Greek bailout and reform programmes and refused to provide access to some requested information, citing banking confidentiality. The European Court of Auditors published a report assessing the effectiveness and results of the Greek bailouts on Thursday (16 November). “In line with the ECA’s mandate to audit the operational efficiency of the management of the ECB, we have attempted to examine the Bank’s involvement in the Greek Economic Adjustment Programmes. However, the ECB questioned the Court’s mandate in this respect,” the report reads. The auditors examined the role of the European Commission and found some shortcomings in its approach, which they said overall lacked transparency.

They made a series of recommendations to improve the design and implementation of the Economic Adjustment Programmes. “These recommendations have been accepted in full,” the report said. However, the ECB had invoked the banking confidentiality and denied access to specific information. “It [ECB] did not provide sufficient amount of evidence and thus we were unable to report on the role of the ECB in the Greek programmes,” the auditors said. The report pointed out that the European Parliament had specifically asked the Court to analyse the role of the ECB in financial assistance programmes. It noted that EU auditors had faced similar problems with obtaining evidence from the ECB when reviewing the Single Supervisory Mechanism.

The report highlighted the ECB’s decision on 4 February 2015 to suspend the waiver for accepting Greek government bonds as loan collateral, thereby automatically increasing short-term borrowing costs for the banks. That happened during the tough negotiations between Greece’s leftist government and its international lenders before the third bailout. Many believed it was meant to put additional pressure on Alexis Tsipras’ government to back down and respect the obligations undertaken by the country’s previous governments.

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It just gets crazier all the time. If your intention was to make sure an economy slowly dies, this is the way to go.

“Retirees on low pensions will effectively have to return the handout they get in late December at the end of January..”

Greek Pensioners Forced To Return ‘Social Dividend’ (K.)

Salary workers, retirees on low pensions, property owners and families with three or more children will bear the brunt of the new austerity measures accompanying the 2018 budget, which come to 1.9 billion euros. Next year the primary budget surplus will have to rise to 3.5% of GDP, therefore more cuts will be required, with low-income pensioners – the recipients of next month’s so-called “social dividend” – set to contribute most, according to the new measures. Retirees on low pensions will effectively have to return the handout they get in late December at the end of January, as the cost of pension interventions according to the midterm fiscal strategy plan amounts to 660 million euros. This is just 60 million euros shy of the social dividend’s 720 million euros that Prime Minister Alexis Tsipras promised this week.

The new measures for 2018 are set to be reflected in the final draft of the budget that is to be tabled in Parliament on Tuesday. They are likely to further increase the amount of expired debts to the state, after the addition of 34 billion euros from unpaid taxes and fines in the last three years, owing to the inability of most taxpayers to meet their obligations to the tax authorities. Plans for next year provide for the further reduction of salaries in the public sector in the context of the single salary system, additional cuts to pensions and family benefits, as well as the abolition of the handout to most low-income pensioners (EKAS). Freelance professionals are also in for an extra burden in 2018, due to the increase in their social security contributions that will be calculated on the sum of their taxable incomes and the contributions they paid in 2017.

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The UN should be all over this.

UK Considers Tax On Single-Use Plastics To Tackle Ocean Pollution (G.)

The chancellor, Philip Hammond, will announce in next week’s budget a “call for evidence” on how taxes or other charges on single-use plastics such as takeaway cartons and packaging could reduce the impact of discarded waste on marine and bird life, the Treasury has said. The commitment was welcomed by environmental and wildlife groups, though they stressed that any eventual measures would need to be ambitious and coordinated. An estimated 12m tonnes of plastic enters the oceans each year, and residues are routinely found in fish, sea birds and marine mammals. This week it emerged that plastics had been discovered even in creatures living seven miles beneath the sea. The introduction just over two years ago of a 5p charge on single-use plastic bags led to an 85% reduction in their use inside six months.

Separately, the environment department is seeking evidence on how to reduce the dumping of takeaway drinks containers such as coffee cups through measures such as a deposit return scheme. Announcing the move on plastics, the Treasury cited statistics saying more than a million birds and 100,000 sea mammals and turtles die each year from eating or getting tangled in plastic waste. The BBC series Blue Planet II has highlighted the scale of plastic debris in the oceans. In the episode to be broadcast this Sunday, albatrosses try to feed plastic to their young, and a pilot whale carries her dead calf with her for days in mourning. Scientists working with the programme believed the mother’s milk was made poisonous by pollution. The call for evidence will begin in the new year and will take into account the findings of the consultation on drinks containers.

Tisha Brown, an oceans campaigner for Greenpeace UK, said the decades-long use of almost indestructible materials to make single-use products “was bound to lead to problems, and we’re starting to discover how big those problems are”. She said: “Ocean plastic pollution is a global emergency, it is everywhere from the Arctic Ocean at top of the world to the Marianas trench at the bottom of the Pacific. It’s in whales, turtles and 90% of sea birds, and it’s been found in our salt, our tap water and even our beer.

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It’s either Christ or Santa Claus. Makes sense.

Irish Catholic Priest Urges Christians To Abandon The Word Christmas (G.)

An Irish Catholic priest has called for Christians to stop using the word Christmas because it has been hijacked by “Santa and reindeer”. Father Desmond O’Donnell said Christians of any denomination need to accept Christmas now has no sacred meaning. O’Donnell’s comments follow calls from a rightwing pressure group for a boycott of Greggs bakery in the UK after the company replaced baby Jesus with a sausage roll in a nativity scene. “We’ve lost Christmas, just like we lost Easter, and should abandon the word completely,” O’Donnell told the Belfast Telegraph. “We need to let it go, it’s already been hijacked and we just need to recognise and accept that.”

O’Donnell said he is not seeking to disparage non-believers. “I am simply asking that space be preserved for believers for whom Christmas has nothing to do with Santa and reindeer. “My religious experience of true Christmas, like so many others, is very deep and real – like the air I breathe. But non-believers deserve and need their celebration too, it’s an essential human dynamic and we all need that in the toughness of life.”

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