Dec 102018
 


Jerry Bywaters Oil Field Girls 1940

 

Investors Managing $32 Trillion In Assets Call For Climate Change Action (R.)
BP, Chevron, ExxonMobil Face Shareholder Challenge Over Carbon Targets (G.)
Bear Market Is Here, Stocks To Plunge At Least 20% – Ned Davis Research (CNBC)
Everyone Is Bearish But No-One Is Short (ZH)
Senior Tory Vultures Circle With May On Brink (Ind.)
EU’s Top Court Says UK Can Unilaterally Stop Brexit (R.)
UK Government Funds Secret Anti-Corbyn, Labour Unit (DR)
Comey: FBI Never Verified Steele Dossier Used To Justify Special Counsel (ZH)
Russian Stealth Jets To Be Armed With New Hypersonic Missiles (ZH)
Medical Researchers Still Routinely Hiding Funding From Big Pharma (RT)
Italian Priests Vow To Open Church Doors To Evicted Immigrants (G.)
Why Greeks Traditionally Decorate a Boat Instead of a Christmas Tree (GR)
The Antidote To Civilisational Collapse (Adam Curtis)

 

 

Right. Questions: How much of the $32 trillion was made doing things that increased emissions? How much of it is presently invested in polluting companies? And how much are the investors prepared to lose in order to comply with whatever it takes to lower emissions?

To put it simply: these people are talking their books. They got rich by polluting. They intend to get even richer by going green.

If you’re serious about the topic, don’t join them.

Investors Managing $32 Trillion In Assets Call For Climate Change Action (R.)

Global investors managing $32 trillion in assets have called on governments to accelerate steps to combat climate change, as policymakers meet for talks at a United Nations conference in Poland. A total of 415 investors from across the world including UBS Asset Management and Aberdeen Standard Investments signed the 2018 Global Investor Statement to Governments on Climate Change demanding urgent action. “The global shift to clean energy is underway, but much more needs to be done by governments to accelerate the low carbon transition and to improve the resilience of our economy, society and the financial system to climate risks,” the statement said.

The intervention is the single largest on the topic to date, the Institutional Investors Group on Climate Change said, as talks continue in the Polish city of Katowice to agree how to slow global warming to below 2ºC. That goal was agreed at a 2015 meeting in Paris, but investors said national governments were being too slow in enacting the policies needed to help the world transition to a low-carbon economy. Failure to act could lead to permanent economic damage three or four times the scale of the impact of the financial crisis, British asset manager Schroders said.

As well as ramping up the involvement of the private sector, governments needed to commit to improving climate-related financial reporting, a move that would help investors better assess the risk and allocate capital to the right companies. “The reality is that the long-term nature of the challenge has, in our view, met a zombie-like response by many,” said Chris Newton, Executive Director Responsible Investment, IFM Investors. “This is a recipe for disaster as the impacts of climate change can be sudden, severe and catastrophic.”

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If these activist shareholders succeed, the value of their shares will plunge. That’s why in an earlier vote at Shell, 94% of shareholders votied against and 5% abstained. That reduces this to window dressing.

BP, Chevron, ExxonMobil Face Shareholder Challenge Over Carbon Targets (G.)

BP, Chevron and ExxonMobil face a shareholder challenge to set carbon targets in line with the Paris climate agreement, as a green group seeks to repeat its success in pressuring Shell to set environmental benchmarks. When Shell’s chief executive, Ben van Beurden, laid out an ambitious long-term carbon target last year, he acknowledged the role played by a resolution on carbon targets submitted by Dutch activist shareholders Follow This. Follow This is hoping to use investor power to push other major oil and gas firms into setting similar goals. The organisation has bought shares in several major fossil fuel groups and has submitted two resolutions to the European firms BP and Shell. It will file identical resolutions with the US companies Chevron and ExxonMobil later this week if other parties do not submit a similar demand.

Investors at the firms’ annual general meetings next year will be asked to vote in favour of them publishing climate change targets in alignment with the international goal of keeping the rise in global temperatures well below 2C. Mark van Baal, the founder of Follow This, said: “Targets should be on the agenda of every oil company, given that the oil industry can make or break the Paris climate agreement.” The group has little chance of winning by persuading a majority of the four companies’ shareholders to back the resolution but it believes the tactic can put public and investor pressure on firms. Although backed by the Church of England and major pension funds, the resolution filed for Shell’s AGM on carbon targets failed in 2017, with 94% of shareholders voting against and 5% abstaining.

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New Davis have no idea how big the fall will be, no more than you or I. And besides, they think that by spring, “the pain will be largely behind the Street”.

Bear Market Is Here, Stocks To Plunge At Least 20% – Ned Davis Research (CNBC)

The wild trading that’s gripped Wall Street may be no ordinary correction. According to Ned Davis Research’s Ed Clissold, a bear market is officially here. “If you take this as a typical bear market, not associated with a recession, it’s going to take you down around 20% — maybe a little bit more,” the firm’s chief U.S. market strategist told CNBC’s “Futures Now” last week. “That’s what we need to be thinking about over the next several months.” A bear market is defined as an environment when overwhelming pessimism sparks a 20% drop or more from recent highs. In this case, it would wipe out 588 points from the S&P 500’s all-time high of 2940.91 hit on Sept. 21. The index closed Friday in correction territory at 2,633.08. That’s down 10% from the high and 4.6% for the week.

Originally, Clissold called for a bear market to hit Wall Street in 2019, due to jitters over interest rate hike risks, U.S.-China trade tensions and slowing growth in earnings and the economy. However, he decided to move up his forecast due to “severe” technical damage from the October correction. Now, it appears the market may soon get hit with another batch of discouraging news. “Earnings growth is becoming a front-burner issue. Everybody expected it to slow down next year because we don’t have the benefit of tax cuts. But the slowdown is probably going to be more than expected,” said Clissold. [..] He may be predicting a deep pullback, but he does not see any signs of a recession. By spring, Clissold said, the pain will be largely behind the Street.

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Everyone still relies on central banks.

Everyone Is Bearish But No-One Is Short (ZH)

In the past two months we have written extensively on how most market participants got caught offside by the dramatic reversion in risk assets, and which after several attempts at bottom-fishing – attempts which have failed because as Morgan Stanley first noted two months ago the Buy The Dip trade no longer works…

… increasingly more traders have thrown in the towel, resulting in YTD returns which are truly “historic” with not one single asset generating positive returns for the first time since the Nixon presidency.

Well, that’s not exactly right: one asset is outperforming – the one which usually does best just as the economy slides into a recession or worse: cash. As Bank of America notes, the YTD score for the top global assets is the following: • equities -4.2%, • bonds -2.3%, • commodities -6.2%, • cash 1.7%, • US$ 4.9%.

Drilling down reveals an even uglier picture: the 2018 bear market has spared nobody with US Treasuries down -4.9%, the 5th largest loss since 1970, US IG bonds -3.3%, their 4th largest loss since 1970, meanwhile 1881 of 2767 global stocks are in a bear market, down more than 20%, 86 of 94 equity indices underwater, and the cherry on top – the FAANG bull market “leader” is down -26% from highs, which according to BofA’s Michael Hartnett is “a big nasty bear market.” The result, per Bank of America, is that “capitulation to lower credit & equity allocations begins but from high allocations to risk assets.” That’s the good news: the bad news is that even as investors are bailing out of risk assets, they are also dumping safe havens like treasuries, and in the last week we saw broad based risk-off flows, including $5.2BN outflow from equities, and $8.1BN outflow from bonds this week

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By the day, it becomes more like one of those Shakespeare plays with gossiping and backstabbing and all that. Love it.

Senior Tory Vultures Circle With May On Brink (Ind.)

Theresa May is set for the bleakest week of her time in power after leadership rivals publicly positioned themselves to grab the Tory crown if her Brexit plans collapse. Ex-cabinet ministers Boris Johnson, Dominic Raab and Esther McVey all signalled a willingness to bid for the leadership amid speculation that Ms May faces a heavy defeat in the crunch Commons vote on her proposed Brexit deal. More resignations were expected from the front bench in the run-up to the vote, with government insiders indicating it could still be delayed. If she survives the first half of the week, Ms May is expected to head to Brussels where she will implore the EU to offer a concession on the hated “Irish backstop” so that she can try to sell the deal to Tory rebels one last time.

The prime minister spoke to president of the European Council Donald Tusk on Sunday, who said afterwards that it would be “an important week for the fate of Brexit”. In London thousands of protestors waving union jacks joined a “Brexit betrayal” march sponsored by Ukip and addressed by far-right activist Tommy Robinson, while even more were said to have turned up to an anti-fascist counter-march. The febrile atmosphere as the week starts is only set to intensify as MPs return to Westminster on Monday, with talk of Conservative plots and leadership challenges filling the air. One Tory backbencher told The Independent: “No one knows if the prime minister is still going to be in Downing Street at the end of the week.

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Ha ha! Don’t forget to say thank you to the EU for your freedoms, Brits! Rumor has it May’s Plan B will include a second vote that does not have a Remain option.

EU’s Top Court Says UK Can Unilaterally Stop Brexit (R.)

The European Union’s top court ruled on Monday that the United Kingdom can unilaterally revoke its divorce notice, raising the hopes of pro-Europeans ahead of a crucial vote in the British parliament on Prime Minister Theresa May’s divorce deal. Just 36 hours before British lawmakers vote on May’s deal, the Court of Justice said in an emergency judgement that London could revoke its Article 50 formal divorce notice with no penalty. May’s government says the ruling means nothing because it has no intention of reversing its decision to leave the EU on March 29. But critics of her deal say it provides options — either to delay Brexit and renegotiate terms of withdrawal, or cancel it altogether if British voters change their minds. “The United Kingdom is free to revoke unilaterally the notification of its intention to withdraw from the EU,” the court said.

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Surprised? Don’t be.

UK Government Funds Secret Anti-Corbyn, Labour Unit (DR)

A secret UK Government-funded infowars unit based in Scotland sent out social media posts attacking Jeremy Corbyn and the Labour Party. On the surface, the cryptically named Institute for Statecraft is a small charity operating from an old Victorian mill in Fife. But explosive leaked documents passed to the Sunday Mail reveal the organisation’s Integrity Initiative is funded with £2million of Foreign Office cash and run by military intelligence specialists. The “think tank” is supposed to counter Russian online propaganda by forming “clusters” of friendly journalists and “key influencers” throughout Europe who use social media to hit back against disinformation.

But our investigation has found worrying evidence the shadowy programme’s official Twitter account has been used to attack Corbyn, the Labour Party and their officials. [..] David Miller, a professor of political sociology in the School for Policy Studies at the University of Bristol, added: “It’s extraordinary that the Foreign Office would be funding a Scottish charity to counter Russian propaganda which ends up attacking Her Majesty’s opposition and soft-pedalling far-right politicians in the Ukraine. “People have a right to know how the Government are spending their money, and the views being promoted in their name.”

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That’s not legal, is it?

Comey: FBI Never Verified Steele Dossier Used To Justify Special Counsel (ZH)

Former FBI Director James Comey didn’t know a lot during Friday’s congressional testimony – claiming hundreds of times (245 according to Trump) that he simply couldn’t remember various things. What Comey did remember, however, confirms that the FBI could not verify the dossier submitted by former UK spy Christopher Steele – which the agency used as the foundation of a spy warrant application to surveil the Trump campaign. While Comey said the dossier came from “a reliable source with a track record, and it’s an important thing when you’re seeking a PC warrant,” he also admitted that the FBI was unable to corroborate the document’s claims.

“But what I understand by verified is we then try to replicate the source information so that it becomes FBI investigation and our conclusions rather than a reliable source’s,” Comey said, adding “That’s what I understand it, the difference to be. And that work wasn’t completed by the time I left in May of 2017, to my knowledge.” The FBI is required to fully vet information they submit to FISA courts, which they of course did not do in their haste to deploy a counterintelligence dragnet on the Trump campaign during the final months of the 2016 US election. Steele, meanwhile, was fired by the FBI for leaking information to the press while the agency was using him as a source. To get around this, the FBI went through former #4 DOJ official Bruce Ohr – who was demoted twice for lying about his contacts with Steele.

Ohr’s wife, Nellie Ohr, worked for the embattled research firm Fusion GPS on the Trump dossier. Fusion GPS hired Steele as part of their ongoing effort to investigate the Trump campaign and any ties with Russia. It was discovered in 2017 that Fusion GPS was being paid by the Hillary Clinton campaign and the Democratic National Committee through the campaign’s law firm Perkins Coie to investigate any alleged ties between Trump and Russia. More importantly, the FBI used information from Steele, a foreign source who was openly antagonistic about Trump. In fact, Ohr told FBI officials that he “was desperate that Donald Trump not get elected and was passionate about him not being president,” as stated in the House Intelligence Committee investigation memo. -Sara Carter

Comey’s confirmation echoes comments made in a string of emails quietly requested by House Republicans for declassification – as reported last week by The Hill’s John Solomon. The emails – kept from Congressional investigators for over two years, “included then-FBI Director James Comey, key FBI investigators in the Russia probe and lawyers in the DOJ’s national security division,” according to the report – and took place in early to mid-October of 2016, prior to the FBI successfully securing a FISA warrant to spy on Trump campaign adviser Carter Page.

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In a worst case scenario, the US will use this as a reason to attack now, before Americans figure out they can’t win.

Russian Stealth Jets To Be Armed With New Hypersonic Missiles (ZH)

The advanced Sukhoi Su-57 multipurpose jet, Russia’s first domestically produced fifth-generation stealth fighter, will be armed with new hypersonic missiles, according to a Russian military source. “In accordance with Russia’s State Armament Program for 2018-2027, Su-57 jet fighters will be equipped with hypersonic missiles,” a Russian defense industry source toldTASS news agency on December 06. “The jet fighters will receive missiles with characteristics similar to that of the Kinzhal missiles, but with inter-body placement and smaller size,” the source added. Moscow said the new Kinzhal (“Dagger”), a nuclear-capable air-launched ballistic missile, can hit speeds of up to Mach 10 and can perform evasive maneuvers that can render NATO’s US-led missile defense system completely “useless.”

The missile can carry both conventional and nuclear warheads with a range of about 1,200 miles. The new hypersonic missile will be much smaller than the current Kinzhal; this is due to size constraints of fitting the weapon inside the stealth aircraft’s weapons bay. The alternative would be mounting the missile on the outside of the plane, but that would increase the jet’s radar signature. No details within the report explain about a timetable for the development or the planned specifications for the new missiles. The Defense Ministry would neither confirm nor deny the information. The Kinzhal missile is currently being tested in field training exercises.

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The US needs to clean up its pharma, along with the entire healthcare system.

Medical Researchers Still Routinely Hiding Funding From Big Pharma (RT)

A huge proportion of scientists and doctors publishing in major medical magazines continue to conceal ties to corporations relevant to their research, while punishment for not declaring interests remains weak, says a new report. “The system is broken,” Mehraneh Dorna Jafari, assistant professor of surgery at the University of California, Irvine, told the New York Times and ProPublica, an investigative journalism non-profit. Jafari was one of the authors of a landmark study published back in August that took the names of the 100 doctors receiving the most funding from medical equipment and drug manufacturers, and then studied whether they declared a potential conflict of interest in their published research. Only 37 did.

For example, Dr. Howard A. Burris III, has been elected as the president of the American Society of Clinical Oncology (ASCO) that includes 40,000 members, and can make influential recommendations on cancer drugs worth tens of billions of dollars. Companies where Burris is an employee have been paid $114,000 in speaking fees, and $8 million in research funding by private corporations. Yet in none of his last 50 articles did the man, whose bio boasts that he “was selected by his peers as a ‘Giant of Cancer Care’ for his achievements in drug development,” think it was necessary to declare any potential biases resulting from corporate involvement.

In the latest investigation, the Times and ProPublica revealed that Dr. Robert J. Alpern, the dean of the Yale School of Medicine, writing about an experimental kidney disease drug failed to state that he was on the board of the company producing it. When journalists approached the publisher of the article, the Clinical Journal of the American Society of Nephrology, its editor discovered that all 12 authors of the article in question had interests they failed to declare.

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Really? Salvini is about to take on the Pope?

Italian Priests Vow To Open Church Doors To Evicted Immigrants (G.)

Italian priests have declared their willingness to “open the church doors of every single parish” to people expelled from reception centres as an anti-immigration law from Italy’s rightwing government threatens to make thousands homeless. The so-called “Salvini decree” – named after Matteo Salvini, the interior minister and leader of the far-right League – left hundreds in legal limbo when its removal of humanitarian protection for those not eligible for refugee status but otherwise unable to return home was applied by several Italian cities soon after its approval by parliament earlier this month. The Catholic church expressed its profound disapproval immediately after the vote.

The Vatican’s position is “very clear”, its secretary of state, Cardinal Pietro Parolin, said last week. “You don’t leave migrants in the street … A profound sense of solidarity must prevail. You cannot put people in this position. You must always focus on people and their rights.” According to Italy’s ministry of the interior, between 2016 and 2017 Italy provided humanitarian protection to 39,145 asylum seekers, who under the Salvini decree risk being made homeless within weeks. In early December, a letter announcing the expulsion of 50 people was sent to the reception centre in Mineo, Sicily: the largest in Europe after the Moria camp in Greece.

The bishop of Caltagirone, Monsignor Calogero Peri, said he was prepared to provide 40 beds in nearby facilities owned by the church to welcome people who risk expulsion. “And if there are not enough beds? I have already spoken with other bishops: we will open the church doors of every single parish under our control,” he said. “It’s not a question of politics. It’s a matter of protecting individuals. Imagine this: in Italy now it is a crime to abandon dogs, but it is not a crime to abandon people. Even worse, abandoning men, women and children is now the law.”

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A little nothing news. But cute.

Why Greeks Traditionally Decorate a Boat Instead of a Christmas Tree (GR)

The most traditional symbol you will find in Greece during the holidays is a small boat decorated with lights, usually placed in the main square of a town and close to the more international Christmas tree. To karavaki, or small boat is rooted in the traditions of a country with a symbiotic relationship with the sea. In fact on the many Greek islands the Christmas boats remain the most popular ornament of the holiday season. Different legends explain the tradition of the Christmas Greek boat. One of them is related to Saint Nicholas (Agios Nikolaos), the Patron Saint of Sailors. This saint is celebrated on December 6, the day when many households start decorating their houses for Christmas. Some agree that this is why boats are decorated, in order to honor the saint.

It’s also true that Greece is proud of the large amount of sailors, fishermen and intrepid captains the country has, which makes them as a symbol of local identity. Men would often be away for months at a time, and those back home would be anxiously waiting for their return. On the islands, the wives, mothers, and daughters of seaman used to spend the cold and dark winter months with their heart and mind at sea. There, their men were battling the stormy seas during the holiday season. These were months of expectation, hope, and prayer for their safe return. The joy of seeing the boats coming back, approaching the shores, made the women celebrate in relief. The boat is a symbol to honor those brave men coming back home.

The tradition wanted the small wooden boats placed inside close to the fireplace and pointing towards the center of the house, never towards the door. They were also lovingly decorated to give a warm welcome to the men of the household. Even kids prepared their own boats with paper and chips of wood, and on Christmas Eve, they used these little boats to collect the treats they had received when singing the carols (kalanda) from house to house.

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Don’t miss the fantastic Adam Curtis. He knows more about what makes our world go round than just about anyone. Watch his docs, all of them.

The Antidote To Civilisational Collapse (Adam Curtis)

Adam Curtis: “HyperNormalisation” is a word that was coined by a brilliant Russian historian who was writing about what it was like to live in the last years of the Soviet Union. What he said, which I thought was absolutely fascinating, was that in the 80s everyone from the top to the bottom of Soviet society knew that it wasn’t working, knew that it was corrupt, knew that the bosses were looting the system, knew that the politicians had no alternative vision. And they knew that the bosses knew they knew that. Everyone knew it was fake, but because no one had any alternative vision for a different kind of society, they just accepted this sense of total fakeness as normal. And this historian, Alexei Yurchak, coined the phrase “HyperNormalisation” to describe that feeling.

I thought “that’s a brilliant title” because, although we are not in any way really like the Soviet Union, there is a similar feeling in our present day. Everyone in my country and in America and throughout Europe knows that the system that they are living under isn’t working as it is supposed to; that there is a lot of corruption at the top. But whenever the journalists point it out, everyone goes “Wow that’s terrible!” and then nothing happens and the system remains the same. There is a sense of everything being slightly unreal; that you fight a war that seems to cost you nothing and it has no consequences at home; that money seems to grow on trees; that goods come from China and don’t seem to cost you anything; that phones make you feel liberated but that maybe they’re manipulating you but you’re not quite sure. It’s all slightly odd and slightly corrupt.

[..] No one is really sure what Trump represents. My working theory is that he’s part of the pantomime-isation of politics. Every morning Donald Trump wakes up in the White House, he tweets something absolutely outrageous which he knows the liberals will get upset by, the liberals read his tweets and go “This is terrible, this is outrageous,” and then tell each other via social media how terrible it all is. It becomes a feedback loop in which they are locked together. In my mind, it’s like they’re together in a theatre watching a pantomime villain. The pantomime villain comes forward into the light, looks at them and says something terrible, and they go “Boo!!”. Meanwhile, outside the theatre, real power is carrying on but no one is really analysing it.

This is the problem with a lot of journalism, especially liberal journalism at the moment. It’s locked together with those people in the theatre. If you look at the New York Times, for example, it’s continually about that feedback loop between what Trump has said and the reaction of liberal elements in the society. It’s led to a great narrowing of journalism. So in a way, he is part of the hypernormal situation because it’s a politics of pantomime locked together with its critics. [..] ..It’s not a conspiracy. It’s a distraction from what’s really happening in the world. I would argue that there is a sense—in a lot of liberal journalism—of unreality. They’re locked into describing the pantomime politics and they’re not looking to what Mr Michael Pence is really up to, and what’s really happening outside the theatre.

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Nov 182018
 
 November 18, 2018  Posted by at 10:35 am Finance Tagged with: , , , , , , , , , , , ,  


Gabriel Loppé The Eiffel tower struck by lightning 1902

 

Habitat And Species Loss Threatens All Our Futures (G.)
John Kerry: ‘People Are Going To Die Because Of The Decision Trump Made’ (G.)
Bear Market Growls (Roberts)
APEC Leaders Divided After US, China Spat (AFP)
Pence Vows No End To Tariffs Until China Bows (R.)
Trump Calls CIA Assessment Of Khashoggi Murder Premature But Possible (R.)
Trump ‘Not Considering’ Extraditing Gülen to Turkey (Ind.)
White House Press Pass Has Nothing To Do With The First Amendment (McMaken)
Brussels Tells Theresa May Delaying Brexit Will Cost UK £10 Billion (O.)
Tory MPs Warn Hardliners They May Abandon Brexit (Ind.)
Activists Who Blocked Migrant Deportations Face Life in Prison In UK (IC)
Glass Was Forged Inside The Heart Of An Exploding Ancient Star (AFP)

 

 

Why does climate change get so much more attention than species extinction? Because people see more profit in it.

Habitat And Species Loss Threatens All Our Futures (G.)

As a UN conference convenes to work out a new deal for protecting the planet’s biodiversity, the focus falls on the nations that are not attending. Amid the worst loss of life on Earth since the demise of the dinosaurs, the agenda at the Convention on Biological Diversity (CBD) in the Egyptian resort of Sharm el-Sheikh could hardly be more important, but the spirit of international collaboration appears to be as much at risk of extinction as the world’s endangered wildlife. The United States has never signed up and Brazil is among a growing group of countries where new nationalist leaders are shifting away from global cooperation.

The two-week meeting of the CBD is its first in two years. It has always been the neglected sibling of its twin, the United Nations Framework Convention on Climate Change. The two organisations were conceived amid great hope at the Rio Earth summit in 1992 but while the energy transition has attracted heads of state interested in billion-dollar renewable projects, the effort to save the natural world has been left to weak environment ministries, conservation NGOs and underfunded scientists. Media research suggests there is only one news story about UN biodiversity talks for every 20 about UN climate negotiations. Coverage tends to focus on a few totemic species, such as lions, chimpanzees and pandas, rather than the collapsing ecosystems on which we depend.

[..] Since 1970 humanity has wiped out 60% of mammals, birds, fish and reptiles, according to the latest Living Planet report by WWF, which warned that the loss of wildlife was now an emergency that is threatening our civilisation. This followed a report earlier this year that one in eight bird species is threatened with global extinction. Recent studies have also tracked calamitous declines of pollinating insects in the US, Costa Rica and Germany, promoting warnings of ecological Armageddon. Cristiana Pasca Palmer, the head of the CBD, says we must stem the loss of biodiversity or face the prospect of our own extinction. But the global mechanics to do that are missing.

Part of the reason for the low level of interest is that the last two major biodiversity agreements – in 2002 and 2010 – have been ineffectual. At Nagoya in Japan eight years ago, the 196 signatory nations to the CBD signed up to the Aichi biodiversity targets: to at least halve the loss of natural habitats, ensure sustainable fishing in all waters, and expand nature reserves from 10% to 17% of the world’s land by 2020. With two years left in the Aichi plan, the conference this year will show that many of the 20 targets have been missed. And even apparent progress in the creation of new protected areas is misleading because governments from Brazil to China have done little to police these “paper reserves”.

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The level of sociopathy here is blinding. Just count the dead on Kerry’s watch. But again, he’s talking about climate change. Because that’s where the money is. Makes you wonder what the real issue is: rising temperatures or people looking to get rich off of them. Remember the braindead Michael Bloomberg/Mark Carney paper I wrote about when it came out, on getting rich while saving the planet. Who’s your enemy, really?

John Kerry: ‘People Are Going To Die Because Of The Decision Trump Made’ (G.)

“Here’s my feeling. And I’m certain of this.” He slows down. “I. Do. Not. Take. It. Personally. I’m sorry for the world. I’m sorry for my country, which looks ridiculous. Look, I’ve known all my life that this is a tough business, that politics is hard – that there are ups and down and if you personalise them you’re never going to survive.” Also, he points out, “I feel better than a lot of people think”, because Trump cannot affect the 194 countries still “doing Paris”, or even the 38 US states (plus Washington DC) committed to renewable energy portfolios regardless of the president’s edicts. The Iran deal is wounded, but still exists, he says. “In fact France, Germany, Britain, Russia and China all met few weeks ago in New York with the foreign minister of Iran, to talk about how to keep the deal moving forward.”

Surely he is angry, though? “You know what I’m angry about? People are going to die because of the decision Donald Trump made. My kids and my grandkids are going to face a difficult world because of what Donald Trump has done. But if you sound angry all the time, people aren’t going to listen to you.” Anger boiled over into a tweet last week, when he could not bear the farrago unfolding on Remembrance Day. “It was just a sad moment, for our country and for the presidency. The president of the United States did not go to an event because of rain, when those guys died in the rain, died in the snow, died in the gas, died in the mud, and not to honour them I thought was brutal.”

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I’d say you don’t need to know much more than this. It’s just that the game of guessing which straw breaks the camel’s back doesn’t strike me as particularly useful.

Bear Market Growls (Roberts)

Fortunately, up to this point, there has not been a triggering of margin debt, as of yet, which remains the “gasoline” to fuel a rapid market decline. As we have discussed previously, margin debt (i.e. leverage) is a double-edged sword. It fuels the bull market higher as investors “leverage up” to buy more equities, but it also burns “white hot” on the way down as investors are forced to liquidate to cover margin calls. Despite the two sell-offs this year, leverage has only marginally been reduced.

If you overlay that the S&P 500 index you can see more clearly the magnitude of the reversions caused by a “leverage unwind.”

The reason I bring this up is that, so far, the market has not declined enough to “trigger” margin calls. At least not yet. But exactly where is that level? There is no set rule, but there is a point at which the broker-dealers become worried about being able to collect on the “margin lines” they have extended. My best guess is that point lies somewhere around a 20% decline from the peak. The correction from intraday peak to trough in 2015-2016 was nearly 20%, but on a closing basis, the draft was about 13.5%. The corrections earlier this year, and currently, have both run close to 10% on a closing basis.

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Does China think Trump will give in?

APEC Leaders Divided After US, China Spat (AFP)

Leaders from 21 Asia-Pacific nations failed Sunday to bridge gaping divisions at a summit overshadowed by a war of words over the US and China as they vie for influence in the region. For the first time in the history of the APEC grouping, leaders were unable to agree on a formal written declaration amid sharp differences over trade policy. “The leaders agreed that instead of a traditional leaders’ declaration, they would leave it to the hands of PNG as the chair to issue a chair statement on behalf of all the members,” said Zhang Xiaolong, a spokesman from the Chinese foreign ministry. Canada’s Prime Minister Justin Trudeau admitted there were “different visions on particular elements with regard to trade that prevented full consensus on a communique document.”

The annual gathering, held for the first time in Papua New Guinea, was overshadowed by speeches from Chinese President Xi Jinping and US Vice President Mike Pence, which appeared to represent competing bids for regional leadership. Pence warned smaller countries not to be seduced by China’s massive Belt-and-Road infrastructure programme, which sees Beijing offer money to poorer countries for construction and development projects. The “opaque” loans come with strings attached and build up “staggering debt”, Pence charged, mocking the initiative as a “constricting belt” and a “one-way road”. He urged nations instead to stick with the United States, which doesn’t “drown our partners in a sea of debt” or “coerce, corrupt or compromise your independence”.

In a speech to business leaders just minutes before Pence, Xi insisted the initiative was not a “trap” and there was no “hidden agenda” – amid criticism that it amounts to “chequebook diplomacy” in the region. Xi also lashed out at “America First” trade protectionism, saying it was a “short-sighted approach” that was “doomed to failure”. [..] Trump — and Russian President Vladimir Putin – both decided to skip the gathering, leaving the spotlight on Xi who arrived two days early to open a Chinese-funded school and road in Papua New Guinea’s dirt-poor capital Port Moresby.

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Putin and Trump were both absent. Why have the summit then? So Xi can shoot himself in the foot?

Pence Vows No End To Tariffs Until China Bows (R.)

The United States will not back down from its trade dispute with China, and might even double its tariffs, unless Beijing bows to U.S. demands, Vice President Mike Pence said on Saturday. In a bluntly worded speech at an Asia Pacific Economic Co-operation (APEC) summit in Papua New Guinea, Pence threw down the gauntlet to China on trade and security in the region. “We have taken decisive action to address our imbalance with China,” Pence declared. “We put tariffs on $250 billion in Chinese goods, and we could more than double that number.” “The United States, though, will not change course until China changes its ways.”

The stark warning will likely be unwelcome news to financial markets which had hoped for a thaw in the Sino-U.S. dispute and perhaps even some sort of deal at a G20 meeting later this month in Argentina. U.S. President Donald Trump, who is not attending the APEC meeting, is due to meet Chinese President Xi Jinping in Argentina. Pence’s warning on Saturday contrasted with remarks made by Trump on Friday, when he said he may not impose more tariffs after China sent the United States a list of measures it was willing to take to resolve trade tensions. [..] There was no hint of compromise from Pence.“China has taken advantage of the United States for many years. Those days are over,” he told delegates gathered on a cruise liner docked in Port Moresby’s Fairfax Harbour.

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Killing the petrodollar is a big responsibility. But the CIA wouldn’t have issued the assessment without strong evidence.

Trump Calls CIA Assessment Of Khashoggi Murder Premature But Possible (R.)

President Donald Trump on Saturday called a CIA assessment blaming Saudi Crown Prince Mohammed bin Salman for the killing of Saudi journalist Jamal Khashoggi “very premature” and said he will receive a complete report on the case on Tuesday. Trump, on a trip to California, said the killing “should never have happened.” The report on Tuesday will explain who the U.S. government believes killed Khashoggi and what the overall impact of his murder is, Trump said. It was unclear who is producing the report. Trump also said the CIA finding that bin Salman was responsible for the killing was “possible.” Trump made the remarks hours after the State Department said the government was still working on determining responsibility for the death of Khashoggi.

“Recent reports indicating that the U.S. government has made a final conclusion are inaccurate,” State Department spokeswoman Heather Nauert said in a statement. “There remain numerous unanswered questions with respect to the murder of Mr. Khashoggi.” Nauert said the State Department will continue to seek facts and work with other countries to hold those involved in the journalist’s killing accountable “while maintaining the important strategic relationship between the United States and Saudi Arabia.” Trump discussed the CIA assessment by phone with the agency’s director, Gina Haspel, and Secretary of State Mike Pompeo while flying to California on Saturday, White House spokeswoman Sarah Huckabee Sanders told reporters.

The CIA had briefed other parts of the U.S. government, including Congress, on its assessment, sources told Reuters on Friday, a development that complicates Trump’s efforts to preserve ties with the key U.S. ally. A source familiar with the CIA’s assessment said it was based largely on circumstantial evidence relating to the prince’s central role in running the Saudi government. The CIA’s finding is the most definitive U.S. assessment to date tying Saudi Arabia’s de facto ruler directly to the killing and contradicts Saudi government assertions that Prince Mohammed was not involved.

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NBC egg on face. ‘T is the season?

Trump ‘Not Considering’ Extraditing Gülen to Turkey (Ind.)

President Donald Trump said on Saturday he is “not considering” extraditing an Islamic cleric self-exiled in the United States to Turkey. The extradition of Fethullah Gulen, accused of plotting a failed coup in 2016 to overthrow Turkish President Tayipp Erdogan, would be a strategic effort to persuade Turkey to lessen scrutiny on Saudi Arabia over the killing of journalist Jamal Khashoggi. In recent months, the Trump administration has been vigorous in its defence and flattery of its close ally Saudi Arabia – and the kingdom’s Crown Prince Mohammed Bin Salman – in hopes Riyadh will serve its role in carrying out the president’s Middle East foreign policy.

“No, it’s not under consideration,” Mr Trump said when pressed on whether or not he would extradite the Turkish cleric, a political opponent of Erdogan, to his home country. “We are looking, always looking at whatever we can do for Turkey.” Mr Trump’s statement comes three days after NBC News reported that his administration is looking into whether or not extraditing Mr Gulen could convince the Turkish president to soften pressure on Saudi Arabia for reportedly killing Mr Khashoggi, a Washington Post columnist critical of Riyadh, in its Istanbul consulate earlier last month.

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The Jim Acosta show continues. CNN should cancel it.

White House Press Pass Has Nothing To Do With The First Amendment (McMaken)

It’s difficult to see how something so limited and so unavailable to nearly everyone could be called a right. After all, not even all reporters can hope to secure a White House press pass. And non-reporters have even less chance of ever getting access. Access to White House media facilities and forums are a privilege reserved for a select few —and most of those few are wealthy operatives of extremely powerful media corporations. A press pass is clearly not a right in the same sense as a trial by jury, a right to be secure in one’s personal property, or a right to peaceably assemble. In theory at least, those rights apply to everyone unless voluntarily waived, or unless revoked through some sort of public due process.

Nor is it the case that just anyone who is recognized as a journalist gets access to the White House press room. The room, of course, is of a finite size — there are 49 seats — and access is limited. Only a select group of people is allowed in, and the credentialing process is controlled in part by the White House Correspondents’ Association which hardly hands out credentials as if they were a human right. [..] even if everyone who wanted it were somehow magically given space in the White House press room, it’s hard to see how hobnobbing with the White House communications staff forms a pillar of a free press or free inquiry. In other words, the very premise that a White House press pass is a critical component of a free press is questionable at best. After all, the press room, the communications staff, and the entire White House media apparatus exists to make the president look good.

It’s not there to offer a frank exchange of information, or to divulge any information the White House doesn’t want released. To find that sort of information, one would have to engage in real investigative journalism in which journalists uncover facts that powerful government officials would rather not be uncovered. That, of course, is what Julian Assange has done. But you won’t find many establishment American journalists defending him. No, in the minds of the Jim Acostas of the world, “journalism” consists of repeating the official talking points released at official press conferences. And this is a lucky thing for presidents, many of whom have long understood that the purpose of White House communications is to manipulate the press.

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Delay will be at least a year if it happens.

Brussels Tells Theresa May Delaying Brexit Will Cost UK £10 Billion (O.)

The latest Opinium poll for the Observer on Sunday delivers more bad news for May, with Labour opening up a three-point lead. It shows Tory Leave supporters appear to be deserting May’s party in droves. Compared with a month ago, the Conservatives have dropped five points to 36% while Labour has gained three to stand on 39%. The proportion of Leavers backing the Tories has dropped by 10 points in one month. As May’s allies sprang to her defence and said she was “winning over the country”, Brussels threw a new spanner in the works by saying any extension of the 21-month transition period designed to smooth the UK’s exit must last at least a year beyond the end of December 2020.

May told an EU leaders summit last month that she might ask for a “few months” extra time if that was what was needed to complete an EU-UK trade deal and prevent the Irish backstop from coming into force. But on Saturday night Brussels was making clear that if the UK wants an extension of the transition – during which it is tied to the EU economic system but with no say over its rules – it must last at least a further year. A year-long extension would cost about £10bn on top of the £39bn divorce bill already agreed. Such a prospect will appal hardline Brexiters who already complain that the UK will have to spend almost two more years tied to the EU after Brexit on 29 March next year.

Read more …

No Brexit at all is also still an option. The problem may well be that Brexit means something different to every single person.

Tory MPs Warn Hardliners They May Abandon Brexit (Ind.)

Moderate Conservatives have warned they will push Britain towards tighter relations with the EU or even turn against Brexit altogether if “purists” in their party tear down Theresa May’s draft withdrawal deal. A string of Tory MPs told The Independent that Eurosceptic colleagues who have begun a sustained push to bring down both Ms May and her Brexit plans, should not be mistaken that a no-deal exit risking the livelihoods of British people is obtainable. The moderates say the only remaining option if Brexiteers block Ms May’s approach will mean being more closely bound to the single market or even revisiting the 2016 referendum result. Their warning comes as the Eurosceptic wing of the Conservatives launched a coordinated campaign against the draft deal to be signed off at an EU summit next weekend, and pushed for a vote of no confidence in the prime minister.

Ms May is set to continue her media offensive defending the deal on Sunday with a live interview in the morning, but Eurosceptics have also been in force attacking it. The pushback from Tory moderates began with pointed words from serving frontbencher Alistair Burt, who indicated that if Ms May’s plans fell, Brexiteers could not expect Remain-voting MPs to continue to go along with the result of the 2016 referendum regardless of the consequences. He wrote on Twitter: “Be very clear. If an agreed deal on leaving between the Govt and the EU is voted down by purist Brexiteers, do not be surprised if consensus on accepting the result of the referendum by Remain-voting MPs breaks down. “Parliament will not support no deal.”

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Picking people up just to fill seats on a plane. Morals we have none.

Activists Who Blocked Migrant Deportations Face Life in Prison In UK (IC)

Smoke is a founding member of Lesbians and Gays Support the Migrants, a group created in 2015 to stand in solidarity with migrant communities in the U.K., and also part of End Deportations, a group campaigning to end deportations that originally formed around the Stansted action. They chose to focus on one particular aspect of the U.K.’s deportation system: charter flights. While some migrants and asylum-seekers are deported on commercial flights alongside passengers traveling for business or pleasure, others are deported via private flights chartered by the Home Office, the government department responsible for immigration, security, and law and order. The Titan plane around which the Stansted 15 locked themselves in March 2017 was one of the latter.

[..] Freedom of Information requests have revealed that the Home Office chartered 93 deportation flights from January 2016 through May 2018, including the flight grounded by the Stansted 15. Most of these flights went to Pakistan, Albania, Nigeria, and Ghana, although a few also flew to Germany, France, and Bulgaria. Some carried over 50 deportees; most had less than 20 passengers being deported because of a criminal conviction. These destinations have shifted over time as the population of asylum-seekers has changed: Charter deportation flights in 2014 also frequented Afghanistan and Kosovo. The Stansted 15, along with many others who research or campaign around deportation, take issue with numerous aspects of deportation charter flights, starting with the way in which migrants and asylum-seekers are notified of them.

“It’s a weird numbers game where the government needs to fill seats on this plane to make it economically viable,” says Morten Thaysen, one of the co-founders of Lesbians and Gays Support the Migrants. There will often be “raids in the weeks leading up to the flight,” according to Thaysen. “People [are] being taken from marketplaces, workplaces, their home, and put in detention centers – these kind of immigration prisons – and then taken in the middle of the night on these secret flights where there are no witnesses. So it’s the brutality of how they function.” Some people, activists also argue, are not notified of their impending deportation with enough time to appeal the decision. “We see so many people on these flights whose cases haven’t been properly finished, haven’t had their cases heard properly,” says Thaysen.

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“Silica makes up around 60 percent of the Earth’s crust..”

Glass Was Forged Inside The Heart Of An Exploding Ancient Star (AFP)

The next time you’re gazing out of the window in search of inspiration, keep in mind the material you’re looking through was forged inside the heart of an exploding ancient star. An international team of scientists said Friday they had detected silica — the main component of glass — in the remnants of two distant supernovae billions of light years from Earth. Researchers used NASA’s Spitzer Space Telescope to analyse the light emitted by the collapsing mega-cluster and obtain silica’s “fingerprint” based on the specific wavelength of light the material is known to emit. A supernova occurs when a large star burns through its own fuel, causing a catastrophic collapse ending in an explosion of galactic proportions.

It is in these celestial maelstroms that individual atoms fuse together to form many common elements, including sulphur and calcium. Silica makes up around 60 percent of the Earth’s crust and one particular form, quartz, is a major ingredient of sand. As well as glass windows and fibreglass, silica is also an important part of the recipe for industrial concrete. “We’ve shown for the first time that the silica produced by the supernovae was significant enough to contribute to the dust throughout the Universe, including the dust that ultimately came together to form our home planet,” said Haley Gomez, from Cardiff University’s School of Physics and Astronomy. “Every time we gaze through a window, walk down the pavement or set foot on a sandy beach, we are interacting with material made by exploding stars that burned millions of years ago.”

Read more …

Jun 072018
 
 June 7, 2018  Posted by at 2:17 am Finance Tagged with: , , , , , , , , , , , ,  Comments Off on Everything That Dies Does Not Come Back


Charles Sprague Pearce The Arab jeweler c1882

 

 

There are a lot of industries in our world that wreak outsized amounts of havoc. Think the biggest global banks and oil companies. Think plastics. But there is one field that is much worse than all others: agro-chemicals. At some point, not that long ago, the largest chemical producers, who until then had kept themselves busy producing Agent Orange, nerve agents and chemicals used in concentration camp showers, got the idea to use their products in food production.

While they had started out with fertilizers etc., they figured making crops fully dependent on their chemicals would be much more lucrative. They bought themselves ever more seeds and started manipulating them. And convinced more and more farmers, or rather food agglomerates, that if there were ‘pests’ that threatened their yields, they should simply kill them, rather than use natural methods to control them.

And in monocultures that actually makes sense. It’s the monoculture itself that doesn’t. What works in nature is (bio)diversity. It’s the zenith of cynicism that the food we need to live is now produced by a culture of death. Because that is what Monsanto et al represent: Their solution to whatever problem farmers may face is to kill it with poison. But that will end up killing the entire ecosystem a farmer operates within, and depends on.

However, the Monsantos of the planet produce much more ‘research’ material than anybody else, and it all says that the demise of ecosystems into which their products are introduced, has nothing to do with these products. And by the time anyone can prove the opposite, it will be too late: the damage will have been done through cross-pollination. Monsanto can then sue anyone who has crops that show traces of its genetically altered proprietary seeds, even if the last thing a farmer wants is to include those traces.

Anyway, when reading John Vidal in the Guardian yesterday, I was struck by some numbers. Bayer-Monsanto, soon to be just Bayer, own 60% of proprietary seeds and 70% of agrochemicals in the world. That’s roughly comparable to the numbers of vertebrates and insects that have vanished from the countrysides of Germany, France and England. Life itself is dying. Species extinction is now a bigger threat than climate change. Vidal:

 

Who Should Feed The World: Real People Or Faceless Multinationals?

“Through its many subsidiary companies and research arms, Bayer-Monsanto will have an indirect impact on every consumer and a direct one on most farmers in Britain, the EU and the US. It will effectively control nearly 60% of the world’s supply of proprietary seeds, 70% of the chemicals and pesticides used to grow food, and most of the world’s GM crop genetic traits, as well as much of the data about what farmers grow where, and the yields they get.

It will be able to influence what and how most of the world’s food is grown, affecting the price and the method it is grown by. But the takeover is just the last of a trio of huge seed and pesticide company mergers.” It will be able to influence what and how most of the world’s food is grown, affecting the price and the method it is grown by.

But the takeover is just the last of a trio of huge seed and pesticide company mergers. Backed by governments, and enabled by world trade rules and intellectual property laws, Bayer-Monsanto, Dow-DuPont and ChemChina-Syngenta have been allowed to control much of the world’s supply of seeds.

Do note that although Dow-DuPont and ChemChina-Syngenta may be large companies, Bayer-Monsanto alone own 60% of proprietary seeds and 70% of agrochemicals. Since they ‘only’ own 60% and 70%, they can’t be accused of running a monopoly. But their main product, glyphosate (Roundup) is also produced by Dow, DuPont and Syngenta. So together they do effectively run a monopoly. Just not ‘technically’. These guys have the world’s best and biggest legal, lobbying and PR teams. Because they’re after global control.

[..] because most farmers in rich countries already buy their seeds from the multinationals, opposition has barely been heard. Instead, it is coming from the likes of Debal Deb, an Indian plant researcher who grows forgotten crops and is the antithesis of Bayer and Monsanto. While they concentrate on developing a small number of blockbuster staple crops, Deb grows as many crops as he can and gives the seeds away.

This year he is cultivating an astonishing 1,340 traditional varieties of Indian “folk” rice on land donated to him in West Bengal. More than 7,000 farmers in six states will be given the seeds, on the condition that they also grow them and give some away.

This seed-sharing of “landraces”, or local varieties, is not philanthropy but the extension of an age-old system of mutualised farming that has provided social stability and dietary diversity for millions of people. By continually selecting, crossbreeding and then exchanging their seeds, farmers have developed varieties for their aroma, taste, colour, medicinal properties and resistance to pests, drought and flood.

The battle is between biodiversity and Monsanto, and the latter is winning big. Monsanto-Bayer wants farmers to grow only a few crops, that it has patents on, and to kill off everything else with the chemicals without which these crops will not grow. Monoculture on steroids, raised in sterile environments bereft of life. 75% of insects gone in Europe’s countrysides, 60% of vertebrates, birds and butterflies becoming a rarity.

It is insanity in its purest form. Insanity of individual people, insanity of legal systems, insanity of governance. No-one, and no country, should be obliged to prove that Monsanto’s products are killing off biodiversity. We have an instrument called the precautionary principle, and we must use it. Like Hippocrates’ First Do No Harm. It is not complicated.

But I must admit I sometimes think it’s already too late. Once you kill off 70% of any form of life, in any ecosystem, how is it going to recover? Because mind you, with the Bayer-Monsanto merger being approved worldwide, things are only going to get worse at ever increasing speed. The agro-chemical industry is a culture of death that relies for its profits on a giant die-off, probably worse than whatever it is that killed the dinosaurs 65 million years ago.

And the odds that mankind will survive this one are slim to none. Our survival depends one on one on the diversity in the ecosystems we reside in. But yeah, I hear you: intelligent species.

 

 

Here’s something I first published in December 2016. Things have gotten much worse much faster than I could have predicted back then. Kill Monsanto before it kills your children.

 

 

Mass Extinction and Mass Insanity

 


Caters Extremely rare albino elephant, Kruger National Park in South Africa

 

Everything dies, baby, that’s a fact
But maybe everything that dies someday comes back …

Springsteen, Atlantic City

“Erwin Schrodinger (1945) has described life as a system in steady-state thermodynamic disequilibrium that maintains its constant distance from equilibrium (death) by feeding on low entropy from its environment – that is, by exchanging high-entropy outputs for low-entropy inputs. The same statement would hold verbatium as a physical description of our economic process. A corollary of this statement is that an organism cannot live in a medium of its own waste products.”
Herman Daly and Kenneth Townsend

 

What drives our economies is waste. Not need, or even demand. Waste. 2nd law of thermodynamics. It drives our lives, period.

First of all, don’t tell me you’re trying to stop the ongoing extinction of nature and wildlife on this planet, or the destruction of life in general. Don’t even tell me you’re trying. Don’t tell me it’s climate change that we should focus on (that’s just a small part of the story), and you’re driving an electric car and you’re separating your trash or things like that. That would only mean you’re attempting to willfully ignore your share of destruction, because if you do it, so will others, and the planet can’t take anymore of your behavior.

This is the big one. And the only ones amongst us who don’t think so are those who don’t want to. Who think it’s easier to argue that some problems are too big for them to tackle, that they should be left to others to solve. But why should we, why should anyone, worry about elections or even wars, when it becomes obvious we’re fast approaching a time when such things don’t matter much anymore?

The latest WWF Living Planet Report shows us that the planet is a whole lot less alive than it used to be. And that we killed that life. That we replaced it with metal, bricks, plastic and concrete. Mass consumption leads to mass extinction. And that is fully predictable, it always was; there’s nothing new there.

We killed 58% of all vertebrate wildlife just between 1970 and 2012, and at a rate of 2% per year we will have massacred close to 70% of it by 2020, just 4 years from now. So what does it matter who’s president of just one of the many countries we invented on this planet? Why don’t we address what’s really crucial to our very survival instead?

 

 

The latest report from the WWF should have us all abandon whatever it is we’re doing, and make acting to prevent further annihilation of our living world the key driver in our everyday lives, every hour of every day, every single one of us. Anything else is just not good enough, and anything else will see us, that self-nominated intelligent species, annihilated in the process.

Granted, there may be a few decrepit and probably halfway mutant specimens of our species left, living in conditions we couldn’t even begin, nor dare, to imagine, with what will be left of their intelligence wondering how our intelligence could have ever let this happen. You’d almost wish they’ll understand as little as we ever did; that some form of ignorance equal to ours will soften their pain.

It’s important to note that the report does not describe a stagnant situation, there’s no state of affairs, not something still, it describes an ongoing and deteriorating process. That is, we don’t get to choose to stop the ongoing wildlife annihilation at 70%; we are witnessing, and indeed we are actively involved in, raising that number by 2% every year that we ‘live’ (can we even call it that anymore, are you alive when you murder all life around you?) in this world.

This is our only home.

 

 

Without the natural world that we were born into, or rather that our species, our ancestors, were born into, we have zero chance of survival. Because it is the natural world that has allowed for, and created, the conditions that made it possible for mankind to emerge and develop in the first place. And we are nowhere near making an earth 2.0; the notion itself is preposterous. A few thousand years of man ‘understanding’ his world is no match for billions of years of evolution. That’s the worst insult to whatever intelligence it is that we do have.

Much has been made through the years of our ability to adapt to changing circumstances, and much of that is just as much hubris as so much of what we tell ourselves, but the big question should be WHY we would volunteer to find out to what extent we can adapt to a world that has sustained the losses we cause it to suffer. Even if we could to a degree adapt to that, why should we want to?

Two thirds of our world is gone, and it’s we who have murdered it, and what’s worse – judging from our lifestyles- we seem to have hardly noticed at all. If we don’t stop what we’ve been doing, this can lead to one outcome only: we will murder ourselves too. Our perhaps biggest problem (even if we have quite a few) in this regard is our ability and propensity to deny this, as we deny any and all -serious, consequential- wrongdoing.

 

 

There are allegedly serious and smart people working on, dreaming of, and getting billions in subsidies for, fantasies of human colonies on Mars. This is advertized as a sign of progress and intelligence. But that can only be true if we can acknowledge that our intelligence and our insanity are identical twins. Because it is insane to destroy the planet on which we depend one-on-one for everything that allows us to live, and at the same time dream of human life on another planet.

While I see no reason to address the likes of King of Subsidies Elon Musk, Stephen Hawking is different. Unfortunately, in Hawking’s case, with all his intelligence, it’s his philosophical capacity that goes missing.

Humanity Will Not Survive Another 1,000 Years If We Don’t Escape Our Planet

Professor Stephen Hawking has warned humanity will not survive another 1,000 years on Earth unless the human race finds another planet to live on. [..] Professor Hawking, 74, reflected on the understanding of the universe garnered from breakthroughs over the past five decades, describing 2016 as a “glorious time to be alive and doing research into theoretical physics”. “Our picture of the universe has changed a great deal in the last 50 years and I am happy if I have made a small contribution,“ he went on.

”The fact that we humans, who are ourselves mere fundamental particles of nature, have been able to come this close to understanding the laws that govern us and the universe is certainly a triumph.” Highlighting “ambitious” experiments that will give an even more precise picture of the universe, he continued: “We will map the position of millions of galaxies with the help of [super] computers like Cosmos. We will better understand our place in the universe.”

“But we must also continue to go into space for the future of humanity. I don’t think we will survive another 1,000 years without escaping beyond our fragile planet.”

The tragedy is that we may have gained some knowledge of natural laws and the universe, but we are completely clueless when it comes to keeping ourselves from destroying our world. Mars is an easy cop-out. But Mars doesn’t solve a thing. Because it’s -obviously- not the ‘fragile planet’ earth that is a threat to mankind, it’s mankind itself. How then can escaping to another planet solve its problems?

What exactly is wrong with saying that we will have to make it here on planet earth? Is it that we’ve already broken and murdered so much? And if that’s the reason, what does that say about us, and what does it say about what we would do to a next planet, even provided we could settle on it (we can’t) ? Doesn’t it say that we are our own worst enemies? And doesn’t the very idea of settling the ‘next planet’ imply that we had better settle things right here first? Like sort of a first condition before we go to Mars, if we ever do?

In order to survive, we don’t need to escape our planet, we need to escape ourselves. Not nearly as easy. Much harder than escaping to Mars. Which already is nothing but a pipedream to begin with.

Moreover, if we can accept that settling things here first before going to Mars is a prerequisite for going there in the first place, we wouldn’t need to go anymore, right?

 

 

We treat this entire extinction episode as if it’s something we’re watching from the outside in, as if it’s something we’re not really a part of. I’ve seen various undoubtedly very well-intentioned ‘green people’, ‘sustainable people’, react to the WWF report by pointing to signs that there is still hope, pointing to projects that reverse some of the decline, chinook salmon on the North American Pacific coast, Malawi farmers that no longer use chemical fertilizers, a giant sanctuary in the Antarctic etc.

That, too, is a form of insanity. Because it serves to lull people into a state of complacency that is entirely unwarranted. And that can therefore only serve to make things worse. There is no reversal, there is no turnaround. It’s like saying if a body doesn’t fall straight down in a continuous line, it doesn’t fall down at all.

The role that green, sustainability, conservationist groups play in our societies has shifted dramatically, and we have failed completely to see this change (as have they). These groups have become integral parts of our societies, instead of a force on the outside warning about what happens within.

Conservationist groups today serve as apologists for the havoc mankind unleashes on its world: all people have to do is donate money at Christmas, and conservation will be taken care of. Recycle a few bottles and plastic wrappings and you’re doing your part to save the planet. It is utterly insane. It’s as insane as the destruction itself. It’s denial writ large, and in the flesh.

It’s not advertized that way, but that doesn’t mean it’s not how it works. Saying that ‘it’s not too late’ is not a call to action as many people continue to believe. It’s just dirt poor psychology. It provides people with the impression, which rapidly turns into an excuse, that there is still time left. As almost 70% of all vertebrates, those animals that are closest to us, have disappeared. When would they say time is up? At 80%, 90%?

 

 

We do not understand why, or even that, we are such a tragically destructive species. And perhaps we can’t. Perhaps that is where our intelligence stops, at providing insight into ourselves. Even the most ‘aware’ amongst us will still tend to disparage their own roles in what goes on. Even they will make whatever it is they still do, and that they know is hurtful to the ecosystem, seem smaller than it is.

Even they will search for apologies for their own behavior, tell themselves they must do certain things in order to live in the society they were born in, drive kids to school, yada yada. We all do that. We soothe our consciences by telling ourselves we mean well, and then getting into our cars to go pick up a carton of milk. Or engage in an equally blind act. There’s too many to mention.

Every species that finds a large amount of free energy reacts the same way: proliferation. The unconscious drive is to use up the energy as fast as possible. If only we could understand that. But understanding it would get in the way of the principle itself. The only thing we can do to stop the extinction is for all of us to use a lot less energy. But because energy consumption provides wealth and -more importantly- political power, we will not do that. We instead tell ourselves all we need to do is use different forms of energy.

Our inbuilt talent for denying and lying (to ourselves and others) makes it impossible for us to see that we have an inbuilt talent for denying and lying in the first place. Or, put another way, seeing that we haven’t been able to stop ourselves from putting the planet into the dismal shape it is in now, why should we keep on believing that we will be able to stop ourselves in the future?

Thing is, an apology for our own behavior is also an apology for everyone else’s. As long as you keep buying things wrapped in plastic, you have no right, you lose your right, to blame the industry that produces the plastic.

 

 

We see ourselves as highly intelligent, and -as a consequence- we see ourselves as a species driven by reason. But we are not. Which can be easily demonstrated by a ‘reverse question’: why, if we are so smart, do we find ourselves in the predicament of having destroyed two thirds of our planet?

Do we have a rational argument to execute that destruction? Of course not, we’ll say. But then why do we do it if rationality drives us? This is a question that should forever cure us of the idea that we are driven by reason. But we’re not listening to the answer to that question. We’re denying, we’re even denying the question itself.

It’s the same question, and the same answer, by the way, that will NOT have us ‘abandon whatever it is we do’ when we read today that 70% of all wildlife will be gone by 2020, that 58% was gone by 2012 and we destroy it at a rate of 2% per year. We’re much more likely to worry much more about some report that says returns on our retirement plans will be much lower than we thought. Or about the economic growth that is too low (as if that is possible with 70% of wildlife gone).

After all, if destroying 70% of wildlife is not enough for a call to action, what would be? 80%? 90? 99%? I bet you that would be too late. And no, relying on conservationist groups to take care of it for us is not a viable route. Because that same 70% number spells out loud and clear what miserable failures these groups have turned out to be.

We ‘assume’ we’re intelligent, because that makes us feel good. Well, it doesn’t make the planet feel good. What drives us is not reason. What drives us is the part of our brains that we share in common with amoeba and bacteria and all other more ‘primitive forms of life, that gobbles up excess energy as fast as possible, in order to restore a balance. Our ‘rational’, human, brain serves one function, and one only: to find ‘rational’ excuses for what our primitive brain has just made us do.

We’re all intelligent enough to understand that driving a hybrid car or an electric car does nothing to halt the havoc we do to our world, but there are still millions of these things being sold. So perhaps we could say that we’re at the same time intelligent enough, and we’re not.

We can see ourselves destroying our world, but we can not stop ourselves from continuing the destruction. Here’s something I wrote 5 years ago:

Most. Tragic. Species. Ever.

We have done exactly the same that any primitive life form would do when faced with a surplus, of food, energy, and in our case credit, cheap money. We spent it all as fast as we can. Lest less abundant times arrive. It’s an instinct, it comes from our more primitive brain segments, not our more “rational” frontal cortex. It’s not that we’re in principle, or talent, more devious or malicious than more primitive life forms. It’s that we use our more advanced brains to help us execute the same devastation our primitive brain drives us to, but much much worse.

That’s what makes us the most tragic species imaginable. We’ll fight each other, even our children, over the last few scraps falling off the table, and kill off everything in our path to get there. And when we’re done, we’ll find a way to rationalize to ourselves why we were right to do so. We can be aware of watching ourselves do what we do, but we can’t help ourselves from doing it. Most. Tragic. Species. Ever.

The greatest miracle you will ever see, that you could ever hope to see, is so miraculous you can’t even recognize it for what it is. We don’t know what the word beautiful means anymore. Or the word valuable. We’ve lost all of that, and are well on our way, well over 70% of it, to losing the rest too.

 

 

 

PS Please note I could not gather all sources for all pictures here, but I’d be more than happy to add them. It’s not that I don’t recognize the effort that goes into them; it’s an emotional thing.

 

 

Oct 022017
 
 October 2, 2017  Posted by at 8:56 am Finance Tagged with: , , , , , , , , ,  


Claude Monet Boulevard des Capucines 1873

 

Catalans Signal They May Declare Independence Within a Week (BBG)
Catalan Referendum Results Show 90% In Favour Of Independence (G.)
Catalan Independence Referendum Is A Smokescreen For Other Issues (Ind.)
Global Retirement Reality: A $400 Trillion Shortfall (Mauldin)
Hedge Funds Are ‘Dancing On The Rim Of A Volcano’ (BI)
CDO Redux: Credit Spreads & Financial Fraud (Whalen)
No, Trump Didn’t Botch the Puerto Rico Crisis (BBG)
Trump Urges Staff To Portray Him As “Crazy Guy” (Axios)
Egypt Fears Disaster From Largest Hydroelectric Dam In Africa (AP)
Planes, Ships, Barges: The DIY Evacuation Of Vanuatu’s Volcano Island (G.)
Climate Change Will Make Some Countries Richer – IMF (BBG)

 

 

An appeal from Puerto Rico via Nicole:

Hurricane Maria destroyed many of Puerto Rico’s local seed and organic food-producing farm crops. Please, if you can, send me seeds. Even fruit seed for the tropics – I can plant them quickly. I will hand them out to those in need – as well as start flats in order to jumpstart their crops. Thank you!

Mara Nieves
PO BOX 9020931
Old San Juan, PR
00901-0931

 

 

Ready for more confrontation.

Catalans Signal They May Declare Independence Within a Week (BBG)

Catalan separatist leaders signaled they may be moving toward a unilateral declaration of independence as early as this week after hundreds of activists were injured on Sunday as they sought to stop Spanish police from shutting down an illegal referendum. Catalan President Carles Puigdemont appealed to the European Union for support as he pledged to inform the regional parliament of the result of the vote in the coming days. The assembly will then act in line with the referendum law, Puigdemont said — and that could lead to a unilateral declaration of independence within 48 hours of the notification. “The citizens of Catalonia have won the right to have an independent state,” Puigdemont said in a televised statement, flanked by members of his regional administration.

Two million Catalans backed independence out of 2.3 million votes cast in total, government spokesman Jordi Turull said at a press conference in the early hours of Monday. Just over 5 million people were eligible to vote. Before the government crackdown began, separatist leaders said they would be comfortable declaring independence with about 1.8 million votes. Puigdemont’s time frame could see him announce the formation of a Catalan republic on Oct. 6, exactly 83 years since his predecessor as regional president, Lluis Companys, also declared independence. Companys was executed by the dictatorship of Francisco Franco. [..] Prime Minister Mariano Rajoy is wrestling with his country’s biggest constitutional crisis since Franco’s death in 1975 as Puigdemont looks to harness decades of frustration to force Catalonia out of Spain.

Heading a minority government, Rajoy is fighting to maintain his authority as allies peel off in the national parliament and his officials struggle to enforce the law in the rebel region. While a declaration of independence would have no legal force, and would most likely not be recognized by the international community, it would nevertheless constitute a historic challenge to the authority of the Spanish government and state institutions. On Sunday night, Rajoy praised police for their “calmness” in defending the constitutional order after they raided polling stations and seized ballot boxes in their efforts to shut down the vote. As forces deployed, camera phones beamed the confrontations to the world. In one video, broadcast by a local newspaper, a woman is seen being thrown down a flight of stairs.

In another, police rip ballot boxes from the hands of would-be electoral officials. “We’ve proved that our rule of law has the resources to repel an attack on democracy of this magnitude,” Rajoy said in a televised statement. “Look for no culprits other than those who organized an illegal act and have broken our common bonds. We’ve witnessed the type of behavior that would be repugnant for any democrat: the indoctrination of children, persecution of judges and journalists.”

Read more …

Just weeks ago there wasn’t even a majority in the polls.

Catalan Referendum Results Show 90% In Favour Of Independence (G.)

Catalan officials have claimed that preliminary results of its referendum have shown 90% in favour of independence in the vote vehemently opposed by Spain. Jordi Turull, the Catalan regional government spokesman, told reporters early on Monday morning that 90% of the 2.26 million Catalans who voted Sunday chose yes. He said nearly 8% of voters rejected independence and the rest of the ballots were blank or void. He said 15,000 votes were still being counted.The region has 5.3 million registered voters. Turull said the number of ballots did not include those confiscated by Spanish police during violent raids which resulted in hundreds of people being injured. At least 844 people and 33 police were reported to have been hurt, including at least two people who were thought to have been seriously injured.

Catalonia’s regional leader, Carles Puigdemont, spoke out against the violence with a pointed address: “On this day of hope and suffering, Catalonia’s citizens have earned the right to have an independent state in the form of a republic. “My government, in the next few days, will send the results of [the] vote to the Catalan parliament, where the sovereignty of our people lies, so that it can act in accordance with the law of the referendum.” Puigdemont had pressed ahead with the referendum despite opposition from the Spanish state, which declared the poll to be illegal, and the region’s own high court. He told crowds earlier in the day that the “police brutality will shame the Spanish state for ever”. The Spanish government defended its response after hundreds of people were hurt when riot police stormed polling stations in a last-minute effort to stop the vote on Sunday.

Read more …

Background.

Catalan Independence Referendum Is A Smokescreen For Other Issues (Ind.)

Tensions are running high in Catalonia, with riot police out in force and protesters advocating their right to vote being shot with rubber bullets. At the time of writing, more than 300 people have been injured and at least one person is currently undergoing surgery as a result of clashes between police and protesters. Police repression, the arresting of politicians and the intransigence of the Spanish government (“there will be no referendum” has been Prime Minister Mariano Rajoy’s favourite refrain over the last few weeks) make the temptation to simplify this into a simple left-right or good-bad discourse tantalising. But this issue is far from simple. Both sides in this debate are using the referendum to further their own political agendas.

Spain’s governing party, the Partido Popular (PP), is a right-wing party housing a spectrum of thought from neoliberalists to the hard-line right. The ruling party in Catalonia, PDeCAT, is a centre right party of the Catalan bourgeois which has historically been the natural ally of PP and not a traditional supporter of independence. Interestingly, their move to advocate a referendum has stopped their support from dropping in recent months. Alongside this, neither the national government nor the Catalan parliament are strangers to corruption in politics. PDeCAT has been plagued with allegations of corruption, debate around which has receded significantly as demands for independence have increased. PP, for its part, has often sought conflict as a means of garnering public support.

Positioning this referendum and the spectre of independence as a threat to Spanish citizens and their economic future – as well as tugging on the strings of nationalist patriotism in demanding the continued unity of Spain – PP has engaged widespread support. In recent days, Spanish flags have poured from windows and balconies, and in towns throughout Spain people have cheered the Civil Guard – Spain’s law enforcement agency which operates on military lines – with football chants advocating the defeat of the opposition. Against this political background, Spain is beginning to emerge from the crisis of which it has been in the grasp of since 2008. However, unemployment, particularly among young people, is still extremely high, with poverty and homelessness rates continuing to rise. Both Catalan and Spanish politicians have invoked nationalism as the banner beneath which popular support can be raised, allowing the referendum and its surrounding debates to create a vacuum in which these pressing social issues are demoted.

Read more …

John Mauldin is a scary man.

Global Retirement Reality: A $400 Trillion Shortfall (Mauldin)

I wrote a letter last June titled “Can You Afford to Reach 100?” Your answer may well be “Yes;” but, if so, you are one of the few. The World Economic Forum study I cited in that letter looked at six developed countries (the US, UK, Netherlands, Japan, Australia, and Canada) and two emerging markets (China and India) and found that by 2050 these countries will face a total savings shortfall of $400 trillion. That’s how much more is needed to ensure that future retirees will receive 70% of their working income. This staggering figure doesn’t even include most of Europe.

[..] The chart below shows the percentage of GDP needed to cover government pension payments in 2015 and 2050. But consider that the percentage of tax revenues required will be much higher. For instance, in Belgium the percentage of GDP going to pensions will be 18% in about 30 years, but that’s 40–50% of total tax revenues. That hunk doesn’t leave much for other budgetary items. Greece, Italy, Spain? Not far behind. And there is other research that makes the above numbers seem optimistic by comparison. The problem that the European economies have is that for the most part they are already massively in debt and have high tax rates. And they can’t print their own currencies. Many of Europe’s private pension companies and corporations are also in seriously deep kimchee. Low and negative interest rates have devastated the ability of pension funds to grow their assets.

Combined with public pension liabilities, the total cost of meeting the income and healthcare needs of retirees is going to increase dramatically all across Europe. Macron, the new French president, really is trying to shake up the old order, to his credit; and this week he came out and began to lay the foundation for the mutualization of all European debt, which I assume would end up on the balance sheet of the ECB. However, that plan still doesn’t deal with the unfunded liabilities. Do countries just run up more debt? It seems like the plan is to kick the can down the road just a little further, something Europe is becoming really good at. In this next chart, note the line running through each of the countries, showing their debt as a percentage of GDP. Italy’s is already over 150%. And this is a chart based mostly on 2006 and earlier data. A newer chart would be much uglier.

I could go on reviewing the retirement problems in other countries, but I hope you begin to see the big picture. This crisis isn’t purely a result of faulty politics – though that’s a big contributor – it’s a problem that is far bigger than even the most disciplined, future-focused governments and businesses can easily handle. Look what we’re trying to do. We think people can spend 35–40 years working and saving, then stop working and go on for another 20–30–40 years at the same comfort level – but with a growing percentage of retirees and a shrinking number of workers paying into the system. I’m sorry, but that’s magical thinking. And it’s not what the original retirement schemes envisioned at all. Their goal was to provide for a relatively small number of elderly people who were unable to work. Life expectancies were such that most workers would not reach that point, or would at least live just a few years beyond retirement.

As I have pointed out in past letters, when Franklin Roosevelt created Social Security for people over 65 years old, US life expectancy was about 56 years. If the retirement age had kept up with the increase in life expectancy, the retirement age in the US would now be 82. Try and sell that to voters. Worse, generations of politicians have convinced the public that not only is a magical outcome possible, it is guaranteed. Many politicians actually believe it themselves. They aren’t lying so much as just ignoring reality. They’ve made promises they aren’t able to keep and are letting others arrange their lives based on the assumption that the impossible will happen. It won’t.

Read more …

“..betting on the VIX is a ‘quick way to lose money.'”

Hedge Funds Are ‘Dancing On The Rim Of A Volcano’ (BI)

The market is calm. Perhaps too calm. The lack of price swings has investors mired in a sea of complacency, which has them ignoring potential risks, says Societe Generale. The firm specifically cites the CBOE Volatility Index – or VIX – which is used to track nervousness in the US stock market. Not only is the so-called fear gauge locked near the lowest levels on record, but hedge funds are betting it’ll decline even further. Their VIX positioning is the most bearish on record, according to data compiled by the US Commodity Futures Trading Commission. “Compare that with dancing on the rim of a volcano,” a group of SocGen strategists led by Alain Bokobza, the firm’s head of global asset allocation, wrote in a client note. “If there is a sudden eruption (of volatility) you get badly burned.”

This isn’t the first time SocGen has issued a warning about low volatility. Two weeks ago, the firm drew parallels to conditions leading up to the 2007 financial crisis. Describing the current situation as a “dangerous volatility regime,” the firm cited the strong mean-reverting tendency of price swings as a big reason why investors should be bracing themselves. Other heavyweights in the investment field have also spoken out about the low-price-swing situation that they see as untenable. In late July, JPMorgan global head of quantitative and derivatives strategy Marko Kolanovic compared rock-bottom volatility to the conditions leading up to the 1987 stock market crash. [..] Laszlo Birinyi, the investment guru who predicted the bull market and has been repeatedly correct over its 8 1/2-year run, said that betting on the VIX is a “quick way to lose money.”

Read more …

“..the large banks cannot survive without cheating customers, creditors and shareholders..”

CDO Redux: Credit Spreads & Financial Fraud (Whalen)

The moral of the story with Citi and other large banks is that there is no free lunch, but sadly no one on the FOMC seems to appreciate this subtlety. When the Fed pushes down interest rates and then manipulates credit spreads to achieve some illusory goal in terms of monetary policy, the result is a change in the behavior of investors and lenders that is profound. The fact that Citi, JPM and GS are now pushing back into the dangerous world of off-balance sheet (OBS) derivatives just illustrates the fact that the large banks cannot survive without cheating customers, creditors and shareholders. And just as retailers cannot compete with AMZN, Citi and GS certainly cannot compete against the monopoly power of the House of Morgan. In the case both of Citi and JPM, just half of the banks’ operating business comes from lending, while the remainder comes from risk bearing investments and trading.

With some $50 trillion in off-balance sheet (OBS) derivatives, which is almost six standard deviations above the $1.8 trillion peer average for large banks, Citi and JPM are now the outliers on Wall Street in terms of derivatives exposure. A move of 30bp in the OBS derivatives book of either bank would wipe out their capital. Chart One below shows the OBS derivatives exposure of Citi, JPM, GS and the other major banks. Notice that all three of the leading derivatives dealers have been increasing exposures since last year. Note too that the relatively small GS has a notional OBS derivatives book of more than $41 trillion, almost as large as that of Citi and JPM. More alarming, a move of just 7bp in the smaller bank’s OBS derivatives exposures would wipe out the capital of Goldman’s subsidiary bank. This gives GS an effective leverage ratio vs its notional OBS derivatives exposures of 8,800 to 1.

Read more …

Yesterday it was the HuffPo, now Bloomberg. Blaming Trump unfairly is a bad approach. Exit echo chamber.

No, Trump Didn’t Botch the Puerto Rico Crisis (BBG)

[..] to look at the larger context of the entire relief operation, I decided to talk to someone whose experience rivals that of General Honore: retired Navy Captain Jerry Hendrix. Now a senior fellow with the Center for a New American Security, Hendrix served for decades both on the high seas and in high-level staff jobs, including with the Chief of Naval Operations’ Executive Panel and the Office of the Undersecretary of Defense for Policy’s Irregular Warfare Quadrennial Defense Review. Few people know more about military history than Hendrix, who has degrees from Purdue, Harvard, the Naval Postgraduate School and a Ph.D. from Kings College in London. Little wonder that in 2012 was named the service’s director of naval history.

TH: So, it seems like everybody has blasted Trump administration’s response to the Puerto Rico crisis. Has that criticism been fair?

JH: No, I don’t think so. First of all, there was a fair amount of anticipatory action that is not being recognized. Amphibious ships including the light amphibious carriers Kearsarge and Wasp and the amphibious landing ship dock Oak Hill were at sea and dispatched to Puerto Rico ahead of the hurricane’s impact. These are large ships that have large flight decks to land and dispatch heavy-lift CH-53 helicopters to and from disaster sites. They also have big well-decks – exposed surfaces that are lower than the fore and aft of the ship – from which large landing craft can be dispatched to shore carrying over 150 tons of water, food and other supplies on each trip. These are actually the ideal platforms for relief operations owing to their range of assets. The ships, due to their designs to support Marine amphibious landings in war zones, also have hospitals onboard to provide medical treatment on a large scale. That these ships were in the area should be viewed as a huge positive for the administration and the Department of Defense.

TH: Your plaudits toward the White House on all this are surprising to say the least. But where does the response still need to improve?

JH: One area in which the Trump administration could possibly lend additional assistance would be looking at a more robust activation of its assets in the Defense Department’s Transportation Command to include more heavy-lift and cargo aircraft, as well as Maritime Administration shipping to move the logistics-heavy large infrastructure items on the ocean. Everything from bulldozers to transformers needs to come by ships, and it’s been decades since it was really flexed to its full capacity. This would have the dual purpose of revealing any significant weaknesses in the Transportation Command assets and readiness should we need it in a military emergency down the road.

Read more …

Does this mean everybody gets what they want?

Trump Urges Staff To Portray Him As “Crazy Guy” (Axios)

In an Oval Office meeting earlier this month, President Trump gave his top trade negotiator, Robert Lighthizer, an Art of the Deal-style coaching session on how to negotiate with the South Koreans. Trump’s impromptu coaching came in the middle of a pivotal conversation with top officials about whether or not to withdraw from the U.S.-Korean trade deal. Sources familiar with the conversation recounted the exchange for Axios, and the White House did not dispute this account. A number of senior officials and cabinet secretaries were present for the conversation, including Defense Secretary Mattis, Agriculture Secretary Perdue, and Secretary of State Tillerson. At issue was whether the U.S. would withdraw from the Korean trade deal — an action Trump threatened but still hasn’t done.

“You’ve got 30 days, and if you don’t get concessions then I’m pulling out,” Trump told Lighthizer. “Ok, well I’ll tell the Koreans they’ve got 30 days,” Lighthizer replied. “No, no, no,” Trump interjected. “That’s not how you negotiate. You don’t tell them they’ve got 30 days. You tell them, ‘This guy’s so crazy he could pull out any minute.'” “That’s what you tell them: Any minute,” Trump continued. “And by the way, I might. You guys all need to know I might. You don’t tell them 30 days. If they take 30 days they’ll stretch this out.” Why this matters: Plenty of world leaders think the president is crazy — and he seems to view that madman reputation as an asset. The downsides are obvious: the rhetoric can unnerve allies and has the potential to provoke enemies into needless, unintended war. But Trump keeps using the tactic, with varying degrees of success:

Just today, the president undercut his secretary of state by suggesting diplomacy with “Little Rocket Man” in North Korea was a waste of time — implying that only military action would resolve the conflict. “Save your energy Rex,” Trump tweeted, “we’ll do what has to be done!” We’ve never seen anything like this before. Trump’s tweet, undercutting Tillerson’s diplomatic efforts, comes a day after Tillerson acknowledged for the first time that the administration was in direct communication with North Korea. Trump’s tweet also undercuts a statement made Tuesday by Joint Chiefs Chairman General Dunford: “The military dimension today is in full support of the economic and diplomatic pressure campaign the secretary of state is leading in North Korea.”

Read more …

The kind of thing that can lead to war.

Egypt Fears Disaster From Largest Hydroelectric Dam In Africa (AP)

The only reason Egypt has even existed from ancient times until today is because of the Nile River, which provides a thin, richly fertile stretch of green through the desert. For the first time, the country fears a potential threat to that lifeline, and it seems to have no idea what to do about it. Ethiopia is finalizing construction of the Grand Ethiopian Renaissance Dam, its first major dam on the Blue Nile, and then will eventually start filling the giant reservoir behind it to power the largest hydroelectric dam in Africa. Egypt fears that will cut into its water supply, destroying parts of its precious farmland, hampering its large desert reclamation projects and squeezing its bourgeoning population of 93 million people, who already face water shortages. Dam construction on international rivers often causes disputes over the downstream impact.

But the Nile is different: few nations rely so completely on a single river as much as Egypt does. The Nile provides over 90% of Egypt’s water supply. Almost the entire population lives cramped in the sliver of the Nile Valley. Around 60% of Egypt’s Nile water originates in Ethiopia from the Blue Nile, one of two main tributaries. Egypt barely gets by with the water it does have. Because of its population, it has one of the lowest per capita shares of water in the world, some 660 cubic meters a person. The strain is further worsened by widespread inefficiency and waste. With the population on a path to double in 50 years, shortages are predicted to become severe even sooner, by 2025. That is despite the fact that Egypt already receives the lion’s share of Nile waters: more than 55 billion of the around 88 billion cubic meters of water that flow down the river each year.

It is promised that amount under agreements from 1929 and 1959 that other Nile nations say are unfair and ignore the needs of their own large populations. Complicating the issue, no one has a clear idea what impact Ethiopia’s dam will actually have. Addis Ababa says it will not cause significant harm to Egypt or Sudan downstream. Much depends on management of the flow and how fast Ethiopia fills its reservoir, which can hold 74 billion cubic meters of water. A faster fill means blocking more water at once, while doing it slowly would mean less reduction downstream.[..] One study by a Cairo University agriculture professor estimated Egypt would lose a staggering 51% of its farmland if the fill is done in three years. A somewhat slower fill over six years would cost Egypt 17% of its cultivated land, the study claimed

Read more …

“..its 83 islands are stuck right in the middle of hurricane alley and they dot the border of the “ring of fire”..”

Planes, Ships, Barges: The DIY Evacuation Of Vanuatu’s Volcano Island (G.)

Vanuatu is no stranger to the rumblings, shakings, flood waters and wrecking winds of natural disaster. The south Pacific island nation was rated the most at-risk country in the world in a 2016 United Nations study. Its 83 islands are stuck right in the middle of hurricane alley and they dot the border of the “ring of fire” – a belt around the Pacific prone to earthquakes and volcanic eruptions. Despite their precarious situation being a day-to-day reality, the country has been galvanised by the prime minister Charlot Salwai’s order to evacuate the entire island of Ambae because of the threat that the volcano at its centre will blow. “People’s lives must be our first priority,” Salwai said. “Everybody has to go.” What followed has been Vanuatu’s own version of the Dunkirk evacuation. Folk began organising even before Salwai gave the order.

The Ni-Vanuatu – the people of this archipelago – are defined by two things: land and family. From the moment a state of emergency was announced, members of the Ambae community in Port Vila, the capital, began to mobilise. They knew better than to wait for the cash-strapped, resource-starved government and instead jury-rigged a disaster response centre at a church. Local companies began donating goods immediately. Before long they had stockpiles of water, food, bedding and other essentials ready to send. Then they chartered a ship. The MV Makila was one of the first of Vanuatu’s ragtag fleet of inter-island barges and coasters to reach Ambae with supplies. It unloaded those goods then took more than 100 passengers to safety on the nearby island of Espiritu Santo. Then it went back and did it again.

There was no hesitation, no reflection. The ships had to run. So the community members dug deep and shifted for themselves. [..] Nadia Kanegai has been a personal assistant to a prime minister, and a former political candidate herself. A past master at getting things done by Vanuatu’s often shambolic bureaucracy, she didn’t flinch at the difficulties presented by moving hundreds of her home island’s most vulnerable inhabitants to safety. She just hired a plane and told the pilot to keep flying until everyone was out. Kanegai won’t discuss how much this airlift is costing her, but whistle-stop charter flights to the outer islands typically cost the equivalent of £1,000 for a return hop. Her plane made 18 flights on the first day alone.

Read more …

Bloomberg headline “Why Russia Should Love Climate Change Deniers”. Because that sells better than Mongolia?

Climate Change Will Make Some Countries Richer – IMF (BBG)

President Donald Trump and other climate-change deniers probably don’t think of themselves as contributing to Russia’s future prosperity. But judging from a new International Monetary Fund report, that’s what they might be doing. In its latest World Economic Outlook, the IMF offers a sobering analysis of global warming’s potential repercussions. Looking at the historical relationship between climate and economic output, it finds that poor countries in hot regions – home to a majority of the world’s population – are likely to suffer the most as average temperatures rise. Here’s a map showing the effect of a one-degree-Celsius temperature increase on per-capita GDP, with countries scaled to reflect their populations:

Gazing at the map, though, I couldn’t help but ask: What about the winners? Those green areas in the north certainly suggest that somebody stands to gain. So I downloaded the data to see which countries would get a per-capita GDP boost. Mongolia, Iceland, Finland and Russia topped the IMF’s list. Here’s the whole thing:

To be sure, this doesn’t mean that the countries will turn into a tropical paradises. For one, the researchers derived their estimates from the relatively small weather fluctuations of the past – nobody can really know what will happen if temperatures go beyond what humans have experienced. Also, don’t forget bigger natural disasters, forced migrations and all the other ills that climate change is expected to bring. That said, the data do suggest that Russia could, at least initially, be an unintended beneficiary of what amounts to a global injustice of epic proportions. Look again at that map: The poor countries in the south stand to bear the brunt of a catastrophe created largely by the wealthy countries in the middle, while the countries in the north get a windfall. That’s an outcome to which Trump, by downplaying the dangers of global warming and withdrawing from the Paris climate accord, has already made a significant contribution.

Read more …

Dec 082016
 
 December 8, 2016  Posted by at 4:05 pm Finance Tagged with: , , , , , , , , , ,  


Caters Extremely rare albino elephant, Kruger National Park in South Africa

 

Everything dies, baby, that’s a fact
But maybe everything that dies someday comes back …

Springsteen, Atlantic City

“Erwin Schrodinger (1945) has described life as a system in steady-state thermodynamic disequilibrium that maintains its constant distance from equilibrium (death) by feeding on low entropy from its environment – that is, by exchanging high-entropy outputs for low-entropy inputs. The same statement would hold verbatium as a physical description of our economic process. A corollary of this statement is that an organism cannot live in a medium of its own waste products.”
Herman Daly and Kenneth Townsend

 

What drives our economies is waste. Not need, or even demand. Waste. 2nd law of thermodynamics. It drives our lives, period.

First of all, don’t tell me you’re trying to stop the ongoing extinction of nature and wildlife on this planet, or the destruction of life in general. Don’t even tell me you’re trying. Don’t tell me it’s climate change that we should focus on (that’s just a small part of the story), and you’re driving an electric car and you’re separating your trash or things like that. That would only mean you’re attempting to willfully ignore your share of destruction, because if you do it, so will others, and the planet can’t take anymore of your behavior.

This is the big one. And the only ones amongst us who don’t think so are those who don’t want to. Who think it’s easier to argue that some problems are too big for them to tackle, that they should be left to others to solve. But why should we, why should anyone, worry about elections or even wars, when it becomes obvious we’re fast approaching a time when such things don’t matter much anymore?

The latest WWF Living Planet Report shows us that the planet is a whole lot less alive than it used to be. And that we killed that life. That we replaced it with metal, bricks, plastic and concrete. Mass consumption leads to mass extinction. And that is fully predictable, it always was; there’s nothing new there.

We killed 58% of all vertebrate wildlife just between 1970 and 2012, and at a rate of 2% per year we will have massacred close to 70% of it by 2020, just 4 years from now. So what does it matter who’s president of just one of the many countries we invented on this planet? Why don’t we address what’s really crucial to our very survival instead?

 

 

The latest report from the WWF should have us all abandon whatever it is we’re doing, and make acting to prevent further annihilation of our living world the key driver in our everyday lives, every hour of every day, every single one of us. Anything else is just not good enough, and anything else will see us, that self-nominated intelligent species, annihilated in the process.

Granted, there may be a few decrepit and probably halfway mutant specimens of our species left, living in conditions we couldn’t even begin, nor dare, to imagine, with what will be left of their intelligence wondering how our intelligence could have ever let this happen. You’d almost wish they’ll understand as little as we ever did; that some form of ignorance equal to ours will soften their pain.

It’s important to note that the report does not describe a stagnant situation, there’s no state of affairs, not something still, it describes an ongoing and deteriorating process. That is, we don’t get to choose to stop the ongoing wildlife annihilation at 70%; we are witnessing, and indeed we are actively involved in, raising that number by 2% every year that we ‘live’ (can we even call it that anymore, are you alive when you murder all life around you?) in this world.

This is our only home.

 

 

Without the natural world that we were born into, or rather that our species, our ancestors, were born into, we have zero chance of survival. Because it is the natural world that has allowed for, and created, the conditions that made it possible for mankind to emerge and develop in the first place. And we are nowhere near making an earth 2.0; the notion itself is preposterous. A few thousand years of man ‘understanding’ his world is no match for billions of years of evolution. That’s the worst insult to whatever intelligence it is that we do have.

Much has been made through the years of our ability to adapt to changing circumstances, and much of that is just as much hubris as so much of what we tell ourselves, but the big question should be WHY we would volunteer to find out to what extent we can adapt to a world that has sustained the losses we cause it to suffer. Even if we could to a degree adapt to that, why should we want to?

Two thirds of our world is gone, and it’s we who have murdered it, and what’s worse – judging from our lifestyles- we seem to have hardly noticed at all. If we don’t stop what we’ve been doing, this can lead to one outcome only: we will murder ourselves too. Our perhaps biggest problem (even if we have quite a few) in this regard is our ability and propensity to deny this, as we deny any and all -serious, consequential- wrongdoing.

 

 

There are allegedly serious and smart people working on, dreaming of, and getting billions in subsidies for, fantasies of human colonies on Mars. This is advertized as a sign of progress and intelligence. But that can only be true if we can acknowledge that our intelligence and our insanity are identical twins. Because it is insane to destroy the planet on which we depend one-on-one for everything that allows us to live, and at the same time dream of human life on another planet.

While I see no reason to address the likes of King of Subsidies Elon Musk, Stephen Hawking is different. Unfortunately, in Hawking’s case, with all his intelligence, it’s his philosophical capacity that goes missing.

Humanity Will Not Survive Another 1,000 Years If We Don’t Escape Our Planet

Professor Stephen Hawking has warned humanity will not survive another 1,000 years on Earth unless the human race finds another planet to live on. [..] Professor Hawking, 74, reflected on the understanding of the universe garnered from breakthroughs over the past five decades, describing 2016 as a “glorious time to be alive and doing research into theoretical physics”. “Our picture of the universe has changed a great deal in the last 50 years and I am happy if I have made a small contribution,“ he went on.

”The fact that we humans, who are ourselves mere fundamental particles of nature, have been able to come this close to understanding the laws that govern us and the universe is certainly a triumph.” Highlighting “ambitious” experiments that will give an even more precise picture of the universe, he continued: “We will map the position of millions of galaxies with the help of [super] computers like Cosmos. We will better understand our place in the universe.”

“But we must also continue to go into space for the future of humanity. I don’t think we will survive another 1,000 years without escaping beyond our fragile planet.”

The tragedy is that we may have gained some knowledge of natural laws and the universe, but we are completely clueless when it comes to keeping ourselves from destroying our world. Mars is an easy cop-out. But Mars doesn’t solve a thing. Because it’s -obviously- not the ‘fragile planet’ earth that is a threat to mankind, it’s mankind itself. How then can escaping to another planet solve its problems?

What exactly is wrong with saying that we will have to make it here on planet earth? Is it that we’ve already broken and murdered so much? And if that’s the reason, what does that say about us, and what does it say about what we would do to a next planet, even provided we could settle on it (we can’t) ? Doesn’t it say that we are our own worst enemies? And doesn’t the very idea of settling the ‘next planet’ imply that we had better settle things right here first? Like sort of a first condition before we go to Mars, if we ever do?

In order to survive, we don’t need to escape our planet, we need to escape ourselves. Not nearly as easy. Much harder than escaping to Mars. Which already is nothing but a pipedream to begin with.

Moreover, if we can accept that settling things here first before going to Mars is a prerequisite for going there in the first place, we wouldn’t need to go anymore, right?

 

 

We treat this entire extinction episode as if it’s something we’re watching from the outside in, as if it’s something we’re not really a part of. I’ve seen various undoubtedly very well-intentioned ‘green people’, ‘sustainable people’, react to the WWF report by pointing to signs that there is still hope, pointing to projects that reverse some of the decline, chinook salmon on the North American Pacific coast, Malawi farmers that no longer use chemical fertilizers, a giant sanctuary in the Antarctic etc.

That, too, is a form of insanity. Because it serves to lull people into a state of complacency that is entirely unwarranted. And that can therefore only serve to make things worse. There is no reversal, there is no turnaround. It’s like saying if a body doesn’t fall straight down in a continuous line, it doesn’t fall down at all.

The role that green, sustainability, conservationist groups play in our societies has shifted dramatically, and we have failed completely to see this change (as have they). These groups have become integral parts of our societies, instead of a force on the outside warning about what happens within.

Conservationist groups today serve as apologists for the havoc mankind unleashes on its world: all people have to do is donate money at Christmas, and conservation will be taken care of. Recycle a few bottles and plastic wrappings and you’re doing your part to save the planet. It is utterly insane. It’s as insane as the destruction itself. It’s denial writ large, and in the flesh.

It’s not advertized that way, but that doesn’t mean it’s not how it works. Saying that ‘it’s not too late’ is not a call to action as many people continue to believe. It’s just dirt poor psychology. It provides people with the impression, which rapidly turns into an excuse, that there is still time left. As almost 70% of all vertebrates, those animals that are closest to us, have disappeared. When would they say time is up? At 80%, 90%?

 

 

We do not understand why, or even that, we are such a tragically destructive species. And perhaps we can’t. Perhaps that is where our intelligence stops, at providing insight into ourselves. Even the most ‘aware’ amongst us will still tend to disparage their own roles in what goes on. Even they will make whatever it is they still do, and that they know is hurtful to the ecosystem, seem smaller than it is.

Even they will search for apologies for their own behavior, tell themselves they must do certain things in order to live in the society they were born in, drive kids to school, yada yada. We all do that. We soothe our consciences by telling ourselves we mean well, and then getting into our cars to go pick up a carton of milk. Or engage in an equally blind act. There’s too many to mention.

Every species that finds a large amount of free energy reacts the same way: proliferation. The unconscious drive is to use up the energy as fast as possible. If only we could understand that. But understanding it would get in the way of the principle itself. The only thing we can do to stop the extinction is for all of us to use a lot less energy. But because energy consumption provides wealth and -more importantly- political power, we will not do that. We instead tell ourselves all we need to do is use different forms of energy.

Our inbuilt talent for denying and lying (to ourselves and others) makes it impossible for us to see that we have an inbuilt talent for denying and lying in the first place. Or, put another way, seeing that we haven’t been able to stop ourselves from putting the planet into the dismal shape it is in now, why should we keep on believing that we will be able to stop ourselves in the future?

Thing is, an apology for our own behavior is also an apology for everyone else’s. As long as you keep buying things wrapped in plastic, you have no right, you lose your right, to blame the industry that produces the plastic.

 

 

We see ourselves as highly intelligent, and -as a consequence- we see ourselves as a species driven by reason. But we are not. Which can be easily demonstrated by a ‘reverse question’: why, if we are so smart, do we find ourselves in the predicament of having destroyed two thirds of our planet?

Do we have a rational argument to execute that destruction? Of course not, we’ll say. But then why do we do it if rationality drives us? This is a question that should forever cure us of the idea that we are driven by reason. But we’re not listening to the answer to that question. We’re denying, we’re even denying the question itself.

It’s the same question, and the same answer, by the way, that will NOT have us ‘abandon whatever it is we do’ when we read today that 70% of all wildlife will be gone by 2020, that 58% was gone by 2012 and we destroy it at a rate of 2% per year. We’re much more likely to worry much more about some report that says returns on our retirement plans will be much lower than we thought. Or about the economic growth that is too low (as if that is possible with 70% of wildlife gone).

After all, if destroying 70% of wildlife is not enough for a call to action, what would be? 80%? 90? 99%? I bet you that would be too late. And no, relying on conservationist groups to take care of it for us is not a viable route. Because that same 70% number spells out loud and clear what miserable failures these groups have turned out to be.

We ‘assume’ we’re intelligent, because that makes us feel good. Well, it doesn’t make the planet feel good. What drives us is not reason. What drives us is the part of our brains that we share in common with amoeba and bacteria and all other more ‘primitive forms of life, that gobbles up excess energy as fast as possible, in order to restore a balance. Our ‘rational’, human, brain serves one function, and one only: to find ‘rational’ excuses for what our primitive brain has just made us do.

We’re all intelligent enough to understand that driving a hybrid car or an electric car does nothing to halt the havoc we do to our world, but there are still millions of these things being sold. So perhaps we could say that we’re at the same time intelligent enough, and we’re not.

We can see ourselves destroying our world, but we can not stop ourselves from continuing the destruction. Here’s something I wrote 5 years ago:

Most. Tragic. Species. Ever.

We have done exactly the same that any primitive life form would do when faced with a surplus, of food, energy, and in our case credit, cheap money. We spent it all as fast as we can. Lest less abundant times arrive. It’s an instinct, it comes from our more primitive brain segments, not our more “rational” frontal cortex. It’s not that we’re in principle, or talent, more devious or malicious than more primitive life forms. It’s that we use our more advanced brains to help us execute the same devastation our primitive brain drives us to, but much much worse.

That’s what makes us the most tragic species imaginable. We’ll fight each other, even our children, over the last few scraps falling off the table, and kill off everything in our path to get there. And when we’re done, we’ll find a way to rationalize to ourselves why we were right to do so. We can be aware of watching ourselves do what we do, but we can’t help ourselves from doing it. Most. Tragic. Species. Ever.

The greatest miracle you will ever see, that you could ever hope to see, is so miraculous you can’t even recognize it for what it is. We don’t know what the word beautiful means anymore. Or the word valuable. We’ve lost all of that, and are well on our way, well over 70% of it, to losing the rest too.

 

 

 

PS Please note I could not gather all sources for all pictures here, but I’d be more than happy to add them. It’s not that I don’t recognize the effort that goes into them; it’s an emotional thing.

 

 

Dec 122015
 
 December 12, 2015  Posted by at 4:23 pm Finance Tagged with: , , , , , , ,  


Nickolay Lamm Jefferson Memorial under 25 feet of water

French Foreign Minister Laurent Fabius just announced, in Paris, a “legally binding agreement” that no-one has agreed the financing for. We can hear a couple thousand lawyers across the globe snicker. But it’s all the COP21 ‘oh-so-important’ climate conference managed to come up with. No surprises there. They couldn’t make the 2ºC former goal stick, so they go for 1.5ºC this time. All on red, double or nothing. Because who really cares among the leadership, just as long as the ‘targets’ are far enough away that they can’t be held accountable.

I’ve been writing the following through the past days, and wondering if I should post it, because I know so many readers of the Automatic Earth have so much emotion invested in these things, and they’re good and fine emotions. But some things must still be said regardless of consequences. Precisely because of that kind of reaction. No contract is legally binding if there’s no agreement on payment. Nobody has a legal claim on your home without it being specified that, if, when and how they’re going to pay for it.

I understand some people may get offended by some of the things I have to say about this – though not all for the same reasons either-, but please try and understand that and why the entire CON21 conference has offended me. After watching the horse and pony show just now, I thought I’d let ‘er rip:

I don’t know what makes me lose faith in mankind faster, the way we destroy our habitat through wanton random killing of everything alive, plants, animals and people, through pollution and climate change and blood-thirsty sheer stupidity, or if it is the way these things are being ‘protested’.

I’m certainly not a climate denier or anything like that, though I do think there are questions people gloss over very easily. And one of those questions has to be that of priorities. Is there anyone who has thought over whether the COP21 stage in Paris is the right one to target in protest, whatever shape it takes? Is there anyone who doesn’t think the ‘leaders’ are laughing out loud in -plush, fine wine and gourmet filled- private about the protests?

Protesters and other well-intended folk, from what I can see, are falling into the trap set for them: they are the frame to the picture in a political photo-op. They allow the ‘leaders’ to emanate the image that yes, there are protests and disagreements as everyone would expect, but that’s just a sign that people’s interests are properly presented, so all’s well.

COP21 is not a major event, that’s only what politicians and media make of it. In reality, it’s a mere showcase in which the protesters have been co-opted. They’re not in the director’s chair, they’re not even actors, they’re just extras.

I fully agree, and more than fully sympathize, with the notion of saving this planet before it’s too late. But I wouldn’t want to rely on a bunch of sociopaths to make it happen. There are children drowning every single day in the sea between Turkey and Greece, and the very same world leaders who are gathered in Paris are letting that happen. They have for a long time, without lifting a finger. And they’ve done worse -if that is possible-.

The only thing standing between the refugees and even greater and more lethal carnage are a wide, even confusingly so, array of volunteers, and the people of the Greek coastguard, who by now must be so traumatized from picking up little wide-eyed lifeless bodies from the water and the beaches, they’ll live the rest of their lives through sleepless nightmares.

Neither Obama nor Merkel nor Hollande will have those same nightmares. And let’s be honest, will you? You weren’t even there. And still, you guys are targeting a conference in Paris on climate change that features the exact same leaders that let babies drown with impunity. Drowned babies, climate change and warfare, these things all come from the same source. And you’re appealing to that very same source to stop climate change.

What on earth makes you think the leaders you appeal to would care about the climate when they can’t be bothered for a minute with people, and the conditions they live in, if they’re lucky enough to live at all? Why are you not instead protesting the preventable drownings of innocent children? Or is it that you think the climate is more important than human life? That perhaps one is a bigger issue than the other?

Moreover, the very same leaders that you for some reason expect to save the planet -which they won’t- don’t just let babies drown, they also, in the lands the refugees are fleeing, kill children and their parents on a daily basis with bombs and drones. Dozens, hundreds, if not thousands, every single day. That’s how much they care for a ‘healthy’ planet (how about we discuss what that actually is?).

And in the hallways of the CON21 conference they’ve been actively discussing plans to do more of the same, more killing, more war. Save the world, bombs away! That’s their view of the planet. And they’re supposed to save ‘the climate’?

There are a number of reasons why the CON21 conference will not move us one inch towards saving this planet. One of the biggest is outlined in just a few quoted words from a senior member of India’s delegation -nothing new, but a useful reminder.

India Opposes Deal To Phase Out Fossil Fuels By 2100

India would reject a deal to combat climate change that includes a pledge for the world to wean itself off fossil fuels this century, a senior official said, underlying the difficulties countries face in agreeing how to slow global warming.

India, the world’s third largest carbon emitter, is dependent on coal for most of its energy needs, and despite a pledge to expand solar and wind power has said its economy is too small and its people too poor to end use of the fossil fuel anytime soon. “It’s problematic for us to make that commitment at this point in time. It’s certainly a stumbling block (to a deal),” Ajay Mathur, a senior member of India’s negotiating team for Paris, told Reuters in an interview this week.

“The entire prosperity of the world has been built on cheap energy. And suddenly we are being forced into higher cost energy. That’s grossly unfair,” he said.

This means the ‘poorer’ countries, -by no means just India; China has 155 more coal plants in the pipeline despite their pollution levels moving ‘beyond index’-, the poorer counties won’t volunteer to lower their emissions unless richer nations lower theirs even a lot more. US per capita emissions are over 10 times higher than India’s, those of the EU six times. Ergo: Step 1: lower US emissions by 90%. It also means that richer nations won’t do this, because it would kill their economies.

Which, in case you haven’t noticed, are already doing very poorly, much worse than the media -let alone politicians- will tell you. In fact, the chances that the richer countries will ‘recover’ from the effects of their debt binge are about on par with those of renewable energy sources becoming cheaper than fossil fuels -barring subsidies. If only because producing them depends entirely on those same fossil fuels. All the rest of what you hear is just con.

The people of India obviously know it, and you might as well. It’s going to cost many trillions of dollars to replace even a halfway substantial part of our fossil energy use with renewables, and we already don’t have that kind of money today. We will have much less tomorrow.

Besides, despite all the talk of Big Oil turning into Big Energy, Shell et al are not energy companies, they’re oil -and gas- companies, and they’ll defend their (near) monopolies tooth and claw. Especially now that their market caps are sinking like so many stones. They have no money left to invest in anything, let alone an industry that’s not theirs. They lost some $250 billion in ‘value’ this week alone. They’re getting killed.

In the same vein, China can’t close more than a token few of its most polluting plants. China’s getting killed economically. And for all nations and corporations there’s one principle that trumps all: competitive advantage. If going ‘green’ means losing that, or even some of it, forget it. We won’t volunteer to go green if it makes us less rich.

And who do you think represents big oil -and the bankers that finance them- more than anyone else? Right, your same leaders again, who make you pay for the by now very extensive and expensive security details that keep them from having to face you. Just like they’re planning to make you pay dearly for the illusion of a world running on renewables.

Because that’s where the profit is: in the illusion.

Whatever makes most money is what will drive people’s, corporations’, and nations’ actions going forward. Saving energy and/or substituting energy sources is not what makes most money, and it will therefore not happen. Not on any meaningful scale, that is.

There will be attempts to force people to pay through the nose to soothe their consciences -which will be very profitable for those on the receiving end-, but people’s ability to pay for this is shrinking fast, so that won’t go anywhere.

The only thing that could help save this planet is for all westerners to reduce their energy use by 90%+, but, though it is theoretically and technically feasible, it won’t happen because the majority of us won’t give up even a part of our wealth, and the powers that be in today’s economies refuse to see their profits (re: power) and those of their backers go up in -ever hotter- air.

The current economic model depends on our profligate use of energy. A new economic model, then, you say? Good luck with that. The current one has left all political power with those who profit most from it. And besides, that’s a whole other problem, and a whole other issue to protest.

If you’re serious about wanting to save the planet, and I have no doubt you are, then I think you need to refocus. COP21 is not your thing, it’s not your stage. It’s your leaders’ stage, and your leaders are not your friends. They don’t even represent you either. The decisions that you want made will not be made there.

There will be lofty declarations loaded with targets for 2030, 2050 and 2100, and none of it will have any real value. Because none of the ‘leaders’ will be around to be held accountable when any of those dates will come to pass.

An imploding global economy may be your best shot at lowering emissions. But then again, it will lead to people burning anything they can get their hands on just to keep warm. Not a pretty prospect either. To be successful, we would need to abandon our current political and economic organizational structures, national governments and ‘up’, which select for the sociopaths that gather behind their heavy security details to decide on your future while gloating with glee in their power positions.

Better still, we should make it impossible for any single one of them to ever be elected to any important position ever again. For now, though, our political systems don’t select for those who care most for the world, or its children. We select for those who promise us the most wealth. And we’re willing to turn a blind eye to very many things to acquire that wealth and hold on to it.

The entire conference is just an exercise in “feel good”, on all sides. Is there anyone out there who really thinks the likes of Bill Gates and Richard Branson will do anything at all to stop this world from burning to the ground? You have any idea what their ecological footprints are?

Sometimes I think it’s the very ignorance of the protesting side that dooms this planet. There’s a huge profit-seeking sociopathic part of the equation, which has caused the problems in the first place, and there’s no serious counterweight in sight.

Having these oversized walking talking ego’s sign petitions and declarations they know they will never have to live up to is completely useless. Branson will still fly his planes, Gates will keep running his ultra-cooled server parks, and Obama and Merkel will make sure their economies churn out growth ahead of anything else. Every single country still demands growth. Whatever gains you make in terms of lower emissions will be nullified by that growth.

And in the hallways, ‘smart’ entrepreneurs stand ready to pocket a ‘smart’ profit from the alleged switch to clean energy. At the cost of you, the taxpayer. And you believe them, because you want to, and because it makes you feel good. And you don’t have the knowledge available to dispute their claims (hint: try thermodynamics).

You’re seeking the cooperation of people who let babies drown and who incessantly bomb the countries these babies and their families were seeking to escape.

I’m sorry, I know a lot of you have a lot of emotion invested in this, and it’s a good emotion, and you’re thinking this conference is really important and all, and our ‘last chance’ to save the planet. But you’ve been had, it’s as simple as that. And co-opted. And conned.

And it’s not the first time, either. All these conferences go the same way. To halt the demise of the planet, you can’t rely on the same people who cause it. Never works.

Aug 042015
 
 August 4, 2015  Posted by at 9:01 am Finance Tagged with: , , , , , , , ,  


DPC “Unloading fish at ‘T’ wharf, Boston, Mass.” 1903

The Real Message Of Plunging Commodities (Michael Pento)
China’s Latest Warning to Equity Investors: No Big Sell Orders (Bloomberg)
China Looks For Scapegoats In Continued Stock Market Decline (Fortune)
US Hedge Fund Citadel Has Account Suspended in China (NY Times)
Greek Banks Lose 30% For Second Day In A Row, Stocks Down 4.5% (Reuters, FT)
Greek Stocks Plunge Most in Decades as Market Reopens to Crisis (Bloomberg)
Greek Traders See No End to Stock Trauma (Bloomberg)
Greece’s Battered Economy Threatens To Sink Further (Reuters)
Greek Tragedy – by Christos Tsiolkas (Yanis Varoufakis)
Greece Is Still Doomed Without Debt Relief (Bloomberg Ed.)
Why The Eurozone Was Always Doomed To Fail (Fortune)
The Eurozone’s Death by a Thousand Bailouts (Newsweek)
Greece Unlikely To Ask For More ECB Liquidity For Weeks (Reuters)
Varoufakis Vindicated While Lagarde Emerges As A Loser (MarketWatch)
Former Libor ‘Ringmaster’ Hayes Gets 14 Years for Libor Rigging (Bloomberg)
Puerto Rico Government Defaults On Bond Payment (BBC)
Catalunya Calls Early Polls In Fresh Independence Challenge (France24)
Homeownership: The Generation That Had It So Good (Guardian)
Obama Puts Climate Change On Nation’s Political Agenda (DFP Ed.)
Shale Gas Is Loser In Obama Climate Plan (FT)
In Case It Implied That God Had Sent The Migrants (Frankie Boyle)

“..the Chinese government wasted $20 trillion worth of credit digging holes to mollify the fallout from the Great Recession of 2007..”

The Real Message Of Plunging Commodities (Michael Pento)

The Chinese stock market recently saw its biggest selloff in eight years as the dramatic 8.5% fall in Shanghai “A” shares also rattled markets around the world. For the past few weeks, China has been balancing its desire to keep the equity market from a complete meltdown, while still courting the international investment community with hopes of being a dominant player in the capital and currency markets. But recently, the IMF warned China’s government about its concern over limiting investors’ freedom to take equity out of financial markets. These concerns were raised when the IMF met with officials in to discuss the chances of including the yuan in the fund’s basket of currencies, also known as Special Drawing Rights.

As China tries to balance the demise of its equity bubble while still keeping the illusion of free markets intact, two delusional narratives have started to circulate around Wall Street. The first such Wall Street-inspired delusion is that the collapsing Shanghai stock market will have no effect on the underlying Chinese economy. However, even though China’s 260 million trading accounts may be a relatively small%age of its total population, it’s also the richest and most productive portion of its citizenry, which also happens to be equal to the entire U.S. population in 1993. And Chinese GDP growth accounts for 1/3 of total global growth. Therefore, we can already find the manifestation of slowing Chinese growth from the nascent fall in equity prices.

For example, the profit of China’s industrial firms fell 0.3% in June from a year earlier. That followed a 0.6% gain in May and a 2.6% jump in April. For the first half of 2015, industrial profits were down 0.7% from a year earlier. China’s producer price index fell 4.8% in June, the 39th straight monthly decline. In fact, the economy is headed for its poorest overall performance in a quarter of a century. The second fallacy is that Wall Street believes in the TV commercial that claims what happens in Las Vegas stays in Vegas. Or, in this case, what happens to the Chinese economy stays in China. But the truth is that the meltdown in China is already spreading all around the Asia-Pacific region. For example, Taiwan’s year-over-year export growth has hit multi-year lows due to collapsing trade with China.

But perhaps the biggest indicator of the magnitude of China’s slowdown can be found in the global commodities market. Most pundits are trying to link the recent selloff in commodities strictly to the rising dollar as measured by the Dollar Index (DXY). But that index is actually down about 3% since March. During that time, the rout in precious and base metals, as well as energy and agriculture, has greatly accelerated. We see the Bloomberg Commodities index now at a 13-year low. Copper is down 28% for the year, tin is down 30%, and nickel is down 44%. And then we have gold. Last week, China dumped four tons on the market, causing the price of the precious metal to fall almost 4% within a matter of seconds. This had little to do with the value of the dollar on the DXY, but it was rather mostly about the waning demand in China from its imploding economy and the need to sell what you can when capital controls are in place.

[..] The true message of plunging commodity markets is that the Chinese government wasted $20 trillion worth of credit digging holes to mollify the fallout from the Great Recession of 2007, primarily creating a huge fixed-asset bubble with little economic viability. And then it forced another $1.2 trillion in margin debt to engender a consumption-based economy, primarily by creating a stock-market bubble after the fixed-asset bubble strategy began to fail miserably.

Read more …

“If investors think the market is coming down, of course they will place sell orders.”

China’s Latest Warning to Equity Investors: No Big Sell Orders (Bloomberg)

Stock investors beware: big sell orders in China could land you in trouble with the authorities. That’s the message from the Shanghai Stock Exchange, which said on its microblog Monday that two trading accounts got verbal warnings for a “large amount of sell orders affecting security prices or volume.” The bourse said the trading was “abnormal,” but didn’t give any details on the two accounts or indicate whether any laws were broken. The warnings follow investigations into algorithmic trading and short selling, part of a government campaign to prop up share prices and prevent market manipulation after an almost $4 trillion selloff. While proponents of the intervention say it’s necessary to restore investor confidence, critics have argued that China is backtracking on its pledge to give markets more sway in the world’s second-largest economy.

“Investors will feel it’s not an international standard,” said Steven Leung at UOB Kay Hian. “If investors think the market is coming down, of course they will place sell orders.” The exchange also issued three warnings to accounts that had “frequent cancellations of orders involving large amounts,” it said in the posting after the close of local markets on Monday. The latter warnings are consistent with the bourse’s previously announced investigation of spoofing, a practice that involves placing then canceling orders to move prices. The Shanghai Composite Index fell 1.1% on Monday, extending its decline from a June 12 high to 30%.

Given the limited details in the Shanghai exchange’s statement, it’s unclear what it was about the sell orders that elicited a warning from the bourse, said Tony Hann at Blackfriars Asset Management. “If the move is against market manipulation, then the move is justified in any environment,” Hann said. “Without more details, we’re working in the dark.” For Wu Kan, a Shanghai-based fund manager at JK Life Insurance Co., the warnings on sell orders are equate to “window guidance” from authorities. “It’s an unconventional strategy that’s used in a difficult time,” Wu said. “We are still in the stage of rescuing the market, and the regulators will try every possible means to stabilize the market.”

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“Industrial output fell to the weakest level since November 2011.”

China Looks For Scapegoats In Continued Stock Market Decline (Fortune)

It’s official — foreign speculators are to blame. China’s stock market rout hit a new phase over the weekend, as officials began acting on their convictions that traders are responsible in part for the crash that has sent shares downward by 30% in the last month and a half after stocks rose by 140% in the preceding year. On Monday, the Shanghai composite index fell by a relatively gentle 1%. Citadel, the massive hedge fund and quantitative trading company controlled by Ken Griffin and advised by former Federal Reserve Board chairman Ben Bernanke, had one of its accounts suspended from trading by Chinese regulators, the WSJ reported.

The news comes two weeks after a high-ranking government official blamed foreign forces for torpedoing China stocks, invoking George Soros’s supposed role of shorting currencies in the Asian financial crisis of 1997 as proof that Westerners wreck havoc in Asian markets. The Citadel fund was one of 34 accounts frozen by regulators who are investigating whether algorithmic traders offer bids then retract them to influence prices– a process that has also come under scrutiny in the U.S. Analysts have viewed the investigation skeptically. A better explanation for the recent stock market decline is that leveraged traders have sold stocks to meet margin calls, causing panic and more selling. Monday also brought more evidence that Chinese officials should be looking at home for explanations of stocks’ continued decline.

New manufacturing data shows that the Chinese economy is failing to recover after multiple interest rate cuts and fiscal spending programs. The Caixin China Manufacturing Purchasing Manager’s Index (formerly HSBC’s PMI) fell to 47.8, which indicates economic contraction. It’s worse than the flash reading that was released last week. Industrial output fell to the weakest level since November 2011. “The official PMI was also weaker than expected for the month of July, suggesting that the manufacturing sector may again be losing momentum,” wrote HSBC economists Julia Wang and Qu Hongbin today in Hong Kong. What the PMI measure suggests is that the Chinese economy isn’t falling off a cliff, but it is not rebounding strongly, either, after months of supportive monetary and fiscal measures.

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Ben Bernanke’s employer.

US Hedge Fund Citadel Has Account Suspended in China (NY Times)

Chinese stock market regulators have suspended more than 30 trading accounts, including one owned by the brokerage unit of the big American hedge fund Citadel, as they continue trying to stabilize the country’s volatile markets. “We can confirm that while one account managed by Guosen Futures – Citadel (Shanghai) Trading – has had its trading on the Shenzhen exchange suspended, we continue to otherwise operate normally from our offices, and we continue to comply with all local laws and regulations,” Citadel wrote on Monday in an email. The suspension came amid continued volatility in the markets, with Shanghai’s main share index closing an additional 1.1% lower on Monday. A week earlier, the index had plunged 8.5% in its biggest single-day loss in eight years.

Chinese regulators have been taking exceptional measures to help halt the recent slide in the country’s markets, including buying shares directly and barring major shareholders of companies from selling their stakes. Despite these efforts, shares have continued to tumble. From their peak in mid-June, the total value of all domestically listed stocks has declined by about a third, shedding more than $3 trillion in market value. The China Securities Regulatory Commission, which has in recent weeks pledged to crack down on “malicious” short-sellers and market manipulators, appears to be expanding its scrutiny to other types of trading. On Friday, the commission said it would strengthen its supervision of so-called program trading, which can include high speed, algorithmic or other computer-driven trading strategies.

It said 24 such trading accounts on the Shanghai and Shenzhen exchanges had been suspended on suspicion of harming the market with rapid-fire share purchase or sale orders that were canceled before they could be fulfilled, a strategy known as spoofing. By the time markets closed on Monday, the Shanghai and Shenzhen exchanges had announced suspensions for more than 10 additional accounts, bringing the total number of targeted accounts to more than 30. Spoofing “has the effect of boosting or pushing down the market, and during the recent period of market volatility the impact of this has been amplified,” Zhang Xiaojun, a spokesman for the regulator, said Friday in a statement on the agency’s website. Mr. Zhang was speaking generally about program trading and did not identify the accounts that had been suspended.

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Recapitalization needs rise by the minute.

Greek Banks Lose 30% For Second Day In A Row, Stocks Down 4.5% (Reuters, FT)

Greek stocks were down 4.5% in early trade on Tuesday, dragged down by another near 30% plunge in banking stocks, a day after sustaining record losses when the bourse opened following a five-week shut down. The main Athens index lost 16.2% on Monday, the worst fall on record, as investors reacted to continuing questions about a new bailout from the European Union and to Greece’s worsening economy. All four major Greek banking stocks were down more than 29% in early Tuesday trade, effectively their daily limit for losses. Bank recapitalisation is on this week’s agenda of talks between Greek finance ministry officials and the so-called quartet of bailout monitors from the EC, the IMF, the ECB and the European Stability Mechanism, the EU’s own bailout fund. Greece’s four systemic banks are together expected to need between €10 billion and €25 billion in capital from the latest bailout following a flight of deposits and a surge in nonperforming loans as the economy dived back into recession.

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“You can’t have a market working properly with capital controls..”

Greek Stocks Plunge Most in Decades as Market Reopens to Crisis (Bloomberg)

Greece’s stock market reopened after five weeks to the most savage wave of selling in decades, underlining a crisis that’s crippled the economy and pushed the country’s euro membership to the brink. Banks led the plunge following the shutdown, which was due to capital controls to prevent the lenders from bleeding more deposits. Piraeus Bank SA and National Bank of Greece SA sank 30%, the daily maximum allowed by the Athens Stock Exchange. The benchmark ASE Index dropped 16% on Monday after sliding as much as 23%. “The situation in Greek equity markets will have to get a lot worse before it gets better,” said Luca Paolini, Pictet Asset Management’s chief strategist in London. “There are still critical risks to be resolved.”

The selloff shows the scale of the crisis still facing Prime Minister Alexis Tsipras as he negotiates a third bailout with creditors after six months that have put unprecedented strain on the Greek economy and its financial system. The Greek market came to a halt in June as Tsipras ended talks with the euro region to ask voters to decide in a referendum whether to accept the terms offered in exchange for emergency loans. The move snuffed out a short recovery in stocks, which have now lost more than 85% of their collective value since 2007. The ASE slump on Monday was the biggest since at least 1987.

Traders in Athens said the market couldn’t function properly because of continuous halts as prices plummeted. They expect stocks to hit their lows in coming days before the market can gain any semblance of normality, according to Stavros Kallinos, head asset manager at Guardian Trust. “It’s a total disaster, it’s like hell here,” he said from Athens. “You can’t have a market working properly with capital controls. It will be a gradual process. We’re moving forward, but a step at a time.”

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Well, there’s always zero…

Greek Traders See No End to Stock Trauma (Bloomberg)

For Greek stock traders exhausted by yesterday’s selloff, relief may not be imminent. Given their first opportunity to trade for five weeks, investors spent Monday selling, sending the benchmark ASE Index down 16% for the worst decline since at least 1987. It should’ve been worse, according to local brokers, who said routine tasks like buying and selling were often impossible due to emergency curbs enacted before the session began. “Without the restrictions, the drop would be steeper,” said Nikos Kyriazis, an equity sales trader at NBG Securities in Athens. “There are a lot of orders in the system that are not executable.” Fractured trading worsened the sense of dread around Athens as losses in the ASE swelled to 23% in the first minutes of the exchange reopening.

The decline extended the rout in Greek equities that began in 2007 and has wiped 85% of the value of companies listed there. Under rules announced last week, stocks with extreme volatility were halted sooner than normal, while would-be buyers had to raise money from places other than their bank accounts due to capital controls implemented last month. The net effect is that it’s going to take time for prices to reach levels that balance supply and demand, traders said. “Greek people can’t buy anything,” said Stavros Kallinos, head asset manager at Guardian Trust in Athens. “Even if people were looking to buy, they’ll probably be on hold position for now, waiting for tomorrow and after tomorrow and see where things stand then.” Slumps in two of the country’s biggest lenders, Piraeus Bank and National Bank of Greece, were limited to the daily 30% allowed by the Athens Stock Exchange.

Monday was not the day for the curbs to be enforced, said Thanassis Drogossis at Pantelakis Securities. “They should have also widened the limit from minus 30%,” Drogossis said in a message. “That would have allowed the discovery of a clearing price much earlier.” In particular, the restrictions on bank withdrawals made it easier to sell than buy, traders said. If you were a local investor looking to purchase shares Monday, your funding was restricted to cash transferred from abroad or money that had been deposited as cash in the first place. “The problem is that there is no demand at current levels, especially for Greek banks due to the forthcoming recapitalization needs,” said Alexandros Malamas at Piraeus Securities. “For sure banking stocks will fall more.”

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There is no other option.

Greece’s Battered Economy Threatens To Sink Further (Reuters)

Greece’s bruising fight with its international creditors sent economic sentiment to its lowest level in nearly three years in July and knocked manufacturing activity down to record lows. The data was released as Greece opened its stock market on Monday after a five-week shutdown prompted by the imposition of capital controls. The bourse’s main index fell around 23% at the open. Greek manufacturing activity plunged to the lowest level on record in July, going back at least 16 years. Significantly, Markit’s purchasing managers’ index (PMI) showed new orders plummeting. “Manufacturing output collapsed in July as the debt crisis came to a head,” said Markit economist Phil Smith.

“Although manufacturing represents only a small portion of Greece’s total productive output, the sheer magnitude of the downturn sends a worrying signal for the health of the economy as a whole.” Greece shut its banks and imposed capital controls on June 29 to avert a bank run after PM Alexis Tsipras called a referendum on whether to accept stringent conditions from lenders on a new bailout. The shutdown battered the economy, already weakened by a six-month standoff between Tsipras’ Syriza government and international lenders on the cash-for-reforms deal. The economy has also begun to reverse the gains it was making before Tsipras was elected on a strong anti-austerity platform. The EC predicts Greece will fall back into recession in 2015, with GDP contracting 2 to 4% having only just emerged from a six-year downturn.

Much of the emphasis over the past few years has been on Greece’s huge debt to GDP ratio. The lender-imposed focus has tended to be on lowering the debt rather than raising the GDP. The IOBE think tank showed economic sentiment hit its lowest level in almost three years in July, hurt by banking restrictions and political uncertainty. The index, which measures expectations in industry, services, retail, and construction along with consumer confidence, fell to 81.3 points last month from 90.7 in June, its lowest level since Oct. 2012. “The real impact of capital controls, which are unprecedented for the modern Greek economy, is not easy to be assessed right now, because there are still ongoing,” IOBE said. “But certainly, they are weighing down on already shrinking economic activity and will deepen recession.”

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Nice conversation and observation.

Greek Tragedy – by Christos Tsiolkas (Yanis Varoufakis)

Yanis Varoufakis is on the phone. Greece’s charismatic finance minister had resigned his position immediately following the referendum result. Varoufakis, an economist with an extensive academic career, has dual Greek and Australian citizenship after a decade-long stint working at the University of Sydney. His outsider status in the European Union political club, his refusal to use technocratic language or conform to bureaucratic style, was a constant sore spot in the negotiations with the Troika. But in many ways, the strong referendum result can be seen as a validation of his tactics and directness. The first thing I ask him is how he felt on the night of the vote, and how he feels now, a week later.

“Let me just describe the moment after the announcement of the result,” he begins. “I made a statement in the Ministry of Finance and then I proceeded to the prime minister’s offices, the Maximos [also the official residency of the Greek prime minister], to meet with Aleksis Tsipras and the rest of the ministry. I was elated. That resounding no, unexpected, it was like a ray of light that pierced a very deep, thick darkness. I was walking to the offices, buoyed and lighthearted, carrying with me that incredible energy of the people outside. They had overcome fear, and with their overcoming of fear it was like I was floating on air. But the moment I entered the Maximos this whole sensation simply vanished. It was also an electric atmosphere in there, but a negatively charged one. It was like the leadership had been left behind by the people. And the sensation I got was one of terror: What do we do now?”

And Tsipras’ reaction? Varoufakis’ words are measured. He insists his affection and respect for the beleaguered Greek prime minister are undiminished. But sadness and disappointment are evident in his reply. “I could tell he was dispirited. It was a major victory, one that I believe he actually savoured, deep down, but one he couldn’t handle. He knew that the cabinet couldn’t handle it. It was clear that there were elements in the government putting pressure on him. Already, within hours, he had been pressured by major figures in the government, effectively to turn the no into a yes, to capitulate.”

Out of loyalty to Tsipras, and to honour a promise he made, Varoufakis won’t name names. But he does tell me that there were powerbrokers within the fragile coalition government “who were counting on the referendum as an exit strategy, not as a fighting strategy”. “When I realised that, I put to him that he had a very clear choice: to use the 61.5% no vote as an energising force, or [to] capitulate. And I said to him, before he had a chance to answer, ‘If you do the latter, I will clear out. I will resign if you choose the strategy of giving in. I will not undermine you, but I will steal into the night.’”

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Bloomberg’s editors have nothing to add, but will be weighed regardless.

Greece Is Still Doomed Without Debt Relief (Bloomberg Ed.)

Keeping Greece inside the euro system was a questionable decision at best – but, having chosen that course, the country’s government and creditors are obliged to make it work. Early signs aren’t encouraging. When the Athens Stock Exchange opened Monday for the first time in five weeks, it tanked. Factory production, according to new figures, is in its deepest slump for years. The IMF told its board last week that the fund couldn’t participate in the next Greek bailout unless Greece’s other creditors agree to another round of debt relief. That’s a problem. Germany and other creditors are opposed – while continuing to insist that the next program can’t happen without the IMF. When Greek Prime Minister Alexis Tsipras capitulated to the creditors’ demands last month, he thought he’d struck a deal.

Not for the first time, he was mistaken: The new program is falling apart before it even exists. Tsipras already has his work cut out to deliver his part of this vaporous bargain. The Greek parliament has passed two big packages of economic measures, including controversial tax increases and pension reforms. The creditors next want to see those implemented, and are pressing for new privatizations and other changes, too. Greece is likely to need bridging finance for a payment to the European Central Bank next month, and the European Union may impose new conditions in return. The ruling Syriza party, deeply divided over the concessions yielded so far, is on the verge of splitting. If that happens, Tsipras would probably have to call an election. No end to this confusion is in sight.

While it lasts, there’s little hope of any revival in confidence or investment — and slim chance of the broader economic recovery that Greece so desperately needs. No doubt, some degree of uncertainty was unavoidable. Greece has serially defaulted on loans and policy commitments. In extending further help, the creditors would be mad not to set conditions and closely monitor Greek compliance. As a result, the threat of a new financial crisis was bound to persist. Nonetheless, a strategy that offered Greece a navigable path to recovery was not too much to ask. As yet, there’s no such strategy. The creditors should agree right now on the principle that debt relief will be forthcoming so long as Greece negotiates in good faith and tries to keep its promises. Otherwise, with or without the IMF, the new program is likely to fail.

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A failure for the people, a smash hit for the power hungry.

Why The Eurozone Was Always Doomed To Fail (Fortune)

The nearly 16-year experiment with a financially integrated Europe is instead tearing the continent apart, stirring ugly ghosts of history and fueling the rise of extremist political parties that could one day control a NATO partner. While Greece’s latest travails capture the world’s attention, Conley sees dire consequences for all of Europe from a fatally-flawed monetary union of 19 countries. “It was a structurally flawed project,” Conley says of the Eurozone, born in 1999. “They were warned about it. This was an economic project designed politically to make Europe more united. But instead it’s pulling Europe apart.” Greece, she adds “should never have been let in; it did not have the economic indicators and strength to participate in this currency union.

But as a political project people said, ‘How can we not include the birthplace of democracy? The great recession showed the weakness and flaws, and we saw all of this unravel.” That unraveling has launched a number of dangerous political trends. Economic pain and anger at European leaders, on the left and right, is combining with the type of anti-immigrant sentiments that fuel the rise of populist and xenophobic parties. France’s far-right National Front and Spain’s far-left Podemos Party are on the upswing. In Britain, which held onto its own currency, UKIP has successfully pressured Prime Minister David Cameron to call a referendum on whether to stay in the EU. And Conley notes that even 25% of EU parliament members can be labeled Euro-skeptics.

“There will come a moment with a far left or far right party in a NATO country potentially forming a government,” she predicts, “and that is a nightmare because then we have to question the democratic credentials of our allies. That’s a thought we don’t want to have.” Conley warns of a dark era, not unlike 1914, with the world “sleep-walking” toward an abyss. “The free movement of labor is under attack,” she says. “The free movement of capital is under attack because of the Eurozone crisis,” she says. “Many EU officials will say Europe evolves through crisis. But this is not forging Europe, it’s pulling it apart.” As the continent’s strongest economy, source of bailout funds and enforcer of Eurozone rules, Germany is a target of populist wrath.

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“If the canary dies, it does not tell you that there is something wrong with the canary, but with the mine.”

The Eurozone’s Death by a Thousand Bailouts (Newsweek)

“All diplomacy is the continuation of war by other means,” former Chinese Premier Zhou Enlai once quipped. These days, the same might be said for eurozone summits. The EU was founded to ease the continent’s toxic wartime legacy, to allow Germany to help lead the continent, not dominate it. But in the aftermath of Greece’s most recent bailout this summer, the harsh austerity terms imposed on Greece have created an unprecedented level of animosity between the two countries. Now, as the rancor ripples across borders, many are questioning the EU’s political and economic future. Under the terms of the bailout, Greece receives funding up to €86 billion. In exchange, the coalition government, led by the left-wing Syriza party, must implement further austerity measures, increase value-added taxes and liberalize the rule-bound Greek economy.

Greece must place national assets worth €50 billion into a privatization fund that will be supervised by European institutions. The Greek parliament approved the deal on July 16, and the backlash was fierce. Zoe Constantopoulou, a Syriza lawmaker, says the bailout terms amounted to “social genocide.” Even moderate Greek politicians say the harsh terms of the deal will increase fear, insecurity and resentment in Greece. “There will be very strict monitoring of how Greece implements the new measures, almost policing the Greek economy,” says former Greek PM George Papandreou. “These have been put in place to create trust for the German taxpayer, but will create more distrust for Greek citizens. Greece’s access to markets is now more difficult, and some of the revenues simply go back to paying off the debt. Some of the burden should have been taken off.”

Meanwhile, the European banks that loaned billions to Greece have escaped any penalty. “If you are a drug addict, you are to blame for your addiction, but the dealer also bears some responsibility,” says Denis MacShane, a former minister for Europe and author of Brexit: How Britain Will Leave Europe. “Greece is an easy whipping boy, [but] French, German and Dutch banks lent recklessly.” The result: Postwar Greek-German relations have never been worse, analysts say. The trauma of the bailout is compounded by the enduring trauma of World War II, when Greece suffered one of the harshest Nazi occupations. What has surprised many observers is the ease with which both sides have slid into stereotyping, calling Greece a lazy, feckless nation that can’t be trusted, and Germany a Fourth Reich run by Chancellor Angela Merkel.

Greeks who believe the latter point to Walter Funk, the Nazi economics minister and one of Hitler’s most important economic theorists. Funk raised the idea of a German-dominated European monetary union in 1940. He recognized that the union would be complicated, in part because of different countries’ standard of living. Yet Funk, like many modern-day European politicians, was an optimist. As the Greek crisis shows, however, Funk’s faith, like that of the euro architects, was wildly misplaced. A currency union of highly disparate states without a shared central budget and fiscal policy was always going to be hobbled. “Greece,” says Peter Doyle, a former division chief in the IMF’s European department, “is the canary in the coal mine. If the canary dies, it does not tell you that there is something wrong with the canary, but with the mine. Greece is the canary, and the eurozone is the mine.”

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Cash inflows?!

Greece Unlikely To Ask For More ECB Liquidity For Weeks (Reuters)

Greece is unlikely to ask for an increase in emergency funding from the ECB for weeks, because its liquidity buffer has risen thanks to cash inflows and central bank help, two sources familiar with the situation told Reuters. The bank liquidity buffer has grown to about €5 billion from €1 billion to €2 billion at the height of Greece’s debt crisis, thanks to two Emergency Liquidity Assistance (ELA) increases from the ECB, tax and tourism inflows, and pension payments, said one of the sources, who asked not to be named. Greek banks, closed for much of July, rely on emergency liquidity from the ECB and limit cash withdrawals to €420 per week to prevent a run on banks. The capital controls have stopped the exodus of cash. And the increase in the buffer indicates that money is leaving banks slower than feared and they retain at least some confidence.

“There’s been relative little outflows and there was actually a week in July when there was a net inflow into the banks,” one source said. Another source close to the process added: “There is an adequate liquidity buffer, there is no reason to ask for an increase in the ELA cap.” The ECB increased ELA to Greek banks twice in July by €900 million each time and ELA is now capped at around €91 billion, of which about 5 billion is unused. The ECB is due to discuss ELA again on Wednesday, when the governing council holds a non-policy meeting. Last week, Greece did not ask for an increase, a sign the banks were stabilising. The Greek stock exchange, which reopened on Monday after being closed for five weeks, tumbled in early trade. Banking shares, which make up about 20% of the Greece index, were particularly hard hit, with the banking index down 30% limit.

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High time to take a hike, Christine.

Varoufakis Vindicated While Lagarde Emerges As A Loser (MarketWatch)

Something is going badly wrong in relations between Christine Lagarde, the IMF’s managing director, and the staff of the institution. Three times this month, in politically fraught negotiations over a Greek debt package, the IMF staff has disavowed its management over providing more loans to Greece as part of the third bailout deal of €82 billion to €86 billion that euro leaders stated they sealed on July 13. As Oscar Wilde might have said, to show one such contradiction might be a misfortune, two appears like carelessness, while three looks downright hapless. The fissures, as well as reinforcing uncertainty over the Greek imbroglio, cast doubt on Lagarde’s utility in attending European debt meetings, where she appeared to endorse decisions later rejected in Washington.

The bizarre nature of IMF divisions may influence a top-level government decision about whether to renew Lagarde’s five-year term that ends in July 2016. Although Lagarde has some support for her incumbency, she is coming under criticism from inside and outside the organization for displaying style rather than substance. The latest setback, revealed last week by the Financial Times, is the most damaging. The IMF’s board was told on Wednesday that Greece’s unsustainably high debt and shortcomings in realizing reforms preclude a third IMF bailout. This could fatally unhinge the package, since German Chancellor Angela Merkel has ruled out further funding unless the IMF participates in new loans from European governments.

The big question is whether legislators in Germany and other restive North and Central European creditors will start to walk away from a deal that is bound up with so many onerous and mutually incompatible conditions as to be well-nigh unrealizable. The latest news from Washington vindicates the analysis of Yanis Varoufakis, the former Greek finance minister, who said in an teleconference sponsored by the Official Monetary and Financial Institutions Forum on July 16, ”According to its own rules the IMF cannot participate in any bailout. They have already violated their rules twice to do so. But I don’t think they would do it a third time. I think they are kicking and screaming that they are not going to it a third time.”

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Scapegoats keep ruling the industry.

Former Libor ‘Ringmaster’ Hayes Gets 14 Years for Libor Rigging (Bloomberg)

Former UBS and Citigroup trader Tom Hayes, the first person to stand trial for manipulating Libor, was sentenced to 14 years in prison after being found guilty of conspiracy to rig the benchmark rate. After a week of deliberations, jurors unanimously found that the 35-year-old worked with traders and brokers to game the London interbank offered rate to benefit his own trading positions. Judge Jeremy Cooke’s sentence after the verdict is among the longest for financial crime in the U.K. “Probity and honesty are essential, as is trust. The Libor activities of which you took part in put that in jeopardy,” Cooke said as he handed out the sentence in London Monday. “A message needs to be sent to the world of banking.”

Hayes, dressed in a light blue shirt and sweater, shook his head from side to side as the jury returned their verdict. His wife, Sarah, bit her bottom lip and shook her head from the gallery and his parents looked on impassively as the charges were read out one by one. Prosecutors said during the nine-week trial that Hayes was the “ringmaster” of a global network of 25 traders and brokers from at least 10 firms who tried to manipulate Libor on an industrial scale. He would bribe, bully, cajole and reward his contacts for their help in skewing the benchmark, used to price more than $350 trillion of financial contracts from mortgages to credit cards and student loans. The scruffy, blond-haired Hayes has been the public face of the global scandal over Libor rigging since he was first charged by U.S. officials in 2012.

Authorities have levied $9 billion in fines against banks and brokerages, including a $1.5 billion penalty for UBS. Citigroup has been censured by Japanese regulators over its involvement. Before sentencing, Hayes’s lawyers reiterated their defense that benchmark manipulation was widespread in the industry. “The conduct Mr. Hayes has been convicted of was prevalent” for at least five years prior to his joining UBS, Neil Hawes, his lawyer, told Cooke. There were “others above him who were aware of the activity.” The sentence was double the seven-year term that was given to Kweku Adoboli, another UBS banker, who was convicted of fraud in 2012 in relation to a $2.3 billion trading loss.

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How will it be different from the eurozone?

Puerto Rico Government Defaults On Bond Payment (BBC)

Puerto Rico has confirmed that it failed to make a debt payment at the weekend, in the latest sign of the economic crisis in the US territory. The government said it did not have the funds available to pay more than $50m due on bonds. The ratings agency Moody’s said it viewed the development as a default. Puerto Rico’s governor said in June that the island’s debts of more than $70bn were unpayable and that its finances needed restructuring. The US commonwealth paid only $628,000 of a $58m payment due on its Public Finance Corp (PFC) bonds, Government Development Bank President Melba Acosta Febo said in a statement on Monday. She said the reason was because the legislature did not appropriate sufficient funds.

The government said on Friday that although it would not complete the full payment, it should not be considered a default under a technical definition of the phrase. But that argument has been discounted by Moody’s and other financial institutions. Puerto Rico has $72bn of public debt. That makes it by far the most indebted territory or state per capita in the United States. Unemployment is at almost 14% – more than double the national average – and over the last decade there has been little or no growth, resulting in the economy teetering on the brink of oblivion. The island has been losing 1% (around 30,000 people) a year to Florida and other parts of the US. And it is mainly the economically active young who are leaving.

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There will be many such polls in Europe in the years ahead.

Catalunya Calls Early Polls In Fresh Independence Challenge (France24)

Catalonia on Monday called early regional elections for September 27, polls that will serve as a proxy vote on independence from Spain and likely raise tensions with the central government in Madrid. Catalan President Artur Mas, who has taken up the secession cause in recent years amid a surge in popular support, formally called the poll for September 27, shortly before a Spanish general election due by year-end. The vote to elect a parliament in the wealthy northeastern region, a year earlier than necessary, ratchets up pressure on centre-right Spanish Prime Minister Mariano Rajoy, who has ruled out Catalan independence. It also forces the issue to the forefront of the national campaigns.

“We all know these elections will be very different,” Mas said in a television address, after signing a decree to dissolve parliament and setting the long-flagged election in motion. “Politically they are a plebiscite on Catalan freedom and sovereignty.” Separatist leaders have said in recent weeks that a victory for them in the election would launch a “roadmap” to Catalan independence within 18 months, although they have not said how they would overcome the staunch opposition from Madrid. Spain’s Deputy Prime Minister Soraya Saenz de Santamaria told a news conference earlier on Monday that the government could legally challenge the decision to call the polls if Mas did not respect the law. It has blocked attempts to hold a referendum on independence in the courts before.

Catalan separatist campaigners defied Madrid and staged a symbolic vote on independence last November, but the outcome was mixed. About 80% of the 2.2 million people who voted backed secession, but the turnout was little more than 40%. Polls suggest that some of the steam may have come out of the pro-independence campaign since then, with voters focusing on social and economic issues as the country emerges from recession. The main Catalan parties supporting a split from Spain, including Mas’ centre-right Convergencia Democratica de Catalunya (CDC), have agreed to present a joint list of candidates to avoid splintering the pro-independence vote. Election campaigning will start on the highly charged date of September 11, Catalonia’s national day.

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How to create a generational war.

Homeownership: The Generation That Had It So Good (Guardian)

Life has changed a lot since fledgling homeowners took their first steps on the property ladder in 1969. Back then, the average first home cost £4,000, according to data from the Office for National Statistics – and you would typically have been able to buy it at the tender age of 25. Not any more. Now just 8% of 25-year-olds make it on to the property ladder, the Council of Mortgage Lenders says. The average price of a first home has increased by 5,225% over the past 46 years, to £209,000. This has massively outpaced the incomes of first-time buyers, which have grown at less than half that rate. Shelter estimates that today’s first-time buyers spend 30% to 40% more to buy their first home today than they would have done in 1969.

“If you were able to buy your first home before prices started rocketing, you have received massive unearned wealth gains – but only at the expense of the generation who are now locked out of ownership, and stuck paying the highest rents in Europe,” says Duncan Stott, director of the affordable housing campaign PricedOut. “Buying today requires your income to be in the top 20% of earnings and a willingness to take out unprecedented levels of mortgage debt.” What has driven these dramatic changes in home ownership – and will any other generation ever have it as good again? By 1971, growth in homeownership meant that an equal number of people rented as owned their homes – but by 1981 the number of owner-occupiers had risen to 58%, according to the ONS.

At around that time Margaret Thatcher launched the Right To Buy scheme, enabling council house tenants to buy their own homes. The legislation was passed in 1980 and was a response to a rise in incomes, argues Professor Colin Jones at Heriot-Watt University’s School of The Built Environment: “Rising incomes meant that more people were demanding home ownership and so some sort of scheme was inevitable. There was also none of the supply-side problem we have today, so councils felt perfectly comfortable selling off the stock.” Supply was so abundant that, even adjusting for general inflation, properties were mostly selling at less than their rebuilding cost, says Angus Hanton, co-founder of the Intergenerational Foundation.

Buying a home was also more affordable because, he says, “mortgage interest relief meant that interest payments on mortgages were tax-advantaged – buyers effectively paid their mortgage out of pre-tax income.” More than a third of property wealth in the UK is now owned by households where at least one occupant is 65 or older, and nearly one in 10 (9%) of 55- to 64-year-olds live in households with net property wealth of £500,000 or more; the highest of any age group, says the ONS. This trend shows no sign of abating and house prices are continuing to rise, with the typical pensioner’s home increasing by an average of £900 a month this year,

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Seems nice, but there’s no many “buts” to count.

Obama Puts Climate Change On Nation’s Political Agenda (DFP Ed.)

With fewer than 18 months remaining in his eight-year tenure, President Barack Obama has at last confronted what he accurately describes as the single greatest threat to America’s future: the proliferation of greenhouse gasses scientists overwhelmingly blame for raising the Earth’s temperature. The centerpiece of the president’s long-awaited Clean Power Plan is a rule from the Environmental Protection Agency that sets the first-ever limits on carbon emissions from coal-fired power plants. If they withstand a certain legal assault by the coal industry and electric utilities, the new limits could force the closure of hundreds of coal-fired power plants, end the construction of new coal plants and spur production of wind and solar energy. The plan sets a goal of reducing the power-plant carbon emissions recorded in 2005 by 32% by 2030.

It would impose hard but custom-tailored limits on the carbon each state’s power plants can release into the atmosphere and reward states that act most quickly to expand their investment in renewable forms of energy production, such as wind and solar. In an address announcing the promulgation of emissions rules that have been two years in the making, Obama asserted that the U.S. has already done more than any other country to reduce the production of greenhouse gasses. But he said pollution from power plants, which release more heat-trapping carbon into the atmosphere than the nation’s cars and homes combined, would have catastrophic consequences for weather patterns, national security and public health unless such emissions are dramatically reduced.

The opposition the president faces from the coal industry, electric utilities, congressional Republicans and coal-state governors in both parties is formidable. But so is the scientific evidence that has accurately described the urgency of global warming’s threat to the planet. “We are the first generation to feel the effects of climate change,” Obama observed, “and the last that can do something about them.” Where climate change is concerned, he added, “there is such a thing as being too late.” In a sense, the White House is already too late to assure that the rules it unveiled Monday will achieve the results it seeks. For one thing, the U.S. can’t take on global warming alone; reducing greenhouse gas emissions will require an equally muscular response by industrialized nations throughout the world, especially China and India. For another, the real impact of the new power-plant rules won’t be evident until 2018, the deadline for states to submit final plans for complying with the limits announced Monday.

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Until we find out the true cost of wind and solar?!

Shale Gas Is Loser In Obama Climate Plan (FT)

US shale gas is the unexpected loser from President Barack Obama’s climate plan, as the White House abandons its previous enthusiasm for natural gas as a cleaner alternative to coal. Last year Mr Obama called natural gas from fracking a “bridge fuel” to smooth the transition from polluting coal to emission-free renewable energy. But the shale industry was left reeling by a sudden reversal on Monday. In its landmark plan to cut greenhouse gas emissions from power plants, the Obama administration eliminated an earlier projection that natural gas would contribute much more electricity, and instead upped the role of renewables. “I’m confused and disappointed,” said Marty Durbin, head of America’s Natural Gas Alliance, a trade group for gas producers.

“It seems the White House is ignoring the market. Natural gas today is already primed to play a big role in power generation.” The shift also caused griping among utility companies that have led the biggest power transformation of the shale era, spending hundreds of millions of dollars to switch generating plants from coal to shale gas. In addition to being cheaper than coal, the shale gas liberated from rocks by fracking, or hydraulic fracturing, generates half as much carbon dioxide as coal when burnt, making it less harmful to the climate, scientists say In April, electricity from natural gas briefly surpassed coal power for the first time since the early 1970s, accounting for 31% of the total while coal dipped to 30%, according to the Energy Information Administration.

The US has surpassed Russia to become the world’s biggest natural gas producer – and a draft of Mr Obama’s climate plan last June said its targets depended on a shift to more gas-fired electricity. But ahead of Monday’s launch of the final plan, a senior administration official said: “In the final rule, that early rush to gas is eliminated. Indeed, the share of natural gas is essentially flat compared to business as usual.” Instead, the White House expects wind and solar power and energy efficiency improvements to play a much bigger role in reaching its target, which is to cut power sector carbon emissions by 32% from 2005 levels by 2030. Renewable energy, including hydropower, wind and solar, accounted for just 13% of US electricity last year. But with generation costs falling, Gina McCarthy, head of the Environmental Protection Agency, the regulator behind the plan, said the shift to renewables had accelerated in the past year and was “happening faster than anybody anticipated”.

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Great from Frankie Boyle.,

In Case It Implied That God Had Sent The Migrants (Frankie Boyle)

David Cameron used ‘swarm’ instead of ‘plague’ in case it implied that God had sent the migrants. David Cameron has offered France dogs, fences, and car parks – dealing with a humanitarian crisis like a primary school kid emptying his pockets for the bullies. I’ve mused before about whether he might be a psychopath and it’s worth noting that he has left reassessing the processing and treatment of genuine asylum applications until after his three-week holiday in Portugal. Cameron used the phrase “promiscuous swarm of foreign peoples”. Oops, my mistake, that was Hitler – but you get the general idea. Cameron’s use of the word “swarm” was carefully thought out; he avoided the word “plague” in case it implied God had sent them.

The Daily Mail (catchphrase circa 1938: “German Jews Pouring Into This Country”) has revelled in the kind of reporting that can only be the sign of a decadent society in freefall. No doubt Rome, in its later days, was also full of people who held very firm opinions based on little evidence, I simply can’t be bothered to find out. One headline reported on terrible food shortages. You might think: “How wonderful to see the Mail reporting on one of the driving forces for people leaving their countries,” but, of course, they meant no frankfurters for Hampshire. At least Calais has replaced the Mail’s hideous stories about how drowning migrants are ruining British people’s holidays, presumably because it’s now impossible for Brits to lay their bloated, burnt bodies down on the beach without locals trying to give them the kiss of life.

[..] Of course, the true existential threat to us might come from ourselves. If we can look at another human being and categorise them as “illegal”, or that chilling American word “alien”, then what has become of our own humanity? To support policies that dehumanise others is to dehumanise yourself. I think most people resist that, but are pressed towards it by an increasingly sadistic elite. If you’re worried about threats to your way of life, look to the people who are selling your public services out from under you. The people who will destroy this society are already here: printing their own money, printing their own newspapers, and responding to undesirables at the gates by releasing the hounds.

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Feb 152015
 
 February 15, 2015  Posted by at 11:26 am Finance Tagged with: , , , , , , ,  


DPC Madison Street east from Fifth Avenue, Chicago Sep 1 1900

‘Finance Is The New Warfare’ Michael Hudson: Has the IMF Annexed Ukraine? (NC)
Ron Paul: ‘Get NATO, Foreign Countries Out Of Ukraine To End Civil War’ (RT)
In Ukraine, The New World Disorder Enters Europe (Observer)
Contrarian US Bond Manager Braces For Big Ukraine Losses (FT)
The War Next Door: Can Merkel’s Diplomacy Save Europe? (Spiegel)
Russia Shrugs Off US Envoy’s ‘Evidence’ Of Russian Troops In Ukraine (RT)
New Anti-Russia Sanctions to Enter Into Force Monday (Sputnik)
Igor Sechin: The Oil Man At The Heart Of Putin’s Kremlin (Independent)
Greece And Creditors Continue Talks Ahead Of Eurogroup Meeting (AFP)
Do Derivatives Make The World Safer? (Guillaume Vuillemey)
Derivatives No Longer Used For Hedging But For “Alpha Generation” (Zero Hedge)
Goldman Warns Over-Supply Means Oil Prices Will Be Much Lower (Zero Hedge)
Libya Warns of Complete Oil Shutdown as Attacks Escalate (Bloomberg)
Start Saving Those Pennies Now, Robert Shiller Warns Investors (CNBC)
UK Tories Told To Shun Wealthy Donors To Avoid Scandal (Guardian)
New York’s Streets Are Suddenly Safer. Why? (Guardian)
GMO Apples Win Approval For Sale In US (Reuters)
Germany Moves To Legalise Fracking (Guardian)
South Africa Bars Foreigners From Owning Land (Reuters)
Planet Earth Is The Titanic, Climate Change The Iceberg (Paul B. Farrell)
Punxsutawney Phil Wanted By Police, Offered Asylum At Ski Resort (ExpressTimes)

“There is no excuse for making this error – except that the error is deliberate, and is intended to lead to failure..”

‘Finance Is The New Warfare’ Michael Hudson: Has the IMF Annexed Ukraine? (NC)

Michael, in a recent interview published in The National Interest magazine, you said that most media covers Russia as if it is the greatest threat to Ukraine. History suggests the IMF may be far more dangerous. What did you mean by that?

HUDSON: First of all, the terms on which the IMF make loans require more austerity and a withdrawal of all the public subsidies. The Ukrainian population already is economically devastated. The conditions that the IMF’s program is laying down for making loans to Ukraine is that it must repay the debts. But it doesn’t have the ability to pay. So there’s only one way to do it, and that’s the way that the IMF has told Greece and other countries to do: It has to begin selling off whatever the nation has left of its public domain; or, to have your leading oligarchs take on partnerships with American or European investors, so that they can buy out into the monopolies in the Ukraine and indulge in rent-extraction. This is the IMF’s one-two punch.

Punch number one is: here’s the loan – to pay your bondholders, so that you now owe us, the IMF, to whom you can’t write down debts. The terms of this loan is to believe our Guiding Fiction: that you can pay foreign debt by running a domestic budgetary surplus, by cutting back public spending and causing an even deeper depression. This idea that foreign debts can be paid by squeezing out domestic tax revenues was controverted by Keynes in the 1920s in his discussion of German reparations. There is no excuse for making this error – except that the error is deliberate, and is intended to lead to failure, so that the IMF can then say that to everyone’s surprise and nobody’s blame, their “stabilization program” destabilized rather than stabilized the economy.

The penalty for following this junk economics must be paid by the victim, not by the victimizer. This is part of the IMF’s “blame the victim” strategy. The IMF then throws its Number Two punch. It says, “Oh, you can’t pay us? I’m sorry that our projections were so wrong. But you’ve got to find some way to pay – by forfeiting whatever assets your economy may still have in domestic hands. The IMF has been wrong on Ukraine year after year, almost as much as it’s been wrong on Ireland and on Greece. Its prescriptions are the same as those that devastated Third World economies from the 1970s onward. So now the problem becomes one of just what Ukraine is going to have to sell off to pay the foreign debts – run up increasingly for waging the war that’s devastated its economy.

One asset that foreign investors want is Ukrainian farmland. Monsanto has been buying into Ukraine – or rather, leasing its land, because Ukraine has a law against alienating its farmland and agricultural land to foreigners. And a matter of fact, its law is very much the same as what the Financial Times reports Australia is wanting to do to block Chinese and American purchase of farmland. The IMF also insists that debtor countries dismantle public regulations againstforeign investment, as well as consumer protection and environmental protection regulations. This means that what is in store for Ukraine is a neoliberal policy that’s guaranteed to actually make the situation even worse. In that sense, finance is war. Finance is the new kind of warfare, using finance and forced sell-offs in a new kind of battlefield.

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“There will be less of a civil war going on there because they will have to worry about their debt. This is an economic matter too. You have to realize that the country is totally bankrupt.”

Ron Paul: ‘Get NATO, Foreign Countries Out Of Ukraine To End Civil War’ (RT)

The best thing for Ukraine is to force NATO, the US, and regional players out of the country, former US congressman and presidential candidate Ron Paul said. Without foreign meddling in the civil war, Kiev will focus on the nation’s economic collapse. “Get the foreigners out of there [Ukraine], get the Europeans out, the US out, get NATO out, and get the Russians out,” Paul said at the International Students for Liberty Conference in Washington on Friday. “There will be less of a civil war going on there because they will have to worry about their debt. This is an economic matter too. You have to realize that the country is totally bankrupt.”

Paul’s speech followed the NSA surveillance whistleblower Edward Snowden’s presentation. “I’m not pro-Putin, I’m not pro-Russia, but I’m pro-facts,” Paul stressed when defending his stance. “Crimea is not exactly a foreign country, according to the Russians. But I’m neutral on that,” the former presidential candidate stated. Paul – a 79-year-old retired doctor who spent nearly three decades in the US Congress representing the state of Texas – reiterated his previous statements, noting that what happened in Ukraine last year was a “coup” that was planned by “NATO, EU” and western Ukrainians. “One thing for sure that we do know, is we [US] had the conversations between our State Department and our ambassador before the coup – who will we put in place. And they planned part of the coup.”

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“..in the foreseeable future there will be no common security system on the continent of Europe, no commonly agreed-upon norms and no rules of behaviour.”

In Ukraine, The New World Disorder Enters Europe (Observer)

After the ceasefire negotiated in Minsk, a peace settlement in eastern Ukraine remains distant. Most of the points in the agreement, including Ukraine’s constitutional reform and the resumption of Kiev’s control over the entire Ukrainian-Russian border, will probably never be implemented. The most one can hope for is that the conflict is frozen and people stop dying. Even that, however, cannot be taken for granted, as continued fighting ahead of the ceasefire’s formal entry into force suggests. If the truce sticks, it will be the first negotiated arrangement in a newly divided Europe, leaving Russia almost alone on the east, with much of the rest of Europe supporting Ukraine. This split can grow much worse if the conflict in Donbass continues. But even if it stops, reconciliation is not on the cards.

This means that in the foreseeable future there will be no common security system on the continent of Europe, no commonly agreed-upon norms and no rules of behaviour. The world disorder has entered the recently most stable and best-regulated part of the globe: Europe. The idea that a combination of western sanctions and the low oil price can bring a change in Kremlin policies, or a change in the Kremlin itself, has so far not been borne out by the facts. Putin remains defiant, the elites do not turn against him, and his popularity among the bulk of the Russian people, despite the hardships they have begun to feel, is at record levels.

These people are not ignorant of the dangers a continued conflict over Ukraine can pose to them, but lay the blame for these on Kiev, Washington and the European leaders. Putin, whether as war leader or a peacemaker, is their champion. At Minsk, he has achieved his minimal goal. Kiev has conceded the failure of its efforts to wipe out the Donbass rebels backed by Moscow. If the ceasefire becomes permanent, the “people’s republics” will be physically safe and can start turning themselves into functioning entities on the models of Transnistria. Russia will need to supply them with more than weapons and humanitarian assistance, straining its resources even more, but there’s hardly an alternative. For Putin, and most Russians, these are “our people”.

Yet, in Minsk, Putin reaffirmed Russia’s official position that Donbass should remain part of Ukraine. This is not a concession. Within a formally unified Ukraine, Donetsk and Lugansk are a protected centre of resistance to the political leadership in Kiev. The situation in the rest of the country permitting, they can expand their influence beyond Donbass and link up with those who, a year after the triumph of the Maidan, have become disillusioned with their government, which is woefully unable to tame corruption and improve the lives of ordinary Ukrainians. Indeed, if the truce in the east of the country holds, the future of Ukraine will depend on how it manages reform and popular discontent.

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Meanwhile, inside the casino…

Contrarian US Bond Manager Braces For Big Ukraine Losses (FT)

Ukraine is widely expected to impose a haircut on private sector creditors under the terms of a forthcoming bailout from the International Monetary Fund. If so, then one investor stands to lose more than any other: Michael Hasenstab, the fund manager renowned for taking unpopular bets on government debt. Through vehicles at Franklin Templeton, the big US money manager based in California, Mr Hasenstab owns more than $7bn of Ukrainian debt, making him the country’s biggest private bondholder. He has previously scored big rewards for his contrarian moves, which included a large purchase of Irish debt in the midst of the eurozone crisis and investments in Hungary and Uruguay.

But as the crisis in Ukraine has escalated his position has suffered, leaving his $69bn Templeton Global Bond Fund and others down approximately $3bn on the investment, according to Bloomberg data, encouraging a flood of client money to leave the fund at the end of last year. Alongside Mr Hasenstab, investments in Ukraine’s eurobonds are split between household financial names, including BlackRock, Allianz and Fidelity, most of which hold no more than 2.5% of any individual Ukrainian bond. In addition to its publicly traded bonds, Ukraine also owes $3bn to Russia, which is due to mature in December. But Mr Hasenstab, who began investing in Ukraine in 2010, clearly has the most at stake.

He was originally drawn by the country s relatively low level of debt to gross domestic product, its promising agricultural sector and high yields available on bonds. Over the years he has topped up his position, reiterating his belief in the long-term potential of Ukraine, thanks in part to its strategic position, geographically and geopolitically, at the crossroads of Europe and the east. In an interview with the Financial Times in June, he said the difficulties that the country faced were political, not economic, and he felt comfortable that tensions would be resolved. ‘Ukraine should have linkages with Europe .. but it should also have linkages with Russia and I think the Nato inclusion was probably one of the largest motivations of Putin’s military aggression and now that is taken off the table’, he said.

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“The situation in Debaltseve plunged the Ukrainian army into a desperate, almost hopeless, position, as the negotiators in Minsk well knew. Indeed, it was the reason the talks were so urgently necessary.” Note that on the map, Der Spiegel pits the Unrainian army vs the Russian one, not the rebels.

The War Next Door: Can Merkel’s Diplomacy Save Europe? (Spiegel)

The problem has four syllables: Debaltseve. German Chancellor Angela Merkel can now pronounce it without difficulties, as can French President François Hollande. Debaltseve proved to be one of the thorniest issues during the negotiations in Minsk on Wednesday night and into Thursday. Indeed, the talks almost completely collapsed because of Debaltseve. Ultimately, Debaltseve may end up torpedoing the deal that was worked out in the end. Debaltseve is a small town in eastern Ukraine, held by 6,000 government troops, or perhaps 8,000. Nobody wants to say for sure. It is the heart of an army that can only put 30,000 soldiers into the field, a weak heart. Until Sunday of last week, that heart was largely encircled by pro-Russian separatists and the troops could only be supplied by way of highway M03. Then, Monday came.

Separatist fighters began advancing across snowy fields towards the village of Lohvynove, a tiny settlement of 30 houses hugging the M03. The separatists stormed an army checkpoint and killed a few officers. They then dug in – and the heart of the Ukrainian army was surrounded. The situation in Debaltseve plunged the Ukrainian army into a desperate, almost hopeless, position, as the negotiators in Minsk well knew. Indeed, it was the reason the talks were so urgently necessary. Debaltseve was one of the reasons Merkel and Hollande launched their most recent diplomatic offensive nine days ago. The other reason was the American discussion over the delivery of weapons to the struggling Ukrainian army.

Debaltseve and the weapons debate had pushed Europe to the brink of a dangerous escalation – and the fears of a broader war were growing rapidly. A well-armed proxy war between Russia and the West in Ukraine was becoming a very real possibility. A conflict which began with the failure of the EU-Ukraine Association Agreement and the protests on Maidan Square in Kiev, and one which escalated with Russian President Vladimir Putin’s annexation of the Crimea Peninsula, has long since become the most dangerous stand-off Europe has seen in several decades. It is possible that it could ultimately involve the US and Russia facing each other across a line of demarcation.

Given the intensity of the situation, Germany and France together took the initiative and forced the Wednesday night summit in Minsk, Belarus. The long night of talks, which extended deep into Thursday morning, was the apex of eight days of shuttle diplomacy between Moscow, Kiev, Washington and Munich. With intense focus during dozens of hours of telephone conversations and negotiations across the globe, the German chancellor helped wrest a cease-fire from the belligerents. It is a fragile deal full of question marks, one which can only succeed if all parties dedicate themselves to adhering to it. Whether that will be the case is doubtful. The Minsk deal is brief respite. Nothing more. But it is a success nonetheless.

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“It’s no secret to anyone that fakes like this are made by a group of US counselors staying in the Kiev building of the Security Council, led by General Randy Kee..”

Russia Shrugs Off US Envoy’s ‘Evidence’ Of Russian Troops In Ukraine (RT)

The Russian Ministry of Defense has branded new claims by the US ambassador to Ukraine as “crystal ball gazing.” The ambassador tweeted pictures of what he said were Russian armed forces in Debaltsevo, eastern Ukraine. On Saturday, the US ambassador to Ukraine, Geoffrey Pyatt, posted on Twitter what he says are satellite photos proving there are Russian artillery systems stationed near the town of Lomuvatka, about 20 kilometers northeast of Debaltsevo. The images could not be immediately verified. Under the tweet, he said: “We are confident these are Russia military, not separatist systems.” The photographs were commissioned by the private Digital Globe satellite company.

“We have failed to understand how those grainy dark patches in the photos published by US Ambassador to Ukraine Geoffrey Pyatt on his Twitter feed could prove anything,” Major General Igor Konashenkov, a spokesman for the Russian Defense Ministry, told journalists later in the day. “Unlike the American intelligence services, Russia’s military [has] never considered crystal ball gazing a good way to check and confirm data.” Konashenkov also disregarded an earlier allegation by State Department spokeswoman Jennifer Psaki, saying he has not heard “anything new.” On Friday, Psaki declared that in addition to the artillery systems and multiple rocket launchers, Russia had also deployed air defense systems to the area near the surrounded railway hub.

“This is clearly not in the spirit of this week’s agreement. All parties must show complete restraint in the run up to Sunday,” Psaki told reporters. In late July, the Russian Ministry of Defense spoke out against images posted by Pyatt on his Twitter account, which alleged that Ukraine had been shelled from Russian territory. “These materials were posted to Twitter not by accident, as their authenticity is impossible to prove – due to the absence of the attribution to the exact area, and an extremely low resolution. Let alone using them as ‘photographic evidence,’” Konashenkov said at the time. “It’s no secret to anyone that fakes like this are made by a group of US counselors staying in the Kiev building of the Security Council, led by General Randy Kee,” he noted.

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Craziness.

New Anti-Russia Sanctions to Enter Into Force Monday (Sputnik)

Maja Kocijancic, European Commission’s spokesperson for foreign affairs, confirmed Friday that the EU will add 19 individuals, including five Russians, and nine entities to the list of sanctions over Ukraine on February 16. The statement was made a day after Russian President Vladimir Putin, together with the leaders of Germany, France and Ukraine, brokered a new deal on the crisis reconciliation in Minsk. “The political decision of additional listings has been taken on January 29. The [EU] Foreign Affairs Council on Monday adopted a legal act so it made it fulfilled this political commitment and has set to give the diplomatic efforts a chance that entering into force will happen on February 16, which is this coming Monday,” Kocijancic said.

The European Union, the United States and other countries have imposed several rounds of sanctions against Russia over its alleged role in the Ukrainian conflict. The restrictions target the country’s defense, energy and finance sectors, as well as a number of individuals. Moscow has repeatedly stressed that it is not militarily involved in Ukraine’s internal affairs. Following the Minsk talks, EU leaders convened for an informal meeting but a new-wave of anti-Russia sanctions was not on the agenda, European Council President Donald Tusk announced. Meanwhile European leaders agreed that the implementation of Thursday’s deal will become a touchstone for further relations with Russia.

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“..The EU imposed a ban in the European Court on accepting claims from Russian entities and individuals that have been subjected to sanctions. [This] has severe consequences, including for European democracy. Is there an independent rule of law?“

Igor Sechin: The Oil Man At The Heart Of Putin’s Kremlin (Independent)

Igor Sechin, the boss of Russian oil behemoth Rosneft and one of the most powerful men in Russia, has declared European sanctions against his giant state-controlled organisation are an illegal affront to democracy. In a rare interview, the man widely seen as being Vladimir Putin’s closest adviser said the world economy faced “severe consequences” as a result of the sanctions, which he said were “absolutely illegal and illegitimate”. He also spoke of how Rosneft – 20% owned by Britain’s BP – will cope with the collapse in the oil price, revealing that the company will be cutting its capital expenditure programme for this year by “approximately 30%”. That will represent a savage reduction on 2014’s spend, said in October to be $14bn-$16bn.

It follows cuts announced recently by other major firms around the world totalling $65bn. Although predicting continued volatility and saying he did not want to get into a “guessing game”, he said the oil price could start to rise again in the final quarter of this year. This was because the current oversupply of oil was insignificant compared with previous oil crises like 1985, so the fundamental supply and demand equation did not justify the current price slump. Moreover, demand is rising, primarily in Asia, and not falling like it was in 1985, he said. He repeatedly expressed his concerns that there could be a global shortage of oil if companies did not return to investing in production and output. If investment levels recovered, next year’s price would be $60-$80 a barrel, he said.

However, if they do not, and the supply-demand equation was not rebalanced, it could bounce back to $100-$110 as the lack of investment in drilling caused a shortfall in production. He talked for the first time of his close bond with the senior management of BP, particularly Bob Dudley, the US-born chief executive who famously fled Russia in fear of his safety during BP’s battle with the oligarch partners of its BP-TNK joint venture. And, speaking after Rosneft’s legal case against EU sanctions was sent from the High Court in London to the European Court of Justice, he declared: “We are fighting: the knot will be untied.” Mr Sechin said Rosneft was prepared for a long haul in its battle to overturn the sanctions, placed on both him and the company by the US and EU authorities in response to the Ukraine conflict.

Asked about the prospects of the time extension of the case’s move from London to the European Court, he said wryly: “Instead of three years, the case may be a year and a half… What can you do? I don’t know if the case will be tried on merit and our claims will be justly reviewed and evaluated.” He attacked the European authorities for the way the sanctions were applied in such a way to ban legal appeals against them: “That is what concerns me most… The EU imposed a ban in the European Court on accepting claims from Russian entities and individuals that have been subjected to sanctions. [This] has severe consequences, including consequences for European democracy. Is there an independent rule of law?”

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It doesn’t look good ahaed of tomorrow’s meeting.

Greece And Creditors Continue Talks Ahead Of Eurogroup Meeting (AFP)

Greek and EU officials met for talks Saturday ahead of a high-stakes show-down over Athens’ demands for a radical restructuring of its massive international bailout programme. “It is not a negotiation but an exchange of views to better understand each other’s position,» an EU official said of the final huddle before next week’s crunch meeting. “The talks are ongoing and the institutions are expected to report at the Eurogroup on Monday,» the official said, without giving further details. No discussions are scheduled for Sunday, with the parties reporting back to their governments to complete preparations for Monday’s meeting of the 19 eurozone finance ministers. The consultations began Friday after new hard-left Greek Prime Minister Alexis Tsipras laid out his plans to his peers, including Europes sceptical paymaster German Chancellor Angela Merkel, at his first EU summit.

Merkel recognised the need for compromise on all sides, but also called for Greece to respect the conditions of the bailout – a position that neatly encapsulated both sides in the stand-off. Dutch Finance Minister and Eurogroup head Jeroen Dijsselbloem said Friday he was «pessimistic» of any quick deal. “The Greeks have sky-high ambitions. The possibilities, given the state of the Greek economy, are limited”, Dijsselbloem said in describing the difficulties in finding common ground. “I don’t know if well get there by Monday,” he added. The EU and the International Monetary Fund bailed Greece out in 2010, and then again in 2012 to the tune of some €240 billion, plus a debt write-down worth more than €100 billion euros.

The rescue may have kept Greece in the eurozone, but it also left Athens with a mountain of debt worth about €315 billion that most analysts do not believe will ever be fully repaid. In return for the bailouts, the then centre-right Greek government agreed to a series of stinging austerity measures, and the much-resented oversight by the EU, IMF and ECB ‘troika to make sure Greece stuck to the terms. Tsipras campaigned and won elections last month on promises to ditch the programme, which he said had wrecked the economy, not helped it, and sent the jobless rate soaring. In a more conciliatory move, however, Athens also said it could live with 70% of the current programme, but that Greece must be allowed leeway on the rest so it can do more to boost the economy, including through additional spending.

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Sure.

Do Derivatives Make The World Safer? (Guillaume Vuillemey)

The interest rate derivatives market is the largest market in the world, with an aggregate notional exposure of 563 trillion USD as of June 2014. Its fast growth over the past 15 years (shown in Figure 1) has raised concerns from policymakers. Currently, no theory provides guidance regarding the effect of the use of derivatives on other decisions by financial intermediaries. In a recent paper, I develop a framework to show how hedging using interest rate derivatives affects:

• Risk management in banking,
• The response of bank lending (both to interest rate and real shocks), and
• The occurrence of bank defaults.

What are interest rate derivatives? Interest rate derivatives are contracts by which two parties commit to exchange future interest rate cash flows, computed as%ages of a given amount – the notional amount. The most popular of these contracts is the interest rate swap, which makes it possible to exchange a fixed rate against a floating rate until the maturity of the contract is reached. Derivative contracts have hedging properties: they make it possible to insure against some future realizations of the short rate, which would otherwise induce losses. One reason why banks are active in the interest rate derivatives market is because most of the cash flows they receive (e.g. loans) or pay (e.g. interbank borrowing) are interest rates whose maturities do not match: they tend to ‘borrow short’ and ‘lend long’. As a consequence of maturity mismatch, changes in interest rates either increase or decrease a bank’s profitability and possibly induce default.

Derivatives and risk management In my framework, hedging is motivated by the existence of financial constraints (as in Froot et al. 1993). Banks aim to manage internal funds so that they have sufficient resources at times profitable lending opportunities arise. A shortage of funds would imply turning to costly external financing sources. Banks optimally engage in risk management either by

• Preserving debt capacity – i.e. by not borrowing up to their collateral constraint and instead keeping cash – or
• Using derivatives to transfer resources to future states where large lending outlays will be optimal.
• My framework features two risks faced by a bank, which give rise to two opposite motives for risk management.

On the liability side, the risk is that the cost of debt financing will be high precisely in states where lending opportunities will be large. This risk gives an incentive to transfer resources from future states where the short rate is low to states where it is high. On the asset side, the risk is that for a given cost of debt financing, the bank will be unable to seize lending opportunities arising from a low short rate, as such states are typically associated with greater optimal lending. This risk gives an incentive to transfer resources from future states where the short rate is high to states where it is low. From the existence of these two opposite forces – which I call respectively the ‘financing’ and the ‘investment’ motives for risk management, – it follows that both pay-fixed and pay-float swaps may be used for hedging. In previous discussions, the fact that banks use pay-float positions – i.e. they get exposed to interest rate spikes – was usually considered a puzzle or as evidence of speculation. I show it is also consistent with genuine hedging.

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CDS are meant to hide losses and wagers.

Derivatives No Longer Used For Hedging But For “Alpha Generation” (Zero Hedge)

Maybe the pervasive “this time is always different” meme has been perpetuated to the point that the market actually believes it, or maybe it’s just old fashioned greed, but whatever the case, market participants (and this means central banks, retail investors, and everyone in between) have an extraordinary inclination towards Einsteinian insanity. Never mind, for instance, that the Fed’s attempts to “smooth out the business cycle” (breaking it in the process) have everywhere and always served only to create bigger and bigger bubbles that have led, invariably, to crashes that are ever more spectacular/devastating – what we need is more intervention by central planners bankers. Forget the fact that throughout the course of human history, minting endless amounts of fiat currency always fails – in the words of new BOJ board member Yutaka Harada, “we just need to print more money.”

And certainly pay no attention (despite the tendency for these types of discrepancies to self-correct) to the divergence between the S&P and trivial things like the U.S. macro picture and/or forward earnings estimates… … the U.S. economy is the cleanest dirty shirt and Jeremy Siegel is probably contemplating Dow 40K as we speak, so just hold your nose and buy.

Given this steadfast refusal to learn from yesterday’s mistakes, it isn’t any wonder that when Citi recently surveyed 43 banks, 29 asset managers, and 31 hedge funds regarding their outlook for the credit derivatives market in 2015, the consensus was that “there seems to be plenty of room and enthusiasm to use derivatives to take leveraged risk.” Phew: for a minute there it looked like leveraged risk taking with derivatives might go the way of the Dodo in the post-crisis world, making Bruno Iksil the last great example of how much fun one can have stomping around in off-the-run CDS indices with depositors’ money.

It’s also comforting to know that among those Citi surveyed, the general consensus was that “…there seems to have been a shift from using derivatives as a hedging tool, to using them more for alpha generation [as] most products are now used more for adding risk and directional views.” So investment professionals and sophisticated market participants are quite eager to take leveraged risk with derivatives with an eye not towards “hedging” (i.e. mitigating risk), but towards “alpha generation” and expressing “directional views” (i.e. gambling). In fact, nearly two-thirds of those surveyed listed either “alpha generation” or “adding risk” as the primary reason for trading single-name and index CDS

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Supply shock.

Goldman Warns Over-Supply Means Oil Prices Will Be Much Lower (Zero Hedge)

Via Goldman Sachs’ Sven Jari Stehn: US Daily: Oil Supply versus Demand: A Market Perspective:
• We use statistical techniques to explore the drivers of the sharp drop in oil prices since last summer. The idea behind our approach is to use the behavior of oil and equity prices to disentangle demand from supply shifts. Intuitively, we would expect that positive demand shocks should push both equity and oil prices up, while positive supply shocks should push equities up and oil prices down.

• Our model suggests that the vast majority of the decline in oil prices until November 2014 was driven by perceptions of improved supply. The continued sell-off in December and January was driven by perceptions of both improving supply and slowing demand. The latest rebound in oil–which started in late January–appears to be driven by a mix of demand and supply.

• Although our approach is subject to a number of caveats, the main conclusion is consistent with our commodities team’s views, who have argued that the decline in oil has been driven by an oversupplied global oil market.

Oil prices have fallen substantially since last summer. Crude West Texas Intermediate (WTI), for example, fell by about 60% between June and January, before starting to rebound somewhat in February. In today’s comment we use statistical techniques to explore the drivers of these changes in the oil price. The idea behind our approach is to use the behavior of oil and equity prices to disentangle demand from supply shifts. Intuitively, we would expect that positive demand shocks should push both equity and oil prices up, while positive supply shocks should push equities up and oil prices down. We therefore call anything that pushes oil and equities in the same direction a “demand” shock and anything that pushes them in opposite directions a “supply” shock.

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“Libya’s state-run oil company warned that it would shut production at all fields..” No it won’t.

Libya Warns of Complete Oil Shutdown as Attacks Escalate (Bloomberg)

Libya’s state-run oil company warned that it would shut production at all fields if authorities in the divided nation fail to contain an escalation of attacks on facilities that has cut crude output to a year-low. “If these incidents continue, National Oil Corp. will regrettably be forced to stop all operations at all fields in order to preserve the lives” of employees, the company said in a statement on its website. “National Oil Corp. urges the Ministry of Defense and the Petroleum Facilities Guard to take the appropriate measures to protect oil sites.” The North African nation’s oil production was reduced by 180,000 barrels a day after a fire at a pipeline that carries crude to the eastern Hariga port, National Oil spokesman Mohamed Elharari said by phone in Tripoli.

Hariga, near Tobruk, has oil left in storage for exports and the last ship to load there was the Greek-flagged Minerva Zoe, he said. Libya, holder of Africa’s largest oil reserves, was producing 350,000 barrels a day in January, Elharari said at the time. The nation may be producing less than 200,000 barrels a day after the pipeline fire. The previous lowest daily average was in March 2014, at 150,000 barrels. A member of OPEC, Libya was producing 1.6 million barrels a day before the 2011 rebellion that ended Muammar Qaddafi’s 23-year rule. National Oil Corp., or NOC as the company is known, has a majority stake in all of Libya’s oil and gas producing ventures. It has a 59% stake in the company that operates Bahi, an oil field that came under attack on Friday, with Marathon Oil, ConocoPhillips and Hess holding the remaining 41%, according to an NOC statement about the attack.

NOC has said it was neutral in the conflict, which is pitting the Islamist-backed government that captured Tripoli last year against the internationally-recognized government that fled to the eastern region. The Petroleum Facilities Guard is loyal to the internationally-recognized administration of Abdullah al-Thinni. The bombing of the pipeline followed attacks on fields in central Libya that Ali al-Hasy, a spokesman for the guards, blames on a local branch of Islamic State, the militants that have proclaimed a caliphate in parts of Iraq and Syria and is being fought by a U.S.-led coalition of Arab and Western nations.

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“Americans will have to rely more heavily on the piggy bank.” Whatever that means. And that’s still provided they have one.

Start Saving Those Pennies Now, Robert Shiller Warns Investors (CNBC)

Nobel Prize-winning economist Robert Shiller has a grim message for investors: Save up, because in the years ahead, assets aren’t going to give you the type of returns that you’ve become accustomed to. In his third edition of “Irrational Exuberance,” which will drop later this month, the Yale professor of economics warns about high prices for stocks and bonds alike. “Don’t use your usual assumptions about returns going forward.” Shiller recommended to investors in a Thursday interview on CNBC’s “Futures Now.” He says that stock valuations look rich.

In fact, Shiller’s favorite valuation measure, the cyclically adjusted price-earnings ratio (which compares current prices to the prior 10 years’ worth of earnings) is “higher than ever before except for the times around 1929, 2000, and 2008, all major market peaks,” he writes in his new preface to the third edition. “It’s very hard to predict turning points in markets,” Shiller said on Thursday. His CAPE measure of the S&P 500 “could keep going up. … But it’s definitely high. By historical standards, it’s up there.” Meanwhile, Shiller said that bond yields, which move inversely to prices, “can’t keep trending down” and “could [reach] a major turning point in coming years.” It’s no surprise, then, that Shiller expects little in the way of asset returns—meaning Americans will have to rely more heavily on the piggy bank.

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That’ll be the day.

UK Tories Told To Shun Wealthy Donors To Avoid Scandal (Guardian)

The Conservative party needs to break its dependence on millionaires, the former Tory chancellor Ken Clarke has told the Observer, amid a growing furore over the tax affairs of the party’s donors. After a week of some of the most intense fighting between the parties in recent years, Clarke said the Conservatives would be strengthened by loosening the hold of rich men on their financial survival. He called on David Cameron to cap political donations and increase state funding of political parties to put an end to damaging scandals and rows. The Conservatives have been rocked in the past week by a potentially toxic combination of allegations of tax evasion by clients of the HSBC bank, whose chairman, Lord Green, became a Tory minister; tax avoidance by party donors; and leaked details of the secretive black and white fundraising ball.

On Saturday, Green stepped down from a financial services lobby group, TheCityUK’s advisory council, in order to avoid “damaging the effectiveness” of its efforts “in promoting good governance”. Clarke said that while he believed the current row over donors and tax avoidance was “artificial and bogus”, such episodic rows over the funding of political parties were feeding into the growing cynicism and distrust of the British political system. He defended Cameron’s decision to attend the fundraising black and white ball in Mayfair, where guests included a series of controversial donors, but said the time had come for the prime minister “to put on his tin hat” and secure further state funding of parties, whatever the short-term public outcry.

Clarke, who was a cabinet minister until last July, said: “I think the Conservative party will be strengthened if it is less dependent on having to raise money from wealthy individuals. But there is no way any leader can avoid raising funds from large gatherings of that kind. “What happens is that the Conservatives attack the Labour party for being ever more dependent on rather unrepresentative leftwing trade union leaders, and the Labour party spends all its time attacking the Conservative party for being dependent on rather unrepresentative wealthy businessmen. In a way both criticisms are true. And the media sends both up. “The solution is for the party leaders to get together to agree, put on their tin hats and move to a more sensible and ultimately more defensible system.”

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Remarkable.

New York’s Streets Are Suddenly Safer. Why? (Guardian)

It is 15 below zero – using what US meteorologists call RealFeel temperature – in Brooklyn’s notorious Marcy Projects. The cold has driven the drug dealers off the streets; police, who have taken to patrolling in fours since two officers were gunned down in a police car last December, are scarce; and at the Ponce Funeral Home the trade is all of the natural-causes kind. Although there was an attempted murder in Queens on Friday that left a man on life-support, New York has enjoyed an almost unprecedented 12-day streak without a homicide. While many pointed to the weather, the embattled New York mayor, Bill de Blasio, sought to improve his strained relationship with the police department, attributing the lull to its hard work.

After months dominated by allegations that US law enforcement is reckless in the use of deadly force, especially when it comes to African-American men, there’s a new criminal-justice narrative: US crime rates are falling, often dramatically, even as incarceration rates begin to level off. The changes are apparent even in Marcy Projects, the neighborhood made famous by homeboy Shawn Carter, aka Jay-Z, who used to describe it in songs such as Murda Marcyville. “Thirty-some odd years ago I’d find dead people on my corner when I came to work,” recalls a community guard who gave her name only as Deborah. In 1990 there were 71 murders here; in 2012 there was just one. “It’s calmed down a lot. Mostly that’s ’cause of the police. They’re more present now.”

The fall in crime in this part of the Bedford-Stuyvesant district is mirrored across the metropolis. In 2014 there were 333 murders in New York City, half the number committed in 2000 and a quarter of the 1,384 recorded in 1985. While crime statistics are difficult to interpret – violent crimes such as rape and assault have not reduced so markedly – the trend overall is repeated across the US. From its peak in 1991, violent crime is down 51%; property crime 4% lower; and murder down 54%. During that same time, incarceration nearly doubled. The US prison population now stands at 2.4 million – up 800% since 1980 – or roughly a quarter of the world’s total. The cost? About $80bn a year. The overall cost of the US criminal justice system is placed at $240bn, or about half of the federal deficit.

But according to What Caused the Crime Decline?, a study published last week by the Brennan centre for justice at New York University school of law, there is no definitive link between falling crime and mass incarceration. The finding runs counter to previous studies claiming that incarceration accounts for as much as a third of the fall in crime. Once violent criminals were taken off the streets in the 1990s, the study claims, an additional 1.1 million low-level or non-violent offenders were jailed without any further benefit. “The rate of incarceration has passed even the point of diminishing returns and now makes no effective difference,” said Oliver Roeder, one of the study’s three authors.

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“This whole thing is just another big experiment on humans for no good reason..”

GMO Apples Win Approval For Sale In US (Reuters)

US regulators have approved what would be the first commercialised biotech apples, rejecting efforts by the organic industry and other GMO critics to block the new fruit. The US Department of Agriculture’s animal and plant health authority, Aphis, approved two genetically engineered apple varieties designed to resist browning that have been developed by the Canadian company Okanagan Specialty Fruits. Okanagan plans to market the apples as Arctic Granny and Arctic Golden, and says the apples are identical to their conventional counterparts except the flesh of the fruit will retain a fresh appearance after it is sliced or bruised. The company’s president, Neal Carter, called the USDA approval “a monumental occasion”.

“It is the biggest milestone yet for us and we can’t wait until they’re available for consumers,” he said. Arctic apples would first be available in late 2016 in small quantities but not widely distributed for some years, Carter said. The new Okanagan apples have drawn broad opposition. The Organic Consumers Association (OCA), which petitioned the USDA to deny approval, says the genetic changes that prevent browning could be harmful to human health and pesticide levels on the apples could be excessive. The OCA would pressure food companies and retail outlets not to use the fruit, said its Director Ronnie Cummins. “This whole thing is just another big experiment on humans for no good reason,” he said.

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Those pesky green Germans do it again…

Germany Moves To Legalise Fracking (Guardian)

Germany has proposed a draft law that would allow commercial shale gas fracking at depths of over 3,000 metres, overturning a de facto moratorium that has been in place since the start of the decade. A new six-person expert panel would also be empowered to allow fracks at shallower levels Shale gas industry groups welcomed the proposal for its potential to crack open the German shale gas market, but it has sparked outrage among environmentalists who view it as the thin edge of a fossil fuel wedge. Senior German officials say that the proposal, first mooted in July, is an environmental protection measure, wholly unrelated to energy security concerns which have been intensified by the conflict in Ukraine. “It is important to have a legal framework for hydraulic fracturing as until now there has been no legislation on the subject,” Maria Krautzberger, president of Germany’s federal environment agency (UBA), told the Guardian.

“We have had a voluntary agreement with the big companies that there would be no fracking but if a company like Exxon wanted, they might do it anyway as there is no way to forbid it,” she said. “This is a progressive step forward.” The draft law would only affect hydraulic fracturing for shale oil and tight gas in water protection and spring healing zones. The tight gas industry made up around 3% of German gas production before the moratorium, and, under the new proposals, could resume fracking in the Lower Saxony region where it is concentrated. Commercial fracking for shale gas and coal bed methane would be banned at levels below 3,000 metres, but allowed for exploration purposes at shallower levels, subject to the assessment of the expert panel.

Environmentalists, however, were alarmed that half of the experts belong to institutions that signed the Hanover Declaration, calling for increased exploration of shale gas in Germany as a way of increasing energy security. “It is clear what these people are going to say,” José Bové, the French Green MEP, told the Guardian. “The panel is not going to be independent, but exactly what the companies are looking for. You don’t need a panel to tell you that shale gas is dangerous. We can see the problems with water pollution, earthquakes and methane emissions. We need people to protest about it before the exploration begins.”

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Nobody should ever be allowed to own land in a foreign country. The land belongs to the people.

South Africa Bars Foreigners From Owning Land (Reuters)

Foreigners will be barred from owning land in South Africa and no individual will be able to own more than 12,000 hectares, the equivalent of two farms, under legislation currently in the works, President Jacob Zuma said on Saturday. Giving more details of a Land Holdings Bill announced this week in a State of the Nation address, Zuma said foreign individuals and companies would be restricted to long-term leases of between 30 and 50 years. If any South Africans owned more than 12,000 hectares, the excess would be liable for seizure by the state, Zuma said, in comments that are likely to upset the large – and still predominantly white-owned – commercial farming sector. “If any single individual owns above that limit, the government would buy the excess land and redistribute it,” he said in a statement.

However, the law will not be applied retroactively for fear of falling foul of the constitution. The legislation would be sent to cabinet for approval soon, after which it will be opened for public consultation and then submitted parliament, Zuma added. Land remains a highly emotive issue in South Africa, where 300 years of colonial rule and white-minority government have left the vast majority of farmland in the hands of a tiny, mainly white, minority. Since the end of apartheid in 1994, the ruling African National Congress has tried to redress the balance through a ‘willing seller, willing buyer’ scheme, but has fallen well short of its target of transferring a third of farmland to blacks by last year.

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“The Koch Empire’s already pledged $889 million to win 2016 election for GOP lobbyists, backed by “No Climate Tax Pledges” that GOP members in Congress must sign to get Koch campaign cash in 2016..”

Planet Earth Is The Titanic, Climate Change The Iceberg (Paul B. Farrell)

Yes, the world is sinking. And the band keeps playing: On the Titanic, first violinist, Big Oil’s Koch Empire. For them capitalism is the solution to everything. Second chair, world’s moral authority, Pope Francis warning that capitalism is the “root cause of the world’s problems.” No harmony. And playing a mean solo flute, Mother Nature, she doesn’t care what the Kochs do, nor what Francis says. Abandon ship? Surrender to the Koch-GOP siren song? Maybe. Pope Francis’s tune is not persuasive enough to win the fight for climate change. True, the pope is the world’s moral authority. But morality — doing what’s right — will never trump the Koch Bros $100 billion bankroll in time to avoid the icebergs we’re all denying. The Koch Empire’s already pledged $889 million to win 2016 election for GOP lobbyists, backed by “No Climate Tax Pledges” that GOP members in Congress must sign to get Koch campaign cash in 2016. They’ve got a winning hand.

Yes, money always trumps morality in today’s raging capitalist society. Yes, your democracy really is for sale to the highest bidder. And yes, everyone has a price … especially senators. But can’t Pope Francis, the world’s moral conscience, lead a resistance movement against Big Oil and the Koch Empire? Save the world? True, he does lead a powerful army of 1.2 billion Catholics worldwide … and, yes, he will soon issue a historic warning in his papal encyclical, making official his position that climate change and global warming are indeed manmade … that capitalism is the root cause of all the world’s deteriorating physical and social environment … that humans are killing their planet.

In recent months the pope has travelled the world warning us capitalism is the enemy of Planet Earth: In capitalism the “worship of the ancient golden calf has returned in a new and ruthless guise in the idolatry of money … lacking a truly human purpose” … our “constant assaults on the natural environment” are “the result of unbridled consumerism” … having “serious consequences for the world economy” … capitalism is morally destructive of the world’s soul and your soul … capitalism will eventually self-destruct the planet and itself.

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“He told several people that Winter would last 6 more weeks, however he failed to disclose that it would consist of mountains of snow!”

Punxsutawney Phil Wanted By Police, Offered Asylum At Ski Resort (ExpressTimes)

Pennsylvania’s most famous forecaster appears to be a controversial figure in New Hampshire, but his supporters are stepping up. The tongue-in-cheek drama appears to have started with a Facebook post Tuesday from police in Merrimack, N.H., saying there is a warrant out for Punxsutawney Phil’s arrest. “We have received several complaints from the public that this little varmint is held up in a hole, warm and toasty,” says the post, which has been shared more than 9,000 times. “He told several people that Winter would last 6 more weeks, however he failed to disclose that it would consist of mountains of snow!”

Merrimack Police Chief Mark Doyle said the joke campaign to get Phil was an attempt to lighten the mood after a series of snowstorms that have buried New England, according to The Associated Press. Others are playing along. Gunstock Mountain Resort in Gilford, N.H., issued a news release Saturday offering asylum to Phil, saying the resort is “thrilled” with snowy conditions it describes as “some of the best snow New Hampshire has seen in years.” “We are concerned with the sensationalist attack on one of America’s true winter heroes,” the release says, adding the resort will work with local authorities to secure the groundhog’s safe passage.

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Feb 052015
 
 February 5, 2015  Posted by at 11:19 am Finance Tagged with: , , , , , , , , , ,  


DPC City Market, Kansas City, Missouri 1906

A World Overflowing With Debt (Bloomberg)
A Greek Morality Tale: We Need A Global Debt Restructuring Framework (Stiglitz)
Devaluation By China Is The Next Great Risk For A Deflationary World (AEP)
Pushing on a String? Two Charts Showing China’s Dilemma (Bloomberg)
Petrobras, Now $262 Billion Poorer, Exposes Busted Brazil Dream (Bloomberg)
Central Bank Surprises: Who’s Next? (CNBC)
There’s Nothing Left To Break The Euro’s Fall Now (MarketWatch)
Will the Next Recession Destroy Europe? (Bloomberg)
What You Need To Know About ECB’s Greek Collateral Decision (MarketWatch)
Greece Sticks to Anti-Austerity Demands Following ECB Loan Cut (Bloomberg)
Greek Finance Ministry Says ECB Decision Aimed At Eurogroup (Kathimerini)
What the ECB’s Move on Greek Government Debt Is Really All About (Bloomberg)
Greek Bill-Sale Demand Slumps as Nation Seeks New Debt Deal (Bloomberg)
Greek Austerity Sparks Sharp Rise In Suicides (CNBC)
Greece, Ukraine and Russia: History Lessons (CNBC)
Here’s Why The Oil Glut May Continue (MarketWatch)
Harvard’s Convicted Fraudster Who Wrecked Russia Resurfaces in Ukraine (NC)
One Brit Discovers Why Americans Are So Fat (MarketWatch)
Temperatures Rise as Climate Critics Take Aim at U.S. Classrooms (Bloomberg)

“Thanks to real estate and shadow banking, debt in the world’s second-largest economy has quadrupled from $7 trillion in 2007 to $28 trillion in the middle of last year.”

A World Overflowing With Debt (Bloomberg)

The world economy is still built on debt. That’s the warning today from McKinsey’s research division which estimates that since 2007, the IOUs of governments, companies, households and financial firms in 47 countries has grown by $57 trillion to $199 trillion, a rise equivalent to 17 percentage points of gross domestic product. While not as big a gain as the 23 point surge in debt witnessed in the seven years before the financial crisis, the new data make a mockery of the hope that the turmoil and subsequent global recession would put the globe on a more sustainable path. Government debt alone has swelled by $25 trillion over the past seven years and developing economies are responsible for almost half of the overall gain.
McKinsey sees little reason to think the trajectory of rising leverage will change any time soon. Here are three areas of particular concern:

1. Debt is too high for either austerity or growth to cure. Politicians will instead need to consider more unorthodox measures such as asset sales, one-off tax hikes and perhaps debt restructuring programs.

2. Households in some nations are still boosting debts. 80% of households have a higher debt than in 2007 including some in northern Europe as well as Canada and Australia.

3. China’s debt is rising rapidly. Thanks to real estate and shadow banking, debt in the world’s second-largest economy has quadrupled from $7 trillion in 2007 to $28 trillion in the middle of last year. At 282% of GDP, the debt burden is now larger than that of the U.S. or Germany. Especially worrisome to McKinsey is that half the loans are linked to the cooling property sector.

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“..the US is adamantly opposed; perhaps it wants to reinstitute debtor prisons for over indebted countries’ officials (if so, space may be opening up at Guantánamo Bay)..”

A Greek Morality Tale: We Need A Global Debt Restructuring Framework (Stiglitz)

Given the amount of distress brought about by excessive debt, one might well ask why individuals and countries have repeatedly put themselves into this situation. After all, such debts are contracts – that is, voluntary agreements – so creditors are just as responsible for them as debtors. In fact, creditors arguably are more responsible: typically, they are sophisticated financial institutions, whereas borrowers frequently are far less attuned to market vicissitudes and the risks associated with different contractual arrangements. Indeed, we know that US banks actually preyed on their borrowers, taking advantage of their lack of financial sophistication.

At the international level, we have not yet created an orderly process for giving countries a fresh start. Since even before the 2008 crisis, the UN, with the support of almost all of the developing and emerging countries, has been seeking to create such a framework. But the US is adamantly opposed; perhaps it wants to reinstitute debtor prisons for over indebted countries’ officials (if so, space may be opening up at Guantánamo Bay). The idea of bringing back debtors’ prisons may seem far-fetched, but it resonates with current talk of moral hazard and accountability. There is a fear that if Greece is allowed to restructure its debt, it will simply get itself into trouble again, as will others. This is sheer nonsense. Does anyone in their right mind think that any country would willingly put itself through what Greece has gone through, just to get a free ride from its creditors?

If there is a moral hazard, it is on the part of the lenders – especially in the private sector – who have been bailed out repeatedly. If Europe has allowed these debts to move from the private sector to the public sector – a well-established pattern over the past half-century – it is Europe, not Greece, that should bear the consequences. Indeed, Greece’s current plight, including the massive run-up in the debt ratio, is largely the fault of the misguided troika programs foisted on it. So it is not debt restructuring, but its absence, that is “immoral”. There is nothing particularly special about the dilemmas that Greece faces today; many countries have been in the same position. What makes Greece’s problems more difficult to address is the structure of the eurozone: monetary union implies that member states cannot devalue their way out of trouble, yet the modicum of European solidarity that must accompany this loss of policy flexibility simply is not there.

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“The average one-year borrowing cost for Chinese companies has risen from zero to 5% in real terms over the past three years..”

Devaluation By China Is The Next Great Risk For A Deflationary World (AEP)

China is trapped. The Communist authorities have discovered, like the Japanese in the early 1990s and the US in the inter-war years, that they cannot deflate a credit bubble safely. A year of tight money from the People’s Bank and a $250bn crackdown on shadow banking have pushed the Chinese economy close to a debt-deflation crisis. Wednesday’s surprise cut in the Reserve Requirement Ratio (RRR) – the main policy tool – comes in the nick of time. Factory gate deflation has reached -3.3%. The official gauge of manufacturing fell below the “boom-bust” line to 49.8 in January. Haibin Zhu, from JP Morgan, says the 50-point cut in the RRR from 20% to 19.5% injects roughly $100bn into the system. This will not, in itself, change anything. The average one-year borrowing cost for Chinese companies has risen from zero to 5% in real terms over the past three years as a result of falling inflation.

UBS said the debt-servicing burden for these firms has doubled from 7.5% to 15% of GDP. Yet the cut marks an inflection point. There will undoubtedly be a long series of cuts before China sweats out its hangover from a $26 trillion credit boom. Debt has risen from 100% to 250% of GDP in eight years. By comparison, Japan’s credit growth in the cycle preceding its Lost Decade was 50% of GDP. The People’s Bank may have to cut all the way to zero in the end – a $4 trillion reserve of emergency oxygen – but to do that is to play the last card. Wednesday’s trigger was an amber warning sign in the jobs market. The employment component of the manufacturing survey contracted for the 15th month. Premier Li Keqiang targets jobs – not growth – and the labour market is looking faintly ominous for the first time.

Unemployment is supposed to be 4.1%, a make-believe figure. A joint study by the IMF and the International Labour Federation said it is really 6.3%, high enough to cause sleepless nights for a one-party regime that depends on ever-rising prosperity to replace the lost elan of revolutionary Maoism. Whether or not you call it a hard-landing, China is struggling. Home prices fell 4.3% in December. New floor space started has slumped 30% on a three-month basis. This packs a macro-economic punch. A study by Jun Nie and Guangye Cao for the US Federal Reserve said that since 1998 property investment in China has risen from 4% to 15% of GDP, the same level as in Spain at the peak of the “burbuja”. The inventory overhang has risen to 18 months compared with 5.8 in the US.

The property slump is turning into a fiscal squeeze since land sales make up 25% of local government money. Zhiwei Zhang, from Deutsche Bank, says land revenues crashed 21% in the fourth quarter of last year. “The decline of fiscal revenue is the top risk in China and will lead to a sharp slowdown,” he said. The IMF says China’s fiscal deficit is nearly 10% of GDP once land sales are stripped out and all spending included, far higher than generally supposed. It warned two years ago that Beijing was running out of room and could ultimately face “a severe credit crunch”.

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“The obsession with monetary policy is a problem around the world, but only China has a money supply of $20 trillion.”

Pushing on a String? Two Charts Showing China’s Dilemma (Bloomberg)

Is China’s latest monetary easing really going to help? While economists see it freeing up about 600 billion yuan ($96 billion), that assumes businesses and consumers want to borrow. This chart may put some champagne corks back in. It shows demand for credit is waning even as money supply continues its steady climb.

The reserve ratio requirement cut “helps to raise loan supply, but loan demand may remain weak,” said Zhang Zhiwei, chief China economist at Deutsche Bank. “We think the impact on the real economy is positive, but it is not enough to stabilize the economy.” This chart may also give pause. It shows the surge in debt since 2008, which has corresponded with a slowdown in economic growth.

“Monetary stimulus of the real economy has not worked for several years,” said Derek Scissors, a scholar at the American Enterprises Institute in Washington who focuses on Asia economics. “The obsession with monetary policy is a problem around the world, but only China has a money supply of $20 trillion.”

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Brazil is falling to bits. The Olympics next year will be the focus of mass protests, much bigger than last year’s.

Petrobras, Now $262 Billion Poorer, Exposes Busted Brazil Dream (Bloomberg)

When Brazil emerged from the global financial crisis as one of the world’s great rising powers, Petrobras was the symbol of that growing economic might. The state-run oil giant was embarking on a $220 billion investment plan to develop the largest offshore crude discovery in the Western hemisphere since 1976 and was, in the words of then-President Luiz Inacio Lula da Silva, the face of “the new Brazil.” Today the company epitomizes everything that is wrong with a Brazilian economy that has been sputtering for the better part of four years: It’s mired in a corruption scandal that cost the CEO her job this week; it has failed to meet growth targets year after year; and it’s saddling investors with spectacular losses. Once worth $310 billion at its peak in 2008, a valuation that made it the world’s fifth-largest company, Petroleo Brasileiro SA is today worth just $48 billion.

While Brazil’s decline on the international stage has been playing out since the commodities-driven economic boom first began to fizzle in 2011, the corruption case at Petrobras deepens the growing sense of crisis in the South American country. The government is posting record budget deficits after a collapse in prices for the soy, oil and iron that the nation exports; Sao Paulo is running out of water amid the biggest drought in decades; and the real dropped the most among major currencies in the past six months. “Brazil seemed great during close to 10 years of rising commodity prices and a very positive terms of trade,” Jim O’Neill, the former Goldman chief economist who coined the BRIC acronym, said. “It disguised lots of underlying problems and of course it made policy makers lazy and allowed bad behavioral habits to go on, as this Petrobras story epitomizes.”

It wasn’t supposed to go like this. In the halcyon days, the country was awarded rights to host the 2014 World Cup and the 2016 summer Olympics. The nation was in the midst of the kind of economic expansion it hadn’t seen in decades, posting growth of more than 5% in three out of four years. To understand how far Brazil has fallen since, compare the markets’ performance under Lula with that of his protege and successor, Dilma Rousseff. Lula oversaw a 113% rally in the real, the best-performing emerging-market currency during his years in office from 2003 through 2010. A commodity surge also helped stocks reach their peak during his last year in office after the benchmark Ibovespa gauge jumped six-fold. Since the 67-year-old Rousseff took office in 2011 after serving as Lula’s energy minister and chief of staff, positions that also put her atop the board at Petrobras, the Ibovespa has lost about a third of its value and the currency sank about 40%.

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Take your pick. The race to the bottom is on.

Central Bank Surprises: Who’s Next? (CNBC)

From Switzerland to Singapore, central banks around the world kept markets on their toes with unexpected policy moves January, and economists say the surprises aren’t going to stop there. Last month alone, central banks in India, Egypt, Peru, Denmark, Canada and Russia announced surprise interest rate cuts. This came alongside Switzerland’s unanticipated decision to scrap its three-year-old cap on the franc and Singapore’s off-cycle move to tweak its exchange rate policy in order to ease the rise of the local currency. On Wednesday, the People’s Bank of China surprised markets on Wednesday by cutting the reserve requirement ratio (RRR) by 50 basis points to 19.5% – its first country-wide RRR cut since May 2012. “We expect more central banks to surprise with either the timing or size of any monetary policy easing,” said Rob Subbaraman, chief economist and head of global markets research, Asia ex-Japan at Nomura.

Within Asia, central banks in China, Thailand, Korea, India, Indonesia and Singapore are the ones to watch, he said. The backdrop of disinflationary pressures, a slowing China, and faltering exports may force central banks to act off-cycle, Subbaraman said. These dynamics have become increasingly clear in the past couple of months. “Thailand has recently joined Singapore in outright CPI (consumer price index) deflation; Korea, excluding the one-off tobacco price hike, is very close to deflation, as is Taiwan. Most other countries are facing low-flation or steep declines in inflation,” he said, citing India and Indonesia. Meanwhile, economic powerhouse China, a key source of demand for smaller economies in the region, started the year on a sluggish note. The country’s Purchasing Managers’ Index (PMI) data for January signaled the manufacturing sector is once again losing steam.

The government’s official PMI dipped into contractionary territory for the first time in two and the half years, coming in at 49.8 and surprising market watchers who were expecting expansion. Finally, Asia’s export engine appears to be sputtering. Korea – the first country in Asia to release January trade data – saw exports shrink 0.4% on year in January. In China, following Wednesday’s surprise move, Subbaraman expects 50 basis point RRR cuts in each of the remaining quarters of 2015 and a 25 basis point interest rate cut in the second quarter. In Korea, where he expects the central bank to cut interest rates by 25 basis points in April and July, there’s a risk they could come earlier. In India, where he expects only one more 25 basis point rate cut this year – in April – there’s a chance there could be more.

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The fall of emerging markets, rather than Greece, is set to be the final nail in the euro’s coffin.

There’s Nothing Left To Break The Euro’s Fall Now (MarketWatch)

The euro remained weak against rival currencies during the Asian session Thursday, weighed down by renewed risk aversion stemming from the ECB’s tougher stance on Greece. The euro hit as low as $1.1304 – close to its 11-year low – before stabilizing at $1.1354 around 0540 GMT. That was weaker than $1.1391 late Wednesday in New York. The common currency also fell as low as ¥132.57 before bouncing back to ¥133.18. That compares with ¥133.56 late in New York. “Because of the quantitative easing (by the ECB) in the first place, I don’t have a feeling that the (euro’s) move to break below $1.1 has stopped,” said Koji Fukaya, chief executive of FPG Securities. “I don’t see any incentives that can help prevent the euro’s fall,” he also said. Earlier in the session, the single currency lost ground following the news that the ECB would suspend a waiver it had extended to Greek public securities used as collateral by the country’s financial institutions for central bank loans.

Greece’s new finance minister, Yanis Varoufakis, softened a hardline tone on debt repayments during a whirlwind tour of Europe this week. But tough negotiations remain and a deal is far from certain. Because Greek government bonds are junk rated, and thus below the ECB’s minimum threshold, Greek banks have relied on a waiver to post collateral for cheap ECB financing through the central bank’s regular facilities. The ECB is suspending that waiver. The headline raised concerns about Greek banks’ fundraising ability at the time when investors are keen to monitor negotiations between Greece and its international creditors on a €240 billion bailout plan. But the euro managed to stay above the $1.13 threshold as investors became aware that Greek banks will still have access to funds through the ECB’s emergency lending program. Under that facility, the credit risk of the loans stays on the books of the Greek central bank, and the loans carry a higher interest rate.

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“..the commitment to European solidarity, invoked down the years to motivate the whole project, has all but vanished. Far from thinking “we’re in this thing together,” Germany sees Greece as a nation of scroungers and thieves, and Greece sees Germany as a nation of atavistic oppressors..”

Will the Next Recession Destroy Europe? (Bloomberg)

As things stand, the policy options would be limited. Interest rates are already at zero. Notwithstanding QE, the ECB is a more inhibited central bank than, say, the U.S. Federal Reserve. It’s forbidden to undertake direct monetary financing of governments. On QE, it finally decided to test the limits of that prohibition, but more effective forms of monetary-base expansion – such as so-called helicopter money – are seen as expressly forbidden. Fiscal stimulus, on the other hand, is ruled out by the sinister combination of institutional incapacity and mutual animosity. To be sure, the euro area as a whole isn’t lacking in fiscal capacity.

Euro-area government debt is less than U.S. public debt. There’s no economic reason why Europe shouldn’t borrow (at extremely low interest rates) and spend the money on, say, large-scale infrastructure investments. But when Europe designed its monetary union it forgot to design even the rudimentary fiscal union that, as we’ve learned, the larger enterprise needs. Then why not start building such a union? Partly because it would require a new European treaty, which in turn would demand a measure of popular consent. With the union and its works so unpopular, governments dread embarking on that process.

More fundamentally, the commitment to European solidarity, invoked down the years to motivate the whole project, has all but vanished. Far from thinking “we’re in this thing together,” Germany sees Greece as a nation of scroungers and thieves, and Greece sees Germany as a nation of atavistic oppressors. Unless this failing union is reshaped in far-reaching ways, the optimistic scenario is protracted stagnation. The pessimistic scenario is political collapse, followed by who knows what. Where are the European leaders willing to rise to this challenge? Name me any who’ve even begun to think about it.

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“Greek banks will be able to tap funds through a program known as emergency liquidity assistance, or ELA. Under the program, the loans are more expensive and remain on the books of Greece’s central bank rather than the ECB.”

What You Need To Know About ECB’s Greek Collateral Decision (MarketWatch)

The European Central Bank just cranked up the pressure on Greece’s new antiausterity government as it attempts to renegotiate the terms of its bailout, telling Athens that Greek banks can no longer use the country’s sovereign debt as collateral for ECB-provided liquidity. U.S. stocks fell in late trade after the headlines hit and the euro extended a drop versus the U.S. dollar. Here’s what you need to know:

What did the ECB just do? The ECB’s Governing Council suspended a waiver that had allowed Greek banks to use the country’s junk-rated government bonds as collateral for central bank loans.

Why did the ECB do it? Greek bonds are junk rated, thus the waiver was needed to allow the banks to post collateral that could be used for cheap funding from the ECB. One of the prerequisites for the waiver was that Greece remain in compliance with a bailout program. In its decision, the ECB said it pulled the plug on the waiver because it can’t be sure that Greece’s attempts to secure a new program will be successful. Beyond the official reasons, the move is seen as a definitive warning that, like Germany, the ECB is in no mood to give in to Athens’s request for a debt swap. News reports also indicated the ECB isn’t open to requests to allow Greece to raise short-term cash by issuing additional Treasury bills in an effort to keep the government funded as it attempts to reach a new deal with its creditors.

Where does that leave Greek banks? It’s not a welcome development. Greek banks have suffered significant deposit withdrawals before and after the January election that brought the antiausterity government, led by Syriza’s Alexis Tsipras, to power. “This news will likely scare depositors and result in further bank runs,” said Peter Boockvar at the Lindsey Group. “This all said, if Greece can come to an agreement with the troika, I’m sure the ECB will reinstate the waiver,” Boockvar added. While the kneejerk reaction in markets has been negative, analysts note that junk-rated Greek sovereign debt made up a relatively small portion of the collateral used by Greek banks in funding operations as of the end of last year.

Karl Whelan, economics professor at University College Dublin, recently estimated that Greek banks were using a maximum of €8 billion in Greek government debt as collateral for loans from the Eurosystem as of December versus total loans of €56 billion. Meanwhile, the ECB said Greek banks will be able to tap funds through a program known as emergency liquidity assistance, or ELA. Under the program, the loans are more expensive and remain on the books of Greece’s central bank rather than the ECB.

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” Its aim is “coming up with a European policy that will definitively put an end to the now self-perpetuating crisis of the Greek social economy.“

Greece Sticks to Anti-Austerity Demands Following ECB Loan Cut (Bloomberg)

Greece held fast to demands to roll back austerity as the European Central Bank turned up the heat before Finance Minister Yanis Varoufakis meets one of his main antagonists, German counterpart Wolfgang Schaeuble. The encounter at 12:30 p.m. in Berlin comes hours after Greece lost a critical funding artery when the ECB restricted loans to its financial system. That raised pressure on the 10-day-old government to yield to German-led austerity demands to stay in the euro zone. The government “remains unwavering in the goals of its social salvation program, approved by the vote of the Greek people,” according to a Finance-Ministry statement issued overnight. Its aim is “coming up with a European policy that will definitively put an end to the now self-perpetuating crisis of the Greek social economy.”

The next move is up to Prime Minister Alexis Tsipras, who swept to power promising to reverse five years of spending cuts that accompanied €240 billion of bailout loans. While he’s retreated from demands for a debt writedown, he’s so far sticking to promises to increase pensions and wages that breach the conditions for financial aid. He’s scheduled to meet with his lawmakers in Athens around midday as parliament convenes. Greek securities fell after the ECB statement. The Global X FTSE Greece 20 ETF of Greek stocks plunged 10.4% in New York trading. Ten-year bonds declined, driving the yield up 70 basis points to 10.4%. The ECB’s decision, announced at 9:36 p.m. Wednesday in Frankfurt, will raise financing costs for Greek banks and stiffen oversight by the central bank. Greece’s Finance Ministry said the decision doesn’t reflect any negative developments in the financial sector and that banks are “adequately capitalized and fully protected.”

The ECB hadn’t publicly signaled that it would take such action so soon. On Jan. 8, the central bank said it would continue the waiver on the assumption that Greece would conclude a review of its current bailout program, which expires Feb. 28, and negotiate another one. A Bank of Greece spokesman said that liquidity will continue as normal, as existing ECB financing will be converted into Emergency Liquidity Assistance, or ELA. The official asked not to be named in line with policy and declined to answer all other questions. ELA is priced at an annual interest rate of 1.55% compared with the current ECB refinancing rate of 0.05%, Bank of Greece Governor Yannis Stournaras said in November. “You have to keep in mind that the Greek banking system used the ELA very extensively in 2012,” Steven Englander at Citigroup said. “So it’s not going beyond break. It’s a warning signal that the patience isn’t infinite.”

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An entirely different interpretation.

Greek Finance Ministry Says ECB Decision Aimed At Eurogroup (Kathimerini)

The Greek Finance Ministry interpreted a European Central Bank decision to stop accepting Greek government bonds as collateral from local lenders as a moved aimed at pushing Athens and its eurozone partners towards a new debt deal. “By taking and announcing this decision, the European Central Bank is putting pressure on the Eurogroup to move quickly to seal a new mutually beneficial deal between Greece and its partners,” said the ministry in a statement released early on Thursday. The ministry insisted that the ECB’s decision, which means Greek lenders will have to revert to borrowing via the more expensive Emergency Liquidity Assistance (ELA) provided by the Bank of Greece, did not reflect any concerns about the health of the local banking system.

“According to the ECB itself, the Greek banking system remains adequately capitalized and fully protected through its access to ELA,” said the statement. The Finance Ministry also indicated that the central bank’s decision would not change the government’s negotiating strategy. “The government is widening the scope of its negotiations with partners and institutions it belongs to each day,” it said. “It remains focussed on the targets of its social relief program, which the Greek people approved with their vote. It is negotiating with the aim of drafting of a European policy that would stop once and for all the self-feeding crisis of the Greek social economy.”

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“..the move from the ECB should have very little immediate effect on the Greek banks – provided there is not a complete loss of confidence..”

What the ECB’s Move on Greek Government Debt Is Really All About (Bloomberg)

In a press release that jolted the markets, the ECB announced it will no longer accept Greek government debt as collateral starting next week. But this news is not necessarily a potential liquidity disaster for Greek banks. The Greek banking system is not particularly reliant on Greek sovereign debt as collateral. Figures from the Bank of Greece show that Greek financial institutions currently have about €21 billion of Greek sovereign exposure. Furthermore, this debt has already been subject to valuation haircuts of up to 40% when used as collateral at the ECB. All collateral that the Greek banks use for ECB operations that is not Greek sovereign debt is still perfectly good to use. This decision of the ECB is against the Greek sovereigns, not the Greek banks. Further, any shortfall in liquidity will be fully made up by Emergency Liquidity Assistance that will be issued by the Greek central bank at its own risk.

So, all together, the move from the ECB should have very little immediate effect on the Greek banks – provided there is not a complete loss of confidence in the Greek banking system in the coming days – and should be viewed as what it is: The ECB is pressuring the Greek government. Greece’s finance minister, Yanis Varoufakis, has been agitating for Greek debt relief since his appointment after January’s election. Today the ECB gave its answer to his moves. If the Greek government does not agree to reenter a program, the ECB will not allow its debt to be used as collateral. The immediate effects should be seen as limited to the debt market but huge within the political realm. The ECB has often been accused of placing too much political pressure on governments. Today’s moves shows that it has chosen to ignore those accusations once again and do what it feels is right.

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Pre ECB decision.

Greek Bill-Sale Demand Slumps as Nation Seeks New Debt Deal (Bloomberg)

Demand for Greece’s Treasury bills slumped to a more-than eight-year low at a sale Wednesday as the government struggles to strike a new bailout deal and avert a funding shortage. The nation sold €812.5 million of six-month bills, with an average yield of 2.75%, the Athens-based Public Debt Management Agency said. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities allotted, fell to 1.3, the least since July 2006. Greece has 947 million euros of debt coming due on Feb. 6. Prime Minister Alexis Tsipras risks a liquidity crunch if he fails to cut a new deal on repaying a rescue package pledged in 2012. Failure to reach an agreement by March, when the bailout program ends, may leave the country unable to repay billions of euros in debt.

Finance Minister Yanis Varoufakis met European Central Bank officials Wednesday as he presses his case with creditors, which also include the European Commission and IMF. “There is uncertainty surrounding the Greek cash position,” said Felix Herrmann, an analyst at DZ Bank AG in Frankfurt. “Greek banks, the main buyer of T-bills, are more reluctant when it comes to buying. There is a lot of uncertainty whether Greek banks will be able to get enough liquidity from March onwards and this is mirrored in T-bill prices and yields.” Greek lenders lost at least 11 billion euros in deposits in January, according to four bankers who asked not to be identified because the data were preliminary.

Withdrawals accelerated from about €4 billion in December in the run-up to elections that catapulted anti-austerity party Syriza to power. The ECB allows Greece’s banks to use as much as €3.5 billion in Greek bills as collateral in its financing operations. This is available only while the nation complies with its bailout program. Banks led gains as Greek stocks rose for a third day in Athens, climbing 2.5%. The previous sale of six-month bills on Jan. 7 drew an average yield of 2.30%. The average auction rate dropped to record-low 0.59% in October 2009 before climbing to 4.96% in June 2011, according to data compiled by Bloomberg. That compares with a rate of 7.83% set at an auction in February 2000, the highest on record in data starting that month.

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“The consideration of future austerity measures should give greater weight to the unintended mental health consequences..”

Greek Austerity Sparks Sharp Rise In Suicides (CNBC)

The harsh austerity measures imposed on the Greek public since the depths of country’s financial crisis have led to a “significant, sharp, and sustained increase” in suicides, a study published in the British Medical Journal has found. The cutbacks, launched in June 2011, saw the total number of suicides rise by over 35%—equivalent to an extra 11.2 suicides every month—and remained at that level into 2012, according to a study published this week by the University of Pennsylvania, Edinburgh University and Greek health authorities. “The introduction of austerity measures in June 2011 marked the start of a significant, sharp, and sustained increase in suicides, to reach a peak in 2012,” a statement accompanying the study said.

After Greece crashed into a six-year recession in 2008, it struggled to handle its sovereign debt burden. The country’s first round of austerity measures failed to help, and the government was forced to ask for an international bailout of some €240 billion, which came with strict conditions for further severe cutbacks and reforms. These had a crippling effect on Greece’s already stricken economy, sending unemployment levels up to 1 in 4 people. The increasing level of hardship sparked an increasing number of protests, riots and even a public suicide by a pensioner in the main square of Athens.

The University of Pennsylvania-led study also found that the suicide rate in men started rising in 2008, increasing by an extra 3.2 suicides a month. The rate then rose by an additional 5.2 suicides every month from June 2011 onward. Figures for the years after 2012 were not available, the statement added. The researchers concluded by urging governments to consider the broader implications of harsh cuts: “The consideration of future austerity measures should give greater weight to the unintended mental health consequences that may follow and the public messaging of these policies and related events.”

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“As the Greek finance minister meets Chancellor Merkel today it might help her to recall how much of Germany’s 1933-1945 external debt the country ended up paying back (close to none, which obviously helped the German economic miracle hugely)..”

Greece, Ukraine and Russia: History Lessons (CNBC)

The two biggest geopolitical flashpoints of the year so far, and potentially of the decade, involve one of the oldest stories of all: creditors chasing their due. As Greece’s new leadership embarks on a European tour to try and negotiate compromises on its debt to the so-called troika (made up of the International Monetary Fund, European Commission and European Central Bank), and Russia threatens to call in a $3-billion bond it used to help bail out struggling Ukraine, it might be time for European leaders to take a leaf from their history books.

First World War Germany is perceived to be the most hard-line of Greece’s European creditors when it comes to renegotiations over the country’s 300-billion-euro-plus debt pile – unsurprisingly, given that Germany is both the biggest contributor to the euro zone’s part of the bailout and its own reputation for fiscal caution. Yet Germany has both suffered from large external debt and benefited from forgiveness before. The reparations it was saddled with after the First World War resulted in hyperinflation and near-economic disaster, which contributed to rising support for the Nazi Party. “As the Greek finance minister meets Chancellor Merkel today it might help her to recall how much of Germany’s 1933-1945 external debt the country ended up paying back (close to none, which obviously helped the German economic miracle hugely),” Rabobank analysts pointed out in a research note Wednesday.

Russia and Cuba Meanwhile in Russia, President Vladimir Putin said on Tuesday that Ukraine needed to repay a $3 billion loan, made while his ally Viktor Yanukovych was still Ukraine’s President, because Russia needs it to fight its own economic crisis. If Ukraine, with its economy already on the brink of disaster, is forced to repay its Russian debts earlier than the planned December 2015, it could push the country into default. Yet Russia hasn’t had a problem with debt forgiveness for neighbours and trading partners in the past. Just in July, it wrote off $32 billion of Cuba’s outstanding debt.

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“Analysts at UBS said in a recent note they expect the rig count to fall at least 31% this year, and potentially more if oil prices remain lower.”

Here’s Why The Oil Glut May Continue (MarketWatch)

Energy companies are slashing spending budgets and shutting down oil rigs, but don’t expect U.S. oil production to slow down soon. There is so much oil available that it will take a while for those measures to make a dent in production. In addition, most of the rigs mothballed so far were in low-yield wells—low-hanging fruit that won’t make much of an impact. Analysts at UBS said in a recent note they expect the rig count to fall at least 31% this year, and potentially more if oil prices remain lower. The bulk of the decline will come in the first half of the year, with some flattening in the second half, they said in the note. A declining rig count, alongside a weaker dollar and market dynamics around short positions have driven a price spike for oil futures in recent sessions.

Futures resumed their downward trajectory on Wednesday, however, after a U.S. government agency pointed to another bump in U.S. inventories. Two other reasons that fewer rigs may not immediately translate into less production include increased drilling efficiency and an oil-well backlog that will serve as a cushion in the coming months, the Energy Information Administration has said. There has been a 16% decline in the number of active onshore drilling rigs in the continental U.S. from the end of October through late January, said the EIA. As well as shutting rigs, companies have been cutting costs to varying degrees based on balance-sheet size, with smaller companies tending to cut deeper. On average, companies have cut this year’s capital expenditures by about 30%.

Chevron last week announced a reduction in 2015 spending of 13% from 2014, taking a relatively small hatchet to its budget and focusing it mostly on its overseas exploration and production business. Chevron reduced U.S. “upstream” spending by 8%, while spending on refinery operations ticked higher. Exxon Mobil reported Monday, but as usual said it would make an announcement about capital expenditures at its analyst day scheduled for March 4. Exploration and production energy companies are going over their budgets, rationalizing spending and drilling activity “at an even faster pace than we thought possible just 6 weeks ago,” analysts at Simmons & Co. wrote in a note earlier this week. “We believe improvement in the oil supply/demand macro is on the horizon,” they said.

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An incredible story.

Harvard’s Convicted Fraudster Who Wrecked Russia Resurfaces in Ukraine (NC)

There are about 450 think-tanks in Europe and the US currently focusing on international relations, war, peace, and economic security. Of these, about one hundred regularly analyse Russian affairs. And of these, less than ten aren’t committed antagonists of Russia. That’s barely two% of the intellectual materiel which can be counted as non-partisan or neutral in the infowar now underway between the NATO alliance and Russia. In this balance of forces, think-tanks behave like tanks – that’s the weapon, not the cistern. The Centre for Social and Economic Research (CASE) has been based in Warsaw since 1991. It claims on its website to be “an independent non-profit economic and public policy research institution founded on the idea that evidence-based policy making is vital to the economic welfare of societies.”

In its 2013 annual report, declares: “we seek to maintain a strict sense of non-partisanship in all of our research, advisory and educational activities.” Three-quarters of CASE’s annual revenues come from the European Commission; another 9% from American and other international organizations. According to CASE, that’s “an indication of progressive diversification of CASE revenue sources.” CASE Ukraine is a branch of this Polish think-tank, and at the same time a descendant, it claims, of a Harvard University-funded group which was active between 1996 and 1999. Registered since 1999 as CASE Ukraine, this calls itself “an independent Ukrainian NGO specializing in economic research, macroeconomic policy analysis and forecasting.” According to parent CASE in Warsaw, one of the group’s goals is “promoting cooperation and integration with the neighboring partners of Europe”.

This means, not only CASE Ukraine, but CASE Kyrgyzstan, CASE Moldova, CASE Georgia, and in Russia, the Gaidar Institute for Economic Policy. Independent is what CASE swears; independent isn’t what CASE represents. Investigate the names, the associations, the sources of money, the secret service engagements, and what you have is a family, a front, a cover, a closed shop, a mafia. Founders of CASE Ukraine like the American Jonathan Hay and operators of CASE Poland like the Balcerowiz family reveal a well-known anti-Russian alliance. So what are a director of the Gazprom board, Vladimir Mau; a professor of the Higher School of Economics in Moscow, Marek Dabrowski; and Simeon Djankov, Rector of the New Economic School in Moscow, and a protégé of First Deputy Prime Minister Igor Shuvalov, doing on the CASE side?

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“He kicked off his odyssey by acknowledging that ‘this country knows how to eat.'”

One Brit Discovers Why Americans Are So Fat (MarketWatch)

America is bursting at the seams. No major development there. In fact, the U.S. makes up only 5% of the global population but tallies 13% of the world’s obese, the largest%age for any nation, according to a study from the Lancet medical journal. More than a third of our county is overweight. And we’re not getting any skinnier. As Americans, we’ve grown accustomed to, say, the gut-bomb portion sizes at the Cheesecake Factory and the bottomless pasta bowls at the Olive Garden. When Maggiano’s Little Italy serves up a massive plate of fettuccine and then hands us another whole serving on the way out, we hardly flinch. (Note the stock tickers “CAKE” and “EAT.”)

But it’s still shocking to visitors from across the pond. Shocking in a good way, at least for one British arrival who has been intoxicated enough by the options during his stay, presumably in San Francisco, that he posted some snapshots on Reddit of his recent months of gluttony. He kicked off his odyssey by acknowledging that “this country knows how to eat.” If he wanted a reaction, he got one. For whatever reason, his post struck a chord, quickly garnering more than 1.1 million views and drawing thousands of comments. Here are some of the highlights that helped make this food thread go viral this week.

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“We’re having this Groundhog Day experience, with state after state actively seeking to thwart kids from learning the truth about climate science..”

Temperatures Rise as Climate Critics Take Aim at U.S. Classrooms (Bloomberg)

While scientists almost universally agree the world is warming, school kids in Texas, Wyoming and West Virginia will get a much less definitive answer if local activists and politicians get their way. At a time when President Obama is pushing a global effort to rein in greenhouse gases, conservative critics back home are pressing a grassroots counterattack, targeting how schools address global warming. The goal is to emphasize doubts about whether humanity is indeed baking the planet. “Climate change was only presented from one side and that side is the Al Gore position that you don’t need to discuss it, it’s a done deal,” said Roy White, a Texan retired fighter pilot. “The other side just doesn’t seem to want to allow the debate to occur.”

White doesn’t want kids indoctrinated by “misinformation,” he said, so he and 100 fellow activists have sought to change textbooks that refer to climate change as fact, rather than opinion. That the vast majority of scientists disagree with him is more a sign of dissent being quashed than of true consensus, White said. White’s band of volunteer activists, the Truth in Texas Textbooks coalition, lobbied the state to reject social studies books that they said contained factual errors or fostered an anti-American bias. Among the books’ sins: omitting mention of those who question climate science. If the coalition had its way, any reference to “global warming,” melting polar ice caps or rising sea levels would be excised from textbooks, or paired with dissenting views.

Phrases such as “consensus science” and “settled science” should be avoided, the group warned in letters to publishers last year, as they suggest a “political agenda.” So far, the campaign has had only limited results. One publisher deleted a reference to global warming and others ignored White’s appeals. The group isn’t done, however. This year, they plan to take their textbook ratings to local school districts, urging them to buy more “balanced” selections. “We want to affect the bottom line,” White said. “That means purchasing.”

To Lisa Hoyos, efforts like White’s amount to “lying about science.” Two years ago, the San Francisco mom and former union organizer co-founded the group Climate Parents to defend the teaching of climate change around the U.S. The group has members in all 50 states, Hoyos said. These days, they’re busier than ever. In Wyoming last year and South Carolina in 2012, legislators banned their states from adopting educational standards that treat human-caused global warming as settled science. A similar measure passed the Oklahoma Senate last year but failed in the State House. Michigan’s state board of education is bracing for its own debate on new standards later this year. “We’re having this Groundhog Day experience, with state after state actively seeking to thwart kids from learning the truth about climate science,” Hoyos, 49, said by telephone. “You’re seeing science standards held hostage to political machinations.”

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Jan 022015
 
 January 2, 2015  Posted by at 7:06 pm Finance Tagged with: , , , , ,  


Gordon Parks A scene at the Fulton Fish Market, New York Jun 1943

In his 1944 play Huis Clos (loosely yet officially translated as No Exit, or Closed Door), French philosopher Jean-Paul Sartre said: “L’enfer, c’est les autres.” Or: Hell is (the) other people. Which can be very true. And Sartre makes his point in a masterful way. He describes a group of people locked up together with no escape, and for eternity, who have a bitter go at each other. Something we all recognize. People can be a nuisance, and even drive one as far as suicide.

But then, the opposite is just as true. In more ways than one. Not only is hell the absence of other people (though I know there are monks who choose full separation), but heaven is the other people too. Or, as normal mortals would say: ‘(Wo)men, can’t live with them, can’t live without them’. Or something along those lines.

It’s who we are. We are social animals. Lions, not tigers. We’re tribal. We cannot give our lives meaning of and by ourselves, we need the other people to give it meaning. Though you may have gotten a different notion in your lifetime, the meaning of your life cannot be measured by something as fleeting as the size of your bank account. It cannot even by measured at all by ‘you’ yourself. Our lives derive their meaning from other people’s lives.

Over the Christmas season, many versions of Dickens’ Scrooge passed by our screens again. He’s a good example to use. In the beginning of the story, Scrooge is wealthy but his life has no meaning. That is Dickens’ core message. His life means nothing. It isn’t until he starts caring about others, and in the process giving – some of – his wealth away, that his life becomes meaningful. This is not a value judgment, and it isn’t for any religious or even philosophical reasons, it’s simple biology.

Religious leaders like Pope Francis and the Archbishop of Canterbury, Justin Welby, get it. The ebola nurses and doctors get it. But that’s not nearly enough. We should all realize who we really are, and why. We all resemble Scrooge much more than we’re willing to admit. Problem is, we have no education system left to tell us about it. Our schools and colleges instead tell us to compete: our education focuses on the ‘Hell Is The Others’ side of our brains. The ‘Heaven Is The Others’ side is out of fashion.

And the education system is not the only problem. We also have a very big problem in that our present economic system doesn’t reflect, or fit in with, our natural-born psychology, our inbuilt mental set-up. Our economic system reflects, and appeals to, the part of our brain that tells us to outdo others, not cooperate with them.

Of course this is a complex issue, if only because our brains just happen to be made up of different parts. Still, if we are ever to enable the newest part of it, that which makes us human, and sets us apart from our non-human ancestors, from the simplest amoeba to far more advanced primates, to take control, if we are ever to achieve that, we will first have to recognize things for what they are. And then act on that.

Endless and forever competition from our earliest childhood days all the way to our graves clearly doesn’t seem the way to go. Look around you. It makes us destructive beings. It makes us unkind to each other, and distant from one another. Those are the very things that tear apart the social fabric our very biology says we need. If we don’t make a strong conscious effort to allow our ‘human brain’ to control our ‘animal brain’, we have no chance, we will be lost. Today, what we do is use our human intelligence to amplify the destructive properties of our animal brain.

This is evident in what we are doing to our living environment. We are at present no better than the yeast in the wine vat, who multiply at fast as they can until all the sugar is gone and then die off in the blink of an eye. Only, for us, the earth itself is both our wine vat and our sugar, and unlike the yeast we can do grave danger to our entire environment. We’re not just killing ourselves, we’re murdering just about everything around us.

A wonderful image of how this works, one that should make us think, was painted last week in the LA Times by James K. Boyce, economics professor at the University of Massachusetts, Amherst.

Amid Climate Change, What’s More Important? Protecting Money Or People?

[..] .. it is too late to prevent climate change, no matter how fast we ultimately act to limit it. [We] now confront an issue that many had hoped to avoid: adaptation. Adapting to climate change will carry a high price tag. [..] Because adaptation won’t come cheap, we must decide which investments are worth the cost.

A thought experiment illustrates the choices we face. Imagine that without major new investments in adaptation, climate change will cause world incomes to fall in the next two decades by 25% across the board, with everyone’s income going down, from the poorest farmworker in Bangladesh to the wealthiest real estate baron in Manhattan. Adaptation can cushion some but not all of these losses. What should be our priority: reduce losses for the farmworker or the baron?

For the farmworker, and a billion others in the world who live on about $1 a day, this 25% income loss will be a disaster, perhaps the difference between life and death. Yet in dollars, the loss is just 25 cents a day. For the land baron and other “one-percenters” in the U.S. with average incomes of about $2,000 a day, the 25% income loss would be a matter of regret, not survival. He’ll find a way to get by on $1,500 a day. In human terms, the baron’s loss pales compared with that of the farmworker. But in dollar terms, it’s 2,000 times larger.

Conventional economic models would prescribe spending more to protect the barons than the farmworkers of the world. The rationale was set forth with brutal clarity in a memorandum leaked in 1992 that was signed by Lawrence Summers, then chief economist of the World Bank. The memo asked whether the bank should encourage more migration of dirty industries to developing countries and concluded that “the economic logic of dumping a load of toxic waste in the lowest-wage country is impeccable and we should face up to that.” Climate change is just a new kind of toxic waste.

The “economic logic” of the Summers memo – later said to have been penned tongue-in-cheek to provoke debate, which it certainly did – rests on a doctrine of “efficiency” that counts all dollars equally. Whether it goes to a starving child or a millionaire, a dollar is a dollar. [..] A different way to set adaptation priorities is to count each person equally, not each dollar. This approach rests on the ethical principle that a healthy environment is a human right, not a commodity to be distributed on the basis of purchasing power, or a privilege to be distributed on the basis of political power.

This equity principle is widely embraced around the world, from the affirmation in the U.S. Declaration of Independence that people have an inalienable right to “life, liberty and the pursuit of happiness,” to the guarantee in the South African Constitution that everyone has the right “to an environment that is not harmful to their health or well-being.” It puts safeguarding the lives of the poor ahead of safeguarding the property of the rich.

In the years ahead, climate change will confront the world with hard choices: whether to protect as many dollars as possible, or to protect as many people as we can.

It’s obvious. The choice is, as I wrote above, between human terms or dollar terms. In which dollar terms stands for choosing the primitive parts of our brain. Most likely, given the way we have organized our societies, our education systems and our economic systems, the rich part of the world will spend hundreds of billions protecting their sea-side villas, while entire poorer nations, and the people living in them, threaten to disappear.

In our own countries as well, that choice will be made, favoring well-to-do over poor. After all, what are the economic reasons for water-proofing a slum? Where 10,000 people can each afford to maybe contribute $100 to the work, while a ‘baron’ can easily afford $10 million to secure his summer home a few miles away?

In today’s world, it’s not even a question. But then in today’s world, money rules the political system, which should in an ideal world be holding a society together, not tearing it apart. Which it very much does. Our political systems separate the rich from the poor, like they’re not of the same species, like there’s nothing that ties them together.

It probably doesn’t even sound as a actual choice to you. You most likely think that these things go as they do, that ‘they’ have all the power anyway and there’s nothing you can do. But that doesn’t seem very human, does it, and certainly not very American, to just give up without a fight. And it’s starting to look as if you don’t stand up now for your self, your progeny and all other people, you needn’t bother anymore.

Then again, perhaps it’s not all that hard. We have a spectacularly failed economic system anyway, and we’re in dire need of a new one. So why not catch two birds with one stone (sorry, Tweetie, just an expression) and redo both our education systems and our economic systems, and make sure our adaptation to climate change gets organized on a one man one vote, instead of a one dollar one vote basis? It’s a place to start. Try and recognize which part of you, yourself, is a dumb predator and which part is a ‘social being human’. And pick the latter for all of your future decisions.

And teach yourself, and your kids, that Scrooge is you, we are all Scrooge, that’s what Dickens meant to say, and that the meaning of your life, too, derives its meaning from other people’s lives, not from itself. Once you got that down, you’re halfway there.

We tend towards thinking our ‘elected’ political leaders should, and will, take care of issues such as these, and in a fair way too. But in fact they’re the very last ones who will do so. Because they owe their positions to the very educational and economic systems that have ‘designed’ the way things are running out of hand.

We need to move, our societies, and the entire earth, need us to move to a ‘people’, as opposed to a ‘dollar’, point of view.

The separation between rich and poor doesn’t of course only come to the fore in climate change adaptation issues. We’re living today inside these narratives of an economic recovery, at the same time that poverty even in western societies rises fast. The rich are doing well, and that’s what we see reflected in ‘official’ economic numbers. But it’s all just pure predation.

What you can do is perhaps to vote for another party, but in many countries that’s not an option, the status quo has far too firm a handle on the entire political system. So you’re going to have to come up with something else, and if need be, take to the streets. Or the internet.

And as you do, think about Scrooge, and about to what extent his fictional, intentionally over the top caricaturized, persona reflects the real life you. As I said, once you got that down, you’re halfway there.