Aug 202018
 August 20, 2018  Posted by at 1:05 pm Finance Tagged with: , , , , , , , ,  

Pablo Picasso Science and Charity 1897


I thought I’d make list of things we can expect to emanate from the White House over the coming year or so. I’m sure you will agree, wherever you stand on the political roller coaster, that there’s little chance things are going to be boring going forward. Here goes:


Trump will end the ‘monopolies’ of Facebook, Google, Twitter et al. The intelligence community will hate this, but they already hate him anyway, so why bother? And besides, it’s the only thing to do that makes any sense. The AT&T model might be useful, essentially creating Baby Bells, though the international reach of the companies may add a layer or two of complications.

But you simply can’t have a few roomfuls of boys and girls ban and shadowban people with impunity from networks that span the globe and reach half of the world’s population on the basis of opaque ‘Terms and Conditions’ that in effect trump the US constitution the way they are used and interpreted. Whether they are private companies or not will make no difference in the end.

At some point an ‘entity’ becomes a ‘utility’. Twitter and Facebook already are the most efficient way to alert people in cases of emergency. To throw people out of such systems is indefensible.

The CIA and FBI will protest like there’s no tomorrow, but they have to realize that spying on Americans the way they do at present in conjunction with Alphabet and Facebook is just as indefensible as throwing people off these services. The judicial system will at some point be forced to curtail these powers. Better for the executive power to be ahead of that. Baby Bells it is.


Trump will tell his people to open up to Mueller . He’s already done this, but will do it again, loudly and publicly, citing the need to wrap up the Mueller investigation ASAP. That will be the target: stop the ‘inquisition’. Mueller has talked for 30 hours over the past nine months to White House lawyer Donald McGahn II, and at some point enough is enough.

As I cited a few days ago, Trump’s legal team has given Mueller until September 1 to talk to the president, and that’s it. It doesn’t look like that’s going to happen, Giuliani again said he doesn’t want to rush Trump into a perjury trap, but Mueller has had plenty time to have that talk. The investigation risks being used as a political tool in the midterms, and that can’t happen.


Moreover, since US District Court Judge Amit Mehta has ruled that the FBI must release documents pertaining to what it knew about the ‘veracity’ of the Steele dossier, the most consequential reason to start the Special Counsel investigation in the first place may well soon be going going gone.

The FBI offered to pay Steele $50,000 for evidence that what was in his report was true, and they never paid that money. Ergo, it is reasonable to conclude that he never delivered the evidence. This points to huge potential problems for the FBI, the DNC -which financed the dossier-, Steele himself, and various other parties. How about James Comey?

Since the judge’s ruling was a direct effect of Trump declassifying the Nunes and Schiff memos in February, count on one thing: Trump will declassify many more documents . Judge Mehta ruled in January that the FBi didn’t have to “disclose the existence of any records containing the agency’s efforts to verify the dossier”, but now says that after Trump declassified the memos ‘the ground shifted’.

In other words, once docs are declassified, intelligence services no longer have a place to hide. Trump is thinking: why didn’t I do this much more and much sooner? Note: it still took 6 months for the judge to rule on the FBI and the memos, but next time this could go much faster. And there are thousands of files that could be de-classified.


Trump will revoke the security clearance of many former FBI and CIA agents whose names have come up in connection with Russiagate. He needs to do this so they can’t get in the way of the Second Special Counsel he’s going to initiate. By now, there are many more reasons for the second counsel than there ever were for the first.

Mueller is going after George Papadopoulos, a nobody, because he’s the only person who allegedly ever mentioned Russians. Everyone else he’s focused on has only ever been indirectly -at best- connected to Russia. But Papadopoulos was allegedly caught saying the R-word when he was drunk, to some never properly identified ‘professor’.

And that’s the only ‘link’ between Russia and the Trump campaign that we’ve ever seen. It is at times like this that we can see how shaky and shady the entire Mueller file was from the get-go. And why that Second Special Counsel will become reality. If you’d like to read a very long and detailed report on this, I recommend Barbara Boyd’s damning Fish Stinks From the Head Down for LaRouchePAC:

In the past week, we have learned that Steele was being paid as a human source by the FBI early in as of February 2016, if not sooner, based on a release of his highly redacted FBI file to Judicial Watch in a FOIA suit. After he was fired as an official FBI human source in October 2016, based on the obvious fact that he was using his FBI relationship as coinage in the information warfare operation he was running against Donald Trump for the British government, Barack Obama, and Hillary Clinton, his relationship to the FBI was continued through a back channel.

That channel was the Number Four attorney at the U.S. Department of Justice, Bruce Ohr, whose wife, Nellie, worked for Steele’s American employer, Fusion GPS, on the Trump Russiagate project. According to documents finally released to Congress by the Justice Department, Ohr would meet with Steele, who would convey new “information,” and then meet with the FBI to convey Steele’s findings.

This relationship lasted through May 2017, if not later. Ohr’s meetings with the FBI were meticulously recorded on formal FD 302s by the FBI agents, the Deputy Associate Attorney General of the United States having become, in effect, an FBI informant in order to circumvent Christopher Steele’s firing as an informant for egregious violations of FBI Guidelines. Steele sought Ohr’s intervention when Senators Lindsay Graham and Chuck Grassley referred him to the Department of Justice for prosecution because of lies he told the FBI. Steele also sought Ohr’s help in getting placed on Robert Mueller’s investigative team.

Boyd provides a lot of additional details of a part of the Mueller investigation that has so far barely been mentioned: the involvement of British intelligence. And on the link between Christopher Steele and Victoria Nuland.


Finally, Trump will push for Julian Assange to testify -with immunity- to probably the Senate Intelligence Committee (but there are alternative options) on what he knows about -potential- Russian involvement in US election meddling and hacking of DNC or RNC servers and computers. There’s no-one who know more on this than Assange, and he has evidence.

That his deal with the DOJ was killed by James Comey will be all the more impetus for Trump to hear what he has to say. For many people, it will appear ironic, but this may be Assange’s best bet to regain freedom.

The one person who can prove that there was never any collusion between Trump and Russia is locked up in a tiny embassy in London. And the one person who can get him out of there lives in the White House.



Aug 172018
 August 17, 2018  Posted by at 1:34 pm Finance Tagged with: , , , , , , , , , , , ,  

William Hogarth Humours of an Election, Plate 2 1754


Two thirds of Americans want the Mueller investigation (inquisition, someone called it) over by the midterm elections. Trump lawyer Rudy Giuliani has said that if Mueller wants to interview Trump, he’ll have to do so before September 1, because the Trump camp doesn’t want to be the one to unduly influence the elections. Mueller himself appears to lean towards prolonging the case, and that may well be with an eye on doing exactly that.

And there’s something else as well: as soon as the investigation wraps up, Trump will demand a second special counsel, this time to scrutinize the role the ‘other side’ has played in the 2016 presidential election and its aftermath. He’s determined to get it, and he’ll fire both Jeff Sessions and Rod Rosenstein if they try to stand in his way.

There have of course been tons of signs that it’s going to happen, but we got two significant ones just the past few days. The first is the termination of John Brennan’s security clearance. It looks impossible that no additional clearances will be revoked. There are more people who have them but would also be part of a second special counsel’s investigation. That doesn’t rhyme.

The second sign is Senator Rand Paul’s call for immunity for Julian Assange to come talk to the US senate about what he knows about Russian involvement in the 2016 election. Obviously, we know that he denies its very existence, and has offered to provide evidence to that end. But before he could do that, a potential deal with the DOJ to do so was torpedoed by then FBI chief James Comey and Senator Mark Warner.

Both will also be part of the second investigation. Rand Paul’s motivation is simple: Assange’s testimony could be a very significant part of the process of figuring out what actually happened. And that should be what everybody in Washington wants. Question is if they all really do. That’s -ostensibly- why there is the first, the Mueller Russian collusion, investigation. Truth finding.

But Mueller doesn’t appear to have found much of anything. At least, that we know of. He’s locked up Paul Manafort on charges unrelated to collusion, put him in isolation and dragged him before a jury. But don’t be surprised if Manafort is acquitted by that jury one of these days. The case against him seemed a lot more solid before than it does now. A jury that asks the judge to re-define ‘reasonable doubt’ already is in doubt, reasonable or not. And that is what reasonable doubt means.


But it wasn’t just Brennan and Comey and Peter Strzok and Lisa Page and all the rest of them in the intelligence community who played questionable roles around the election and the accusations of Russian meddling in it. The American media were also there, and very prominently. Which is why when 300 papers publish editorials pushing against Trump ‘attacking’ the media, you can’t help but -wryly- smile.

Why does Trump attack the press? Because they’ve been attacking him for two years, and they’re not letting go. So the press can attack the president, but he cannot fight back. That’s the rationale, but with the Mueller investigation not going anywhere it’s a hard one to keep alive.

There are three reasons for the behavior of the New York Times, WaPo, MSNBC, CNN et al. The first is political, they’re Democrat hornblowers. The second is their owners have a personal thing against Donald Trump. But these get trumped by the third reason: Trump is their golden goose. Their opposition makes them a fortune. All they need to do is publish articles 24/7 denouncing him. And they have for two years.

That puts the 300 papers’ editorials in a strange light. Many of them would have been fighting for their very lives if not for anti-Trump rhetoric. All 300 fit neatly and easily in one echo chamber. And, to put it mildly, inside that chamber, not everyone is always asking for evidence of everything that’s being said.

It’s not difficult to whoop up a storm there without crossing all your t’s. And after doing just that for 2 years and change, it seems perhaps a tad hypocritical to claim that you are honest journalists just trying to provide people with the news as it happened.

Because when you’ve published hundreds, thousands of articles about Russian meddling, and the special counsel that was named to a large degree because of those articles, fails to come up with any evidence of it, it will become obvious that you’ve not just, and honestly, been reporting the news ‘as it happened’. You have instead been making things up because you knew that would sell better.

And when the second special counsel starts, where will American media be? Sure, it may not happen before the midterms, and you may have hopes that the Democrats win those bigly, but even if that comes to pass (slim chance), Trump will still be president, and the hearings and interviews won’t be soft and mild. Also, there will be serious questions, under oath, about leaks to the press.


Still, whichever side of this particular fence you’re on, there’s one thing we should all be able to agree on. That is, when we get to count how many of the 300 editorials have actually mentioned, let alone defended, Julian Assange, and I’ll bet you that number is painfully close to zero, that is where we find out how honest this defense of the free press is.

If for you the free press means that you should be able to write and broadcast whatever you want, even if it’s lacking in evidence, as much of the Russiagate stuff obviously is, and you ‘forget’ to mention a man who has really been attacked and persecuted for years, for publishing files that are all about evidence, you are not honest, and therefore probably not worth saving.

Julian Assange and WikiLeaks are the essence of the free press. A press that is neutral, objective, fearless and determined to get the truth out. The New York Times and CNN simply don’t fit that description -anymore-. So when their editors publish calls to protect free press, but they leave out the one person who really represents free press, and the one person who’s been tortured for exactly that, you have zero credibility.

Sure, you may appear to have credibility in your echo chamber, but that’s not where real life takes place, where evidence is available and where people can make up their own minds based on objective facts provided by real journalists.

You guys just blew this big time. You don’t care about free press, you care about your own asses. And the second special counsel is coming. Good luck. Oh, and we won’t forget your silencing of Assange, or your attacks on him. If you refuse to do it, WE will free the press.



Aug 132018
 August 13, 2018  Posted by at 8:43 am Finance Tagged with: , , , , , , , , , , , ,  

Vincent van Gogh The yellow house (The Street), Arles 1888


Turkey Central Bank To Take ‘All Necessary Measures’ For Stability (AFP)
Turkey Pledges Action To Calm Markets (BBC)
Euro Drops To One-Year Low On Lira Crisis Contagion Fears (G.)
Beware the Dog Days of August (Pettifor)
Trump Gives Mueller Three Weeks For Sitdown (ZH)
Trump ‘Will Deny Under Oath’ Asking Comey For Flynn Leniency (AT)
Why Trump Cancelled the Iran Deal (Zuesse)
China Slashes Support For Solar Industry (R.)
Greek Bailout Drama ‘In Last Throes’ But The Hardship Is Not Over Yet (G.)
Those Who Think That They Will Break Julian Assange Are Mistaken (P.)



“Whatever it takes” is still popular. But there are limits. They’re cutting off FX trade and injecting liquidity. But what if they’re called on this? It’s only Monday… As I write this the lira has lost another 6.6% so far for the day.

Turkey Central Bank To Take ‘All Necessary Measures’ For Stability (AFP)

Turkey’s central bank on Monday announced it was ready to take “all necessary measures” to ensure financial stability after the collapse of the lira, promising to provide banks with liquidity. “The central bank will closely monitor the market depth and price formations, and take all necessary measures to maintain financial stability, if deemed necessary,” the bank said in a statement, vowing to provide “all the liquidity the banks need”. The statement came after the Turkish lira hit record lows against the dollar amid a widening diplomatic spat with the United States. The detention of US pastor Andrew Brunson since October 2016 on terrorism charges has sparked the most severe crisis in ties between the two NATO allies in years.

The central bank announced the series of measures on Monday, a day after Erdogan’s son-in-law Berat Albayrak, who is treasury and finance minister, announced an action plan was in the pipeline. “In the framework of intraday and overnight standing facilities, the Central Bank will provide all the liquidity the banks need,” the bank said. The bank also revised reserve requirement ratios for banks, in a move also aimed at staving off any liquidity issues. It said with the latest revision, approximately 10 billion lira, $6 billion, and $3 billion equivalent of gold liquidity will be provided to the financial system. The nominally independent central bank has defied pressure to hike interest rates which economists said would curb the fall of the lira.

Read more …

“I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars… You should know that to keep this nation standing is… also the manufacturers’ duty..”

Turkey Pledges Action To Calm Markets (BBC)

Turkey has pledged it will take action to calm markets after the lira plunged to a new record low in Asian trading. The details would be unveiled shortly, the country’s finance minister told Turkish newspaper Hurriyet. “From Monday morning onwards our institutions will take the necessary steps and will share the announcements with the market,” Berat Albayrak said. The lira lost 20% of its value versus the dollar on Friday. It had already fallen more than 40% in the past year. The latest blow came on Friday, when US President Donald Trump said he had approved the doubling of tariffs on Turkish steel and aluminium. Concerns about contagion prompted investors to sell riskier assets on Monday including emerging market currencies and stocks in Asia.

Mr Albayrak said the country would “act in a speedy manner” and its plan included help for the banks and small and medium-sized businesses most affected by the dramatic volatility in the lira. His assurance came after Turkey’s president blamed the lira’s plunge on a plot against the country. “What is the reason for all this storm in a tea cup? There is no economic reason… This is called carrying out an operation against Turkey,” he said. Recep Tayyip Erdogan once again urged Turks to sell dollars and buy liras to help boost the currency. “I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars… You should know that to keep this nation standing is… also the manufacturers’ duty,” he said.

Read more …

It’s starting to spread. And hurt.

Euro Drops To One-Year Low On Lira Crisis Contagion Fears (G.)

The Turkish lira fell almost 9% in early trading on Monday and the euro hit a one-year low as investors feared that the country’s financial crisis could spread to European markets. Despite defiant words by the Turkish president Erdogan over the weekend pledging as yet unspecified action to reverse the slide, the currency slipped alarmingly against the US dollar on Monday. In early trading it reached an all-time low of 7.24 before bouncing back after the country’s banking regulator announced late on Sunday night that it would limit the ability of Turkish banks to swap the battered lira for foreign currency. Asian stock markets were also down on Monday. The Nikkei in Japan lost 1.7%, Hong Kong was off 1.8%, Shanghai -1.7%, Sydney -0.5% and the Taiwanese bourse fell 3%.

The FTSE100 was expected to open down 0.4% later on Monday morning while Germany’s Dax 30 was set for a 0.65% fall. The euro dropped 0.3% to a one-year low against the US dollar on Monday as the falling lira fuelled demand for safe havens, including the greenback, Swiss franc and yen. The Vix volatility index measuring turbulence in financial markets – also known as the fear index – jumped 16% on Monday. There was also concern that other emerging market currencies – already under pressure from the rising US dollar – could be dragged into the lira’s downward spiral. The South African rand hit a low level not seen since mid-2016, the Russian rouble slumped again and the Indian rupee slid to an all-time trough. The lira has tumbled more than 40% this year on worries about Erdogan’s increasing control over the economy and deteriorating relations with the United States ..

Read more …

The Fed is to blame for Turkey.

Beware the Dog Days of August (Pettifor)

Today’s financial turbulence can be traced back to Fed decisions in June 2017 to begin the “normalisation” of its balance sheet, gradually shedding its bond holdings in monthly stages. This monthly “runoff” of $10bn of maturing assets on to capital markets causes bond prices to fall, and yields to rise. On some estimates the Fed’s bond portfolio is expected to shrink by $315bn in 2018 and $437bn in 2019. This process of “normalisation” is no simple and stable matter. In the words of market analyst Kristina Hooper, it’s like “defusing a bomb”. To add to the strains caused by the “runoff” of assets, in June 2018, the Fed raised rates for the seventh time in three years and Libor followed suit.

These rising rates of interest have led to the strengthening of the dollar and capital flight from emerging markets. But above all, interest rate rises pose a threat to the heavily indebted global economy. In 2000, the stock of global private and public debt amounted to $142 trillion – 260% of global GDP or income. Today, 10 years after, the credit bubble at the heart of the GFC has nearly doubled to $247 trillion, or 318% of global GDP. Much of that debt is a result of the Federal Reserve’s largesse. Thanks to capital mobility, quantitative easing enabled companies, like many based in Turkey, to borrow in dollars on the international capital markets at low rates of interest.

Now, as Turkey’s currency and those of other emerging markets fall, the cost of servicing debt denominated in dollars rises dramatically, threatening default. But while it is necessary to point to the Fed’s actions to understand tremors in world markets, and to warn of the threat of another financial crisis, the fact is that central bankers should never have alone been held responsible for the restoration of macroeconomic stability.

[..] After the 1929 financial crisis, Keynes in 1931 and Roosevelt in 1933 got a grip, and as Erich Rauchway explains in his book The Money Makers, jointly began the process of ending the gold standard, and radically restructuring the global financial system to restore not just macroeconomic stability but, after 1945, a “golden age” in economics. Today, we are once again threatened by global financial turmoil. This may be the time to ditch economic orthodoxy, and revive the radical and revolutionary monetary theory and policies of John Maynard Keynes. Or do we have to endure another global crisis before economists come to their senses?

Read more …

“..we’re not going to be the ones to interfere with the election..”

Trump Gives Mueller Three Weeks For Sitdown (ZH)

President Trump is giving special counsel Robert Mueller until September 1st for a sit-down interview under limited conditions, as an interview beyond that window “could interfere with the midterm elections,” reports the Wall Street Journal, citing Trump attorney Rudy Giuliani. Trump’s attorneys sent Mueller’s team a proposal indicating that the president would be willing to take questions on collusion with Russia in the 2016 elections, but not obstruction of justice alleged to have occurred after he took office – as Giuliani has previously said it could become a perjury trap. “We certainly won’t do [an interview] after Sept. 1, because we’re not going to be the ones to interfere with the election,” Mr. Giuliani told the Journal.

“Let him [Mr. Mueller] get all the bad publicity and the attacks for that.” “I think we made the offer we can live with,” said Giuliani. “Based on a prior meeting with Mr. Mueller, Mr. Giuliani said he had believed prosecutors wanted to wrap up the inquiry by September. “Now they’re not really rushing us,” he said. Mr. Mueller has made some moves that suggest the inquiry itself could stretch beyond the midterm elections and certainly past the September timeline Mr. Giuliani laid out.” -WSJ Last week the special counsel subpoenaed Roger Credico, comedian and radio host that former Trump adviser Roger Stone claims was a back channel to Wikileaks. Credico has denied this – instead calling himself a “confirming source” due to his contacts with WikiLeaks attorneys. He is set to testify in front of Mueller’s grand jury on September 7.

Read more …

Can we get Comey under oath too?

Trump ‘Will Deny Under Oath’ Asking Comey For Flynn Leniency (AT)

If he has to testify under oath, US President Donald Trump will deny he ever asked former FBI director James Comey to treat former national security adviser Michael Flynn leniently, his lawyer said on Sunday. “There was no conversation about Michael Flynn,” Rudy Giuliani said on CNN’s State of the Union program regarding the February 14, 2017, meeting in the Oval Office. The private chat figures prominently in Special Counsel Robert Mueller’s probe into possible obstruction of justice in the Russia election interference case.

Comey testified in Congress last year that Trump tried to persuade him to go easy on Flynn the day after the president sacked his national security adviser for lying about his contact with the Russian ambassador. “I hope you can see your way to letting Flynn go. He’s a good guy. I hope you can let this go,” Comey quoted Trump as saying. Trump sacked Comey in May 2017, later admitting on TV that the FBI’s Russia investigation was on his mind when he made the decision.

Read more …

Nice analysis by Eric Zuesse. h/t ZH

Why Trump Cancelled the Iran Deal (Zuesse)

[..] whereas Fox News, Forbes, National Review, The Weekly Standard, American Spectator, Wall Street Journal, Investors Business Daily, Breitbart News, InfoWars, Reuters, and AP, are propagandists for the Republican Party; NPR, CNN, NBC, CBS, ABC, Mother Jones, The Atlantic, The New Republic, New Yorker, New York Magazine, New York Times, Washington Post, USA Today, Huffington Post, The Daily Beast, and Salon, are propagandists for the Democratic Party; but, they all draw their chief sponsors from the same small list of donors who are America’s billionaires, since these few people control the top advertisers, investors, and charities, and thus control nearly all of the nation’s propaganda. The same people who control the Government control the public; but, America isn’t a one-Party dictatorship. America is, instead, a multi-Party dictatorship. And this is how it functions.

Trump cancelled the Iran deal because a different group of billionaires are now in control of the White House, and of the rest of the US Government. Trump’s group demonize especially Iran; Obama’s group demonize especially Russia. That’s it, short. That’s America’s aristocratic tug-of-war; but both sides of it are for invasion, and for war. Thus, we’re in the condition of ‘permanent war for permanent peace’ — to satisfy the military contractors and the billionaires who control them. Any US President who would resist that, would invite assassination; but, perhaps in Trump’s case, impeachment, or other removal-from-office, would be likelier. In any case, the sponsors need to be satisfied — or else — and Trump knows this.

Trump is doing what he thinks he has to be doing, for his own safety. He’s just a figurehead for a different faction of the US aristocracy, than Obama was. He’s doing what he thinks he needs to be doing, for his survival. Political leadership is an extremely dangerous business. Trump is playing a slightly different game of it than Obama did, because he represents a different faction than Obama did. These two factions of the US aristocracy are also now battling each other for political control over Europe.

Read more …

Too much debt.

China Slashes Support For Solar Industry (R.)

China’s solar stress could burn more dealmakers. The industry faces a glut of raw materials and panels after the Chinese government slashed support for the heavily indebted sector. The first victim of the switch is industry giant GCL-Poly Energy, which scrapped plans to flog assets to state-backed Shanghai Electric. It won’t be the last. The loss of official support has cast a shadow over the business. After Beijing in June limited the number of new projects and cut tariffs it pays to solar generators, analysts lowered their forecasts for new installations of solar capacity this year by as much as a third. That signals dark days ahead, as new projects drive growth for both power plant operators and manufacturers.

The industry’s dependence on hefty leverage – a legacy of hasty expansion and delayed subsidy payouts – makes its position more precarious. Some solar companies, such as Panda Green Energy, were already struggling with net borrowing of more than 10 times EBITDA. The squeeze is especially hard on manufacturers of solar materials and equipment, which must splash cash on research to stay competitive. Meanwhile, overcapacity has depressed prices: Chinese solar modules now trade at a 15% discount to the global average, according to Macquarie. Distress should spur consolidation. The Solactive China Solar Index has fallen nearly 20% since the policy shift. As valuations sink, less indebted players like LONGi Green Energy Technology can go bargain-hunting.

Read more …

Stop trying to make it look like a recovery. It is not possible under present conditions.

Greek Bailout Drama ‘In Last Throes’ But The Hardship Is Not Over Yet (G.)

In an economy that has contracted by 26%, a fifth of the working population – two-fifths of young people – have been left unemployed, while about 500,000 people have fled, mostly to EU member states in Europe’s wealthier north. And the hardship isn’t over. The leftist-led government has signed up to a staggering array of ambitious targets. Post–bailout Greece has committed to produce primary surpluses of 3.5 % of GDP until 2022, a feat achieved by only a handful of countries since the 1970s, and 2.2 % until 2060. For Kevin Featherstone, who heads the Hellenic Observatory at the London School of Economics, such obligations amount to perpetual purgatory.

“No other government in Europe would choose to follow this path,” he said. “Greece has been saved in the sense of avoiding the armageddon of euro exit but how it has been saved is so disadvantageous that one can’t talk of a rescue or exit from crisis.” Although Tsipras is at pains to play down outside supervision, Greece will still be subject to a regime of enhanced surveillance initially. Further pension cuts are in store. In May he had unveiled a 106-page post-bailout growth plan. But no amount of preparation can conceal the country’s acute vulnerability to turbulence beyond its borders. Only days before the programme’s end, global market jitters saw yields on Greek bonds soared.

It is accepted that Greece has enough resources to meet funding needs for the next two years, but the IMF is far from persuaded that Athens will be able to sustain market access “over the longer run without further debt relief”. If so, the fund is likely to clamour ever more loudly that the landmark deal, reached in June, easing Greek debt repayments (extending maturities on some loans and improving interest rates on others) just does not go far enough. The crisis has lasted so long that many Greeks can no longer recall their country being “normal” or their pockets full. The middle class has been hardest hit with taxes as high as 70% of income earned. Controversial property levies have added to the toll. “In reality this exit will be a formality because in truth it isn’t going to change a thing,” said Stratos Paradias, who leads the Hellenic Property Federation.

Read more …

Great interview with Ecuador’s former consul to the UK, who became a close friend of Assange.

Those Who Think That They Will Break Julian Assange Are Mistaken (P.)

[..] conditions in the Latin American country’s embassy in Knightsbridge are now very different to those that Assange experienced during the six years beginning 19 June 2012, when he arrived seeking political asylum. Ecuador’s government at the time, and its president Rafael Correa, openly accepted his request, believing Assange’s life to be in danger and admiring his fight to defend freedom of information and expression. At that time the Consul of Ecuador in the UK was Fidel Narváez, who was tasked with accompanying Assange from the day he first set foot in the embassy. Narváez had contacted Julian and Wikileaks in April 2011 to request that the organisation publish all the cables relating to Ecuador.

At that moment an amicable relationship was born, one which has continued to grow throughout the years. Fidel is no longer Consul. He was relieved of his duties for issuing a letter of safe-conduct for Edward Snowden without consulting his government. It was, he states, a completely personal decision, and one for which he feels absolutely no regret. “If I found myself in the same situation now, I would do the same thing again. It was the correct decision, the just decision. I knew who Snowden was, what he had done, why he was being pursued, and I knew how important it was to protect him. I do not regret it. I am proud of what I did.”

Read more …

Aug 052018
 August 5, 2018  Posted by at 1:19 pm Finance Tagged with: , , , , , , , , , , , ,  

Salvador Dali Spain 1936-38 (Spanish civil war)


Jeremy Corbyn is an anti-semite. Julian Assange is a rapist, a Russian agent and a terrorist. Donald Trump is an anti-semite, a rapist AND a Russian agent. Vladimir Putin wants to invade and enslave the entire western world and to that end employs Assange, Trump, maybe also Corbyn(?), as well as thousands upon thousands of hackers and murderers who make people vote for whoever Putin chooses, and poison former Russian agents on western soil.

These allegations, and there’s many more of them, have a number of things in common. Most importantly, they serve to change your mind. They serve to change your perception of reality. They seek to whip up your support for the very people and forces that launch them into the media.

Something else they have in common is that none of them has ever been proven, even though some of them are getting on in years. But they were never meant to be proven, simply because they don’t have to be. If your mind is a fertile breeding ground for such allegations, all that needs to be done is plant a seed, and plant another, and then water them day after day by repeating the allegations and make them ‘yummier’, until they sprout a plant or a tree ‘spontaneously’.

A third feature the allegations have in common is that as they change your perception of reality, you will be -more- inclined to support those who invented them for that exact purpose, so you will not oppose their -further- grab for power and wealth.

That Jeremy Corbyn would hate Jews goes against the man’s entire life history. But he’s been exceedingly weak in defending himself, and his Labour Party, against the accusations of anti-semitism, so the label sticks and has been very successful. Instead of explaining his position in the face of the unfolding and increasingly disastrous Brexit proceedings, all Corbyn gets to do is utter some feeble defence about his history with Jewish people. On Brexit, he’s been all but silenced. Even his own party merrily goes along with the smear.


The accusations concerning Assange in the Swedish rape ‘case’ are, if possible, even more preposterous, even if they have also ostensibly been even more successful. The Swedes, British and Americans involved in the narrative knew beforehand that all they needed was to plant a fragile seed. Julian had historically enjoyed a lot of support from women, and that was over in a heartbeat.

Sweden’s female(!) prosecutor, Marianne Ny, refused for 4 years to talk to Assange one on one and when she finally did, dropped the case right after. But that’s 4 years of allegations hanging over him, easily enough to serve the purpose of those allegations: plant a seed of doubt. By then, another -hollow- tree had sprouted: Assange was accused of working directly with the Kremlin.

He always denied this, but after negotiations with the US Justice Department in early 2017 were abruptly halted by then FBI-head James Comey and US Senator Mark Warner (D.-VA) as Assange offered to prove that it wasn’t Russians who provided him with files from the DNC server(s), Robert Mueller felt free to accuse him of working with Russia once again in his indictment of 12 Russians last month. Not only could Assange not defend himself by then, since he had been totally silenced, but Mueller didn’t even attempt to provide evidence.

And I’ve said this numerous times before, but I still think it bears repeating: WikiLeaks is based on one underlying principle above and beyond anything else: trust; which means uncompromising honesty. WIthout that, no-one would ever again offer them any files. WikiLeaks doesn’t reveal sources, and it doesn’t redact things out of files other than to protect people’s lives.

In that sense it’s interesting that even with the Vault7 CIA files, after Comey had betrayed Assange, the latter still held back from publishing certain pages, just so CIA operatives wouldn’t be exposed. If Assange is caught in just one lie, be it about rape or about Russia, WikiLeaks is done, and so is he and his life’s work. So what do you do about someone who doesn’t lie? You spread lies about him.

But, again, that’s not what people see, because that’s not what their media report. Papers like the New York Times and the Guardian, who were more than happy to share, and profit from, WikiLeaks files before, have turned on Assange with a vengeance. Journalists are more than willing to throw a fellow journalist under the bus and then turn around and accuse Donald Trump of endangering journalists when he says they spread fake news. Well, they do, that’s what Assange’s case proves without a doubt.


That brings us to Trump, a ‘case’ that has much in common with Assange -even if the men themselves don’t-, but is also very different. Trump doesn’t seem to shy away from the odd white lie or embellishment. And sure, that may be putting it mildly. But both journalists and their viewers and readers need to keep one thing in mind: their work does not consist of spouting allegations. They need to provide proof.

And in the 18 -or 24- months since Trump prominently rose upon the Washington scene, precious little has been proven. Robert Mueller has alleged plenty, but proven next to nothing. It’s fair to say after all that time that he’s fishing. Sure, Paul Manafort will likely go to jail, but his case has nothing to do with Russia collusion, at least not in any way that Mueller has evidence for (we would have known if he did).

And you know, if you spend so much time, and resources, trying to find something, trying to find proof, and you have failed to find it, you have to acknowledge just that. Maybe not halt the investigation entirely, but go public and state that you haven’t been able to find what you thought you would or could. The country deserves that, The American people deserve it, and yes, Donald Trump does, too.

But the whole country now lives on a narrative. Media left and right profit from it, each to feed their audience the ‘latest’ 24/7. And there’s nothing really, so they have to make it up in order to continue profiting from the whipped-up attention. One side tells you how evil Trump is, the other how great he’s doing. The truth is always in the middle, but America has no middle left.


I said before that Donald Trump is portrayed as an anti-semite, a rapist AND a Russian agent. As for the first bit, I covered that a few days ago in “Globalist”. Does Trump hate Jews? Even if he does, he hides it pretty well. He’s always done business with Jewish people (hey, this is New York!), there are plenty Jews in his government, and in his own family. Calling someone an anti-Semite is a very serious thing, not a detail to be thrown around at will. Prove it or hold your tongue.

Is Trump a rapist, like what Assange is accused of? You can certainly find no shortage of people willing to state that in both cases. But again, no evidence. And with the fame and glory awaiting anyone who does prove it in either case, you would think by now someone would have found something. Again, prove it or hold your tongue.

Thirdly: is Trump a Russian agent? Look, if Robert Mueller hasn’t been able to prove that he is after two years and tens of millions spent, at least get off your high horse and focus on something else for a bit, if you want to be taken serious as a journalist. Russia, and Putin, are America’s favorite bogeyman today, and about the only thing that still unites the country.

So find something instead that unites you that is not your enemy. Find common cause. Find what makes you proud to be America. Are you all going to be proud if Assange is dragged into some place like Gitmo? Then you have completely lost what it is that should make you proud citizens of the land of the free and the home of the brave.

Because no matter how you may twist it, Julian Assange is braver than any of you, and braver than all of you put together too. But no, he’s not free. He gave up his freedom so you would know what it means to be free. Free from manipulation, free from people making up your minds for you, free from indoctrination, free from the forces that take more of your freedom away every day.

You see, Julian Assange is not free. But neither are you. He’s a prisoner of the very people who are taking your freedom away, day by day, step by step. That’s why you should stand up for him. And of course, it’s not just your freedom that’s at stake, it’s your humanity, it’s the very essence of what makes you human, the difference between a life worth living and a life wasted by complacency and cowardice.

Anything else is just narrative. It’s not life.



And yes, the title is from Paul Simon’s You Can Call Me Al.





Jul 242018
 July 24, 2018  Posted by at 12:25 pm Primers Tagged with: , , , , , , , , , , ,  

Jacques-Louis David Erasistratus Discovering the Cause of Antiochus’ Disease 1774


One thing that’s not receiving enough attention in the respective Assange and Russia coverage is to what extent both protagonists are needed in each other’s narratives to keep each of these alive. Without explicitly linking Assange to Russia, allegations against him lose a lot, if not most, of their credibility. Likewise, if Assange is not put straight in the middle of the Russia story, it too loses much. Linking them is the gift that keeps on giving for the US intelligence community and the Democratic party.

In that light, as the shameful/shameless treatment of Julian Assange continues and is on the verge of even worse developments, I was wondering about some dates and timelines in the whole sordid affair. And about how crucial it is for those wanting to ‘capture’ him, to tie him to Russia in any form and shape they can come up with and make halfway credible.

10 days ago in The True Meaning of ‘Collusion’ I mentioned how Robert Mueller in his indictment of 12 Russians -but not Assange-, released on the eve of the Trump-Putin summit, strongly insinuated that WikiLeaks had actively sought information from Russians posing as Guccifer 2.0, that would be damaging to Hillary Clinton. I also said that Assange was an easy target because, being closed off from all communication, he cannot defend himself. From the indictment:


a. On or about June 22, 2016, Organization 1 sent a private message to Guccifer 2.0 to “[s]end any new material [stolen from the DNC] here for us to review and it will have a much higher impact than what you are doing.” On or about July 6, 2016, Organization 1 added, “if you have anything hillary related we want it in the next tweo [sic] days prefable [sic] because the DNC [Democratic National Convention] is approaching and she will solidify bernie supporters behind her after.” The Conspirators responded, “ok . . . i see.” Organization 1 explained, “we think trump has only a 25% chance of winning against hillary . . . so conflict between bernie and hillary is interesting.”


Now, the indictment itself has been blown to shreds by Adam Carter, while the narrative that the Russians hacked DNC servers and provided what they stole to WikiLeaks, has always categorically been denied by Assange, while the Veteran Intelligence Professionals for Sanity (VIPS) and others have concluded that the speed at which the info was downloaded from the servers means it couldn’t have been a hack.

Oh, and Carter left little standing of Mueller et al’s portrait of Guccifer 2.0 as being of Russian origin. Plus, as several voices have pointed out, Assange had said on British TV on June 12 2016, ten days before the date the indictment indicates, that WikiLeaks was sitting on a batch of material pertaining to Hillary Clinton. An indictment full of allegations, not evidence, that in the end reads like Swiss cheese.

But it does serve to keep alive, and blow new fire into, the “The Russians Did It” narrative. And obviously, it also rekindles the allegation that Assange was working with the Russians to make Trump win and Hillary lose. Allegations, not evidence, against which neither Assange nor “the Russians” are in a position to defend themselves. Very convenient.


In his June 25 article How Comey Intervened To Kill Wikileaks’ Immunity Deal, The Hill’s John Solomon details how negotiations in early 2017 between legal representatives for Julian Assange and the US Justice Department were suddenly halted when James Comey, then FBI director, and Sen. Mark Warner (D-Va.) suddenly and entirely unexpectedly told Adam Waldman, Assange’s attorney, and David Laufman, then head of Justice’s counterintelligence and export controls section, who had been picked to lead the talks, to stand down.

This happened when Waldman reached out to Warner, who informed Comey, among other things, about Assange’s offer to provide evidence that he did not get the DNC files from the Russians. That would have dealt a huge blow to the Russia-Did-It allegation, and it would also have destroyed the narrative of Assange working with Russia. And lest we forget: it would have made Mueller’s indictment worth less than the paper it’s written on.

That Comey’s order for Waldman and Laufman to stand down risked the lives and safety of CIA operatives receives surprisingly(?) little attention, but apparently it was worth it for Comey to keep the narrative(s) alive. What do the operatives themselves think about it, though?

It’s not fully clear from Solomon’s article when exactly the stand down order was given, and/or when the talks broke down entirely. Going through the dates, we know it’s sometime between March 28 2017, when we know talks were still ongoing, and April 7 2017, when Assange “released documents with the specifics of some of the CIA malware used for cyber attacks.” After that, then CIA director Mike Pompeo labeld WikiLeaks a “hostile intelligence service.”

Why is the date interesting? For one thing because present Ecuadorian President Lenin Moreno was elected to his job on April 2 2017 (he took office on May 24). And it’s Moreno who now holds Assange’s fate in his hands. It was Moreno, also, who cut off Assange completely from the outside world last March.

Moreno’s about-face since becoming president is something to behold. He had been vice-president, trustee and friend to his predecessor Rafael Correa from 2007 to 2013. Moreno, who’s wheelchair bound after being shot in a burglary in 1998, was nominated for a Nobel Peace Prize for his efforts for the disabled in Ecuador.

What made him turn? Or should we perhaps ask: when did the Americans get to him? And what do they have on him? Is it bribe or blackmail? There’s talk of new and generous IMF loans as we speak. What’s clear is that Moreno is in London this week, and it’s unlikely that Assange’s situation doesn’t come up in talks at all, even if that’s what Moreno’s people want to make us believe. It’s way more likely that discussions are happening about how to put Assange out on to the street and then in a British or even US jail.


But Assange’s case may not be as hopeless as we think. First, all the British have on him is a charge of jumping bail. That carries three months and a fine. It’s not labeled a serious charge, that goes for offences that carry three years and more. New UK Foreign Minister Jeremy Hunt misspoke seriously when he said Assange faced serious charges. He doesn’t. And Britain still has a court system, and Assange still has lawyers.

More important, perhaps, is that Moreno will come under a lot of pressure, and probably already is, to not hand over Assange. The UN has been very clear about what it thinks about Assange’s treatment. It violates more international laws than we can count. But who cares about the UN anymore these days, right?

Even more outspoken has been the Inter-American Court of Human Rights. I know, I had never heard of them either. But they’re a serious body, most South American nations are members, and many Caribbean ones. Here’s what the court said on July 13:


The Inter-American Court of Human Rights ruled on Friday the right to seek asylum in embassies and other diplomatic compounds. The ruling includes a mandatory safe process, and the obligation of states to provide safe passage to those granted asylum. Without naming Julian Assange, the ruling was deemed a huge victory for the WikiLeaks founder who has been held up in the Ecuadorean embassy in London since 2012.

The court released a public statement, which said that it had “interpreted the reach of the protection given under Article 22 (7) of the American Convention on Human Rights and Article XXVII of the American Declaration on the Rights and Duties of Man, which recognize the right to seek and receive asylum in a foreign territory.”

“In particular, the Court declared upon the relative issue of whether this human right protects both territorial asylum and diplomatic asylum. Similarly, the Court determined the human rights obligations of the Member States of the Organization of American States regarding the host country and, in this case, for third States, in virtue of the risk that persons seeking international protection could suffer, which was the reason for the principle of non-refoulement.


This court is not some hobby club. Wiki: “The Organization of American States established the Court in 1979 to enforce and interpret the provisions of the American Convention on Human Rights. Its two main functions are thus adjudicatory and advisory. Under the former, it hears and rules on the specific cases of human rights violations referred to it. Under the latter, it issues opinions on matters of legal interpretation brought to its attention by other OAS bodies or member states.”

The court is also very clear in its ruling. Note: “the obligation of states to provide safe passage to those granted asylum”. Moreno may want to think twice before he surrenders Assange and goes against the ruling. The consequences could be far-reaching. Nobody wants to start a fight with ALL of their neighbors all at the same time. Violating the ruling would make the court obsolete.

The ideal solution would be if Australia would offer Julian Assange safe passage back home. Another country could do the same. Assange has never been charged with anything, other than the UK’s bail-skipping charge, a minor offence.

Julian Assange is a journalist, and a damn good one at that. The silence in the Anglo -and international- media about his case is shameful and deafening. So is the smear campaign that’s been going on for over a decade. How many women have been turned against the man by the false Swedish rape charges? Condemning someone to isolation without access to daylight or medical care goes way beyond shameful.

It’s time to end this horror show, not prolong or deepen it. But the power of international intelligence services is at stake, and they’re going to go to great lengths to impose that power. The US has already even claimed that freedom of speech, i.e. its entire Constitution, does not apply to non-Americans.

That’s quite the claim when you think about it. That also tells us how much is at stake for ourselves. The mainstream media are already captives to the system, lock, stock and barrel. But if Assange can be silenced this way, what are Jim Kunstler, the Automatic Earth and Zero Hedge going to do? Are we all going to shut up?


We need to rage against the dying of the light more than ever. Because the light, indeed, is dying. We should not go gentle into that night without ever being heard from again. We owe that to ourselves, our children, and to Julian. It’s all the same thing. Not standing up for Assange means not standing up for your children. Are you sure you’re okay with that?



Jul 142018
 July 14, 2018  Posted by at 12:14 pm Finance Tagged with: , , , , , , , , ,  

Vincent van Gogh Weeping woman 1883


The indictment by Special Counsel Robert Mueller, whose task it is to investigate possible collusion between the Trump campaign and ‘Russians’, that was released yesterday by Deputy AG Rod Rosenstein, raises so many questions one has to be picky.

Many people have already stated that the report contains no proof of anything it claims, and that Mueller doesn’t have to prove a thing, because the 12 Russians he accuses will never show up in a US court. Many of course also have at least questioned the timing of the release, 3 days before the Putin-Trump summit in Helsinki, of information Mueller and Rosenstein have allegedly been sitting on for months.

The idea that the event was not coordinated to inflict maximum damage to the summit seems indeed far-fetched. But something else struck me in the report: the role of WikiLeaks (labeled “Organization 1”). Mueller very much focuses on both Julian Assange -though he doesn’t get named and is not indicted- and his presumed links to the indicted Russians, who -allegedly- posed as Guccifer 2.0:


Use of Organization 1

47. In order to expand their interference in the 2016 U.S. presidential election, the Conspirators transferred many of the documents they stole from the DNC and the chairman of the Clinton Campaign to Organization 1. The Conspirators, posing as Guccifer 2.0, discussed the release of the stolen documents and the timing of those releases with Organization 1 to heighten their impact on the 2016 U.S. presidential election.

a. On or about June 22, 2016, Organization 1 sent a private message to Guccifer 2.0 to “[s]end any new material [stolen from the DNC] here for us to review and it will have a much higher impact than what you are doing.” On or about July 6, 2016, Organization 1 added, “if you have anything hillary related we want it in the next tweo [sic] days prefable [sic] because the DNC [Democratic National Convention] is approaching and she will solidify bernie supporters behind her after.” The Conspirators responded, “ok . . . i see.” Organization 1 explained, “we think trump has only a 25% chance of winning against hillary . . . so conflict between bernie and hillary is interesting.”

b. After failed attempts to transfer the stolen documents starting in late June 2016, on or about July 14, 2016, the Conspirators, posing as Guccifer 2.0, sent Organization 1 an email with an attachment titled “wk dnc link1.txt.gpg.” The Conspirators explained to Organization 1 that the encrypted file contained instructions on how to access an online archive of stolen DNC documents. On or about July 18, 2016, Organization 1 confirmed it had “the 1Gb or so archive” and would make a release of the stolen documents “this week.”

48. On or about July 22, 2016, Organization 1 released over 20,000 emails and other documents stolen from the DNC network by the Conspirators. This release occurred approximately three days before the start of the Democratic National Convention. Organization 1 did not disclose Guccifer 2.0’s role in providing them. The latest-in-time email released through Organization 1 was dated on or about May 25, 2016, approximately the same day the Conspirators hacked the DNC Microsoft Exchange Server.

49. On or about October 7, 2016, Organization 1 released the first set of emails from the chairman of the Clinton Campaign that had been stolen by LUKASHEV and his co-conspirators. Between on or about October 7, 2016 and November 7, 2016, Organization 1 released approximately thirty-three tranches of documents that had been stolen from the chairman of the Clinton Campaign. In total, over 50,000 stolen documents were released.


This means Mueller et al claim that WikiLeaks received the DNC files from Russian parties which had hacked into DNC(-related) servers. Something Julian Assange has always denied. Now, remember that the Veteran Intelligence Professionals for Sanity (VIPS), a group of former US intelligence professionals, as well as others, have said that the speed with which the files were downloaded from the server(s) indicates that they were not hacked, but put onto a hard drive.

The person who is supposed to have done that is Seth Rich. Who was murdered on July 10 2016. Kim Dotcom has long claimed to have evidence that Seth Rich was indeed the person who provided the files to Assange. Today he said on Twitter that his lawyers warned him about exposing that evidence, citing his safety and that of his family.

Half a year after Rich’s -never solved- murder, in the first months of 2017, the US Department of Defense was involved in negotiations with Assange in which the latter was offered -temporary- ‘safe passage’ from the Ecuador Embassy in London where he is holed up, in exchange for Assange ‘redacting’ a batch of files on the CIA known as Vault 7.

These negotiations were suddenly halted in April 2017 through the interference of James Comey -then FBI chief- and Mark Warner, a US Senator (D-VA). In the talks, Assange had offered to prove that no Russians were involved in the process that led to WikiLeaks receiving the files.

Today, of course, Assange is completely incommunicado in the Ecuador embassy, so he cannot defend himself against the Mueller accusations. Mueller really doesn’t have to prove anything: he can say what he wants. Comey and Warner prevented Assange from providing evidence exonerating ‘the Russians’, and Assange has been shut down.

Let me reapeat once again: Assange is fully aware that the smallest bit of non-truth or half-lie would mean the end of WikiLeaks. It is based on ultimate trust. Nobody would ever offer a single file again if they wouldn’t have full confidence that Wikileaks would treat it -and them- with the utmost respect. So the American approach is to smear Assange in any way possible, rape allegations, collusion with Russian agents, anything goes.

And ‘the Russians’ can be ‘freely’ accused in a 29-page indictment released on the eve of the first summit President Trump is supposed to have with his Russian counterpart a year and a half into his presidency, where his predecessors all had such meetings much earlier into their presidencies. With many lawmakers calling on him to cancel it.

Do we all still remember the true meaning of ‘collusion’?



Jun 152018
 June 15, 2018  Posted by at 8:10 am Finance Tagged with: , , , , , , , , , , , , ,  

OR LIGHT Compassion 2018


Argentina’s Peso Collapses Even Further Despite $50 Billion IMF Bailout (WS)
ECB Calls Halt To Quantitative Easing, Despite ‘Soft’ Euro (G.)
Japan’s Central Bank Dials Down Inflation View, Complicates Stimulus-Exit (R.)
Powell Orchestrates a Masterful Move (DDMB)
The Fed Creates Problems For Itself (Macleod)
The Art of the Deal Worked On Sentosa Island (AT)
Absence of “CVID” In Joint Statement? (Hani)
Optimism (Caitlin Johnstone)
Blackstone Becomes Biggest Hotel & Property Owner in Spain (WS)
‘Tourism Pollution’: Japanese Crackdown Costs Airbnb $10 Million (G.)
Greeks Are Least Satisfied In The EU (K.)
Turkey: Even Birds Need Our Consent To Fly In The Aegean (K.)
Comey et al Just Made It More Difficult For Mueller To Prosecute Trump (Hill)
A Closer Look At Extreme FBI Bias Revealed In OIG Report (ZH)



Money has left the building.

Argentina’s Peso Collapses Even Further Despite $50 Billion IMF Bailout (WS)

Today the Argentina peso plunged another 5.5% against the US dollar. It now takes ARS 27.7 to buy $1. Over the past 16 years, the peso has gone through waves of collapses. This collapse began on April 20. The central bank of Argentina (BCRA) countered it by selling $1 billion per day of scarce foreign exchange reserves and buying pesos. The peso fell more quickly. The BCRA responded with three rate hikes, to finally 40%! On May 8, the government asked the IMF for a bailout. On May 16, after a chaotic plunge of the peso, the BCRA was able to refinance about $26 billion in maturing peso-denominated short-term debt (Lebacs) at an annual interest of 40%, and the peso bounced. It was a dead-cat bounce, however, and the peso plunged another 13% against the dollar through today.

Since April 20, the peso has plunged 27.5%. The annotated chart shows the daily moves of the collapse, and the various failed gyrations to halt it (the chart depicts the value of 1 ARS in USD). The collapse of the peso comes despite an endless series of measures to halt it. Just this week so far: On Tuesday, the BCRA decided to keep its key interest rate at 40%; and on Wednesday, the Ministry of Finance announced it would hold daily auctions to sell $7.5 billion in foreign exchange reserves and buy pesos, to prop up the peso. But it was apparently the only one buying pesos. With inflation at 25.5% and heading to 27% by year-end, according to government estimates, with a rising budget deficit, a surging current account deficit, soaring borrowing costs, and burned investors, what else is there to do?

Read more …

Not Draghi’s finest hour.

ECB Calls Halt To Quantitative Easing, Despite ‘Soft’ Euro (G.)

The European Central Bank has shrugged off evidence of a slowdown in the eurozone and announced that it will phase out the stimulus provided by its massive three-year bond-buying programme to the eurozone economy by the end of the year. Despite warning that the single currency area was going through a soft patch at a time when protectionist risks were rising, the ECB said it would wind down its bond purchases over the next six months. The ECB is currently boosting the eurozone money supply by buying €30bn of assets each month, but this will be reduced to €15bn a month after September and ended completely at the end of 2018.

The move follows strong pressure from some eurozone countries, led by Germany, that were uncomfortable about the more than €2.4tn of assets accumulated by the ECB since it launched its quantitative easing programme at the start of 2015. Mario Draghi, the ECB’s president, said at the end of a meeting of the bank’s governing council in Latvia that the QE programme had succeeded in its aim of putting inflation on course to meet its target of being below but close to 2%. Eurozone activity has accelerated markedly over the past three years, with some estimates suggesting that QE contributed 0.75percentage points a year to the average 2.25% annual growth rate.

The ECB’s statement reflected the battle between hawks and doves on the bank’s council, with the decision on QE matched by a softening of its approach to interest rates. Draghi said there would be no prospect of an increase in the ECB’s key lending rate – currently 0.0% – until next summer at the earliest. “We decided to keep the key ECB interest rates unchanged and we expect them to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path,” Draghi said.

Read more …

No, really, Abenomics is dead.

Japan’s Central Bank Dials Down Inflation View, Complicates Stimulus-Exit (R.)

The Bank of Japan maintained its ultra-loose monetary policy on Friday and downgraded its view on inflation in a fresh blow to its long-held 2% price goal, further complicating the central bank’s path to rolling back its crisis-era stimulus. Markets are on the lookout for clues from BOJ Governor Haruhiko Kuroda’s post-meeting briefing on how long the central bank could hold off on whittling down stimulus given recent disappointingly weak price growth. As widely expected, the Bank of Japan kept its short-term interest rate target at minus 0.1% and a pledge to guide 10-year government bond yields around zero%.

The move contrasts with the European Central Bank’s decision to end its asset-purchase program this year and the U.S. Federal Reserve’s steady rate increases, which signaled a break from policies deployed to battle the 2007-2009 financial crisis. “Consumer price growth is in a range of 0.5 to 1%,” the BOJ said in a statement accompanying the decision. That was a slightly bleaker view than in the previous meeting in April, when the bank said inflation was moving around 1%. The BOJ stuck to its view the economy was expanding moderately, unfazed by a first-quarter contraction that many analysts blame on temporary factors like bad weather.

Read more …

He just likes the attention.

Powell Orchestrates a Masterful Move (DDMB)

Federal Reserve Chairman Jerome Powell has taken the first steps in remaking the central bank in his “plain-English” image, which can only be a good thing for financial markets. Earlier this week, news leaked that the central bank was considering holding a press conference following each Federal Open Market Committee meeting instead of after every other one like it does now. The reports set off a mini-storm. Speculation rose the Fed would implement this new policy immediately, which could mean the central bank was considering accelerating the pace of interest-rate increases as soon as August. After all, investors had become accustomed to the Fed only making a major policy move at meetings followed by a press conference. Now, every meeting would be “live.”

But in a masterful move, Chairman Jerome Powell managed to confirm the policy while also putting financial markets at ease. Rather than announcing the change in the official statement outlining the Fed’s plan to raise its target for the federal funds rate for the seventh time since December 2015, Powell waited until the start of his press conference to drop the bomb, noting that the policy wouldn’t start until January. Here’s Powell’s reasoning: “My colleagues and I meet eight times a year and take a fresh look each time at what is happening in the economy and consider whether our policy needs adjusting. We don’t put our interest rate decisions on auto-pilot because the economy can always evolve in unexpected ways.

History has shown that moving interest rates either too quickly or too slowly can lead to bad economic outcomes. We think the outcomes are likely to be better overall if we are as clear as possible about what we are likely to do and why. To that end, we try to give a sense of our expectations for how the economy will evolve and how our policy stance may change. As Chairman, I hope to foster a public conversation about what the Fed is doing to support a strong and resilient economy. And one practical step in doing so is to have a press conference like this after every one of our scheduled FOMC meetings. We’re going to do that beginning in January. That will give us more opportunities to explain our actions and to answer your questions.

Read more …

“..the unsustainable excesses of unprofitable debt created by suppressing interest rates..”

The Fed Creates Problems For Itself (Macleod)

Since Hayek’s time, monetary policy, particularly in America, has evolved away from targeting production and discouraging savings by suppressing interest rates, towards encouraging consumption through expanding consumer finance. American consumers are living beyond their means and have commonly depleted all their liquid savings. But given the variations in the cost of consumer finance (between 0% car loans and 20% credit card and overdraft rates), consumers are generally insensitive to changes in interest rates. Therefore, despite the rise of consumer finance, we can still regard Hayek’s triangle as illustrating the driving force behind the credit cycle, and the unsustainable excesses of unprofitable debt created by suppressing interest rates as the reason monetary policy always leads to an economic crisis.

The chart below shows we could be living dangerously close to another tipping point, whereby the rises in the Fed Funds Rate (FFR) might be about to trigger a new credit and economic crisis. Previous peaks in the FFR coincided with the onset of economic downturns, because they exposed unsustainable business models. On the basis of simple extrapolation, the area between the two dotted lines, which roughly join these peaks, is where the current FFR cycle can be expected to peak. It is currently standing at about 2% after yesterday’s increase, and the Fed expects the FFR to average 3.1% in 2019. The chart tells us the Fed is already living dangerously with yesterday’s hike, and further rises will all but guarantee a credit crisis.

Read more …

The view from Asia Times. Many people in that part of the world don’t understand the criticism.

The Art of the Deal Worked On Sentosa Island (AT)

Some statesmen by their sheer force of personality and unorthodox ways of politicking arouse disdain among onlookers. US President Donald is perhaps the most famous figure of that kind in world politics today. No matter what he does, Trump attracts criticism. He evokes strong feelings of antipathy among a large and voluble swathe of opinion within half of America. The making of history in a virtual solo act on his part, which is the rarest of efforts, on Sentosa Island in Singapore on Tuesday and which the world watched with awe and disbelief, will be instinctively stonewalled. Half of America simply refuses to accept the positive tidings about him coming from Singapore.

The skeptics are all over social media pouring scorn, voicing skepticism, unable to accept that if the man has done something sensible and good for his country and for world peace, it deserves at the very least patient, courteous attention. The problem is about Trump – not so much the imperative need of North Korea’s denuclearization. But western detractors – ostensibly rooting for the “liberal international order” – will eventually lapse into silence because what emerges is that North Korean leader Kim Jong-un has enough to “bite” here in the deal that Trump is offering – broadly, a security guarantee from the US and the offer of a full-bodied relationship with an incremental end to sanctions plus a peace treaty.

Succinctly put, Trump has offered a deal that Kim simply cannot afford to reject. The ending of the US-ROK military exercises forthwith; Trump’s agenda of eventual withdrawal of troops from ROK; the lure of possible withdrawal of sanctions once 20% of the denuclearization process gets underway, or once the process becomes irreversible; Trump’s hint that he has sought assurances from Japan and the ROK that they will be “generous” in offering economic assistance to the reconstruction of North Korea; China’s involvement in the crucial process – these are tangibles.

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The view from South Korea.

Absence of “CVID” In Joint Statement? (Hani)

The absence of any reference to “complete, verifiable, and irreversible dismantlement” (CVID) of North Korea’s nuclear program in the joint statement reached at US President Donald Trump and North Korean leader Kim Jong-un’s June 12 summit in Singapore is being seen by some as a “negotiation failure” on the US’s part. But an analysis of Trump’s subsequent remarks – and a reading between the lines of the Pyongyang’s official announcement – suggests the US achieved practical gains in terms of a commitment from the North in exchange for the face-saving measure of avoiding use of the “CVID” term due to possible North Korean objections to it.

To begin with, the Singapore joint statement’s language marks a step forward from the Panmunjeom Declaration of Apr. 27 in terms of the final goal of denuclearizing the Korean Peninsula. The latest statement refers to Kim having “reaffirmed his firm and unwavering commitment to complete denuclearization of the Korean Peninsula.” While the Panmunjeom Declaration referred to “realizing, through complete denuclearization, a nuclear-free Korean Peninsula,” the new statement includes the additional reference to a “firm and unwavering commitment.”

From the reference to Kim’s “firm and unwavering” commitment to denuclearization, some experts are suggesting North Korea may have agreed to verification in addition to denuclearization – in other words, that the language may be a substitute for the “verifiable” part of the CVID approach demanded by Washington. “You could see them as having used the term out of awareness of North Korea’s discomfort with the word ‘verification,’” Handong Global University professor Kim Joon-hyung said after a Korea Press Foundation debate at Singapore’s Swissotel on June 13. “It may be fair to say North Korea made a definite commitment on the implementation and verification issues,” Kim argued.

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“..while you can always count on Capitol Hill to make it incredibly easy for a president to deploy military personnel around the globe, giving that same office the power to bring troops home is a completely different matter. ”

Optimism (Caitlin Johnstone)

Off the top of my head I have a hard time thinking of anything sleazier than smearing peace talks in order to gain partisan political points, but that has indeed been the theme of the last few days when it comes to the Singapore summit. Liberal pundits everywhere have been busily circulating the narrative that Kim Jong-Un “played” Trump by getting him to temporarily halt military drills in exchange for suspended nuclear testing. It was the most fundamental beginning of peace negotiations and a slight deescalation in tensions on the Korean Peninsula, but the way they talk about it you’d think Kim had taken off from Singapore in Air Force One with the keys to Fort Knox and Melania on his lap.

I’m not sure how far up the military-industrial complex’s ass one’s head needs to be to think that one single step toward peace is a gigantic take-all-the-chips win for the impoverished North Korea, but many of Trump’s political enemies are taking it even further. Senate Democrats have introduced a bill to make it more difficult for Trump to withdraw US troops from South Korea, because while you can always count on Capitol Hill to make it incredibly easy for a president to deploy military personnel around the globe, giving that same office the power to bring troops home is a completely different matter.

Surprising no one, MSNBC’s cartoon children’s program The Rachel Maddow Show took home the trophy for jaw-dropping, shark-jumping ridiculousness with an eighteen-minute Alex Jones impression claiming that the chief architect of the Korean negotiations was none other than (and if you can’t guess whose name I’m going to write once we get out of these parentheses I deeply envy your ignorance on this matter) Vladimir Putin. [..] This president is facilitating acts of military violence and dangerous escalations around the world; anyone who isn’t relieved by the possibility of one powder keg being defused in that rampage actually has a lot more faith in Trump’s competence than they’re pretending to.

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Easy pickings.

Blackstone Becomes Biggest Hotel & Property Owner in Spain (WS)

Private equity firm Blackstone, the undisputed king of property funds, continues to bet big on global real estate. In the last week it raised $9.4 billion for Asian real estate. It was also given the green light to acquire Spain’s biggest real estate investment fund (REIT), Hispania, for €1.9 billion. The move, after its prior acquisitions, will cement its position as Spain’s biggest hotel owner and fully private landlord. Hispania’s 46 hotels, added to Blackstone’s other hotels, will turn the PE firm into Spain’s largest hotelier with almost 17,000 rooms, far ahead of Meliá (almost 11,000), H10 (more than 10,000) and Hoteles Globales (just over 9,000).

It took Blackstone just three moves to become market leader. First, it acquired the hotel group HI Partners from struggling Spanish lender Banco Sabadell for €630 million in October 2017. Then, a month ago, it bought 29.5% of the hotel chain NH Hoteles, which is currently in the hands of the Chinese conglomerate HNA. Now, by raising its stake in Hispania from 16.75% to 100%, it will take up a dominant position in one of the world’s biggest tourist markets. With this deal, it will also expand its residential property empire in Spain. Blackstone has over 100,000 real estate assets controlled via dozens of companies. Those assets include a huge portfolio of impaired real estate assets, including defaulted mortgages and real estate-owned assets (REOs).

Blackstone also owns 1,800 social housing units, which it acquired from Madrid City Hall in a controversial deal brokered by the son of former Spanish prime minister José María Aznar and former Madrid mayor Ana Botella. Blackstone paid €202 million for the apartments in 2013; they are now estimated to be worth €660 million — a 227% return in just five year! Since its purchase of the properties, Blackstone has hiked rents on the flats by 49%. Those who can’t pay have been evicted. Blackstone also played a starring role in one of the world’s biggest real estate operations of 2017, in which it payed €5.1 billion for the defaulted loans Banco Santander inherited from its shotgun-acquisition of Banco Popular.

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“..a dramatic drop in the number of Japanese properties available via Airbnb, from more than 60,000 this spring to just 1,000 on the eve of the law’s introduction.”

‘Tourism Pollution’: Japanese Crackdown Costs Airbnb $10 Million (G.)

It has become a familiar scene: tourists in rented kimonos posing for photographs in front of a Shinto shrine in Kyoto. They and other visitors have brought valuable tourist dollars to the city and other locations across Japan. But now the country’s former capital is on the frontline of a battle against “tourism pollution” that has already turned locals against visitors in cities across the world such as Venice, Barcelona and Amsterdam. The increasingly fraught relationship between tourists and their Japanese hosts has spread to the short-stay rental market. On Friday a new law comes into effect that requires property owners to register with the government before they can legally make their homes available through Airbnb and other websites.

The restriction has caused the number of available properties to plummet and has cost the US-based company millions of dollars. Thanks to government campaigns, the number of foreign tourists visiting Japan has soared since the end of a flat period caused by a strong yen and radiation fears in the aftermath of the 2011 Fukushima disaster. A record 28.7 million people visited last year, an increase of 250% since 2012. Almost seven million were from China, with visitors from South Korea, Taiwan, Hong Kong Thailand and the US taking the next five spots. By 2020, the year Tokyo hosts the Olympic Games, the government hopes the number will have risen to 40 million.

[..] Under the new private lodging law, which was supposed to address a legal grey area surrounding short-term rentals – known as minpaku – properties can be rented out for a maximum of 180 days a year, and local authorities are permitted to impose additional restrictions. The result has been a dramatic drop in the number of Japanese properties available via Airbnb, from more than 60,000 this spring to just 1,000 on the eve of the law’s introduction. The legislation has forced the firm to cancel reservations for guests planning to stay in unregistered homes after Friday and to compensate clients to the tune of about $10m.

A sign in Kyoto cautions against touching geishas, taking selfies, littering, sitting on fences and eating and smoking on the street. Photograph: Justin McCurry for the Guardian

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Greeks Are Least Satisfied In The EU (K.)

Greece is the least satisfied nation in the European Union, according to a Eurobarometer survey published Thursday. More specifically, the survey, conducted between March 17 and 28, showed that just 52% of Greeks said they were satisfied with their lives, compared to a 83% average for the 28-member bloc. Only 35% of Greeks surveyed said they were satisfied with the financial situation of their households, compared to 71% across the EU. A staggering 98% said the state of the country’s economy is bad while one in two Greeks said the country’s financial crisis is not over yet and that it will deteriorate even further. As for the country’s general situation, 94% said it is negative. Just 6% said the general situation was positive compared to the 51% average for EU member-states.

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Even turkeys?!

Turkey: Even Birds Need Our Consent To Fly In The Aegean (K.)

With Greece featuring prominently in Turkey’s election campaigning, Turkish Foreign Minister Mevlut Cavusoglu raised the tension a notch again Thursday, warning that not even a bird will fly over the Aegean without Ankara’s permission. Responding to criticism by Turkish ultra-nationalists that 18 islands have been “lost” to Greece in recent years, Cavusoglu said that since the crisis over the Imia islets in 1996 there have been no changes in the legal status of the Aegean. “Not only during our own rule, but before that there has been no change in the status of the Aegean. We will not allow this. Even in the case of research we will not give permission, not even to a bird in the Aegean,” he said during an interview with a Turkish radio station.

He went on to say that Turkey will make no concessions in the Aegean and Cyprus, and that Ankara will also begin gas exploration “around” the Eastern Mediterranean island. “We also have a drill,” he said. Turkey has vowed to stop Cyprus from drilling for gas and oil in its exclusive economic zone (EEZ), insisting there can be no development of the island’s natural resources without the participation of the Turkish Cypriots in the island’s Turkish-occupied north. “In the last few months we have prevented drilling and we drove the Italians away. We will not allow anyone to take away the rights of Turkish Cypriots,” he said. Cyprus government spokesman Prodromos Prodromou said that Nicosia will not be dragged into the “climate of tension” that Turkey is cultivating. He cited international law and said that Cyprus has an established EEZ. Moreover, he said the US, Russia and the European Union have all backed Cyprus’s rights.

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Wonder what the fallout will be.

Comey et al Just Made It More Difficult For Mueller To Prosecute Trump (Hill)

James Comey once described his position in the Clinton investigation as being the victim of a “500-year flood.” The point of the analogy was that he was unwittingly carried away by events rather than directly causing much of the damage to the FBI. His “500-year flood” just collided with the 500-page report of the Justice Department inspector general (IG) Michael Horowitz. The IG sinks Comey’s narrative with a finding that he “deviated” from Justice Department rules and acted in open insubordination. Rather than portraying Comey as carried away by his biblical flood, the report finds that he was the destructive force behind the controversy. The import of the report can be summed up in Comeyesque terms as the distinction between flotsam and jetsam.

Comey portrayed the broken rules as mere flotsam, or debris that floats away after a shipwreck. The IG report suggests that this was really a case of jetsam, or rules intentionally tossed over the side by Comey to lighten his load. Comey’s jetsam included rules protecting the integrity and professionalism of his agency, as represented by his public comments on the Clinton investigation. The IG report concludes, “While we did not find that these decisions were the result of political bias on Comey’s part, we nevertheless concluded that by departing so clearly and dramatically from FBI and department norms, the decisions negatively impacted the perception of the FBI and the department as fair administrators of justice.”

The report will leave many unsatisfied and undeterred. Comey went from a persona non grata to a patron saint for many Clinton supporters. Comey, who has made millions of dollars with a tell-all book portraying himself as the paragon of “ethical leadership,” continues to maintain that he would take precisely the same actions again. Ironically, Comey, fired FBI deputy director Andrew McCabe, former FBI agent Peter Strzok and others, by their actions, just made it more difficult for special counsel Robert Mueller to prosecute Trump for obstruction. There is now a comprehensive conclusion by career investigators that Comey violated core agency rules and undermined the integrity of the FBI. In other words, there was ample reason to fire James Comey.

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Many heads will roll at the Bureau.

A Closer Look At Extreme FBI Bias Revealed In OIG Report (ZH)

As we digest and unpack the DOJ Inspector General’s 500-page report on the FBI’s conduct during the Hillary Clinton email investigation “matter,” damning quotes from the OIG’s findings have begun to circulate, leaving many to wonder exactly how Inspector General Michael Horowitz was able to conclude: “We did not find documentary or testimonial evidence that improper considerations, including political bias, directly affected the specific investigative actions we reviewed” We’re sorry, that just doesn’t comport with reality whatsoever. And it really feels like the OIG report may have had a different conclusion at some point.

Just read IG Horowitz’s own assessment that “These texts are “Indicative of a biased state of mind but even more seriously, implies a willingness to take official action to impact the Presidential candidate’s electoral prospects.” Of course, today’s crown jewel is a previously undisclosed exchange between Peter Strzok and Lisa Page in which Page asks “(Trump’s) not ever going to become president, right? Right?!” to which Strzok replies “No. No he’s not. We’ll stop it.” Nevermind the fact that the FBI Director, who used personal emails for work purposes, tasked Strzok, who used personal emails for work purposes, to investigate Hillary Clinton’s use of personal emails for work purposes. Of course, we know it goes far deeper than that…

The Wall Street Journal’s Kimberley Strassel also had plenty to say in a Twitter thread:
1) Don’t believe anyone who claims Horowitz didn’t find bias. He very carefully says that he found no “documentary” evidence that bias produced “specific investigatory decisions.” That’s different
2) It means he didn’t catch anyone doing anything so dumb as writing down that they took a specific step to aid a candidate. You know, like: “Let’s give out this Combetta immunity deal so nothing comes out that will derail Hillary for President.”
3) But he in fact finds bias everywhere. The examples are shocking and concerning, and he devotes entire sections to them. And he very specifically says in the summary that they “cast a cloud” on the entire “investigation’s credibility.” That’s pretty damning.
4) Meanwhile this same cast of characters who the IG has now found to have made a hash of the Clinton investigation and who demonstrate such bias, seamlessly moved to the Trump investigation. And we’re supposed to think they got that one right?
5) Also don’t believe anyone who says this is just about Comey and his instances of insubordination. (Though they are bad enough.) This is an indictment broadly of an FBI culture that believes itself above the rules it imposes on others.
6) People failing to adhere to their recusals (Kadzik/McCabe). Lynch hanging with Bill. Staff helping Comey conceal details of presser from DOJ bosses. Use of personal email and laptops. Leaks. Accepting gifts from media. Agent affairs/relationships.
7)It also contains stunning examples of incompetence. Comey explains that he wasn’t aware the Weiner laptop was big deal because he didn’t know Weiner was married to Abedin? Then they sit on it a month, either cuz it fell through cracks (wow) or were more obsessed w/Trump
8) And I can still hear the echo of the howls from when Trump fired Comey. Still waiting to hear the apologies now that this report has backstopped the Rosenstein memo and the obvious grounds for dismissal.

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Apr 212018
 April 21, 2018  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , , ,  

James McNeill Whistler Morning Glories 1869


A US Recession Ahead? Fed Policymakers Say Not To Worry (R.)
If Treasuries Reach 3%, That Would Be Big (BBG)
Kim Jong-Un Halts Nuclear & Missile Tests, Shuts Down Testing Site (RT)
DNC Sues Russia, Trump, Wikileaks For Conspiring To Hurt Hillary in 2016 (ZH)
DNC Lawsuit Against WikiLeaks a Serious Threat to Press Freedom (IC)
Trump To “Counter” DNC Lawsuit (ZH)
Comey Memos Probed By DOJ For Classified Info Leaks (ZH)
Wells Fargo’s $1 Billion Pact Gives U.S. Power to Fire Managers (BBG)
IMF’s Thomsen Proposes Broadening Greek Tax Base (K.)
Windrush: When Even Legal Residents Face Deportation (Atlantic)



The illusion of control. Watch the hand.

A US Recession Ahead? Fed Policymakers Say Not To Worry (R.)

As the gap between short- and long-term borrowing costs hovers near its lowest in more than 10 years, speculation has risen over whether the so-called yield curve is signaling that a recession could be around the corner. Not to worry, two influential Federal Reserve policymakers said on Friday. Another, whose views are typically outside the mainstream at the Fed, disagreed. Growth prospects look pretty strong, which is why the Fed is raising short-term interest rates, the two sanguine policymakers explained. Those rate hikes, they said, are in and of themselves acting to flatten the yield curve. In addition, they argued, the curve will likely steepen as the U.S. government runs a bigger deficit and issues more debt.

The calming comments, from the New York Fed’s incoming chief John Williams and from Chicago Fed President Charles Evans in back-to-back but separate appearances, appeared calculated to allay concern about a potential slowdown ahead. “The yield curve is not nearly as much of a concern as I might have pointed to a couple months ago,” Evans said in Chicago after a speech, in response to a reporter’s question. Williams, who will leave his current job as San Francisco Fed president in June to take over at the New York Fed, also said he expects the Fed’s shrinking balance sheet will help steepen the curve by putting upward pressure on longer-term rates.

In January the U.S. Congress passed a budget deal that boosts U.S. government spending, following a December tax package that slashes corporate tax rates. Both changes are expected to lead to an increase in government borrowing in coming years. The Fed policymakers reason that a bigger supply of debt should put downward pressure on Treasury prices and deliver a corresponding lift to yields. “We’ve got more fiscal debt in train in the U.S. That has to be funded,” and will likely push up long rates and steepen the yield curve, Evans said. At their March meeting, Fed officials “generally agreed that the current degree of flatness of the yield curve was not unusual by historical standards,” according to the meeting minutes.

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Where the Fed loses control.

If Treasuries Reach 3%, That Would Be Big (BBG)

The global bond market’s primary benchmark, the 10-year U.S. Treasury yield, is knocking on the door of 3 percent, a level it hasn’t topped in more than four years. That’s more than just a nice round number. Higher yields make the burden of everything from mortgages to student loans and car payments even heavier. Some market gurus see it as a turning point with effects that could be felt for years — and not just in bonds. With the Federal Reserve signaling interest rates are going up even more, investors in riskier assets like stocks and high-yield debt are left to wonder if this is how their post-recession party ends.

1. What’s so important about yield? A bond’s yield is a measure of the return an investor can expect from buying it. It’s determined by the bond’s interest rate and the price paid for it. For instance, buying a security that pays a fixed 2 percent (the “coupon”) at face value (known as “par”) results in a yield of 2 percent. Buying it at a cheaper price would raise the yield for the investor, while paying a premium would reduce the overall yield. (Maybe the most confusing aspect of the bond market to outsiders is the inverse relationship between price and yield.)

2. How do you determine the benchmark 10-year yield?In the $14.9 trillion Treasuries market, the benchmark is based on the most recently auctioned 10-year security (known as the “on-the-run”). It’s the best measure because it tends to have a price close to par and a coupon close to the current yield. On Friday, the 10-year yield closed at 2.96 percent.

3. Why are yields going up?The Fed is raising its short-term lending rate as the U.S. economy strengthens, after holding it near-zero in the wake of the financial crisis. The three rate hikes last year pushed up two- and five-year Treasury yields in particular, but they’ve also affected 10-year yields as central bankers expect more boosts this year. Another reason: inflation is showing signs of picking up, which erodes the value of bonds’ fixed payments and leads investors to demand higher yields.

4. Why is 3 percent a milestone?Since 2011, it’s been touched only twice, briefly, in 2013 and early 2014, before a bond bull market drove yields to record lows. But 3 percent has also been cited by prominent fixed-income investors like Jeffrey Gundlach at DoubleLine Capital and Scott Minerd at Guggenheim Partners as critical to determining whether the three-decade bull market in bonds is at an end. In the mind of analysts who look at market patterns, once the yield breaks much beyond the 3.05 percent, to levels last reached in 2011, that threshold could flip to a floor from a ceiling.

5. Why does it matter?The 10-year Treasury yield is a global benchmark for borrowing costs. Corporations will have to pay more to issue debt, which they’ve done cheaply in recent years. So will state and local governments, which could jeopardize investments in public infrastructure. Homeowners will face higher mortgage rates (or lose out on refinancing at a lower cost). Taking out loans for cars or college could also become more expensive.

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A Nobel Peace Prize.

Kim Jong-Un Halts Nuclear & Missile Tests, Shuts Down Testing Site (RT)

North Korea’s nuclear and ballistic missile programs have allowed it to secure strategic stability and peace, so there is no need for additional missile and nuclear tests anymore, Kim Jong-un has proclaimed. “From April 21, 2018, nuclear tests and intercontinental ballistic missile tests will be discontinued,” the Korean Central News Agency cited Kim as saying at a plenary meeting of the central committee of the ruling Worker’s Party of Korea (WPK). Furthermore, since North Korea’s nuclear test center has “completed” its mission, it “will be discarded in order to ensure the transparency of the nuclear test suspension,” KCNA reported.

Announcing the new course, the ruling party has declared that North Korea “will never use nuclear weapons, unless there is nuclear threat or nuclear provocation to our country, and in no case we will proliferate nuclear weapons and nuclear technology.” In the announcement, North Korea noted that the “suspension of nuclear testing is an important process for global nuclear disarmament.” Therefore, North Korea is willing to join international denuclearization efforts. North Korea’s last major missile test took place on November 29. Pyongyang announced at the time that it had tested a new type of intercontinental ballistic missile known as the Hwasong-15 that could reach the entire continental United States.

US President Donald Trump, who has traded insults and threats with Kim since taking office, tweeted that the latest decision by Pyongyang is “good news for North Korea and the world,” calling it “big progress.” China has also hailed the move, expressing hope that Pyongyang will continue towards the path of denuclearization and “political settlement” on the Korean Peninsula. “Denuclearization of the peninsula and lasting peace in the region are in line with the common interests of the people of the peninsula,” the Chinese Foreign Ministry said in a statement on Saturday.

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Have they really thought this through?

DNC Sues Russia, Trump, Wikileaks For Conspiring To Hurt Hillary in 2016 (ZH)

Did The Democrats’ “The Russians did it” narrative just jump the shark? The Washingtoin Post reports that The Democratic National Committee filed a multimillion-dollar lawsuit Friday against the Russian government, the Trump campaign and the WikiLeaks organization alleging a far-reaching conspiracy to disrupt the 2016 campaign and tilt the election to Donald Trump. The lawsuit alleges that in addition to the Russian Federation, the General Staff of the Armed Forces of the Russian Federation, Wikileaks and Guccifer 2.0, top Trump campaign officials, including Donald Trump Jr, Roger Stone, Jared Kushner, Paul Manafort and pretty much everyone else who has been mentioned in the same paragraph as Trump….

… conspired with the Russian government and its military spy agency to hurt Democratic presidential nominee Hillary Clinton and help Trump by hacking the computer networks of the Democratic Party and disseminating stolen material found there. [..] The suit filed today seeks millions of dollars in compensation to offset damage it claims the party suffered from the hacks. The DNC argues that the cyberattack undermined its ability to communicate with voters, collect donations and operate effectively as its employees faced personal harassment and, in some cases, death threats.

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And Julian Assange is not allowed to see this. Let alone defend himself. A pattern in his life.

DNC Lawsuit Against WikiLeaks a Serious Threat to Press Freedom (IC)

The Democratic National Committee (DNC) filed a lawsuit this afternoon in a Manhattan federal court against the Russian Government, the Trump campaign and various individuals it alleges participated in the plot to hack its email servers and disseminate the contents as part of the 2016 election. The DNC also sued WikiLeaks for its role in publishing the hacked materials, though it does not allege that WikiLeaks participated in the hacking or even knew in advance about it; its sole role, according to the DNC’s lawsuit, was publishing the hacked emails.

The DNC’s suit, as it pertains to WikiLeaks, poses a grave threat to press freedom. The theory of the suit – that WikiLeaks is liable for damages it caused when it “willfully and intentionally disclosed” the DNC’s communications (paragraph 183) – would mean that any media outlet that publishes misappropriated documents or emails (exactly what media outlets quite often do) could be sued by the entity or person about which they are reporting, or even theoretically prosecuted for it, or that any media outlet releasing an internal campaign memo is guilty of “economic espionage” (paragraph 170).

It is extremely common for media outlets to publish or report on materials that are stolen, hacked, or otherwise obtained in violation of the law. In October, 2016 – one month before the election – someone mailed a copy of Donald Trump’s 1995 tax returns to the New York Times, which published parts of it even though it is illegal to disclose someone’s tax returns without the taxpayer’s permission; in March, 2017, MSNBC’s Rachel Maddow did the same thing with Trump’s 2005 tax returns.

In April, 2016, the Washington Post obtained and published a confidential internal memo from the Trump campaign. Media outlets constantly publish private companies’ internal documents. Just three weeks ago, BuzzFeed obtained and published a secret Facebook memo outlining the company’s internal business strategies, the contents of which were covered by most major media outlets. Some of the most important stories in contemporary journalism have come from media outlets obtaining and publishing materials that were taken without authorization or even in violation of the law. Both the New York Times and Washington Post published thousands of pages from the top secret Pentagon Papers after Daniel Ellsberg took them without authorization from the Pentagon – and they won the right to publish them in the U.S. Supreme Court.

The Guardian and the Washington Post won the 2014 Pulitzer Prize for Public Service for publishing and reporting on huge numbers of top secret documents taken by Edward Snowden from the NSA. The Guardian, the New York Times, and numerous papers from around the world broke multiple stories by publishing classified classified documents downloaded by Chelsea Manning without authorization and sent to WikiLeaks. In 2016, more than 100 newspapers from around the world published and reported on millions of private financial documents known as the “Panama Papers,” which were taken without authorization from one of the world’s biggest offshore law firms and revealed the personal finances of people around the world.

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Did the DNC see this coming, and is that why they sued first?

Trump To “Counter” DNC Lawsuit (ZH)

President Trump is eager to go head-to-head with the DNC which filed a multimillion-dollar lawsuit on Friday against several parties, including the Russian government, the Trump campaign and the WikiLeaks organization – alleging a “far-reaching conspiracy to disrupt the 2016 campaign and tilt the election to Donald Trump.” Hours after the Washington Post broke the news of the lawsuit, Trump tweeted “Just heard the Campaign was sued by the Obstructionist Democrats. This can be good news in that we will now counter for the DNC server that they refused to give to the FBI,” referring to the DNC email breach. Trump also mentioned “the Debbie Wasserman Schultz Servers and Documents held by the Pakistani mystery man and Clinton Emails.”

The “Pakistani mystery man” is a clear reference to former DNC CHair Debbie Wasserman Schultz’s longtime IT employee and personal friend, Imran Awan – whose father, claims a Daily Caller source, transferred a USB drive to the former head of a Pakistani intelligence agency – Rehman Malik. Malik denies the charge. Of note, the DNC would not allow the FBI to inspect their servers which were supposedly hacked by the Russians – instead relying on private security firm Crowdstrike. Meanwhile, the “Wasserman Schultz Servers” Trump mentions is likely in reference to the stolen House Democratic Caucus server – which Imran Awan had been funneling information onto when it disappeared shortly after the House Inspector General concluded that the server may have been “used for nefarious purposes.”

Imran Awan, his wife Hina Alvi and several other associates ran IT operations for at least 60 Congressional Democrats over the past decade, along with the House Democratic Caucus – giving them access to emails and computer data from around 800 lawmakers and staffers – including the highly classified materials reviewed by the House Intelligence Committee.

Napolitano: He was arrested for some financial crime – that’s the tip of the iceberg. The real allegation against him is that he had access to the emails of every member of congress and he sold what he found in there. What did he sell, and to whom did he sell it? That’s what the FBI wants to know. This may be a very, very serious national security situation.

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“..all of Comey’s memos – all of them, were classified at the time they were written, and they remain classified.”

Comey Memos Probed By DOJ For Classified Info Leaks (ZH)

The Department of Justice (DOJ) inspector general is now conducting an investigation into classification issues concerning the “Comey memos” leaked to the New York Times by former FBI Director James Comey. Sources tell the Wall St. Journal that at least two of the memos which Comey leaked to his “good friend,” Columbia Law Professor Daniel Richman, contained information that officials now consider classified – prompting the review by the Office of the Inspector General, headed by Michael Horowitz. “Of those two memos, Mr. Comey himself redacted elements of one that he knew to be classified to protect secrets before he handed the documents over to his friend. He determined at the time that another memo contained no classified information, but after he left the Federal Bureau of Investigation, bureau officials upgraded it to “confidential,” the lowest level of classification.” -WSJ

Comey told Congressional investigators that he considered the memos to be personal rather than government documents. The memos – leaked through Richman, were a major catalyst in Deputy Attorney General Rod Rosenstein’s decision to appoint former FBI Director Robert Mueller as special counsel to investigate Russian interference in the 2016 US election. While Richman told CNN “No memo was given to me that was marked ‘classified,’ and James Comey told Congressional investigators he tried to “write it in such a way that I don’t include anything that would trigger a classification,” it appears the FBI’s chief FOIA officer disagrees.

We previously reported that Senator Chuck Grassley (R-IA) said four of the 7 Comey memos he reviewed were “marked classified” at the “Secret” or “Confidential” level – however in January the FBI’s chief FOIA officer reportedly told Judicial Watch – in a signed declaration, that every single Comey memo was classified at the time. “We have a sworn declaration from David Hardy who is the chief FOIA officer of the FBI that we obtained just in the last few days, and in that sworn declaration, Mr. Hardy says that all of Comey’s memos – all of them, were classified at the time they were written, and they remain classified.” -Chris Farrell, Judicial Watch

Therefore, Farrell points out, Comey mishandled national defense information when he “knowingly and willfully” leaked them to his friend at Columbia University. It’s also mishandling of national defense information, which is a crime. So it’s clear that Mr. Comey not only authored those documents, but then knowingly and willfully leaked them to persons unauthorized, which is in and of itself a national security crime. Mr. Comey should have been read his rights back on June 8th when he testified before the Senate. Farrell told Lou Dobbs “Recently retired and active duty FBI agents have told me – and it’s several of them, they consider Comey to be a dirty cop.”

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“Wells Fargo fined twenty days worth of net income sounds a lot less daunting than $1 billion..”

Wells Fargo’s $1 Billion Pact Gives U.S. Power to Fire Managers (BBG)

Wells Fargo’s $1 billion fine won’t close the book on fallout from its consumer scandals. The nation’s third-largest bank submitted to an unprecedented order Friday that would give the Office of the Comptroller of the Currency the right to remove some of the lender’s executives or board members. That comes on top of the penalties Wells Fargo will pay to settle U.S. probes into mistreatment of consumers, the largest sanction of a U.S. bank under President Donald Trump. The OCC said it “reserves the right to take additional supervisory action, including imposing business restrictions and making changes to executive officers or members of the bank’s board of directors.” The agency could also veto potential executive candidates.

The bank will pay $500 million in penalties each to the OCC and the Consumer Financial Protection Bureau, according to a statement Friday. Wells Fargo warned shareholders last week it would soon face a fine of that size, which it will book retroactively in the first quarter. The bank remains under a Federal Reserve penalty that bans growth in total assets. “CEOs who hoped the Trump administration would be universally lenient regulators missed the difference between a dislike for rules that stifle innovation and employment and a dislike for rules against wrongdoing,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.

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Squeezing that stone for all he’s worth.

IMF’s Thomsen Proposes Broadening Greek Tax Base (K.)

Poul Thomsen, director of the International Monetary Fund’s European department, on Friday spoke in favor of broadening Greece’s tax base though he stopped short of determining whether the IMF would call for reductions to the tax-free threshold (due to come into effect in January 2020) to apply a year in advance. Speaking in Washington, where the IMF is holding its Spring Meetings, Thomsen said that raising taxes had played a large part in the country’s fiscal adjustment in recent years but that Greece must find a way of meeting fiscal targets that is “growth-friendly.” The IMF will not impose any specific policies, he said but proposed a “discussion” about the timing of tax reforms.

As regards the Fund’s potential role in Greece’s third international bailout, which expires in August, he said at least one bailout review must be carried out before a decision can be made as well as agreement to lighten Greece’s debt. “Time is running short for us to be able to activate the program,” he said. A discussion on debt measures is likely to take place at the next meeting of eurozone finance ministers, scheduled for April 27 in Sofia. Talks there will also focus on a growth plan that the government has presented to bailout auditors. Finance Minister Euclid Tsakalotos on Friday met in Washington with European Economic and Monetary Affairs Commissioner Pierre Moscovici, Eurogroup Chairman Mario Centeno and European Central Bank President Mario Draghi and is to meet Thomsen and IMF chief Christine Lagarde on Saturday.

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If this doesn’t bring down the government, Britain has a whale of a problem. And no excuses. May suddenly offering them money now, after being exposed, is perhaps the worst part of it. You can’t buy off blatant racism with taxpayer money. And those taxpayers should let that be known, very loudly. Or they’re just as guilty.

Windrush: When Even Legal Residents Face Deportation (Atlantic)

In the aftermath of World War II, the British government invited thousands of people from Caribbean countries in the British Commonwealth to immigrate to the United Kingdom and help address the war-torn country’s labor shortages. Now, nearly 70 years later, many of those same people, now elderly, are having their legal status in the country questioned and are facing deportation. Though the deportation threats date as far back as October, the crisis burst into wider view this week after Caribbean diplomats representing a dozen Commonwealth nations chastised the U.K. government publicly. “This is about people saying, as they said 70 years ago, ‘Go back home.’ It is not good enough for people who gave their lives to this country to be treated like this,” Guy Hewitt, the high commissioner from Barbados to the U.K., said at a gathering of the diplomats.

The migrants are known as the “Windrush generation,” named for the HMT Empire Windrush that brought the first group of them to the U.K. in June 1948. Of the half a million people who immigrated to the U.K. from the Commonwealth between then and 1971, an estimated 50,000 lack the proper documentation to prove it. In a meeting with Caribbean leaders on Tuesday, U.K. Prime Minister Theresa May apologized “for any anxiety that has been caused” and promised no deportations would take place. Still, such assurances won’t necessarily convince those who remain skeptical of the U.K.’s strict immigration policies—ones May herself championed when she served as home secretary between 2010 and 2016.

During that time, May sought to meet then-Prime Minister David Cameron’s goal of reducing net immigration to the tens of thousands by making the U.K. a “hostile environment” for illegal immigration. In practice, this meant requiring doctors, employers, landlords, and schools to confirm that those whom they served were in the country legally. “The determination was to go systematically through any interaction people might have with the state, short of putting checkpoints in the road, just to have people’s immigration status checked,” Polly Mackenzie, the director of cross-party think tank Demos and the former policy director to Deputy Prime Minister Nick Clegg, told me. The Windrush generation wasn’t supposed to be part of that calculus—they had immigrated to the country legally and were thereby entitled to public services, including the right to education, healthcare, and social security.

But after the implementation of the “hostile environment” policies in 2012, these individuals suddenly had to prove their right to live and work in the country—a right which was guaranteed to them under the Immigration Act of 1971, though not everyone obtained the documentation to confirm it. This documentation problem arose in part from the fact that so many people belonging to the Windrush generation immigrated to the U.K. as children, often on their parents’ passport. What’s more, the British government didn’t keep records of who was permitted to stay in the country, nor did they issue documentation confirming it. What little records the government did keep, such as the landing cards documenting the arrival dates of Windrush-era immigrants, were discarded in 2010.

For some, the result was catastrophic. In one case, a woman had lived and worked in the U.K. for 50 years before she was wrongfully declared an illegal immigrant and almost forced on a plane to her native Jamaica. In another, a man who had lived in the U.K. for 59 years received a letter that not only informed him of his illegal status in the country, but also offered him “help and support on returning home voluntarily.” Perhaps one of the most severe cases concerned a man who, after living in the U.K. for 44 years, had his cancer treatment through the National Health Service withheld because he couldn’t provide sufficient documentation to prove he lived in the country continuously since immigrating from Jamaica in 1973.

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Apr 202018
 April 20, 2018  Posted by at 8:32 am Finance Tagged with: , , , , , , , , , , , ,  

Daniel Garber The quarry 1917


The World’s First Total Bubble (MB)
Now Even a Fed Dove Homes in on the “Everything Bubble” (WS)
Recession Risks Are Increasing – Axel Weber (CNBC)
The Faster Tesla Makes Model 3’s, The More Money They Will Lose (SM)
Marx Predicted Our Present Crisis – And Points The Way Out (Varoufakis)
Market Power Wielded By US Tech Giants Concerns IMF Chief (G.)
Bill Gates Backs Plan to Surveil the Entire Planet From Space (Gizmodo)
Palantir Knows Everything About You (BW)
Comey Memos Already Leaked To AP (ZH)
US Sorghum Armada U-Turns At Sea After China Tariffs (R.)
EU to Reject UK Brexit Plan for the Irish Border (BBG)
Turkey Snap Election All About Power And A ‘Deteriorating’ Economy (CNBC)
Brazil Prosecutor Recommends Denying Total Oil License Near Amazon (AFP)
Cow Could Soon Be Largest Land Mammal Left Due To Human Activity (R.)



Australians think they won.

The World’s First Total Bubble (MB)

The regulators, yes, they’ll have to be reformed. But it doesn’t stop there. They were just the elite enablers. The corruption at the heart of the great Australian property bubble seeped into our entire economy and culture. It oozed under every door, entered every home and visited every BBQ. It bent every business. It ruined our media and distorted our politics. It infected our entire place in the world, disenfranchised from the Australian dream entire generations. It has choked our cities. And sold out the national interest to Chinese speculators, threatening our very freedom. There has never been a more comprehensive bubble in any nation. We have been engulfed by it. The world’s first total bubble.

Yet at its heart was not a miracle but prosaic bank corruption. Only the failure to assess expenditures and incomes, the failure to report accurately and honestly, the failure to advise with integrity and responsbility made any of it possible. Everything else flows outward from this black singularity. Your wealth. Your lifestyle. Your retirement plan. The roof over your head not being over someone else’s. All of it stems from the core corruption of a banking system that disgorged massive sub-prime mortgages across our firmament. I really have no idea what attempted snow job we will see next. But it is over. It is now only a matter of time before the Australian housing supernova collapses towards the banking black hole at its centre, sucked back into the void from whence it came. We’re all the royal commission now.

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Brainard. Warning about what the Fed itself has built.

Now Even a Fed Dove Homes in on the “Everything Bubble” (WS)

“If we have learned anything from the past, it is that we must be especially vigilant about the health of our financial system in good times, when potential vulnerabilities may be building,” explained Federal Reserve Board Governor Lael Brainard in a speech in Washington, D.C., this morning. This was a reference to a time-honored banker adage, now mostly forgotten after nearly nine years of easy money: Bad deals are made in good times. Brainard fills one of the seven slots on the Board of Governors. Two slots are filled by Chairman Jerome Powell and by Randal Quarles. Four slots remain vacant, waiting for Trump appointees to wend their way. She is a strong “dove” in the world of central banks, and she just pointed at why the Fed is tightening – and will continue to tighten: the Everything Bubble.

After rattling off a litany of indicators showing why and how the economy’s “cyclical conditions have been strengthening,” she added this gem, there being nothing like Fed-speak to make your day: “Currently, inflation appears to be well-anchored to the upside around our 2 percent target.” “Well-anchored to the upside” of the Fed’s target – and then she moved on to the “signs of financial imbalances.” “Financial imbalances,” in Fed speak, are asset bubbles, a phenomenon when prices are out of whack with economic reality. In a credit-based economy, assets are collateral for debt. And inflated asset prices put the financial system, meaning the lenders, at risk when those asset prices deflate. Since the Fed has to take care of the financial system, and since it blew up so wonderfully last time due to asset bubbles deflating, the Fed is right to be worried about it. At first the hawks, the rare ones; and now even the doves

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“Risks will begin materializing in 3 years ‘at the latest..'”

Recession Risks Are Increasing – Axel Weber (CNBC)

The world economy is set for one of its best years since the global financial crisis, with both developed and emerging countries growing while inflation is still subdued and monetary conditions remain largely accommodative. But such a good run could end in the next two to three years, according to UBS Chairman Axel Weber. “We’re at the end of a long recovery and, two to three years from now, at the latest, some of the risks could materialize. The recession risks are increasing,” Weber told CNBC’s Joumanna Bercetche this week at the Spring Meetings of the IMF and the World Bank. The IMF this week kept its forecast for 2018’s global growth at 3.9 percent which, if it materializes, would be the fastest expansion since 2011.

But the agency warned that global debt levels have hit a record, and governments should start reducing their indebtedness and build buffers for “challenges that will unavoidably come in the future.” Financial institutions should also brace for such risks, said Weber, adding that he thinks banks have become better prepared compared to before the last crisis. Like many in the industry, Weber said he doesn’t think a full-fledged trade war will happen as a result of the ongoing dispute between the U.S. and China. But, he added that it’s time to reassess Beijing’s role in the World Trade Organization, especially given projections that China will one day become the world’s largest economy. Weber added that companies from around the world should be allowed to do business in China more freely.

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“..a “they will take over the world” and a “they will save the world” combination of hopes..”

The Faster Tesla Makes Model 3’s, The More Money They Will Lose (SM)

A few weeks ago, we shared a note about Tesla from the hedge fund Vilas Capital Management. The firm, which is short the shares, said “Tesla is going to crash in the next 3-6 months.” I received an update from Vilas this morning explaining why they’re even more bearish on Tesla today. The firm pared its short positions after the recent selloff. And Telsa now comprises about 98% of their short book. Clearly Vilas thinks Tesla’s reckoning is imminent. You can read the rest of Vilas’ thoughts on Tesla below:

We added meaningfully to our Tesla position in the first quarter at prices in the $340 range. We continue to believe that Tesla is extremely overvalued and that it will experience significant financial difficulties over time. All companies in a capitalistic system need to earn profits and those profits need to be attractive relative to the amount of shareholder capital employed. Tesla has never earned an annual profit. Along with digital currencies and Unicorns, Tesla appears to be caught up in a gold-rush-fever type of emotional response, both from a “they will take over the world” and a “they will save the world” combination of hopes, instead of their owners looking at the numbers.

Tesla bulls will argue that their production will rise to 5000 Model 3’s per week soon and, therefore, the stock will trade meaningfully higher. Given that the company lost $20,000 per Model S and X sold for roughly $100,000 each last year, due to the fact that it cost more to build, sell, service, charge and maintain these cars than they collected in revenue, as it is important to include all costs when evaluating a business, we predict it will impossible for Tesla to make a profit on a $35,000 to $50,000 car. As anyone with automotive experience knows, profit margins are far higher on bigger, more expensive cars. Therefore, the faster Tesla makes Model 3’s, the more money they will lose.

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Das Kapital.

Marx Predicted Our Present Crisis – And Points The Way Out (Varoufakis)

To see beyond the horizon is any manifesto’s ambition. But to succeed as Marx and Engels did in accurately describing an era that would arrive a century-and-a-half in the future, as well as to analyse the contradictions and choices we face today, is truly astounding. In the late 1840s, capitalism was foundering, local, fragmented and timid. And yet Marx and Engels took one long look at it and foresaw our globalised, financialised, iron-clad, all-singing-all-dancing capitalism. This was the creature that came into being after 1991, at the very same moment the establishment was proclaiming the death of Marxism and the end of history.

Of course, the predictive failure of The Communist Manifesto has long been exaggerated. I remember how even leftwing economists in the early 1970s challenged the pivotal manifesto prediction that capital would “nestle everywhere, settle everywhere, establish connexions everywhere”. Drawing upon the sad reality of what were then called third world countries, they argued that capital had lost its fizz well before expanding beyond its “metropolis” in Europe, America and Japan.

Empirically they were correct: European, US and Japanese multinational corporations operating in the “peripheries” of Africa, Asia and Latin America were confining themselves to the role of colonial resource extractors and failing to spread capitalism there. Instead of imbuing these countries with capitalist development (drawing “all, even the most barbarian, nations into civilisation”), they argued that foreign capital was reproducing the development of underdevelopment in the third world. It was as if the manifesto had placed too much faith in capital’s ability to spread into every nook and cranny. Most economists, including those sympathetic to Marx, doubted the manifesto’s prediction that “exploitation of the world-market” would give “a cosmopolitan character to production and consumption in every country”.

As it turned out, the manifesto was right, albeit belatedly. It would take the collapse of the Soviet Union and the insertion of two billion Chinese and Indian workers into the capitalist labour market for its prediction to be vindicated. Indeed, for capital to globalise fully, the regimes that pledged allegiance to the manifesto had first to be torn asunder. Has history ever procured a more delicious irony?

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Yeah, sure.

Market Power Wielded By US Tech Giants Concerns IMF Chief (G.)

The head of the International Monetary Fund, Christine Lagarde, has expressed concern about the market power wielded by the US technology giants and called for more competition to protect economies and individuals. Speaking at a press conference to mark the start of the IMF’s spring meeting in Washington, Lagarde said breaking up companies was not the solution, but added that her organisation was monitoring their impact on prosperity, financial stability and the workplace. “Competition is needed. From competition you get productivity growth and innovation. Too much concentration, too much market power in the hands of the few is not helpful to the economy or to the wellbeing of individuals.”

Pressure has been building in the US for antitrust laws to be used to break up some of the biggest companies, with Google, Facebook and Amazon all targeted by critics. Lagarde said: “I am not sure breaking up some of the tech titans in this country [the US] or in other countries will be the right answer. It used to be the right answer, but when most of the assets are intangible, how do you break them up? How do you facilitate access and allow market disruptors to operate? I think that is where a lot of new thinking has to be done.”

The IMF is carefully monitoring new digital currencies such as Bitcoin, which it says are prone to fraud and can be used for money laundering. “We have seen a flourishing of cryptocurrencies. There are now more than 100. That has stability implications eventually. We do not think it is systemic at this point in time but regulators and supervisors have to be watchful.” Lagarde expressed concern at the growing threat of a trade war between the US and China, saying that protectionism posed a threat to the upswing in the global economy and to an international system that had served countries well.

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Facebook is peanuts.

Bill Gates Backs Plan to Surveil the Entire Planet From Space (Gizmodo)

EarthNow is a new company looking to provide satellite imagery and live video in virtually real-time. Its unsettling pitch describes a network of satellites that can see any corner of the globe and provide live video with a latency of about a second. And a look at the startup’s top investors gives a lot of confidence that this thing is happening. On Wednesday, EarthNow announced that it will emerge from the Intellectual Ventures ISF Incubator to become a full-scale commercial business. Its first round of investors is comprised of a small group of complimentary powerhouses: AirBus, the SoftBank Group, Bill Gates, and satellite-industry vet Greg Wyler.

The amount of the initial investment hasn’t been disclosed, but the announcement says the funding “focuses primarily on maturing the overall system design to deliver innovative and unique real-time Earth observation services.” That makes it sound like the company is in its very early stages, but don’t be so sure. Wyler’s OneWeb has already deployed highly advanced satellites with a blazing fast 130ms latency and its goal is to have a constellation of hundreds of satellites beaming broadband around the globe by 2020.

EarthNow will use an upgraded version of OneWeb’s technology with a lot of hardware power packed into a 500-pound unit. “Each satellite is equipped with an unprecedented amount of onboard processing power, including more CPU cores than all other commercial satellites combined,” the announcement says. The satellites will also do an onboard analysis of the live imagery using machine learning, but the company doesn’t go into detail about what it will analyze or why it would be necessary to dedicate that processing onboard.

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“Wall Street meets Apocalypse Now,..”

Palantir Knows Everything About You (BW)

High above the Hudson River in downtown Jersey City, a former U.S. Secret Service agent named Peter Cavicchia III ran special ops for JPMorgan Chase & Co. His insider threat group—most large financial institutions have one—used computer algorithms to monitor the bank’s employees, ostensibly to protect against perfidious traders and other miscreants. Aided by as many as 120 “forward-deployed engineers” from the data mining company Palantir, which JPMorgan engaged in 2009, Cavicchia’s group vacuumed up emails and browser histories, GPS locations from company-issued smartphones, printer and download activity, and transcripts of digitally recorded phone conversations.

Palantir’s software aggregated, searched, sorted, and analyzed these records, surfacing keywords and patterns of behavior that Cavicchia’s team had flagged for potential abuse of corporate assets. Palantir’s algorithm, for example, alerted the insider threat team when an employee started badging into work later than usual, a sign of potential disgruntlement. That would trigger further scrutiny and possibly physical surveillance after hours by bank security personnel. Over time, however, Cavicchia himself went rogue. Former JPMorgan colleagues describe the environment as Wall Street meets Apocalypse Now, with Cavicchia as Colonel Kurtz, ensconced upriver in his office suite eight floors above the rest of the bank’s security team.

People in the department were shocked that no one from the bank or Palantir set any real limits. They darkly joked that Cavicchia was listening to their calls, reading their emails, watching them come and go. Some planted fake information in their communications to see if Cavicchia would mention it at meetings, which he did. It all ended when the bank’s senior executives learned that they, too, were being watched, and what began as a promising marriage of masters of big data and global finance descended into a spying scandal. The misadventure, which has never been reported, also marked an ominous turn for Palantir, one of the most richly valued startups in Silicon Valley. An intelligence platform designed for the global War on Terror was weaponized against ordinary Americans at home.

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It took less than an hour.

Comey Memos Already Leaked To AP (ZH)

Update 3: President Trump is up late tonight, we suspect reading through former FBI Director Comey’s leaked memos as he exclaims: “James Comey Memos just out and show clearly that there was NO COLLUSION and NO OBSTRUCTION.” Trump is also quick to remind Americans of one of the reasons he fired him: “Also, he leaked classified information,” and ended with a jab at the endless farce: “WOW! Will the Witch Hunt continue?”

Update 2: Less than an hour after Comey’s memos were released by DOJ to Congress, the 15 pages have miraculously “become available” to The Associated Press. Given that no source is provided, we assume they were leaked with the intent to embarrass President Trump. Comey’s memos detail private dinner conversations with the President in January 2017, during which Trump asked him to pledge his loyalty. Another conversation about former White House national security adviser Michael Flynn is also detailed in the memos. In a memo dated Jan. 28, 2017, Comey recounted a dinner he had with Trump at the White House shortly after the president’s inauguration.

Trump asked Comey who he thought he should be in contact with in the administration, and Comey mentioned the national security adviser. The president said Flynn had “serious judgment issues,” Comey wrote in his memo. Trump then explained to Comey that when the president had complimented British Prime Minister Theresa May on being the first to congratulate him on his election, Flynn interjected that another leader had called first. That was the first time Trump learned of the other leader’s call, Comey wrote.

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Why is US farmland used to provide Chinese animal feed? Isn’t that perhaps what’s wrong with global trade?

US Sorghum Armada U-Turns At Sea After China Tariffs (R.)

Several ships carrying cargoes of sorghum from the United States to China have changed course since Beijing slapped hefty anti-dumping deposits on U.S. imports of the grain, trade sources and a Reuters analysis of export and shipping data showed. Sorghum is a niche animal feed and a tiny slice of the billions of dollars in exports at stake in the trade dispute between the world’s two largest economies, which threatens to disrupt the flow of everything from steel to electronics. The supply-chain pain felt by sorghum suppliers on the Pacific, Atlantic and Indian oceans underscores how quickly the mounting trade tensions between the U.S. and China can impact the global agricultural sector, which has been reeling from low commodity prices amid a global grains glut.

Twenty ships carrying over 1.2 million tonnes of U.S. sorghum are on the water, according to export inspections data from the USDA’s Federal Grain Inspection Service. Of the armada, valued at more than $216 million, at least five changed course within hours of China’s announcing tariffs on U.S. sorghum imports on Tuesday, Reuters shipping data showed. The five shipments, all headed for China when they were loaded at Texas Gulf Coast export terminals owned by grain merchants Cargill or Archer Daniels Midland would be liable for a hefty deposit to be paid on their value, which could make the loads unprofitable to deliver. Beijing, which is probing U.S. imports for damage to its domestic industry, announced Tuesday that grains handlers would have to put up a deposit of 178.6% of the value of the shipments.

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Thie red lines are far apart. Hard to see how they will resolve this.

EU to Reject UK Brexit Plan for the Irish Border (BBG)

European Union officials are set to reject a potential U.K. solution to the crucial issue of what happens to the Irish border after Brexit, deepening the stalemate in negotiations. While the U.K. hasn’t made a formal proposal, it has indicated that the bloc’s “backstop” solution for maintaining an invisible border should apply to the whole of the U.K., according to three people familiar with the EU position. It would mean the whole U.K. stays in parts of the single market and customs union as a last resort to avoid a border on the island of Ireland. But the European Commission opposes it and only wants to offer that special status to Northern Ireland, according to the people, who declined to be named.

Finding a way to avoid customs checks on the border between Northern Ireland and Ireland after Brexit is proving the biggest obstacle for U.K. and EU negotiators trying to get a deal on Britain’s divorce from the bloc. While both sides agree that withdrawal treaty must include a “backstop” on Ireland in case a better option doesn’t emerge from the final trade deal, they can’t agree on what it should look like. As talks fail to yield solutions, pressure is mounting on Prime Minister Theresa May at home to backtrack on one her main Brexit pledges and keep the U.K. in the EU’s customs union after Brexit.

That would go a long way to solve the Irish border issue and would also please businesses that are keen on keeping cross-border trade easy. The Commission’s proposal would effectively cut Northern Ireland off from mainland Britain and May has said no British prime minister could accept that. In December, the two sides agreed on a backstop that would have applied to the whole of the U.K., rather than just Northern Ireland. The U.K. stands by that agreement, which also pledged that “no regulatory barriers develop between Northern Ireland and the rest of the United Kingdom.”

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Remember: Jim Rickards predicted Turkish default recently. Erdogan may see it too.

Turkey Snap Election All About Power And A ‘Deteriorating’ Economy (CNBC)

Turkey’s president surprised markets Wednesday by announcing that he would hold snap presidential and parliamentary elections in June with experts saying the move is a sign of both panic and genius. Recep Tayyip Erdogan said elections will be held on June 24, far earlier than previously expected, saying uncertainty over Turkey’s neighbor Syria, and macroeconomic imbalances, were a reason not to delay the vote originally scheduled for November 2019. He also said the country urgently needed to make the switch to an executive presidency, implementing changes to the Turkish constitution which give the president more power.

Fadi Hakura, Turkey analyst at Chatham House, told CNBC Thursday that the move was a sign of panic amid a deteriorating economy. “Erdogan’s calling of the election is a sign of panic and despair. Erdogan has previously viewed early elections as weakness and dishonorable to democracy, but now he’s panicking over the state of the Turkish economy,” Hakura said. “The very fact he’s called brought them forward by almost a year and a half should mitigate the fallout of a worsening economy on his popularity,” he said. [..] If Erdogan wins the election, as widely expected, he will be able to consolidate power following changes to the constitution which have changed Turkey from a parliamentary to a presidential republic, concentrating power in the hands of the president.

It will not be plain sailing for the president, however, with Turkey’s economy dealing with high inflation (at 10.2 percent) fueled by fiscal and monetary policies that have promoted rampant growth — the economy expanding 7.3 percent in the fourth quarter of 2017, according to the last reading available. The Turkish lira has been on a rollercoaster ride in recent months, reflecting wider fears on the prioritization of growth over inflation control, but the announcement of a snap election — and the likelihood that Erdogan will win – has calmed the currency somewhat.

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WIth Brazil as corrupt as it is, how long will this hold?

Brazil Prosecutor Recommends Denying Total Oil License Near Amazon (AFP)

A Brazilian prosecutor warned of “ecocide” in recommending against a drilling license for French oil major Total close to a huge coral reef near the mouth of the Amazon River. The prosecutor’s office for Amapa state said “the only way to guarantee avoiding environmental damage to the area is to deny the license.” “Authorizing oil drilling activity without adequate studies violates the international obligations that Brazil has signed,” the prosecutor’s office said late Wednesday, warning of “large-scale environmental destruction that would amount to ecocide and a crime against humanity.”

The recommendation was sent to the government environmental agency Ibama, which has 10 days to respond. On Tuesday, environmental campaigners Greenpeace said that a previously discovered coral reef had been found to extend right into where Total plans to drill. The enormous reef was found in 2016, but is only now said to overlap directly with Total’s blocks, 75 miles (120 km) off the Brazilian coast, the group said. The finding, made during a research expedition, invalidates Total’s environmental impact assessment, which is based on the reefs being located at least five miles (eight kilometers) from drilling, Greenpeace said.

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People say it won’t be that bad, because elephants do well in protected parks. But isn’t that the problem? That the best we can do is build big zoos?

Cow Could Soon Be Largest Land Mammal Left Due To Human Activity (R.)

The cow could be left as the biggest land mammal on Earth in a few centuries, according to a new study that examines the extinction of large mammals as humans spread around the world. The spread of hominims – early humans and related species such as Neanderthals – from Africa thousands of years ago coincided with the extinction of megafauna such as the mammoth, the sabre-toothed tiger and the glyptodon, an armadillo-like creature the size of a car. “There is a very clear pattern of size-biased extinction that follows the migration of hominims out of Africa,” the study’s lead author, Felisa Smith, of the University of New Mexico, said of the study published in the journal Science on Thursday..

Humans apparently targeted big species for meat, while smaller creatures such as rodents escaped, according the report, which examined trends over 125,000 years. In North America, for instance, the mean body mass of land-based mammals has shrunk to 7.6kg (17lb) from 98kg after humans arrived. If the trend continues “the largest mammal on Earth in a few hundred years may well be a domestic cow at about 900kg”, the researchers wrote. That would mean the loss of elephants, giraffes and hippos. In March, the world’s last male northern white rhino died in Kenya. [..] Smith said “my optimist hat would like to say that it’s not going to happen because we love elephants”. But she said populations of large land mammals were falling and “declining population is the trajectory to extinction”.

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Apr 172018
 April 17, 2018  Posted by at 1:43 pm Finance Tagged with: , , , , , , , , , , , ,  

Charles Sprague Pearce Lamentations over the Death of the First-Born of Egypt 1877


In Matthew 12:22-28, Jesus tells the Pharisees:


Every kingdom divided against itself is brought to desolation, and every city or house divided against itself will not stand.

In 1858, US Senate candidate Abraham Lincoln borrows the line:


On June 16, 1858 more than 1,000 delegates met in the Springfield, Illinois, statehouse for the Republican State Convention. At 5:00 p.m. they chose Abraham Lincoln as their candidate for the U.S. Senate, running against Democrat Stephen A. Douglas. At 8:00 p.m. Lincoln delivered this address to his Republican colleagues in the Hall of Representatives. The title reflects part of the speech’s introduction, “A house divided against itself cannot stand,” a concept familiar to Lincoln’s audience as a statement by Jesus recorded in all three synoptic gospels (Matthew, Mark, Luke).

Even Lincoln’s friends regarded the speech as too radical for the occasion. His law partner, William H. Herndon, considered Lincoln as morally courageous but politically incorrect. Lincoln read the speech to him before delivering it, referring to the “house divided” language this way: “The proposition is indisputably true … and I will deliver it as written. I want to use some universally known figure, expressed in simple language as universally known, that it may strike home to the minds of men in order to rouse them to the peril of the times.”

On April 12, 2018, the Washington Post runs this headline:

We need to go big in Syria. North Korea is watching.

The WaPo is undoubtedly disappointed that James Mattis prevailed over more hawkish voices in Washington and the least ‘expansive’ attack was chosen.

Then after the attack, Russian President Putin warns of global ‘chaos’ if the West strikes Syria again. And I’m thinking: Chaos? You ‘Predict’ Chaos? You mean what we have now does not qualify as chaos?

Yes, Washington Post, North Korea is watching. And you know what it sees? It sees a house divided. It sees an America that is perhaps as divided against itself as it was prior to the civil war. An America that elects a president and then initiates multiple investigations against him that are kept going seemingly indefinitely. An America where hatred of one’s fellow countrymen and -women has become the norm.

An America that has adopted a Shakespearian theater as its political system, where all norms of civil conversation have long been thrown out the window, where venomous gossip and backstabbing have become accepted social instruments. An America where anything goes as long as it sells.


In an intriguing development, while Trump pleased the Washington Post, New York Times, CNN and MSNBC, his declared arch-enemies until the rockets flew, his own base turned on him. While the ‘liberals’ (what’s in a word) cheered and smelled the blood, the right wing reminded the Donald that this is not what he was elected on – or for.

Can Trump afford to lose his base? Isn’t the right wing supposed to be the side that calls for guns and bombs? It’s unlikely that he can do without his base, it would weaken him a lot as the Lady Macbeths watch his every move looking for just that one opportunity, that one moment where his back is turned.

As for the right wing not being the bloodthirsty one, that is quite the shift. Not that it’s a 180 on a dime, it has been coming for a while. It’s not just interesting with regards to Trump, there are many war hawks who -will- see their support crumble too if or when they speak out for more boots in deserts. Maybe John McCain should consider changing parties?


So yeah, what does North Korea see? Should it be afraid? Will it have become more afraid? Kim Jong-Un will have watched for China’s reaction, much more important to him that what the US does. And China has condemned the attack. It would do the same if America were to attack North Korea, and a lot stronger. Therefore Kim Jong-Un doesn’t believe Washington will dare attack him.

An interesting line from Chinese state run newspaper Global Times illustrates how China sees the world, and the US in particular, at present:


“A weak country has no diplomacy. As a hundred years have passed, China is no longer that [weak] China, but the world is still that world.”

That is how China, and in its wake, North Korea, see America. And so does Russia. Americans may -and do- think that they are still no. 1, and the most powerful, economically, politically, militarily, but that’s no longer what the rest of the world sees.

Is the US still mightier than China militarily? Probably, but not certainly. Still, how do you conquer 1.3 billion people and keep them subdued? Xi Jinping is very aware of that, and he bides his time.

Is the US still mightier than Russia militarily? Almost certainly not. To quote Paul Craig Roberts once more (and he’s no amateur):

The Russians know that they can, at will within a few minutes, sink the entire US fleet, destroy every US airplane & ship in the ME & within range of the ME, completely destroy all of Israel’s military capability & wipe out the military of the two-bit punk state of Saudi Arabia.

I’ve written this before in the past: there is a big difference between how America sees and treats its military, and how Russia does it. A difference that explains how Russia can, with one tenth of American defense spending, still be militarily superior, or at least make any wars against it unwinnable.

That is, in the US the focus is not on making the best weapons, it’s on making the most money on weapons. Boeing, Raytheon, Lockheed will develop those weapons that are most profitable, not those that are most effective. The interminable story of the development of the Joint Strike Fighter is perhaps the best example of this, but there are many others. The Pentagon is a money pit.

Americans can perhaps still make the best weapons for the least money, but they don’t do it. Russia does. For Putin, the best weapons are a matter of survival. Russia has been under American threat as long as he can remember.

While Americans believe so strongly in their supremacy, and have grown so accustomed to the idea, that they no longer see having the best weapons as a matter of survival for the nation. They have come to see their superiority as something automatic and natural.


The attack on Syria is seen as a sign of weakness. Because there was no need for it. Because the evidence is flimsy at best. Because the world has international bodies to deal with such issues. Because there is no logic in allowing the blood to flow in the Gaza and Yemen but cite humanitarian reasons for bombing alleged chemical facilities elsewhere.

What the world sees is bluster emanating from a deeply divided nation (and we haven’t even tackled Britain). It sees that less than 48 hours after the airstrikes, a former FBI chief talks about his former boss in terminology that nobody would dare use in most countries, and throughout most of history,

James Comey is beyond Shakepeare. And in America, the issue is who’s right in the Comey-Trump conflict. In Russia, China et al it’s not. They see a house, a country divided. A weak country has no diplomacy.

That’s how all empires end. Complacency and division. That is what North Korea sees when it watches America, what China, and Russia see. And they may even know how Jesus put it. He didn’t just say a kingdom divided would become less powerful or wealthy, he said:


Every kingdom divided against itself is brought to desolation.