Apr 242019
 


Giovanni Bellini Pietà 1474

 

Bipolar Markets in the “New Mediocre” (Roubini)
Fed Key Interest Rate Keeps Climbing, That Could Become A Problem (CNBC)
Cut the Price and They Will Come: US New Home Prices At Dec. 2014 Level (WS)
Chinese Banks Are Running Out Of Dollars (ZH)
Hillary Outlines “Roadmap” To Trump Impeachment (ZH)
The Conspiracy Against Trump (Giraldi)
Theresa May Accuses Labour Of Dragging Its Heels In Brexit Talks (Ind.)
Labour Says Theresa May Unwilling To Offer Key Brexit Concessions (G.)
UK MPs Campaign To Have Donald Trump’s State Visit Cancelled (G.)
The Revelations of WikiLeaks: No. 1 (CN)

 

 

Who will be the first in the world of finance to understand what’s going on AND be honest about it? It won’t be Roubini. Nothing has anything to do with recession or trade risks anymore. It’s the Fed and the Fed only. And there are no investors as long as the Fed monopolizes what were once markets. These so-called investors are in reality a bunch of rich socialists waiting for a central bank to hand them money. They’ll also be the first to warn about the dangers of socialism.

Bipolar Markets in the “New Mediocre” (Roubini)

Financial markets tend to undergo manic-depressive cycles, and this has been especially true in recent years. During risk-ons, investors – driven by “animal spirits” – produce bull markets, frothiness, and sometimes outright bubbles; eventually, however, they overreact to some negative shock by becoming too pessimistic, shedding risk, and forcing a correction or bear market. Whereas prices of US and global equities rose sharply throughout 2017, markets began to wobble in 2018, and became fully depressed in the last quarter of the year. This risk-off reflected concerns about a global recession, Sino-American trade tensions, and the Federal Reserve’s signals that it would continue to raise interest rates and pursue quantitative tightening.

But since this past January, markets have rallied, so much so that some senior asset managers now foresee a market “melt-up” (the opposite of a meltdown), with equities continuing to rise sharply above their current elevated levels. One could argue that this latest risk-on cycle will continue for the rest of the year. For starters, growth is stabilizing in China, owing to another round of macroeconomic stimulus there, easing fears of a hard landing. And the United States and China may soon reach a deal to prevent the ongoing trade war from escalating further.

At the same time, US and global growth are expected to strengthen somewhat in the second half of the year, and the disruption of a “hard Brexit” has been averted, with the European Union extending the deadline for the United Kingdom’s departure to October 31, 2019. As for the eurozone’s prospects, much will depend on Germany, where growth could rebound as global headwinds fade. Moreover, central banks, particularly the Fed, have become super-dovish again, and this appears to have reversed the tightening of financial conditions that produced the risk-off in late 2018.

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They are well on their way towards blowing up the entire US economy. Just like their counterparts in Japan, Europe, China. Will Russia be the last one standing?

Fed Key Interest Rate Keeps Climbing, That Could Become A Problem (CNBC)

The Federal Reserve’s benchmark interest rate has inched up to its highest level in 11 years even though the central bank has sent a clear message that it is done tightening policy indefinitely. In recent days, the effective fed funds rate, which targets the overnight level that banks charge each other for loans, has moved up to 2.44%. That’s the highest since March 2008 and is just 6 basis points from the top of the target range and the closest to the top since December, when the Fed last raised rates. For now, the move is looked on as not being especially problematic given that there is still room between the current level and the top of the 2.25% to 2.5% range in which the rate is supposed to trade.


But moves toward the upper end of the band have prompted action before, and the trend likely will be a topic of discussion at next week’s Federal Open Market Committee meeting. When the Fed first began raising rates in December 2015, it succeeded in keeping the funds rate around the midpoint of the target range. But that has changed over the past year. “At 6 basis points from the top of the range, you’re still within the target. The question becomes whether they think technical pressure is driving this,” said Lou Crandall, chief economist at Wrightson ICAP and formerly of the New York Fed. “The only concern is whether you’ll have to make a technical adjustment in the future from preventing it from going higher.”

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Fed to the rescue! Actually, as long as banks write new loans, the Fed can and will hold back.

Cut the Price and They Will Come: US New Home Prices At Dec. 2014 Level (WS)

Home builders, the ultimate pros in the housing market, have figured out something after the malaise in the second half last year: Cut prices and buyers will come. The median selling price of new houses dropped 9.7% in March from March last year to $302,700, the Commerce Department reported this morning. This took the price back to about where it had first been in December 2014 ($301,500):

Homebuilders are motivated to move their speculative inventory. They’re making deals at lower prices, and they’re building homes at lower price points. And buyers responded. House sales at the lower end gained market share while houses at the higher end lost market share. Houses that were sold below $200,000 made up 16% of the mix in March, up from 11% in March 2018. Houses that were sold at prices of $400,000 or higher in March made up 29% of the mix, down from 32% in March 2018. This shift in the market, and the price cuts by homebuilders, has pushed the median new house price down 11.8% from the peak in December 2017. The year-over-year price drops starting in November last year were the sharpest such drops since Housing Bust 1:

The new-house sales data, produced jointly by the Census Bureau and the Department of Housing and Urban Development, is volatile. It is revised in the following months, often quite drastically. But after a while, the trends become clear. For the long-term view: The median price of new houses ballooned by about 55% from the range in 2011 and 2012 to the peak in December 2017 ($343,300). This peak had exceeded by 31% the crazy peak of Housing Bubble 1 in March 2007. When it comes to price, the sky is not the limit:

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Give ’em a swap line.

Chinese Banks Are Running Out Of Dollars (ZH)

Following the biggest quarterly credit injection in Chinese history, it is safe to say that China’s banks are flush with yuan loans. However, when it comes to dollar-denominated assets, it’s a different story entirely. As the WSJ points out, in the past few years, a funding problem has emerged for China’s biggest commercial banks, one which is largely outside of Beijing’s control: they’re running low on US dollars so critical to fund operations both domestically and abroad. As shown in the chart below, the combined dollar liabilities at China’s four biggest commercial banks exceeded their dollar assets at the end of 2018, a sharp reversal from just a few years ago.

Back in 2013, the four together had around $125 billion more dollar assets than liabilities, but now they owe more dollars to creditors and customers than are owed to them. The reversal is the result of just one bank: Bank of China, which for many years held more net assets in dollars than any other Chinese lender, ended 2018 owing $72 billion more in dollar liabilities than it booked in dollar assets. The other “top 3” lenders finished the year with more dollar assets than liabilities, even though their net dollar surplus has shrunk substantially in the past five years.

And yet, as everything else with China, there is more than meets the eye: as the WSJ reports looking at Bank of China’s annual report, the bank’s asset-liability imbalance is more than addressed by dollar funding that doesn’t sit on its balance sheet. Instruments like currency swaps and forwards are accounted for elsewhere. This is reminiscent of the shady operations discussed recently involving Turkey’s FX reserves, where the central bank has been borrowing dollar assets from local banks via off balance sheet swaps, which it then used to prop up and boost the lira at a time of aggressive selling of the local currency. It is safe to assume that the PBOC has been engaging in a similar operation.

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Hmmm. Hillary says: “You don’t put impeachment on the table as the only item on the table and say you’re going to get there no matter what.

But as I said yesterday, that is precisely what Nadler appears to do: “I do think, if proven – which hasn’t been proven yet – if proven, some of this would be impeachable, yes,” Nadler said..”

At best awfully close.

Hillary Outlines “Roadmap” To Trump Impeachment (ZH)

Just hours after Nancy Pelosi attempted to mend the gaping division between the realists and the extremists in her party, failed presidential candidate Hillary Clinton decided to pile into the impeachment debate with her own take on the Mueller Report. “Well, I think what Nancy means, and I agree with what she means, is that it shouldn’t be a preordained conclusion, it shouldn’t be what you do for partisan, political purposes almost outside the framework of the Constitution,” she said during an appearance at the Time 100 Summit in New York. “You don’t put impeachment on the table as the only item on the table and say you’re going to get there no matter what, which is what happened in ’99. Instead, you say we are going to proceed with the seriousness that this demands.”

Dripping with irony, Clinton – whose husband was impeached by the House of Representatives in 1998 for perjury and obstruction of justice (only to be acquitted the following year by the Senate), and allegedly used her position to gain personal wealth through pay-to-play peddling of her and her husband’s influence – discuss the roadmap to President Trump’s impeachment and said he should have been indicted. “I have a kind of weird personal history about impeachment,” Clinton said to laughter from the audience. But, “not what you’re thinking,” she added, referring to her time as a staff attorney serving on the impeachment inquiry for former President Richard Nixon two decades earlier in 1974.

“I was one of the young lawyers who actually drafted the memo about what is a high crime and misdemeanor, and it was truly meant by our founders to describe actions that undermine the integrity of our government that placed the personal or political interest in a president over the interest of the nation,” she said.

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It makes no difference where you stand on the issue(s), this is what you will have to deal with going forward. First off, the Horowitz report next month: “he intends to make criminal referrals as a result of his investigation.”

The Conspiracy Against Trump (Giraldi)

Whether the Mueller report is definitive very much depends on the people they chose to interview and the questions they chose to ask, which is something that will no doubt be discussed for the next year if not longer. Beyond declaring that the Trump team did not collude with Russia, it cast little light on the possible Deep State role in attempting to vilify Trump and his associates. The investigation of that aspect of the 2016 campaign and the possible prosecutions of former senior government officials that might be a consequence of the investigation will likely be entertaining conspiracy theorists well into 2020. Since Russiagate has already been used and discarded the new inquiry might well be dubbed Trumpgate.

The media has scarcely reported how Michael Horowitz, the Inspector General of the Department of Justice (DOJ), has been looking into the activities of the principal promoters of the Russiagate fraud. Horowitz, whose report is expected in about a month, has already revealed that he intends to make criminal referrals as a result of his investigation. While the report will only cover malfeasance in the Department of Justice, which includes the FBI, the names of intelligence officers involved will no doubt also surface. It is expected that there will be charges leading to many prosecutions and one can hope for jail time for those individuals who corruptly betrayed their oath to the United States Constitution to pursue a political vendetta.

A review of what is already known about the plot against Trump is revealing and no doubt much more will be learned if and when investigators go through emails and phone records. The first phase of the illegal investigation of the Trump associates involved initiating wiretaps without any probable cause. This eventually involved six government intelligence and law enforcement agencies that formed a de facto task force headed by the CIA’s Director John Brennan. Also reportedly involved were the FBI’s James Comey, Director of National Intelligence James Clapper, Attorney General Loretta Lynch, Department of Homeland Security Director Jeh Johnson, and Admiral Michael Rogers who headed the National Security Agency.

Brennan was the key to the operation because the Foreign Intelligence Surveillance Act (FISA) court refused to approve several requests by the FBI to initiate taps on Trump associates and Trump Tower as there was no probable cause to do so but the British and other European intelligence services were legally able to intercept communications linked to American sources. Brennan was able to use his connections with those foreign intelligence agencies, primarily the British GCHQ, to make it look like the concerns about Trump were coming from friendly and allied countries and therefore had to be responded to as part of routine intelligence sharing. As a result, Paul Manafort, Carter Page, Donald Trump Jr., Jared Kushner and Gen. Michael Flynn were all wiretapped. And likely there were others. This all happened during the primaries and after Trump became the GOP nominee.

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I don’t see any common ground here that could lead to a solution. The country’s split right down the middle.

Theresa May Accuses Labour Of Dragging Its Heels In Brexit Talks (Ind.)

Theresa May has accused Labour of dragging its heels in the bid to find a cross-party compromise to deliver Brexit, even before the talks resumed after Easter. “The discussions with Labour have been serious but had also been difficult in some areas, such as in relation to the timetable for the negotiations,” the prime minister told her cabinet. No 10 fears Jeremy Corbyn does not share Ms May’s desire to avoid next month’s European parliament elections – which would require an agreement within days. The criticism is striking because it is the first time the government has turned on Labour since approaching the opposition three weeks ago.


Until now, it has been Mr Corbyn’s party that has blamed the prime minister for the lack of progress, accusing her of refusing to shift on her red lines – in particular, membership of a customs union. The cabinet discussion took place even before the talks resumed on Tuesday afternoon – but after a failure to hold any meaningful negotiations last week. Ms May’s spokesman told journalists: “The PM said the discussions with Labour had been serious, but had also been difficult in some areas, such as in relation to the timetable for the negotiations. “The PM said that the government’s position was that progress needed to be made urgently as it was vital to deliver on the result of the referendum and for the UK to leave the European Union as soon as possible.”

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They knew that before agreeing to the talks.

Labour Says Theresa May Unwilling To Offer Key Brexit Concessions (G.)

Labour has accused Theresa May of failing to offer any substantive changes to her Brexit deal in cross-party talks, as Downing Street’s hopes of a breakthrough in time to avoid taking part in European parliamentary elections waned. Brexit talks resumed on Tuesday between a team of ministers and shadow ministers. But Labour sources said the government team again appeared unwilling to countenance changes to the political declaration, which sets out the UK’s future relationship with the EU. Instead, ministers offered alternative ways of giving reassurance about the issues Labour has raised, such as on environmental standards and workers’ rights, including through redrafting the withdrawal act implementation bill (WAB) and tweaking separate planned government bills.


Downing Street continues to insist that it hopes to secure parliamentary ratification of a Brexit deal in time to avoid the UK having to participate in next month’s European parliament elections. The government has been considering tabling the WAB as a way of breaking the Brexit deadlock, but Labour has rejected the idea. “There’s a sequence; you have got to start with a different deal,” said a source. After the talks, Jeremy Corbyn blamed the government’s refusal to compromise on central issues such as membership of a customs union for the failure to make significant progress. “We’ll continue putting our case but quite honestly there’s got to be change in the government’s approach. They cannot keep on just regurgitating what has already been emphatically rejected three times by parliament, there’s got to be a change,” Corbyn said.

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They should get Theresa May and Boris Johnson cancelled. Hypocrites.

UK MPs Campaign To Have Donald Trump’s State Visit Cancelled (G.)

Theresa May has been criticised for allowing Donald Trump to make a state visit in June for D-day commemorations, with MPs orchestrating a campaign to stop the US president addressing parliament. Labour said it “beggars belief” that the government is offering the red-carpet treatment to Trump given his attacks on British and American values. Backbenchers began gathering signatures for a petition aiming to force the cancellation of the trip. The three-day trip starting on 3 June was confirmed by Buckingham Palace and the White House on Tuesday. The initial invitation was extended soon after Trump took office but a planned state visit in 2018, with all its pomp and ceremony, was downgraded to an official visit amid security concerns.


This time, Trump is likely to dine with the Queen, attend discussions with May in Downing Street and join an event in Portsmouth to mark the D-day landings. No 10 said the D-day event would be “one of the greatest British military spectacles in recent history” and would include a flypast of 26 types of RAF aircraft and at least 11 Royal Navy ships in the Solent. May said the visit would emphasise that the UK and US “have a deep and enduring partnership that is rooted in our common history and shared interests”. “We do more together than any two nations in the world and we are both safer and more prosperous because of our cooperation,” May said. “The state visit is an opportunity to strengthen our already close relationship in areas such as trade, investment, security and defence, and to discuss how we can build on these ties in the years ahead.”

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Promises to be a good series. But who will pay attention?

The Revelations of WikiLeaks: No. 1 (CN)

WikiLeaks was founded in 2006, but it was the April 5, 2010, publication of “Collateral Murder” that made the whistleblower-publisher a world-wide phenomenon, attracting admirers and enemies. WikiLeaks wrote of the film: “The video, shot from an Apache helicopter gun-sight, clearly shows the unprovoked slaying of a wounded Reuters employee and his rescuers. Two young children involved in the rescue were also seriously wounded.” WikiLeaks noted that Reuters had unsuccessfully attempted to gain access to the video through the Freedom of Information Act in the years after the strike. The day after the release of the footage, The New York Times described WikiLeaks as a once-fringe website that had moved into the big time.

“The site has become a thorn in the side of authorities in the United States and abroad,” it said. “With the Iraq attack video, the clearinghouse for sensitive documents is edging closer toward a form of investigative journalism and to advocacy.” Before 2010 WikiLeaks received a few high-profile journalism awards. But in the years since the publication of the video, it has received a slew of honors, including The Sam Adams Award for Integrity. On April 16, WikiLeaks announced a fresh award for its founder, Julian Assange, even as he remains isolated in a London prison. “Collateral Murder” was one of the most prominent releases sourced from then-Army intelligence analyst Chelsea Manning, who served seven years in a military prison as a result.

Manning, who had access to the video, having a Top Secret clearance, first offered the video to The New York Times and The Washington Post, which both turned her down. Manning then turned to WikiLeaks. Manning described the events that led up to her decision to submit the footage to the press in leaked audio of her testimony during her 2013 court-martial. She said Reuters’ inability to get the footage via a freedom-of-information request contributed to her decision to leak it. “The most alarming aspect of the video for me, was the seemingly delight of bloodlust they [the pilots] appeared to have. They dehumanized the individuals they were engaging with, and seemed to not value human life in referring to them as ‘dead bastards,’ and congratulating each other on the ability to kill in large numbers.”

Marjorie Cohn, a legal analyst, is one of those who has described the contents of the footage as evidence of U.S. war crimes. As such she argues that Manning was legally obligated to expose such information. In a 2013 column for Truthout, she cites the Geneva Conventions, the Army Field Manual and the Uniform Code of Military Justice as all setting forth the duty of a service member to disobey unlawful orders. None of the pilots, military officials nor policy-makers have ever been charged or otherwise held responsible for the events shown in the video.

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Apr 132019
 


Pablo Picasso Standing nude 1928

 

The Assange Arrest Is a Warning From History (John Pilger)
The 7 Years Of Lies About Assange Won’t Stop Now (Cook)
UK MPs Want Assange Extradited To Sweden (G.)
Labour Urges PM To Block Julian Assange Extradition To US (G.)
Assange’s ‘Conspiracy’ to Expose War Crimes Has Already Been Punished (Fair)
Cascading Cat Litter (Jim Kunstler)
Is Julian Assange Another Pentagon Papers case? (Alan Dershowitz)
Facebook Removes Page of Rafael Correa on Same Day as Assange’s Arrest (MU)
Second Brexit Referendum Vote ‘Very Likely’ – Philip Hammond (Ind.)
What Went Wrong With Pensions And Why The Whole World Must Be Worried (Rubino)
Italy’s Fiscal Health Is Once Again In Serious Decline (DQ)
Uber Discloses 3-Yr $10-Billion Loss from Operations (WS)

 

 

“Imagine Tony Blair dragged from his multi-million pound Georgian home in Connaught Square, London, in handcuffs [..] Blair’s “paramount crime” is the deaths of a million Iraqis.”

The Assange Arrest Is a Warning From History (John Pilger)

The glimpse of Julian Assange being dragged from the Ecuadorean embassy in London is an emblem of the times. Might against right. Muscle against the law. Indecency against courage. Six policemen manhandled a sick journalist, his eyes wincing against his first natural light in almost seven years. That this outrage happened in the heart of London, in the land of Magna Carta, ought to shame and anger all who fear for “democratic” societies. Assange is a political refugee protected by international law, the recipient of asylum under a strict covenant to which Britain is a signatory. The United Nations made this clear in the legal ruling of its Working Party on Arbitrary Detention.

But to hell with that. Let the thugs go in. Directed by the quasi fascists in Trump’s Washington, in league with Ecuador’s Lenin Moreno, a Latin American Judas and liar seeking to disguise his rancid regime, the British elite abandoned its last imperial myth: that of fairness and justice. Imagine Tony Blair dragged from his multi-million pound Georgian home in Connaught Square, London, in handcuffs, for onward dispatch to the dock in The Hague. By the standard of Nuremberg, Blair’s “paramount crime” is the deaths of a million Iraqis. Assange’s crime is journalism: holding the rapacious to account, exposing their lies and empowering people all over the world with truth.

The shocking arrest of Assange carries a warning for all who, as Oscar Wilde wrote, “sew the seeds of discontent [without which] there would be no advance towards civilisation”. The warning is explicit towards journalists. What happened to the founder and editor of WikiLeaks can happen to you on a newspaper, you in a TV studio, you on radio, you running a podcast. Assange’s principal media tormentor, the Guardian, a collaborator with the secret state, displayed its nervousness this week with an editorial that scaled new weasel heights. The Guardian has exploited the work of Assange and WikiLeaks in what its previous editor called “the greatest scoop of the last 30 years”. The paper creamed off WikiLeaks’ revelations and claimed the accolades and riches that came with them.

With not a penny going to Julian Assange or to WikiLeaks, a hyped Guardian book led to a lucrative Hollywood movie. The book’s authors, Luke Harding and David Leigh, turned on their source, abused him and disclosed the secret password Assange had given the paper in confidence, which was designed to protect a digital file containing leaked US embassy cables. With Assange now trapped in the Ecuadorean embassy, Harding joined the police outside and gloated on his blog that “Scotland Yard may get the last laugh”. The Guardian has since published a series of falsehoods about Assange, not least a discredited claim that a group of Russians and Trump’s man, Paul Manafort, had visited Assange in the embassy. The meetings never happened; it was fake.

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We just get more. But it’s what NOT being said that reveals more.

The 7 Years Of Lies About Assange Won’t Stop Now (Cook)

For seven years, from the moment Julian Assange first sought refuge in the Ecuadorean embassy in London, they have been telling us we were wrong, that we were paranoid conspiracy theorists. We were told there was no real threat of Assange’s extradition to the United States, that it was all in our fevered imaginations. For seven years, we have had to listen to a chorus of journalists, politicians and “experts” telling us that Assange was nothing more than a fugitive from justice, and that the British and Swedish legal systems could be relied on to handle his case in full accordance with the law. Barely a “mainstream” voice was raised in his defence in all that time.

From the moment he sought asylum, Assange was cast as an outlaw. His work as the founder of Wikileaks – a digital platform that for the first time in history gave ordinary people a glimpse into the darkest recesses of the most secure vaults in the deepest of Deep States – was erased from the record. Assange was reduced from one of the few towering figures of our time – a man who will have a central place in history books, if we as a species live long enough to write those books – to nothing more than a sex pest, and a scruffy bail-skipper. The political and media class crafted a narrative of half-truths about the sex charges Assange was under investigation for in Sweden.

They overlooked the fact that Assange had been allowed to leave Sweden by the original investigator, who dropped the inquiry, only for it to be revived by another investigator with a well-documented political agenda. They failed to mention that Assange was always willing to be questioned by Swedish prosecutors in London, as had occurred in dozens of other cases involving extradition proceedings to Sweden. It was almost as if Swedish officials did not want to test the evidence they claimed to have in their possession. [..] It was a freedom of information request by an ally of Assange, not a media outlet, that unearthed documents showing that Swedish investigators had, in fact, wanted to drop the case against Assange back in 2013. The UK, however, insisted that they carry on with the charade so that Assange could remain locked up. A British official emailed the Swedes: “Don’t you dare get cold feet!!!”

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There’s some confusion here. Some say because Sweden dropped charges, the US is now first in line. Others deny this.

UK MPs Want Assange Extradited To Sweden (G.)

Political pressure is mounting on Sajid Javid to prioritise action that would allow Julian Assange to be extradited to Sweden, amid concerns that US charges relating to Wikileaks’ activities risked overshadowing longstanding allegations of rape. More than 70 MPs and peers have written to Javid and the shadow home secretary, Diane Abbott, urging them to focus attention on the earlier Swedish investigations that Assange would face should the case be resumed at the alleged victim’s request.


In a letter coordinated by Labour’s Stella Creasy and Jess Phillips and seen by the Guardian, the MPs declare: “We do not presume guilt, of course, but we believe due process should be followed and the [Swedish] complainant should see justice be done.” They call on Javid and Abbott to “champion action” to ensure that extradition is a possibility should Swedish authorities choose to pursue it. Assange first entered the Ecuadorian embassy in 2012 in order to avoid extradition to Sweden over sexual assault allegations, which he has always denied. While the statute of limitations on one of the allegations has expired, the other will not be reached until August 2020.

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May did it before in 2012, but I understand laws have changed since. Labour better make sure that block counts.

Labour Urges PM To Block Julian Assange Extradition To US (G.)

The shadow home secretary, Diane Abbott, has urged Theresa May to block the extradition of Julian Assange to the US in the same way she intervened in the case of the computer hacker Gary McKinnon. In 2012, as home secretary, May halted McKinnon’s extradition on human rights grounds after doctors warned he was at risk of suicide if sent to face trial in the US. Abbott said similar grounds should be used to block Assange’s extradition. On Thursday, the Wikileaks founder was arrested on behalf of the US authorities, who have charged him with involvement in a computer hacking conspiracy.

The 47-year-old faces up to 12 months in a British prison after he was found guilty of breaching his bail conditions. The US charge could attract a maximum jail sentence of five years, according to the US Department of Justice. Speaking on BBC Radio 4’s Today programme on Friday, Abbott said: “If you remember the Gary McKinnon case, the Americans insisted on extraditing him. He had done this massive computer hack, but his real crime was to have embarrassed the American military and security service. “In the end the then home secretary, Theresa May, blocked his extradition on what she said were human rights grounds. We think there may be human rights grounds in relation to Assange.”

Abbott described the allegations facing Assange from two women in Sweden as “serious”, but said charges were never brought. She said: “If the Swedish government wants to come forward with those charges I believe that Assange should face the criminal justice system.” But she added: “It is not the rape charges, serious as they are, it is about WikiLeaks and all of that embarrassing information about the activities of the American military and security services that was made public. “He is at the very least a whistleblower and much of the information that he brought into the public domain, it could be argued, was very much in the public interest.”

[..] “It is this whistleblowing into illegal wars, mass murder, murder of civilians and corruption on a grand scale, that has put Julian Assange in the crosshairs of the US administration. “It is for this reason that they have once more issued an extradition warrant against Mr Assange.” In response, the home secretary, Sajid Javid, said: “Why is it whenever someone has a track record of undermining the UK and our allies and the values we stand for, you can almost guarantee that the leadership of the party opposite will support those who intend to do us harm? You can always guarantee that from the party opposite.”

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“The point of journalism is to expose horrific crimes like this so that the powerful people who order them pay legal consequences, not the ones who expose them.”

Assange’s ‘Conspiracy’ to Expose War Crimes Has Already Been Punished (Fair)

In 2010, the Guardian, like the New York Times and a few other corporate newspapers, briefly partnered with WikiLeaks to publish the contents of thousands of confidential US diplomatic cables, known as Cablegate. That year, WikiLeaks released other confidential US government information as well: the Afghanistan War Logs, the Iraq War Logs, the infamous “Collateral Murder” video. The material exposed atrocities perpetrated by the US military, as well as other disgraceful acts—like US diplomats strategizing on how to undermine elected governments out of favor with Washington, spying on official US allies and bullying poor countries into paying wildly exorbitant prices for life-saving drugs.

One US soldier involved in the “collateral murder” airstrike that Manning and Assange exposed, Ethan McCord, was threatened and reprimanded by a superior officer for requesting psychiatric help after the atrocity. (“Get the sand out of your vagina,” he was reportedly told.) McCord had tended to wounded children during the massacre. He was soon expelled from the military, apparently now “unsuited” for it. The point of journalism is to expose horrific crimes like this so that the powerful people who order them pay legal consequences, not the ones who expose them. Presumably that is why “press freedom” is considered important, and why it’s guaranteed by the First Amendment.

The law should have protected Manning from punishment, the same way it protects somebody who uses violence in justifiable self-defense or in defense of others. In Manning’s case, that was especially true, because she exposed grave crimes while stationed in Iraq, as the US perpetrated an even higher-level crime—a war of aggression based on a fraudulent pretext. If the law should have protected Manning, who was at the very heart of the “conspiracy” to expose gruesome crimes, then it obviously should protect Assange, and any of the outlets that worked with him.

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“I’d like to see The New York Times’s front page headline on that story: Russian Colluder Wins Nobel Prize, Put on Trial in Federal Court.”

Cascading Cat Litter (Jim Kunstler)

And so now Julian Assange of Wikileaks has been dragged out of his sanctuary in the London embassy of Ecuador for failing to clean his cat’s litter box. Have you ever cleaned a litter box? The way we always did it was to spread some newspaper — say, The New York Times — on the floor, transfer the used cat litter onto it, wrap it into a compact package, and put it in the trash. It was interesting to scan the Comments section of The Times’s stories about the Assange arrest: Times readers uniformly presented themselves as a lynch mob out for Mr. Assange’s blood. So much for the spirit of liberalism and The Old Gray Lady who had published The Pentagon Papers purloined by Daniel Ellsberg lo so many years ago.

Reading between the lines in that once-venerable newspaper — by which I mean gleaning their slant on the news — one surmises that The Times has actually come out against freedom of the press, a curious attitude, but consistent with the neo-Jacobin zeitgeist in “blue” America these days. Anyway, how could anyone expect Mr. Assange to clean his cat’s litter box when he was unable to go outside his sanctuary to buy a fresh bag of litter, and was denied newspapers this past year, as well as any other contact with the outside world? US government prosecutors had better tread lightly in bringing Mr. Assange to the sort of justice demanded by readers of The New York Times — which is to say: lock him up in some SuperMax solitary hellhole and throw away the key. The show trial of Julian Assange on US soil, when it comes to pass, may end up being the straw that stirs America’s Mickey Finn as a legitimate republic.

The bloodthirsty hysteria among New York Times readers is a symptom of the mass confusion sown by agencies of the US government itself when its own agents ventured to meddle in the national election of 2016 and then blame it on “the Russians.” As you will learn in the months ahead, it was The Times itself, and other corporate news organizations, who colluded with officers of the FBI, the Department of Justice, the CIA, and the Obama White House to concoct a phony narrative about Mr. Trump being in cahoots with Vladimir Putin, thus depriving Hillary Clinton of her “turn” in the White House; and then to join those agencies, and the grotesquely dishonest two-year investigation of Special Counsel Robert Mueller, in a cover-your-ass operation to hide their nefarious and criminal acts.

In the meantime, Mr. Assange may receive a Nobel Prize as a symbol of a lone conscience standing up against the despotic deceits of the world’s deep states. Wouldn’t that gum up the works nicely? I’d like to see The New York Times’s front page headline on that story: Russian Colluder Wins Nobel Prize, Put on Trial in Federal Court. By then, the United States of America will be so completely gaslighted that it will pulsate in the darkness like a death star about to explode.

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Michael Malice on Twitter: “Let’s be clear: Julian Assange is not a journalist.
He uncovered and released information that the political establishment and government wanted to stay hidden.
Does that sound like the work of a journalist?”

Is Julian Assange Another Pentagon Papers case? (Alan Dershowitz)

Before WikiLeaks founder Julian Assange gained asylum in the Ecuadorian embassy in London in 2012, he and his British legal team asked me to fly to London to provide legal advice about United States law relating to espionage and press freedom. I cannot disclose what advice I gave them, but I can say that I believed then, and still believe now, that there is no constitutional difference between WikiLeaks and the New York Times. If the New York Times, in 1971, could lawfully publish the Pentagon Papers knowing they included classified documents stolen by Rand Corporation military analyst Daniel Ellsberg from our federal government, then indeed WikiLeaks was entitled, under the First Amendment, to publish classified material that Assange knew was stolen by former United States Army intelligence analyst Chelsea Manning from our federal government.

So if prosecutors were to charge Assange with espionage or any other crime for merely publishing the Manning material, this would be another Pentagon Papers case with the same likely outcome. Many people have misunderstood the actual Supreme Court ruling in 1971. It did not say that the newspapers planning to publish the Pentagon Papers could not be prosecuted if they published classified material. It only said that they could not be restrained, or stopped in advance, from publishing them. Well, they did publish, and they were not prosecuted.

[..] the problem with the current effort is that, while it might be legally strong, it seems on the face of the indictment to be factually weak. It alleges that “Assange encouraged Manning to provide information and records” from federal government agencies, that “Manning provided Assange with part of a password,” and that “Assange requested more information.” It goes on to say that Assange was “trying to crack the password” but had “no luck so far.” Not the strongest set of facts here!

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Nice going, Zuck.

Facebook Removes Page of Rafael Correa on Same Day as Assange’s Arrest (MU)

Facebook has unpublished the page of Ecuador’s former president, Rafael Correa, the social media giant confirmed on Thursday, claiming that the popular leftist leader violated the company’s security policies.[..] In March, WikiLeaks published a tranche of documents dubbed the INA Papers linking President Lenin Moreno to the INA Investment Corporation, an offshore shell company used by Moreno to procure furniture, property, and various luxury items. The account number for the offshore account allegedly used by the president to launder money was shared across Ecuadorean social networks by netizens of all political stripes, including by Correa – who had about 1.5 million followers and whose Facebook page enjoyed more interactions and attention than that of President Moreno himself.


[..] The removal of Correa’s page for violating Facebook’s “community standards” is an unprecedented move, and the former statesman is the most high-profile public political figure to ever be removed from the social platform–placing the economist and icon of Latin American “socialism of the 21st century” in the same unlikely category as right-wing conspiracy theorist and broadcaster Alex Jones.

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What would that solve?

Second Brexit Referendum Vote ‘Very Likely’ – Philip Hammond (Ind.)

A second referendum on Brexit is “very likely” to be put before parliament, Philip Hammond has said. Speaking in Washington on Friday, the chancellor said a fresh public vote was a “proposition that could and, on all the evidence, is very likely to be put to parliament at some stage”. However, he also said about six months would be needed to hold a referendum, and that there would not be enough time before Britain is due to leave the EU on the new deadline of 31 October. Mr Hammond also stressed that the government was still opposed to a second referendum, although he said other Labour demands – such as a customs union with the EU – were up for debate.


“The government’s position has not changed,” he said. “The government is opposed to a confirmatory referendum and therefore we would not be supporting it.” The idea of a new referendum was among several Brexit alternatives to Theresa May’s deal that were put to lawmakers in the last month – but which all fell short of a majority in parliament. The prime minister has so far failed to get her own party behind the Brexit divorce deal she agreed with other European Union leaders last year. She was forced to ask the bloc for a delay and to start talks with Labour about how to break the impasse in parliament.

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It says a lot about the human attention span that this doesn’t receive a lot more scrutiny.

This is where Fed policies will be found to have hurt people most.

What Went Wrong With Pensions And Why The Whole World Must Be Worried (Rubino)

As baby boomer teachers, police and firefighters retire, the required pension payouts are soaring. Combine this with inadequate contributions, and the liabilities of major U.S. public pensions are up 64% since 2007 while assets are up only 30%. This math is simple enough for even a politician or fund trustee to grasp, but because there’s no immediate penalty for underfunding a pension system, it has become normal practice in a long list of places. Another, related problem is also mathematical, but it’s harder to manage in a boom-and-bust world: When pension plans suffer a big loss, as they tend to do in bear markets, the next few years’ returns have to go towards making up that loss before plan assets can start growing again. The following chart, from a recent Wall Street Journal article, shows pension fund assets falling behind in the past two bear markets and having increasing trouble catching up with steadily-growing liabilities.

In some cases this puts funds permanently behind the curve and can only be fixed with massive infusions of taxpayer cash or draconian benefit cuts, neither of which are feasible in a system that punishes hard choices. The next chart shows how much more the worst offenders would have to contribute to their plans to get by with honest future return assumptions. For Illinois, Kentucky and New Jersey this will never happen.

What does all this mean? A few things: In the next bear market the pension funds that are already wildly underfunded will fall into a financial black hole from which they’ll never be able to escape. Those states and cities – many of which are issuing bonds to cover their day-to-day expenses – will be exposed as junk credits (as Chicago was recently) and will have to either pay way up to borrow or enact some combination of tax increases (politically almost impossible) or pension benefit cuts (legally impossible in many places) which will cause chaos without fixing the underlying problem. The weakest cities and the states in which they reside will be forced to default on some of their obligations, stiffing suppliers, creditors, and/or employees.


This will throw the municipal bond market into chaos as investors, worried that the next Chicago is lurking in their portfolios, dump the whole muni sector. Faced with a cascade failure of a crucial part of the fixed income universe, the federal government will react the way it did when the mortgage market imploded in 2008, with a massive taxpayer funded bailout. At which point there’s a good chance of the crisis spreading from pensions to currencies, as the world finally realizes that the bailouts are just beginning, with US states and cities soon to be followed by student loans, emerging markets, and European failed states.

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Drip. Drip.

Italy’s Fiscal Health Is Once Again In Serious Decline (DQ)

On Wednesday, Italy’s coalition government slashed its growth forecast for the Italian economy in 2019 to 0.2% – the weakest forecast in the Eurozone – from a previous forecast of 1%. Italy is already in a technical recession after chalking up two straight quarters of negative GDP growth in the second half of 2018. The government’s budget for this year was based on the assumption that the economy would expand by 1% this year. Now, it seems the economy may not grow at all; it could even shrink. One direct result of this is that Italy’s current account deficit for 2019 will be substantially higher than the 2.04% of GDP Italy’s government pledged to stick to late last year. And that can mean only thing: another standoff between Rome and Brussels over the direction of fiscal policy is in the offing.

Italy already boasts the largest public debt pile in Europe in nominal terms, clocking in at €2.14 trillion, as well as the second largest in relative terms after Greece’s twice bailed out economy. Rome just forecast that public debt would hit a new record high of 132.6% of GDP this year. That record is unlikely to last very long given Italy’s stagnating economy and the government’s determination to cut taxes, reduce the retirement age and introduce a citizens’ basic income.

The biggest problem with Italy’s economy is that many of its problems are chronic and deep seated. Many of them date back to the adoption of the euro, in 2000, or in the case of Rome’s massive addiction to public debt, to the 1980s. As the OECD points out, real GDP in Italy is still well below its pre-crisis peak. Italy is also the only OECD country where incomes (as measured by GDP per capita) are no higher than in 2000. By contrast, in France, Spain, the UK and Germany they have risen during the same period by 13%, 17%, 21% and 23 respectively.

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Now imagine this WITHOUT interest rates at record lows. What was once a market has now turned into a slot machine.

Uber Discloses 3-Yr $10-Billion Loss from Operations (WS)

Uber Technologies’ IPO filing was made public today. The 330-page or so S-1 filing disclosed all kinds of goodies, including detailed but still unaudited pro-forma financial statements as of December 31, 2018, huge losses from operations, big tax benefits, large gains from the sale of some operations, stagnating rideshare revenues, and an enormous list of chilling “Risk Factors” that go beyond the usual CYA. The filing, however, didn’t disclose the share price, the IPO valuation, and how much money the IPO will raise for Uber. On Tuesday, “people familiar with the matter” had told Reuters that Uber plans to raise $10 billion in the IPO. Most of the IPO shares would be sold by the company to raise funds, and a smaller amount would be sold by investors cashing out, the sources said.


The filing did not confirm this and instead left blanks or used placeholder amounts. But if true, $10 billion in shares sold would make this IPO one of the biggest tech IPOs. And the rumored $90 billion to $100 billion valuation would make it the biggest since Alibaba’s $169 billion IPO. Uber will need every dime it raises in the IPO going forward because it’s got a little cash-burn situation in its operations that persists going forward, as it admitted in its “Risk Factors,” and it will need to raise more money, and if it cannot raise more money, it might not make it. Uber is upfront about this. The company has already raised – and mostly burned through – over $20 billion so far in its 10 years of existence. This includes $15 billion in equity funding and over $6 billion in debt.

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Aug 142017
 


August Strindberg Alpine Landscape I 1894

 

Multiple Contraction : Stock Market Warning Siren is Blaring (WS)
Is The Euro Crisis Really Over? (Lacalle)
US Is The Real Trade Protectionist – China State Media (CNBC)
Fourth Turning: “It’s Going To Be A Rollercoaster Ride” (ZH)
Conspiracy or Chaos? (Jim Quinn)
Forget GDP – There’s More To Britain’s Wealth Than Its Bank Balance (Baggini)
Factory Farming, Antibiotics Use In Asia Creating Global Health Risks (G.)
More NGOs Follow MSF In Suspending Mediterranean Migrant Rescues (R.)
Syrian Refugees Can Return To Aleppo… And Do So In Their 100,000s (RT)
Do Elephants Have Souls? (NA)

 

 

Creative accounting is subject to inherent limits.

Multiple Contraction : Stock Market Warning Siren is Blaring (WS)

“Adjusted” earnings growth is 10.2% year-over-year in the second quarter, according to FactSet, based on the 91% of the companies in the S&P 500 that have reported results. The energy sector was a key driver, with 332% “adjusted” earnings growth from the oil-bust levels of a year ago. The sectors with double-digit earnings growth: information technology (14.7%), utilities (10.8%), and financials (10.3%). The rest were single digit. Earnings in the consumer discretionary sector declined. Revenues grew 5.1%, also led by the energy sector. At the beginning of Q2 last year, the WTI grade of crude oil traded at $35 a barrel. In Q2 this year, WTI ranged from $42 to $53 a barrel.

So the Wall-Street hype machine is cranking at maximum RPM to propagate the great news that earnings are soaring, and that this is the reason why stocks should also be soaring, and forget everything else. The hype machine carefully avoids showing the bigger picture which is dismal for earnings and ludicrous for stock valuations. Aggregate earnings per share (EPS) for the S&P 500 companies on a trailing 12-months basis rose for the second quarter in a row. That’s the foundation of the Wall Street hype. But here’s the thing with these EPS: they’re now back where they had been in… May 2014. Yep. More than three years of earnings stagnation. No growth whatsoever, even for “adjusted” earnings. In fact, on a trailing 12-month basis, aggregate EPS of the S&P 500 companies are down about 5% from their peak in Q4 2014.

And yet, over the same three-plus years of total earnings stagnation, the S&P 500 index has soared 34%. This chart shows those “adjusted” earnings per share for the S&P 500 companies (black line) and the S&P 500 index (blue line). I marked August 2012 as the point five years ago, and May 2014. And these are not earnings under the Generally Accepted Accounting Principles (GAAP). FactSet uses “adjusted” earnings for its analyses. These are the earnings with the bad stuff “adjusted” out of them by management to manipulate earnings into the most favorable light. Not all companies report “adjusted” earnings. Some only report GAAP earnings and live with the consequences. But others put adjusted earnings into the foreground, and that’s what Wall Street dishes up.

[..] This is the peculiar situation of today: On average, these companies have stagnating earnings per share propped up by “adjusting” these earnings and by financial engineering. The price-earnings multiple (P/E ratio) for stagnating companies should be low. In January 2012, the P/E ratio for the companies in the S&P 500 index was 14.9. And that was high. As of Friday, the aggregate P/E ratio is 24.3:

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Brussels keeps Europe from recovering. A continent of zombies.

Is The Euro Crisis Really Over? (Lacalle)

This week we have read that Brussels has certified “the end of the crisis”. In an uncomfortably triumphant statement, the group welcomed the fact that Europe had emerged from the crisis and returned to growth “thanks to the decisive action of the European Union”. Really? Thanks to the “decisive action” of the European Union the “economy is back in shape”? It is true that the communique says that “much remains to be done to overcome the legacy of the crisis years”, but if we can say something about the European crisis is that the “decisive” action of the European Union has not helped to end the crisis, but has perpetuated and silenced it. The European economy is not “in shape”.

According to the Bank of International Settlements and Merrill Lynch, Europe has more zombie companies today than before the crisis, 9% of large listed non-financial corporations are considered walking dead, ie generating operating profits that do not cover their financial costs, in spite of all-time low-interest rates and an unprecedented monetary stimulus. And that is among the big companies, where the business results of the Eurostoxx remain below 2008. If we go to SMEs, the European Union has higher rates of bankruptcies and losses than in 2008, yet the tax burden on companies has increased. In fact, if anything can be said of the European business fabric is that it has been devastated by taxes.

The European Union has continued to hamper the high-productivity sectors to support the so-called national champions and zombies, that large amount of low-value added conglomerates, ridden by high debt and poor margins. While the United States saw the astronomical takeoff of technology giants and corporate profits growing at double digit rates, the EU decided to put obstacles to growth, and today, in the Eurostoxx 100, we have the same collection of dinosaurs that we had a decade ago. European banks, at the end of 2016, had more than €1 trillion in non-performing loans, a figure that represents 5.1% of total loans compared to 1.5% in the US or Japan. Europe has gone from financial crisis to financial crisis, and recently we have had new episodes in Italy, Spain and Portugal.

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Theory: Xi will not put up a real fight if he’s not certain he can win (Deng Xiao Ping’s stance on US).

US Is The Real Trade Protectionist – China State Media (CNBC)

Trump is expected to issue the so-called Section 301 investigation under the 1974 Trade Act later on Monday to investigate Chinese trade practices that force U.S. firms operating in China to turn over intellectual property, multiple outlets reported. China will retaliate in such a case, said the Communist Party-linked Global Times, which is known for its nationalist slant. “The Trump administration should have second thoughts about putting pressure on China on trade and avoid a full-blown trade war,” said the newspaper, adding that the Beijing “should make use of the WTO mechanism to sue the U.S. for trade protectionism.” “The trade policies of the Trump administration have been widely criticized. Although filing a lawsuit with the WTO is time-consuming, it is highly likely that China would win,” it said.

The latest news about a U.S. probe into Chinese trade practices could lead to steep tariffs and comes as Trump is pressing for China’s cooperation in reining in North Korea’s nuclear program. “The U.S. now is walking softly and carrying a huge stick in regards to what it wants. Here, this is tactically nothing more than ‘We need your support with North Korea,’ part and parcel, that’s it. The symbolism of this is just politics and game play,” Frank Troise, managing director at SoHo Capital, told CNBC’s “The Rundown.” China has repeatedly said the two issues were not related, with the Global Times calling the link “illogical” in its Sunday night editorial. Commentaries in state media normally provide insight into government thinking beyond typically thin official statements.

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Neil Howe is an interesting voice, and that’s only partly because Steve Bannon likes his work.

Fourth Turning: “It’s Going To Be A Rollercoaster Ride” (ZH)

[..] .. although 9/11 changed America’s attitude towards the rest of the world, I think that the stock market boom and celebrity circus that’s here in the United States really hadn’t changed very much. And I don’t think you really had a shift, a fundamental shift, in America’s perception of themselves as a people, as their own country, to a fundamental degree until 2008. Also, 2001, as we explained to many people at the time, was simply too early. Every turning starts when each generation is beginning to move into a new phase of life. Back in 2001 boomers were not yet retiring, millennials were still—maybe the first one of them was barely graduating from high school.

So, this was not what we expected. 2008 really did coincide with the generational maturity of the turning, so to speak. And I think that, in terms of the basic shift in our efficacy of the social system, I think 2008 was a bigger change.” The crisis also ushered in an era where central banks exhibit total control of markets, which has created an “artificial quality,” Howe said. “The economic emergency that occurred in 2008-2009 really catapulted us into by far the biggest economic emergency we’ve been in since the early 1930s. And, arguably, we are still living out the consequences of that with complete change in central bank policy, monetary policy, with sustaining these record low interest rates and arguable very high valuations in financial markets—almost anything pushed by that—and people still wondering how we’re going to get out from under that.

The constant discussion is when are central banks going to pull back on their balance sheets and actually go back to the old normal? So, I think there is the sense, even in this the booming markets that we see today, that there is this artificial quality: people think that there’s something wrong about this. We have not re-righted where we were. We are not letting price discovery and actual markets function the way they did before then. So, I do believe that 2008 was the beginning of a whole new regime. And I also believe that the political dysfunction, the sense of political dysfunction—created during the two turns of the Obama presidency and, obviously, also into the Trump presidency—of government completely grinding to a halt is going to have some very powerful repercussions in the years shortly to come.”

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Anarchy in the UK.

Conspiracy or Chaos? (Jim Quinn)

Alan Moore, the renowned graphic novel writer, and author of the dystopian classic V for Vendetta, politically identifies as an anarchist. His view that all political states are an outgrowth of anarchy, with the biggest gang taking control and dictating how things will be run, is manifested in V for Vendetta. As an anarchist, you can understand why he is doubtful of conspiracy theories and an all-powerful entity controlling the world. He believes in a chaotic world competing gangs position themselves to gain power and control.

“We live in a badly developed anarchist situation in which the biggest gang has taken over and have declared that it is not an anarchist situation – that it is a capitalist or a communist situation. But I tend to think that anarchy is the most natural form of politics for a human being to actually practice.”- Alan Moore

The Guy Fawkes mask from V for Vendetta has been adopted by anarchist groups around the world, including: Anonymous, WikiLeaks, and the Occupy protestors. Moore’s positive view of the Occupy movement was based on his belief ordinary people had the right to reclaim what had been taken from them by criminal bankers. The initial impetus for the Occupy protests was the destruction of Main Street USA by Wall Street sociopaths, who not only escaped prosecution for their crimes, but were bailed out by the taxpayers they had pillaged and further enriched as captured politicians enabled them to get even bigger. Millions were evicted from their homes and lost their jobs. Middle class families have seen their real income continue to stagnate, while bankers, corporate executives, and politicians have reaped billions in bonuses, stock gains, and payoffs, provided by central bankers in their back pocket.

“I can’t think of any reason why as a population we should be expected to stand by and see a gross reduction in the living standards of ourselves and our kids, possibly for generations, when the people who have got us into this have been rewarded for it – they’ve certainly not been punished in any way because they’re too big to fail. I think that the Occupy movement is, in one sense, the public saying that they should be the ones to decide who’s too big to fail. As an anarchist, I believe that power should be given to the people whose lives this is actually affecting.” – Alan Moore

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Basic argument: technological growth beats economic growth. But why argue this using social housing and libraries?

Forget GDP – There’s More To Britain’s Wealth Than Its Bank Balance (Baggini)

How is this possible? Because “a lot of improvements in standard of living come not through what we normally consider as growth, but through technological improvements”. This is a concrete example of real growth without what is normally understood by economic growth. If we can grasp this, we can see why the argument about whether indefinite growth is environmentally sustainable is bogus. Orthodox economics says that it is essential if the world’s worst-off are to escape their poverty. Critics argue for zero or even negative growth, claiming that this is the only way to ensure we don’t deplete the planet’s resources. Both are wrong. Real wealth is created not just by exploiting more resources and increasing society’s cash pot but by exploiting the same or fewer resources better.

The whole question of GDP growth is a red herring if we are interested in real wealth. What matters is that we do more with the resources we have. Building a better future depends on seeing this clearly. Take the need to reduce inequality, which many now accept is urgent. To do this it is assumed we need to reduce the income gap between rich and poor. But real equality is increased simply by making it possible for the less well-off to do more with the money they have. Social housing was, and could again be, an example of that. Take two people, one of whom earns £30k a year and the other £15k. To close the real wealth gap between the two does not necessarily require increasing the income of the latter. Providing them with a decent council flat at low rent effectively allows their disposable income to equalise.

The basic principle here is that what matters most is giving people the resources they need to live better, which doesn’t necessarily require giving them more cash. This has in effect been the principle behind all sorts of socially levelling initiatives. Local authorities didn’t give local people free books, they gave them the use of libraries. They didn’t give them cars, they gave them bus passes. We need to relearn the wisdom of these policies, and update them for the modern age. In an era where car ownership is not rare, what about low-cost car clubs? Why shouldn’t more people be able to borrow laptops and tablets from libraries as well as books and DVDs?

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“Half of all antibiotics globally are now consumed in China alone.”

Factory Farming, Antibiotics Use In Asia Creating Global Health Risks (G.)

The use of antibiotics in factory farms in Asia is set to more than double in just over a decade, with potentially damaging effects on antibiotic resistance around the world. Factory farming of poultry in Asia is also increasing the threat of bird flu spreading beyond the region, with more deadly strains taking hold, according to a new report from a network of financial investors. Use of antibiotics in poultry and pig farms will increase by more than 120% in Asiaby 2030, based on current trends. Half of all antibiotics globally are now consumed in China alone. The Chinese meat and animal feed producers New Hope Group and Wen’s Group are now among the 10 biggest animal feed manufacturers in the world. The growth of Asian meat production in intensive units is also producing a rise in greenhouse gas emissions from the food chain, with emissions likely to rise by more than 360m tonnes, the equivalent of running 100 coal-fired power plants for a year.

There are knock-on impacts such as deforestation, as China’s need for animal feed is responsible for more than a third of Brazil’s soybean production. The report, Factory Farming in Asia: Assessing Investment Risks, comes three years after a meat scandal in China, in which suppliers to McDonalds, KFC and others were found to be using dirty meat and products past their sell-by date. It also comes in the midst of a growing food scandal in Europe, which has required the recall of millions of eggs tainted with harmful chemicals, and as concerns have been aired over the impact of Brexit on imports of farm products to the UK. Asian food companies have rapidly expanded their meat production in response to growing populations and the tastes of the rising middle class, but this expansion has come to the detriment of food safety.

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They’re being shot at. And the Italian Foreign Minister calls that “a welcome readjustment” and a “positive process”.

More NGOs Follow MSF In Suspending Mediterranean Migrant Rescues (R.)

Two more aid groups have suspended migrant rescues in the Mediterranean, joining Doctors Without Borders, because they felt threatened by the Libyan coastguard. Save the Children and Germany’s Sea Eye said on Sunday their crews could no longer work safely because of the hostile stance of the Libyan authorities. Doctors Without Borders – or Medecins sans Frontieres – cited the same concern when it said on Saturday it would halt Mediterranean operations. “We leave a deadly gap in the Mediterranean,” Sea Eye’s founder Michael Busch Heuer warned on Facebook, adding that Libya had issued an “explicit threat” against non-government organisations operating in the area around its coast. Libyan coastguard boats have repeatedly clashed with NGO vessels on the edge of Libyan waters, sometimes opening fire.

The coastguard has defended such actions, saying the shooting was to assert control over rescue operations. “In general, we do not reject (NGO) presence, but we demand from them more cooperation with the state of Libya … they should show more respect to the Libyan sovereignty,” coastguard spokesman Ayoub Qassem told Reuters on Sunday. Tension has also been growing for weeks between aid groups and the Italian government, which has suggested some NGOs are facilitating people smuggling, while Italy is trying to enhance the role of the Libyan coastguard in blocking migrant departures. This month, Italy began a naval mission in Libyan waters to provide technical and operational support to its coastguard, despite opposition from factions in eastern Libya that oppose the U.N.-backed government based in Tripoli.

[..] Italian Foreign Minister Angelino Alfano said in a newspaper interview on Sunday that Libya’s growing role in controlling its waters was curbing people trafficking and producing a welcome “readjustment” in the Mediterranean. MSF’s decision to halt its rescue operations was part of this positive process, he told the newspaper La Stampa.

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There’s propaganda and then there’s reality. You decide who you believe.

Syrian Refugees Can Return To Aleppo… And Do So In Their 100,000s (RT)

Aleppo, a city retaken by Damascus from rebels in December last year, has become a major destination for displaced Syrian returning home in 2017 as numbers of returnees to Syria spills over 600,000, according to the UN. Over the first seven months of 2017, over 600,000 displaced Syrians returned home, the International Organization for Migration (IOM) said Friday, citing its own figures as well as those of the UN Migration Agency and partners on the ground. The returnees are overwhelmingly internally-displaced people, but 16% returned to Syria from other nations, primarily Turkey. The number almost matched that recorded in the whole of 2016. An estimated 67% of returnees went to government-controlled Aleppo Governorate, with the provincial capital itself being the primary destination.

Among other places where refugees went in significant numbers, according to ICO, is Al-Hasakah Governorate, the north-eastern province dominated by Kurds. The city of Aleppo – the largest in Syria prior to the conflict – was retaken by the government army last year, aided by Russia, with hostilities ending in mid-December. For years before that, it was divided between two parts, held respectively by government forces and by a disjointed collection of militant groups, including hardcore jihadists. The battle for the city ended with a ceasefire deal, which allowed remaining rebel forces and their families leave Aleppo and go to Idlib governorate, which currently remains a rebel stronghold.

Earlier an increasing number of refugees returning to their homes in Syria was reported by the UN Refugee Agency (UNHCR), which said more than 440,000 internally-displaced persons and 31,000 refugees in other countries had done so over the first six months of 2016. Aleppo and other government-controlled governorates like Hama, Homs and Damascus were mentioned as destinations for the returnees. [..] The situation is far from rosy of course, according to IOM. The number of people forced to leave their homes in 2017 still outweighs that of returnees, with over 808,000 people estimated to be displaced. Around 10% of those who returned in 2016 and 2017 have ended up fleeing their homes again. Almost 20% of the returnees have no secure supply of food and access to water and health services is a problem for some 60%, a testament to the damage the Syrian war has taken on its civilian infrastructure.

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Love it. Absolute must read, the whole article. Very rich.

Do Elephants Have Souls? (NA)

The birth of an elephant is a spectacular occasion. Grandmothers, aunts, sisters, and cousins crowd around the new arrival and its dazed mother, trumpeting and stamping and waving their trunks to welcome the floppy baby who has so recently arrived from out of the void, bursting through the border of existence to take its place in an unbroken line stretching back to the dawn of life. After almost two years in the womb and a few minutes to stretch its legs, the calf can begin to stumble around. But its trunk, an evolutionarily unique inheritance of up to 150,000 muscles with the dexterity to pick up a pin and the strength to uproot a tree, will be a mystery to it at first, with little apparent use except to sometimes suck upon like human babies do their thumbs.

Over time, with practice and guidance, it will find the potential in this appendage flailing off its face to breathe, drink, caress, thwack, probe, lift, haul, wrap, spray, sense, blast, stroke, smell, nudge, collect, bathe, toot, wave, and perform countless other functions that a person would rely on a combination of eyes, nose, hands, and strong machinery to do. Once the calf is weaned from its mother’s milk at five or whenever its next sibling is born, it will spend up to 16 hours a day eating 5% of its entire weight in leaves, grass, brush, bark, and basically any other kind of vegetation. It will only process about 40% of the nutrients in this food, however; the waste it leaves behind helps fertilize plant growth and provide accessible nutrition on the ground to smaller animals, thus making the elephant a keystone species in its habitat. From 250 pounds at birth, it will continue to grow throughout its life, to up to 7 tons for a male of the largest species or 4 tons for a female.

Of the many types of elephants and mammoths that used to roam the earth, one born today will belong to one of three surviving species: Elephas maximus in Asia, Loxodonta africana (savanna elephant) or Loxodonta cyclotis (forest elephant) in Africa. There are about 500,000 African elephants alive now (about a third of them the more reticent, less studied L. cyclotis), and only 40,000 – 50,000 Asian elephants remaining. The Swedish Elephant Encyclopedia database currently lists just under 5,000 (most of them E. maximus) living in captivity worldwide, in half as many locations — meaning that the average number of elephants per holding is less than two; many of them live without a single companion of their kind.

For the freeborn, if it is a cow, the “allomothers” who welcomed her into the world will be with her for life — a matriarchal clan led by the oldest and biggest. She in turn will be an enthusiastic caretaker and playmate to her younger cousins and siblings. When she is twelve or fourteen, she will go into heat (“estrus”) for the first time, a bewildering occurrence during which her mother will stand by and show her what to do and which male to accept. If she conceives, she will have a calf twenty-two months later, crucially aided in birthing and raising it by the more experienced older ladies. She may have another every four to five years into her fifties or sixties, but not all will survive.

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Mar 252015
 
 March 25, 2015  Posted by at 7:39 am Finance Tagged with: , , , , , , , , ,  Comments Off on Debt Rattle March 25 2015


William Henry Jackson Jupiter & Lake Worth R.R., Florida 1896

The Long-Distance Relationship Between Americans and Jobs (WSJ)
American Cash Is Flooding Into European Stocks (CNN)
Bank of Canada, Government and Others Face Lawsuit for IMF Conspiracy (Epoch T.)
ECB Said to Limit Greek Lenders’ Treasury-Bill Holdings (Bloomberg)
Greeks Celebrate Independence as EU Creditors Discuss Their Fate (Bloomberg)
Next Task For Tsipras Is To Convince His Party (Kathimerini)
Greece: Fascists At The Gate (Hallinan)
China’s Influence Poised To Climb In Revamp Of Postwar Order (Bloomberg)
The New Chinese Dream (Pepe Escobar)
Gulf Should Be More Worried About Yemen Than Oil (CNBC)
Oil Stand-Off In Ukraine Shows Oligarchs Won Maidan Revolution (Sputnik)
Fiscal Virtue And Fiscal Vice – Macroeconomics At A Crossroads (Skidelsky)
Pension Funds Seek Shelter From Dollar’s Rise (WSJ)
Brazil Investigates Deficit-Ridden Pension Fund (Bloomberg)
Money May Make The World Go Round, But At What Cost? (BBC)
Obama Snubs NATO Chief as Crisis Rages (Bloomberg)
Paulson and Warren: The Unlikely Twin Towers of Dodd-Frank (Bloomberg)
Presidents, Bankers, the Neo-Cold War and the World Bank (Nomi Prins)
Financial Feudalism (Dmitry Orlov)
Antibiotics In Meat Rising Fast Worldwide, Especially Bacon (UPI)
Monsanto Bites Back at Roundup Findings (WSJ)

3 trillion kilometers driven last year.

The Long-Distance Relationship Between Americans and Jobs (WSJ)

For more Americans, jobs are moving out of reach, literally. The number of “nearby jobs”–jobs within a typical commute for residents in a major metropolitan area–dropped 7% between 2000 and 2012, according to a new study of census data by Elizabeth Kneebone and Natalie Holmes of the Metropolitan Policy Program at the Brookings Institution. Minorities and poor Americans, who have moved to the suburbs in droves, fared worse. The number of nearby jobs fell 17% for Hispanic residents and 14% for blacks over this time period, compared with a drop of 6% for whites. Typical poor residents saw a drop in job proximity of 17%, versus 6% for the nonpoor. The growing distance between Americans and job opportunities is a discouraging trend amid what’s become the strongest job creation in two decades.

Last month, U.S. employers added a seasonally adjusted 295,000 jobs, the 12th straight month of 200,000-plus net job creation. That’s the best streak since 1995. Most of those jobs are full-time. (In 2012, where the Brookings analysis ends, overall U.S. employment in America’s largest metros was about 2% higher than in 2000, following the Great Recession’s catastrophic job losses.) But what matters for Americans’ employment prospects isn’t just the number of job opportunities, or even how “good” they are, but where they are. People near jobs are more likely to work, and have shorter job searches and periods of joblessness—especially black Americans, women and older workers, Brookings says. Among the poor, being near a job increases the chances of leaving welfare.

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The world gets more distorted by the day.

American Cash Is Flooding Into European Stocks (CNN)

American cash is pouring into European stocks. Last week alone, U.S.-based funds sent a record amount -$3.9 billion – into Europe equities. That’s according to EPFR Global, a research firm that tracks fund flow data. “The trend is definitely accelerating,” says Cameron Brandt, director of research at EPFR. U.S. investments going to Europe thru mid-March have already outpaced February’s total and are triple the size of January’s figure. Here’s why investors are flocking to Europe:

• Europe’s stock success: It’s no secret that European stocks are hot right now. Since the ECB announced its stimulus plan for the continent in January, markets have surged. The STOXX index (SXXL) is up 16% this year while Germany’s DAX has risen 21% in 2015. Markets in Belgium, Sweden and even Spain – yes, Spain! – are doing great so far too. That’s a lot better than the U.S. markets, which are up just over 1% so far this year. As U.S. stocks look pricey, investors see more upside potential across the pond.
“It’s time for Europe to play catch up,” says Kevin Kelly at Recon Capital. “That’s why you’re seeing investors and funds flow into Europe.”

The stimulus plan has weakened the value of the euro, and at the same time the U.S. dollar is gaining value. The euro has rallied a bit this week, but it’s still near 12-year lows. Many believe the dollar and euro could be equal later this year. The currency situation makes European companies more attractive to investors because their products are cheaper to sell than American companies’ products. European exports are on the rise, and the eurozone economy is showing signs of a pick up.

• Expect the trend to continue: The flood of money into Europe is unlikely to stop any time soon. Sixty-three% of fund managers want to invest more in Europe this year, according to the most recent BofA Merrill Lynch fund manager survey. That’s the highest rate since 2001. One of the hot-ticket items right now for investors is exchange-traded fund (ETF) that own European stocks. Investment in those ETFs so far this year has doubled compared to the same time a year ago, according to BlackRock.

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Intriguing.

Bank of Canada, Government and Others Face Lawsuit for IMF Conspiracy (Epoch T.)

It would be easy to assume the people suing the Queen of England, the Bank of Canada, and three ministers for a conspiracy against “all Canadians” wear tinfoil hats. They don’t. They may be conspiracy theorists, but they are also intelligent, thoughtful people who have a lawyer with a history of winning unlikely cases. And despite the government’s best efforts to have this case thrown out, it’s going ahead after winning an appeal that overturned a lower court’s ruling to have it tossed and surviving a follow-up motion to have it tossed again. The government has one more chance to have it thrown out through an appeal at the Supreme Court, but that has to be filed by Mar. 29 and that looks unlikely. That means the Committee on Monetary and Economic Reform (COMER) is going to have its day in federal court.

This little think-tank alleges that the Bank of Canada, the Queen, the attorney general, the finance minister, and minister of national revenue are engaging in a conspiracy with the International Monetary Fund (IMF), the Financial Stability Board (FSB), and the Bank for International Settlements (BIS) to undermine Canada’s financial and monetary sovereignty. No major media have covered this story. That could be because of the powerful vested interests the suit targets, as Rocco Galati, the lawyer trying the case, suggests. Or it could be because there are parts of the statement of claim that read like they were pulled from the dark corners of some Internet conspiracy forum. They weren’t. These are serious people with wide knowledge of the financial and monetary system. And their lawyer is no slouch.

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Dangerous games.

ECB Said to Limit Greek Lenders’ Treasury-Bill Holdings (Bloomberg)

The ECB banned Greek banks from increasing holdings of short-term government debt, two people familiar with the matter said. The decision, approved by the ECB Governing Council, comes five days after the same body stalled a previous proposal by the institution’s supervisory arm, pending legal review. In the intervening days, Greek Prime Minister Alexis Tsipras met high-level euro-area officials, including ECB President Mario Draghi and German Chancellor Angela Merkel. Tsipras agreed to submit a comprehensive list of policy measures aimed at securing more financial aid from European partners.

Euro-area finance officials will hold a call on Wednesday to discuss progress on Greece, amid concerns that the country will run out of money by early April. The Governing Council decision makes previous supervisory recommendations legally binding, and reflects increasing concern at the ECB’s bank oversight body, the SSM, about Greek lenders’ exposure to the state and the accompanying default risk. The ban echoes decisions already made on the monetary policy side, such as a €3.5 billion limit on accepting Greek treasury bills as collateral, one of the people said.

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Independence Day. But not a lot of independence.

Greeks Celebrate Independence as EU Creditors Discuss Their Fate (Bloomberg)

Greeks celebrate their independence Wednesday with a military parade and a folk-music festival sponsored by the Ministry of Defense, as European officials more than 1,000 miles away review the financial aid that will shape their future. The ECB Governing Council will hold a weekly call to assess the Emergency Liquidity Assistance keeping Greece’s banking system afloat while euro-area finance ministry officials will have a separate discussion on the progress of the country’s economic policy program. Without access to capital markets, or the ECB’s normal financing operations, Greek banks rely on almost €70 billion of ELA to cover a financing shortfall exacerbated by steep deposit withdrawals.

While inspectors are gauging the case for continuing financial support for Europe’s most-indebted nation, many Athenians will be watching a parade of battle tanks and fighter jets to mark the beginning in 1821 of the war that won independence from the Ottoman Empire. The government of George Papandreou scaled down military parades to cut costs after the Greek debt crisis erupted in 2010. Fighter jets made a comeback to the skies of Athens last year at a cost of about €500,000, according to a defense ministry official from the previous administration.

With government cash supplies running out and negotiations on financial aid only inching forwards, European officials have said that Greece could default on its obligations within weeks unless there’s a breakthrough. The government has to pay about €1.5 billion of salaries and pensions by the end of March and Prime Minister Alexis Tsipras is at loggerheads with its creditors over the conditions attached to its emergency loans. Revenue from taxes also missed budget targets by about €1 billion in the first two months of the year, the country’s Ministry of Finance said Tuesday, further depleting cash buffers.

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Will Syriza blow it all up?

Next Task For Tsipras Is To Convince His Party (Kathimerini)

Returning from his official visit to Germany, one of Prime Minister Alexis Tsipras’s main tasks will be to ensure his party’s support for the reform list his government is compiling and preparing to send to lenders, possibly by the end of the week. Sources said that Tsipras will take it upon himself to convince SYRIZA members and MPs to back the reform plan, which should secure Greece the funding it needs to survive until the end of June, when the government will have to reach a new agreement with its lenders. The prime minister’s first port of call in this effort to sell the current package will be the party’s political secretariat. A meeting is expected to take place in the next few days.

This will be followed by a gathering of SYRIZA’s parliamentary group, where Tsipras will try to persuade the party’s 149 MPs to back the reforms when they come to Parliament. The content of the reform package is not yet known but the government is concerned that it will contain a number of items that will not go down well within SYRIZA. This could include the retention of the contentious ENFIA property tax for another year, albeit adjusted so that the less well-off pay less, as well as labor and pension reforms. The coalition has already sought to defuse any tension over privatizations by saying that it will only seek strategic partnerships that allow the state to retain a controlling majority.

An area of increasing friction is what the government plans to do with value-added tax. Lenders want the special 30% reduction on VAT enjoyed by islands to be scrapped. Alternate Finance Minister Nadia Valavani told ANT1 TV yesterday that one option might be to adopt regular VAT rates on the most popular islands, such as Santorini and Myconos. However, this runs counter to what government sources have been saying so far. It is believed the coalition is examining the option of adopting an across-the-board VAT rate of 15%, which means some goods will become cheaper and others more expensive, but with possible exceptions for some basic items such as medicines.

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Next in line if Syriza fails?!

Greece: Fascists At The Gate (Hallinan)

When some 70 members of the neo-Nazi organization Golden Dawn go on trial sometime this spring, there will be more than street thugs and fascist ideologues in the docket, but a tangled web of influence that is likely to engulf Greece’s police, national security agency, wealthy oligarchs, and mainstream political parties. While Golden Dawn—with its holocaust denial, its swastikas, and Hitler salutes—makes it look like it inhabits the fringe, in fact the organization has roots deep in the heart of Greece’s political culture Which is precisely what makes it so dangerous. Golden Dawn’s penchant for violence is what led to the charge that it is a criminal organization. It is accused of several murders, as well as attacks on immigrants, leftists, and trade unionists. Raids have uncovered weapon caches.

Investigators have also turned up information suggesting that the organization is closely tied to wealthy shipping owners, as well as the National Intelligence Service (EYP) and municipal police departments. Several lawyers associated with two victims of violence by Party members—a 27-year old Pakistani immigrant stabbed to death last year, and an Afghan immigrant stabbed in 2011— charge that a high level EYP official responsible for surveillance of Golden Dawn has links to the organization. The revelations forced Dimos Kouzilos, director of EYP’s third counter-intelligence division, to resign last September. There were several warning flags about Kouzilos when he was appointed to head the intelligence division by rightwing New Democracy Prime Minister Antonis Samaras.

Kouzilos is a relative of a Golden Dawn Parliament member, who is the Party’s connection to the shipping industry. Kouzilos is also close to a group of police officers in Nikea, who are currently under investigation for ties to Golden Dawn. Investigators charge that the Nikea police refused to take complaints from refugees and immigrants beaten by Party members, and the police Chief, Dimitris Giovandis, tipped off Golden Dawn about surveillance of the Party. In handing over the results of their investigation, the lawyers said the “We believe that this information provides an overview of the long-term penetration ands activities of the Nazi criminal gang with the EYP and the police.” A report by the Office of Internal Investigation documents 130 cases where Golden Dawn worked with police.

It should hardly come as a surprise that there are close ties between the extreme right and Greek security forces. The current left-right split goes back to 1944 when the British tried to drive out the Communist Party—the backbone of the Greek resistance movement against the Nazi occupation. The split eventually led to the 1946-49 civil war when Communists and leftists fought royalists and former German collaborationists for power.

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What if a big recession hits?

China’s Influence Poised To Climb In Revamp Of Postwar Order (Bloomberg)

Seven decades after the end of World War II, the international economic architecture crafted by the U.S. faces its biggest shakeup yet, with China establishing new channels for influence to match its ambitions. Three lending institutions with at least $190 billion are taking shape under China’s leadership, one of them informally referred to as a Marshall Plan – evoking the postwar U.S. program to rebuild an impoverished Europe. Also this year, China’s yuan may win the IMF’s blessing as an official reserve currency, a recognition of its rising use in trade and finance. China’s clout has been expanding for decades, as its rapid growth allowed it to snap up a rising share of the world’s resources, its exports penetrated global markets, and its bulging financial assets gave it power to make big individual loans and purchases.

Now, the creation of international lending institutions is leveraging that economic influence closer to the political and diplomatic arenas, as U.S. allies defy America to back China’s initiative. “This is the beginning of a bigger role for China in global affairs,” said Jim O’Neill, formerly at Goldman Sachs, who coined the term BRICs in 2001 to highlight the rising economic power of Brazil, Russia, India and China. Chinese President Xi Jinping’s vision of achieving the same great-power status enjoyed by the U.S. received a major boost this month when the U.K., Germany, France and Italy signed on to the Asian Infrastructure Investment Bank. The AIIB will have authorized capital of $100 billion and starting funds of about $50 billion.

Canada is considering joining, which would leave the U.S. and Japan as the only Group of Seven holdouts as they question the institution’s governance and environmental standards. Australian Prime Minister Tony Abbott’s cabinet approved negotiations to join too, according to a government official who asked not to be identified as the decision hasn’t been made public. “China’s economic rise is acting as a huge pull factor forcing the existing architecture to adapt,” said James Laurenceson, deputy director of the Australia-China Relations Institute in Sydney. “The AIIB has shown the U.S. that a majority in international community support China’s aspirations for taking on greater leadership and responsibility, at least on economic initiatives.”

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It’s still all just printed Monopoly cash, Pepe.

The New Chinese Dream (Pepe Escobar)

It’s no wonder top nations in the beleaguered EU have gravitated to the AIIB – which will play a key role in the New Silk Road(s). A German geographer – Ferdinand von Richthofen – invented the Seidenstrasse (Silk Road) concept. Marco Polo forever linked Italy with the Silk Road. The EU is already China’s number one trade partner. And, once again symbolically, this happens to be the 40th year of China-EU relations. Watch the distinct possibility of an emerging Sino-European Fund that finances infrastructure and even green energy projects across an integrated Eurasia. It’s as if the Angel of History – that striking image in a Paul Klee painting eulogized by philosopher Walter Benjamin – is now trying to tell us that a 21st century China-EU Seidenstrasse synergy is all but inevitable.

And that, crucially, would have to include Russia, which is a vital part of the New Silk Road through an upcoming, Russia-China financed $280 billion high-speed rail upgrade of the Trans-Siberian railway. This is where the New Silk Road project and President Putin’s initial idea of a huge trade emporium from Lisbon to Vladivostok actually merge. In parallel, the 21st century Maritime Silk Road will deepen the already frantic trade interaction between China and Southeast Asia by sea. Fujian province – which faces Taiwan – will play a key role. Xi, crucially, spent many years of his life in Fujian. And Hong Kong, not by accident, also wants to be part of the action.

All these developments are driven by China being finally ready to become a massive net exporter of capital and the top source of credit for the Global South. In a few months, Beijing will launch the China International Payment System (CIPS), bound to turbo-charge the yuan as a key global currency for all types of trade. There’s the AIIB. And if that was not enough, there’s still the New Development Bank, launched by the BRICs to compete with the World Bank, and run from Shanghai.

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.. the Saudi Arabian foreign minister said the GCC would take “necessary measures” to resolve the Yemeni conflict..”

Gulf Should Be More Worried About Yemen Than Oil (CNBC)

Civil strife and terrorism in Yemen could pose a greater threat to the Gulf countries of the Middle East than tumbling oil prices, a major bank said on Tuesday. “We can’t help but think that the turmoil in Yemen is the emerging and underappreciated risk for investors in GCC (Gulf Cooperation Council) stocks,” said Citi analysts Josh Levin and Rahul Bajaj in a research note. Despite worries about Islamic insurgency and destabilization in the Middle East and North Africa, investors in the oil-exporting GCC countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) have focused on the potential hit from the slump in energy prices, with crude oil down around 50% since a peak in June 2014.

However, Levin and Bajaj said that increasing strife in Yemen—which borders Saudi Arabia to the south and Oman to the west— could be an “underappreciated risk” to the GCC. “One of the key takeaways from our GCC trip in early February came from an executive in Qatar who observed that while most people are focused on the price of oil, the recent instability in Yemen posed a greater and underappreciated risk to the GCC. Recent events appear to bear out this executive’s observation,” they said on Tuesday. Yemen is in the grips of a worsening civil war, with fighting intensifying between ousted Sunni President Abd-Rabbuh Mansuh Hadi and the Shiite, anti-American rebels who seized power in a coup in January.

The rebels also face violent resistance from Sunni tribesman and competing Islamist extremists in the south. Last week, suicide bombers opposed to the rebels killed 137 people and injured more than 300 others during Friday prayers in the Yemini capital of Sana’a. On Monday, the Saudi Arabian foreign minister said the GCC would take “necessary measures” to resolve the Yemeni conflict, according to media reports. This is in response to requests for military assistance from Hadi, who belongs to the same Muslim Sunni sect as Saudi Arabia’s leaders. Levin and Bajaj warned that the turmoil in Yemen had the potential to spill over into nearby countries. “We have no edge or ability to predict whether or not the conflict in Yemen will spill over into neighboring countries or impact other GCC countries,” they said.

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Kolomoysky ‘resigned’ after the article was written.

Oil Stand-Off In Ukraine Shows Oligarchs Won Maidan Revolution (Sputnik)

Whatever the outcome of the stand-off between President Petro Poroshenko and his subordinate Igor Kolomoysky may be, their conflict over Ukrainian oil giant Ukrnafta reveals realities about post-Maidan Ukraine which mainstream media manages to circumvent. Firstly, the country is still ruled by oligarchs, not by the people, even though Igor Kolomoysky is formally governor of Dnepropetrovsk region. Kolomoysky’s private army simply took control first of Ukrtransnafta (Ukraine’s oil transportation monopoly) and later of Ukrnafta. What does this tell us about the Ukrainian state? Secondly, Ukraine’s oligarchs are not at peace with each other; the country is bracing for a major ‘war for assets’ between the country’s richest men (Kolomoysky is worth $2.4 billion on the Forbes list and Poroshenko is worth $1.3 billion).

Thirdly, the Maidan revolution not only left the country without any meaningful legal opposition in the parliament or in the media – as Kost Bondarenko, director of the Kiev-based Foundation for Ukrainian Politics, put it in his article for the Moscow-based Nezavisimaya Gazeta – but the revolution also left Ukraine in a situation of complete lawlessness, when neither laws nor even the words of the president mean much before brutal force and big money (the main weapons of oligarchs). The story of the weekend conflict between Ukraine’s president and the governor of Ukraine’s most important industrial region is a perfect illustration of all these sad truths. Kolomoysky’s men with submachine guns not only took control of Ukrtransgaz on Friday, but the governor of Dnepropetrovsk was apparently untroubled by President Poroshenko’s reprimand for his “unethical behavior” issued the next day.

Kolomoysky’s response to this “scolding” from Poroshenko was widely reported, along with an officially unconfirmed freeze on the accounts of Poroshenko’s companies in Kolomoysky’s bank (Privat-bank). Adding armed insult to the financial injury, Kolomoysky’s men on Sunday took control of Ukrnafta, the country’s biggest oil company, presenting themselves as members of the “voluntary battalion Dnieper” (a Kolomoysky-sponsored paramilitary group known for its atrocities against civilians in the rebellious Donetsk Region). Despite Poroshenko’s order to disarm the gunmen and the president’s promise that “there will be no pocket armies in Ukraine,” Kolomoysky’s men did not leave the building on Monday; instead, they started to put up metal fences around it.

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“..fiscal tightening has cost developed economies 5-10 percentage points of GDP growth since 2010..”

Fiscal Virtue And Fiscal Vice – Macroeconomics At A Crossroads (Skidelsky)

Until a few years ago, economists of all persuasions confidently proclaimed that the Great Depression would never recur. In a way, they were right. After the financial crisis of 2008 erupted, we got the Great Recession instead. Governments managed to limit the damage by pumping huge amounts of money into the global economy and slashing interest rates to near zero. But, having cut off the downward slide of 2008-2009, they ran out of intellectual and political ammunition. Economic advisers assured their bosses that recovery would be rapid. And there was some revival; but then it stalled in 2010. Meanwhile, governments were running large deficits – a legacy of the economic downturn – which renewed growth was supposed to shrink.

In the eurozone, countries such as Greece faced sovereign-debt crises as bank bailouts turned private debt into public debt. Attention switched to the problem of fiscal deficits and the relationship between deficits and economic growth. Should governments deliberately expand their deficits to offset the fall in household and investment demand? Or should they try to cut public spending in order to free up money for private spending? Depending on which macroeconomic theory one held, both could be presented as pro-growth policies. The first might cause the economy to expand, because the government was increasing public spending; the second, because they were cutting it. Keynesian theory suggests the first; governments unanimously put their faith in the second.

The consequences of this choice are clear. It is now pretty much agreed that fiscal tightening has cost developed economies 5-10 percentage points of GDP growth since 2010. All of that output and income has been permanently lost. Moreover, because fiscal austerity stifled economic growth, it made the task of reducing budget deficits and national debt as a share of GDP much more difficult. Cutting public spending, it turned out, was not the same as cutting the deficit, because it cut the economy at the same time. That should have ended the argument. But it did not. Some economists claim that governments faced a balance of risk in 2010: cutting the deficit might have slowed growth; but not committing to cut it might have made things even worse.

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Reinforce your local infrastructure!

Pension Funds Seek Shelter From Dollar’s Rise (WSJ)

The soaring U.S. dollar is driving pension funds into the currency markets, in part to protect their overseas investments but also to take advantage of some of the biggest price swings in the financial world. In January, the California State Teachers Retirement System, the nation’s second-largest public pension fund with $190.8 billion under management, handed $500 million to a pair of specialist currency funds as part of an effort to limit losses on their international investments, which fall in value as the dollar rises against other currencies. Late last year, the $150.2 billion Florida State Board of Administration expanded its currency investments by more than 10%, to $2.25 billion.

Last June, the $29 billion Connecticut Retirement Plans & Trust Funds hired two managers to help reduce the foreign-currency risks in its international stock investments. And the $14.3 billion Kansas Public Employees Retirement System is now looking to hire a currency manager. The clamor to protect against currency swings marks a return to a strategy that pension funds have tried on and off for years, with mixed results. While it is good news for the money managers that provide the strategies, which stand to reap tens of thousands of dollars in fees for every pension plan that signs up, it also adds to the risks taken on by pensions. Currency markets are among the most volatile, raising the potential for big profits, but also big losses.

“The pickup since December has been extraordinary,” said Adrian Lee, who manages Adrian Lee & Partners hedge fund. “We’ve had more funds interested in our strategies in the last three months than we’ve had in the last three years.” The fund’s assets have grown 30% in the past year, as existing clients raised their allocations, Mr. Lee said. At their most basic, currency strategies come in two flavors. A passive currency-overlay program that seeks to hedge against foreign-exchange losses typically costs between 0.05% and 0.1% of assets, based on a pension’s exposure to foreign markets, according to NEPC, a consultant to pension plans.

Active strategies that seek to profit from currency swings tend to be several times more expensive, as they include higher management fees and allow hedge funds to keep a share of profits. The rising dollar has re-energized interest in both strategies. While the U.S. Federal Reserve is expected to raise interest rates as soon as June, both Europe and Japan are pumping out economic stimulus at unprecedented levels, seeking to stimulate their economies by keeping rates low. The divergence in borrowing costs has sparked an exodus of capital, as investors quit euro and yen-denominated assets and head into the greenback.

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From one scandal to the next.

Brazil Investigates Deficit-Ridden Pension Fund (Bloomberg)

The deficit-ridden pension fund for Brazilian postal workers is being investigated for alleged reckless management after several years of money-losing bets ranging from investments in Lehman Brothers bonds to Argentine debt, two people with knowledge of the matter said. Pension-fund agency Previc, securities regulator CVM, the central bank and federal prosecutors are collaborating on the probe and meeting weekly to conclude a report on Postalis, Brazil’s third-largest retirement system by number of beneficiaries, said one of the people, who asked not to be named because the issue is private. The findings may be released in coming days, the person said. Under Brazilian law, the agencies may seek penalties that may include fines of as much as 1 million reais ($320,200) and a 10-year ban from managing pension funds.

Postalis has been running a deficit every year since 2011 and the shortfall of 5.6 billion reais now eclipses its 5 billion reais in assets, public records show. Now, the pension fund created in 1981 to take care of Brazil’s more than 100,000 postal workers is requiring those same employees to boost contributions so it can keep making payments to beneficiaries. “They threw us under the bus,” said 36-year-old Douglas Melo, who is required to pitch in an extra 40 reais a month on top of the 55 reais he already contributes to guarantee future benefits of 200 reais a month. “The fund’s investments that later defaulted or were involved in scandals make no sense.”

Postalis amassed billions of reais in losses pursuing risky bets while its peers flocked to the relative safety and high yields of Brazilian government debt. Brazil’s pension funds allocated 15% of their combined 641.7 billion-real portfolio to Brazil local sovereign debt in 2012, according to the nation’s association that tracks the industry. Postalis held less than 1% in 2012. Postalis bet on a fund that booked 18 million reais of Lehman Brothers debt in August 2008, one month before the New York investment bank filed for bankruptcy, according to data from Brazil’s securities regulator. It bought bonds or invested in funds of mid-sized Brazilian banks that were liquidated by the central bank in 2012 amid fraud allegations and lack of capital.

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Rage against the monopoly. And then create another one just as fast.

Money May Make The World Go Round, But At What Cost? (BBC)

Banks once had a near monopoly on moving money around the world, and they charged a pretty penny for it. But since the 2008 financial crisis, their reputations have taken an almighty battering, and a growing number of technology-focused start-ups are intent on getting a slice of the action. Cost has become the battleground and technology the weapon in this huge business: people send more than $500bn (£334bn) abroad each year. TransferWise, for example, says banks and independent money transfer giants such as Western Union and MoneyGram, charge about 5-8% in fees when transferring money abroad, and these fees are often concealed within the exchange rate. It charges just 0.5% of the amount being converted. This can equate to a £100-£150 saving on a £5,000 international money transfer.

Founded by Estonians Taavet Hinrikus and Kristo Kaarman, the firm achieves this by matching people transferring money in one direction with people transferring it in the other – so called peer-to-peer transfers. In other words, you are in effect buying your currency from other individuals, thereby cutting out a big chunk of exchange rate and “foreign transaction” charges normally levied by banks. “We didn’t understand why transferring money had to be so expensive,” says Mr Hinrikus, who was one of the first employees of Skype, the online communications company. “With us, it’s all about transparency – that’s really important. We choose the mid-market rate when we transfer money.” Another key to their success – TransferWise has shifted more than £3bn of customers’ money since 2011 – is the simplicity of design, he says.

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Does he do this of his own accord?

Obama Snubs NATO Chief as Crisis Rages (Bloomberg)

President Barack Obama has yet to meet with the new head of NATO, and won’t see Secretary General Jens Stoltenberg this week, even though he is in Washington for three days. Stoltenberg’s office requested a meeting with Obama well in advance of the visit, but never heard anything from the White House, two sources close to the NATO chief told me. The leaders of almost all the other 28 NATO member countries have made time for Stoltenberg since he took over the world’s largest military alliance in October. Stoltenberg, twice the prime minister of Norway, met Monday with Canadian Prime Minister Stephen Harper in Ottawa to discuss the threat of the Islamic State and the crisis in Ukraine, two issues near the top of Obama’s agenda. Kurt Volker, who served as the U.S. permanent representative to NATO under both President George W. Bush and Obama, said the president broke a long tradition.

“The Bush administration held a firm line that if the NATO secretary general came to town, he would be seen by the president … so as not to diminish his stature or authority,” he told me. America’s commitment to defend its NATO allies is its biggest treaty obligation, said Volker, adding that European security is at its most perilous moment since the Cold War. Russia has moved troops and weapons into eastern Ukraine, annexed Crimea, placed nuclear-capable missiles in striking distance of NATO allies, flown strategic-bomber mock runs in the North Atlantic, practiced attack approaches on the UK and Sweden, and this week threatened to aim nuclear missiles at Denmark’s warships. “It is hard for me to believe that the president of the United States has not found the time to meet with the current secretary general of NATO given the magnitude of what this implies, and the responsibilities of his office,” Volker said.

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Barney Frank memoirs.

Paulson and Warren: The Unlikely Twin Towers of Dodd-Frank (Bloomberg)

On the surface, Henry Paulson, the former CEO of Goldman Sachs and Secretary of the Treasury under President George W. Bush, and Senator Elizabeth Warren, the populist Democrat from Massachusetts, seem an unlikely team. But former Representative Barney Frank, co-author of the Dodd-Frank financial reform legislation enacted in 2010, said he views Paulson and Warren as twin pillars protecting the financial system. In an interview this week on the Charlie Rose television program, Frank, who was chairman of the House Financial Services Committee during the 2008-2009 financial crisis, recalled former Federal Reserve Chairman Ben Bernanke and Paulson telling Congressional Democratic leaders, “The economy is about to fall apart and we have got to do something the public isn’t going to like.”

Frank worked with Bernanke and Paulson to push through the unpopular but ultimately successful financial bailout known as the Troubled Asset Relief Program. Paulson, Frank said, remained helpful even after leaving government, assisting in the drafting and passing of Dodd-Frank. While Paulson helped establish Dodd-Frank, Frank said, “Elizabeth Warren is helping safeguard it” from Republicans eager to scuttle the law. He acknowledged that Dodd-Frank is complex. But Frank insisted it was neither politically nor substantively possible to make the legislation, which overhauls some regulations dating to the 1930s, less complicated. “In the thirties, there was no such thing as credit default swaps and collateralized loan obligations and collateralized debt obligations,” he said.

Frank’s memoir – titled “Frank” – chronicles his more than four decades in public life. For the first two decades, he said, he felt it necessary to hide his sexuality while celebrating his advocacy of liberal policies. Now, he says, it’s easier to be gay — he was married during his final term in Congress – and harder to champion liberal policies.

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The World Bank as a power tool.

Presidents, Bankers, the Neo-Cold War and the World Bank (Nomi Prins)

At first glance, the neo-Cold War between the US and its post WWII European Allies vs. Russia over the Ukraine, and the stonewalling of Greece by the Troika might appear to have little in common. Yet both are manifestations of a political-military-financial power play that began during the first Cold War. Behind the bravado of today’s sanctions and austerity measures lies the decision-making alliance that private bankers enjoy in conjunction with government and multinational entries like NATO and the World Bank. It is President Obama’s foreign policy to back the Ukraine against Russia; in 1958, it was the Eisenhower Doctrine that protected Lebanon from a Soviet threat. For President Truman, the Marshall Plan arose partly to guard Greece (and other US allies) from Communism, but it also had lasting economic implications.

The alignment of political leaders and key bankers was more personal back then, but the implications were similar to the present day. US military might protected its major trading partners, which in turn, did business with US banks. One power reinforced the other. Today, the ECB’s QE program funds swanky Frankfurt headquarters and prioritizes Germany’s super-bank, Deutschebank and its bond investors above Greece’s future. These actions, then and now, have roots in the American ideology of melding military, political and financial power that flourished in the haze of World War II. It’s not fair to pin this triple-power stance on one man, or even one bank; yet one man and one bank signified that power in all of its dimensions, including the use of political enemy creation to achieve financial goals.

That man was John McCloy, ‘Chairman of the Establishment’ as his biographer, Kai Bird, characterized him. The relationship between McCloy and Truman cemented a set of public-private practices that strengthened private US banks globally at the expense of weaker, potentially Soviet (now Russian) leaning countries. [..] During the Cold War, the World Bank provided funds for countries that leaned toward capitalism versus communism. Political allies of the United States got better treatment (and still do). The Nations that private bankers coveted for speculative and lending purposes saw their debt loads increase substantially and their industries privatized. Equally, the bankers decided which bonds they could sell to augment public aid funds, which meant they would have control over which countries the World Bank would support. The World Bank did more to expand US banking globally than any treaty or entity that came before it.

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Good read.

Financial Feudalism (Dmitry Orlov)

Once upon a time—and a fairly long time it was—most of the thickly settled parts of the world had something called feudalism. It was a way of organizing society hierarchically. Typically, at the very top there was a sovereign (king, prince, emperor, pharaoh, along with some high priests). Below the sovereign were several ranks of noblemen, with hereditary titles. Below the noblemen were commoners, who likewise inherited their stations in life, be it by being bound to a piece of land upon which they toiled, or by being granted the right to engage in a certain type of production or trade, in case of craftsmen and merchants. Everybody was locked into position through permanent relationships of allegiance, tribute and customary duties: tribute and customary duties flowed up through the ranks, while favors, privileges and protection flowed down.

It was a remarkably resilient, self-perpetuating system, based largely on the use of land and other renewable resources, all ultimately powered by sunlight. Wealth was primarily derived from land and the various uses of land. Feudalism was essentially a steady-state system. Population pressures were relieved primarily through emigration, war, pestilence and, failing all of the above, periodic famine. Wars of conquest sometimes opened up temporary new venues for economic growth, but since land and sunlight are finite, this amounted to a zero-sum game. But all of that changed when feudalism was replaced with capitalism. What made the change possible was the exploitation of nonrenewable resources, the most important of which was energy from burning fossilized hydrocarbons: first peat and coal, then oil and natural gas.

Suddenly, productive capacity was decoupled from the availability of land and sunlight, and could be ramped up almost, but not quite, ad infinitum, simply by burning more hydrocarbons. Energy use, industry and population all started going up exponentially. A new system of economic relations was brought into being, based on money that could be generated at will, in the form of debt, which could be repaid with interest using the products of ever-increasing future production. Compared with the previous, steady-state system, the change amounted to a new assumption: that the future will always be bigger and richer—rich enough to afford to pay back both principal and interest.

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A tragic species killing itself:”..antibiotic use in livestock will likely rise 67% by 2030 if livestock conditions don’t improve. About 80% of antibiotics sold in the United States go to livestock”.

Antibiotics In Meat Rising Fast Worldwide, Especially Bacon (UPI)

In the next 15 years, countries around the world will see a major increase in antibiotic use in livestock, a new study finds. “The invention of antibiotics was a major public health revolution of the 20th century,” said senior author Ramanan Laxminarayan, a senior research scholar at the Princeton Environmental Institute and director of the Center for Disease Dynamics, Economics and Policy. “Their effectiveness – and the lives of millions of people around the world – are now in danger due to the increasing global problem of antibiotic resistance, which is being driven by antibiotic consumption.” The study was done by researchers at the Center for Disease Dynamics, Economics and Policy, Princeton University, the International Livestock Research Institute and the Université Libre de Bruxelles.

The researchers found antibiotic use in livestock will likely rise 67% by 2030 if livestock conditions don’t improve. About 80% of antibiotics sold in the United States go to livestock. Antibiotic resistance not only applies to the animals, but it can affect the humans eating the meat. The researchers found pig farmers producing pork and bacon use four times as many antibiotics as cattle farmers. One of the major reasons farmers are having to use more and more antibiotics is that demand for meat is going up, and animals are often subjected to smaller and smaller living quarters, where disease can spread.

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Feel the power.

Monsanto Bites Back at Roundup Findings (WSJ)

Monsanto Co. escalated its criticism of a World Health Organization agency’s finding last week that a commonly used herbicide probably has the potential to cause cancer in humans. The St. Louis-based agribusiness giant—a major seller of the weed killer—sought a meeting with senior WHO officials on the International Agency for Research on Cancer’s finding, while a WHO agency official defended what he called an “exhaustive” review of eligible data. The IARC’s classification of glyphosate, the U.S.’s most commonly used weedkiller, as “probably carcinogenic” in a report published Friday reignited debate over a chemical that environmental groups have long criticized and the agricultural industry has defended as safe for humans and less harsh on the environment than others.

“We are outraged with this assessment,” Robert Fraley, Monsanto’s chief technology officer, said Monday, arguing that the finding was derived from “cherry picking” data based on an “agenda-driven bias.” Monsanto, which markets glyphosate under the Roundup brand, sent letters to WHO members seeking to discuss the IARC classification, which Monsanto officials said ran counter to many other findings, including those by other WHO programs, according to Philip Miller, the company’s vice president of global regulatory affairs. Dana Loomis, deputy head of the monographs section for the IARC, said the agency’s classification of glyphosate as “probably carcinogenic” was based on an examination of peer-reviewed research and completed government reports on the herbicide.

“We feel confident that our process is transparent and rigorous, based on the best available scientific data, and that it’s free from conflicts of interest,” Mr. Loomis said. He also said it was “categorically not true” that the IARC overlooked research on glyphosate, as Monsanto and other agriculture groups alleged. He said the IARC seeks to find and review all publicly available, peer-reviewed research and government documents in their final form. That excludes draft research, he said, which can change before it is completed.

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