Dec 052017
 
 December 5, 2017  Posted by at 10:01 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
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The Kennedies

 

China’s Property Binge Fuels Mortgage Fraud Frenzy (R.)
This Time IS Different, It Just Ends The Same (Roberts)
What Sowed The Seeds Of The Bitcoin Mania? (TM)
Bitcoin Is A ‘Dangerous Speculative Bubble’ – Stephen Roach (CNBC)
The Two-Tiered European Community (Bilbo)
This Could Mean The End Of May – And The Beginning Of Corbyn (Ind.)
Theresa May Humiliated As DUP Scuppers Border Deal (Ind.)
Confused May In Alignment Only With Herself Over Irish Issue (G.)
White House Weighing Plans For Private Spies To Counter “Deep State” (IC)
Apple Agrees To Pay Over $15 Billion To Ireland In Back Taxes (ArsT)
China, the Digital Giant (PS)
Pilots Across Germany Are Blocking The Deportation Of Asylum Seekers (IBT)
Push To Move Refugees From Greek Islands To Mainland (K.)
The World’s Oceans Are Under The Greatest Threat In History – Attenborough (G.)

 

 

It’s all fraud, and none of it is persecuted: “When everyone is doing it, you can’t put everyone in jail..”

“Operating out of small, cramped offices, often in residential blocks, loan agents “re-package” – or falsify documents for mortgage applications. “Around 60% of property buyers in Shanghai are involved in some kind of re-packaging..”

China’s Property Binge Fuels Mortgage Fraud Frenzy (R.)

[..] across China, unqualified borrowers use fake documents to secure mortgages, while loans deceptively obtained for other purposes are funnelled into property. These frauds are often committed with the consent and encouragement of other parties to the transactions, including lending brokers, property agents, valuation companies and the banks themselves. And these alleged crimes are rarely punished. Hu Weigang, a senior partner at Guangdong Shen Dadi Law Firm, would like to see the law enforced on the mainland as it is in Hong Kong, where creating a bogus document can lead to jail. But, he acknowledges, the scale of this cheating makes it virtually impossible. “When everyone is doing it, you can’t put everyone in jail,” says Hu, who specializes in real estate litigation.

While property prices in China continue to rise, mortgage fraud remains largely a hidden danger, much as subprime loans in the United States remained mostly out of sight ahead of the 2008 global financial crisis. The fear is that in a property correction, fraudulent mortgages would unravel, accelerating a collapse of housing prices in the world’s second biggest economy. This, in turn, would imperil China’s debt-laden financial system. The danger from gravity-defying home prices is clear to the ruling Communist Party. In his marathon speech at the 19th Party Congress in October, Chinese President Xi Jinping warned about the overheated property market. “Houses are built to be lived in, not for speculation,” he said. Top bank officials are also worried. Xu Zhong, head of the research bureau at the central bank, the People’s Bank of China, sees pitfalls ahead.

“We must be very aware that rapidly rising housing prices could not only hamper our economic development, but could easily result in systemic risks and negatively impact the macroeconomy..” The motive for widespread mortgage fraud is simple: fear of missing out. Millions of homeowners are enjoying the sensation of ever-expanding wealth. The average value of residential housing in China more than tripled between 2000 and 2015 as a huge property market emerged from the early decades of economic reforms. So far, China’s new home-owning class has yet to experience a sustained downturn in housing values. Official data showed prices grew 12.4% in 2016, the fastest rate since 2011. A report tracking home price trends by the Chinese Academy of Social Sciences, a state think tank, showed prices in 33 major cities soared 42% in 2016. Private estimates and anecdotal evidence suggest prices in most big Chinese cities actually doubled or tripled since late 2015.

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Look at them bubbles…

This Time IS Different, It Just Ends The Same (Roberts)

“Market bubbles have NOTHING to do with valuations or fundamentals.” [..] Stock market bubbles are driven by speculation, greed, and emotional biases – therefore valuations and fundamentals are simply a reflection of those emotions. In other words, bubbles can exist even at times when valuations and fundamentals might argue otherwise. Let me show you a very basic example of what I mean. The chart below is the long-term valuation of the S&P 500 going back to 1871.

The pattern of bubbles is interesting because it changes the argument from a fundamental view to a technical view. Prices reflect the psychology of the market which can create a feedback loop between the markets and fundamentals. This pattern of bubbles can be clearly seen at every bull market peak in history. The chart below utilizes Dr. Robert Shiller’s stock market data going back to 1900 on an inflation-adjusted basis with an overlay of the asymmetrical bubble shape.

There is currently a strong belief that the financial markets are not in a bubble. The arguments supporting those beliefs are all based on comparisons to past market bubbles. The inherent problem with much of the mainstream analysis is that it assumes everything remains status quo. However, the question becomes what can go wrong for the market? In a word, “much.” Economic growth remains very elusive, corporate profits appear to have peaked, and there is an overwhelming complacency with regards to risk. Those ingredients combined with an extraction of liquidity by the Federal Reserve leaves the markets more vulnerable to an exogenous event than currently believed.

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I can hear the protests from here…

What Sowed The Seeds Of The Bitcoin Mania? (TM)

2017 was an unusual year where financial conditions actually eased despite the Federal Reserve raising rates. The financial tightness in 2015 and 2016 was catalyzed by weakness in the energy market. With the help of central banks, as we have previously stated, the economy narrowly avoided a recession. It’s still remarkable to see how much financial conditions have eased since. According to the Taylor Rule, financial conditions are the easiest since 1970. The Chicago Fed’s net financial conditions index has financial conditions the easiest since 1993.


Chicago Fed- Financial Conditions Index

This explains why GDP growth was above 3% in Q2 and Q3 2017 for the first time since 2004-2005. It also explains why stock volatility has been very low; the S&P 500 has been up for 13 straight months which is the longest streak since at least 1928 (the index was created in 1923). With low interest rates and easy financial conditions, it’s not surprising that we’ve seen intense speculation in bitcoin. The cryptocurrency space has had other years with great performance, but the break out in 2017 is partially a result of the easy monetary environment. As you can see, the financial conditions in the 1990s and in the past year have both been very loose. The economic expansions were both elongated which further increases speculation as traders forget what a recession is. The chart below compares bitcoin’s rally since 2016 with other bubbles.

As you can see, Qualcomm’s performance in the 1990s is like bitcoin’s rally. This is a great analogy because Qualcomm saw its stock collapse in the dot com bust, but it has had a viable business model recently, making the Snapdragon chips in smartphones. The tech bubble was based on optimism which ended up being realized with the expansion of the mobile internet. However, the tech bubble witnessed exaggerated valuations, much like cryptocurrencies are experiencing today. Most of the blockchain startups today will fail like Pets.com did in the 1990s. However, blockchain technology in the future will likely become as synonymous with daily life as the internet is today.

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And more protests. Lots of older economists speak out against bitcoin.

Bitcoin Is A ‘Dangerous Speculative Bubble’ – Stephen Roach (CNBC)

With the price of bitcoin moving toward $12,000, a top economist on Tuesday sent a stark warning to investors: The cryptocurrency is in a “dangerous speculative bubble.” “This is a toxic concept for investors,” said Stephen Roach, Yale University senior fellow and the former Asia chairman and chief economist at investment bank Morgan Stanley. Roach, described by Yale as one of Wall Street’s most influential economists, spent the bulk of his 30-year career at Morgan Stanley heading up a highly regarded team of economists around the world. He had a critical take on the explosion of buying the world’s most popular cryptocurrency. “This is a dangerous speculative bubble by any shadow or stretch of the imagination,” he told CNBC’s “The Rundown.” “I’ve never seen a chart of a security where the price really has a vertical pattern to it. And bitcoin is the most vertical of any pattern I’ve ever seen in my career,” he added.

Bitcoin has surged more than 1,000% this year, accelerated by rising interest from retail and institutional investors who view the digital currency as a possible future means of exchange and store of value. Major exchanges like the CME and CBOE have also legitimized the currency’s investment credentials by saying they plan to introduce futures contracts to their respective exchanges, likely further supporting the price. Roach suggested that exchange legitimization makes bitcoin “somewhat dangerous” for investors, given what he described as a “lack of intrinsic underlying economic value to the concept.” Many investors admit to not understanding the technicalities of the instrument or the blockchain technology that underpins its existence, hoping instead to profit on the expectation that bitcoin as an investment will simply continue to rise. “Like all bubbles, they burst,” Roach said. “They go down, and the one who’s made the last investment gets hurt the most, there’s no question about it.”

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But the Troika demands 3.5% surpluses! “My estimate is that Greece should be running deficits close to 8 to 10% of GDP to move the economy in the right direction.”

The Two-Tiered European Community (Bilbo)

This is the final part of my four-part discussion of a so-called progressive proposal advanced by German academic Fritz Sharpf to reform the Eurozone into two tiers: a ‘Northern’ hard currency tier and a ‘Southern’ non-euro tier with the latter nations tying their currencies to the euro. We have seen that rather than providing a framework for convergence between the current Eurozone Member States, Sharpfs’ proposal would not liberate the weaker nations from the yoke of the euro, In fact, the proposal would just tie the exiting nations to the euro in a slightly different way – one that will not provide sufficient flexibility to make much difference.

In questioning the current orthodoxy, Sharpf also notes that if the ECB strictly behaved within the Maastricht rules then the need for even more aggressive internal devaluation would be required as the “sanctions would be inflicted by anonymous market forces”. That is, the Member States currently in trouble would soon go broke as they would have trouble raising funds from the bond markets at acceptable yields, given they do not issue their own currencies. In this context, Sharpf concludes that: “It is hard to see why Southern governments, after all the sacrifices that they have already been forced to make under the present regime, should opt for an alternative that would not loosen economic constraints but remove the present protections against state insolvency.” The same might be said of his Proposal 2.

Why would the Southern states, who would be forced to exit under his plan, not then fully exploit their new found currency capacities to improve domestic demand conditions immediately, which would then, after a while push their external balances into deficit, and once there was sufficient volumes of their own currency in the system, place downward pressure on their exchange rates? Greece only has a current account close to balance because the enduring Depression has killed import growth. Turn the growth back on and they will soon be back in deficit. As I noted in Part 1, the real exchange rate data shows that despite the painful internal devaluation that has been imposed on many Eurozone nations, only Ireland has improved its international competitiveness against Germany.

I also cannot see the ECB agreeing to unconditionally provide euro and other foreign currency reserves to the exiting nations who are running their fiscal policy outside the parameters of the Northern states. Can you imagine Germany, which proudly runs fiscal surpluses while its major transport network is falling apart (bridges etc) tolerating Greece running the fiscal deficits it needs to restore some sense of prosperity? While Germany sits on current account surpluses of around 7-8% and thus creating massive imbalances within the Eurozone, they lecture everyone else about fiscal rectitude. My estimate is that Greece should be running deficits close to 8 to 10% of GDP to move the economy in the right direction.

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More entertainment.

This Could Mean The End Of May – And The Beginning Of Corbyn (Ind.)

Is this it? The moment when the May premiership is over? Could Corbyn end up taking power in a matter of weeks? It’s at least possible, though I concede it sounds far-fetched at first. In history, some British Prime Ministers have had their premierships wrecked by the “Irish Question”. Others, in more recent times, have been destroyed by Europe. Theresa May is unique in managing to combine both famously intractable and insoluble issues into one lethal cocktail. And so, it seems she is about to swallow the poison. Her premiership may be even shorter than many anticipated, and a Jeremy Corbyn-led government could be a fact of British life by the time the snows melt next year. Here’s how.

From what we can discern, the Government is perfectly happy to concede “special status” for Northern Ireland / Ireland in the Brexit talks – anathema to the Ulster Unionists. This is because the Government desperately needs to get onto the second phase of the process – the trade talks for the whole UK – and MPs, without being too crude about it, are happy to sign whatever the EU sticks under their nose and worry about the consequences later. In the end, they will risk their support from the DUP to get moving on Brexit. Jobs (Tory MPs’ included) are at stake. After all, ministers such as David Davis always say that “nothing’s agreed until everything’s agreed”, so having now ratted on the Democratic Unionists, they can, in due course, re-rat on the Irish and the EU, after a trade deal is sorted out.

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This looks very amateurish. And everybody knows.

Theresa May Humiliated As DUP Scuppers Border Deal (Ind.)

Theresa May’s Brexit strategy is in disarray after the Irish Prime Minister dramatically accused her of reneging on an agreement that would have ended the deadlock in the talks. On a day of drama, the Prime Minister pulled the plug on a deal on the Irish border after it was rejected by the Democratic Unionist Party which props her up in power – triggering claims she is being “held to ransom”. The embarrassment left Ms May scrambling to arrange crisis talks with the DUP before she heads back to Brussels later this week, with the clock ticking on the negotiations. EU leaders have demanded she guarantee there will no hard land border in Ireland before a summit next week, if the talks are to move on to discussing future trade and a transitional deal.

The unravelling of the deal also left many Conservatives questioning Ms May’s handling of the talks, amid disbelief that the DUP had not been squared off in advance. The talks broke down after Arlene Foster, the DUP leader, ruled out any move “which separates Northern Ireland economically or politically from the rest of the United Kingdom”. “We have been very clear. Northern Ireland must leave the EU on the same terms as the rest of the United Kingdom,” she said, speaking at Stormont. The party – despite being the Tories’ partner in government – appeared to be blindsided by the UK’s apparent concession of “regulatory alignment” on both sides of the border, to avoid checks. Within 20 minutes, Ms May interrupted her talks with Jean-Claude Juncker, the EU Commission President, to telephone Ms Foster. When she went back to the lunch, the deal was off.

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“By the time Cornwall had got in on the act by insisting its dogs be allowed to surf wherever they wanted..”

Confused May In Alignment Only With Herself Over Irish Issue (G.)

“Are you sure we can’t fudge the Northern Ireland border issue just a little bit?” she had asked Juncker on arrival in Brussels. Juncker had sniggered. Absolutely not. What bit of “regulatory alignment” did she not get? Theresa had another go. How about we say that pigs, cheese and a few cows are allowed to wander across the border without a passport? So you’re basically giving in and accepting that Northern Ireland must stay inside the single market and the customs union, Juncker had observed. Mmm, yes and no, Theresa whispered, checking over her shoulder to make sure no one was listening. It was like this. Regulatory divergence and regulatory alignment could almost mean exactly the same thing. It just depended which side you were looking at it from. The secret was to persuade the divergers that you weren’t aligning and the aligners you weren’t diverging by drafting something that was equally open to misinterpretation by both.

“Whatever,” Juncker had yawned. Having persuaded herself she had got a deal she could sell – to herself if no one else – Theresa set about drafting an agreement with the Irish government. As the news seeped out that an agreement had been reached, all hell broke loose. If the Northern Irish could have a special nod and a wink for pigs, the Scots must have the same exemptions for scotch. And heather. Then London started making demands. Just because it could. It had never fancied leaving the EU anyway. By the time Cornwall had got in on the act by insisting its dogs be allowed to surf wherever they wanted, it dawned on the prime minister that maybe she ought to run the agreement past the DUP. Arlene Foster’s response had been unequivocal. Theresa could keep her £1bn. Any deal that didn’t make Northern Ireland exactly the same as the rest of the UK was unacceptable. No special status, no nothing. And if push came to shove, she’d bring down the UK government.

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Erik Prince and Oliver North. Yeah, those are the guys I would trust.

White House Weighing Plans For Private Spies To Counter “Deep State” (IC)

The Trump administration is considering a set of proposals developed by Blackwater founder Erik Prince and a retired CIA officer — with assistance from Oliver North, a key figure in the Iran-Contra scandal — to provide CIA Director Mike Pompeo and the White House with a global, private spy network that would circumvent official U.S. intelligence agencies, according to several current and former U.S. intelligence officials and others familiar with the proposals. The sources say the plans have been pitched to the White House as a means of countering “deep state” enemies in the intelligence community seeking to undermine Trump’s presidency. The creation of such a program raises the possibility that the effort would be used to create an intelligence apparatus to justify the Trump administration’s political agenda.

“Pompeo can’t trust the CIA bureaucracy, so we need to create this thing that reports just directly to him,” said a former senior U.S. intelligence official with firsthand knowledge of the proposals, in describing White House discussions. “It is a direct-action arm, totally off the books,” this person said, meaning the intelligence collected would not be shared with the rest of the CIA or the larger intelligence community. “The whole point is this is supposed to report to the president and Pompeo directly.” Oliver North, who appears frequently on Trump’s favorite TV network, Fox News, was enlisted to help sell the effort to the administration. He was the “ideological leader” brought in to lend credibility, said the former senior intelligence official.

Some of the individuals involved with the proposals secretly met with major Trump donors asking them to help finance operations before any official contracts were signed. The proposals would utilize an army of spies with no official cover in several countries deemed “denied areas” for current American intelligence personnel, including North Korea and Iran. The White House has also considered creating a new global rendition unit meant to capture terrorist suspects around the world, as well as a propaganda campaign in the Middle East and Europe to combat Islamic extremism and Iran. “I can find no evidence that this ever came to the attention of anyone at the NSC or [White House] at all,” wrote Michael N. Anton, a spokesperson for the National Security Council, in an email. “The White House does not and would not support such a proposal.”

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“The deal had allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003, down to as low as 0.005% in certain years..”

Apple Agrees To Pay Over $15 Billion To Ireland In Back Taxes (ArsT)

According to a top Irish official, Apple has agreed to to pay Ireland around $15.4 billion in back taxes. “We have now reached agreement with Apple in relation to the principles and operation of the escrow fund,” Finance Minister Paschal Donohoe told reporters before a meeting with European Competition Commissioner Margrethe Vestager. “We expect the money will begin to be transmitted into the account from Apple across the first quarter of next year.” Ireland was formally referred to the European Court of Justice after it failed to implement a 2016 order that required the island nation to collect the same amount in unpaid taxes. Over a year ago, as Ars reported, the EU’s competition chief Vestager said that a two-year investigation into so-called sweetheart tax deals in 1991 and 2007 had found Apple guilty of receiving illegal state aid from the Emerald Isle.

The deal had allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003, down to as low as 0.005% in certain years, according to Vestager. Apple has denied any wrongdoing and has also said that it received no “special deal.” “We have a dedicated team working diligently and expeditiously with Ireland on the process the European Commission has mandated,” Apple said in a Monday statement according to UPI. “We remain confident the General Court of the EU will overturn the Commission’s decision once it has reviewed all the evidence.” Both Apple and Ireland have challenged the EU’s court order.

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Why not check this for fraud too?

China, the Digital Giant (PS)

China has firmly established itself as a global leader in consumer-oriented digital technologies. It is the world’s largest e-commerce market, accounting for more than 40% of global transactions, and ranks among the top three countries for venture capital investment in autonomous vehicles, 3D printing, robotics, drones, and artificial intelligence (AI). One in three of the world’s unicorns (start-ups valued at more than $1 billion) is Chinese, and the country’s cloud providers hold the world record for computing efficiency. While China runs a trade deficit in services overall, it has lately been running a trade surplus in digital services of up to $15 billion per year. Powering China’s impressive progress in the digital economy are Internet giants like Alibaba, Baidu, and Tencent, which are commercializing their services on a massive scale, and bringing new business models to the world.

Together, these three companies have 500-900 million active monthly users in their respective sectors. Their rise has been facilitated by light – or, perhaps more accurate, late – regulation. For example, regulators put a cap on the value of online money transfers a full 11 years after Alipay introduced the service. Now, these Internet firms are using their positions to invest in China’s digital ecosystem – and in the emerging cadre of tenacious entrepreneurs that increasingly define it. Alibaba, Baidu, and Tencent together fund 30% of China’s top start-ups, such as Didi Chuxing ($50 billion), Meituan-Dianping ($30 billion), and JD.com ($56 billion). With the world’s largest domestic market and plentiful venture capital, China’s old “copy-cat” entrepreneurs have transformed themselves into innovation powerhouses.

They fought like gladiators in the world’s most competitive market, learned to develop sophisticated business models (such as Taobao’s freemium model), and built impregnable moats to protect their businesses (for example, Meituan-Dianping created an end-to-end food app, including delivery). As a result, the valuation of Chinese innovators is many times higher than that of their Western counterparts. Moreover, China leads the world in some sectors, from livestreaming (one example is Musical.ly, a lip-syncing and video-sharing app) to bicycle sharing (Mobike and Ofo exceed 50 million rides per day in China, and are now expanding abroad).

Most important, China is at the frontier of mobile payments, with more than 600 million Chinese mobile users able to conduct peer-to-peer transactions with nearly no fees. China’s mobile-payment infrastructure – which already handles far more transactions than the third-party mobile-payment market in the United States – will become a platform for many more innovations.

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Merkel is losing ground fast. First inviting refugees and then paying them to leave, what is that?

Pilots Across Germany Are Blocking The Deportation Of Asylum Seekers (IBT)

Pilots across Germany are refusing to carry out deportations of asylum seekers and have prevented at least 222 planned flights so far, the government said on Monday (4 December) Germany’s main airline Lufthansa and its subsidiary Eurowings halted at least 85 flights in the first eight months of this year, according to a freedom of information request obtained by the Left party. The majority of the cancellations took place at Frankfurt airport, Germany’s largest and most important transport hub. A large number of the flights were scheduled to repatriate refugees to Afghanistan, a move which has been widely condemned by human rights organisations. Earlier this year, Amnesty International called on European governments to “implement a moratorium on returns to Afghanistan until they can take place in safety and dignity”.

Anna Shea, Amnesty International’s Researcher on Refugee and Migrant Rights, said that government was being “wilfully blind” to the fact that violence was at a record high in Afghanistan. Despite an increase in deportations, Germany remains the top destination for refugees in the European Union. This year, Germany has taken in more asylum seekers than all other 27 EU countries combined. In the first six months of 2017 the country processed 388,201 asylum cases, Die Welt reported, quoting statistics agency Eurostat. To try and curb the numbers, the German government is offering rejected asylum seekers up to €1000 in benefits if they voluntarily return home. Families who agree to leave are entitled to receive up to €3000. Interior Minister Thomas de Maizière (CDU) told the Süddeutsche Zeitung on Sunday (3 December): “If you decide by the end of February for a voluntary return, you will get in addition to first aid, a housing aid for the first 12 months in your country of origin.”

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Tsipras has to ask Brussels (re: Merkel) for permission.

Push To Move Refugees From Greek Islands To Mainland (K.)

Municipal officials from the islands of Lesvos, Chios and Samos, which are bearing the brunt of an increased influx of migrants from neighboring Turkey, are due in Athens on Tuesday to press the government for action to ease the pressure on their local communities. The officials decided to coordinate their protests and seek a meeting with Migration Minister Yiannis Mouzalas to speed up the transfer of migrants from the islands to mainland Greece. There are currently more than 15,000 migrants living in state-run camps on Lesvos, Chios, Samos, Leros and Kos. More than 15,000 have been transferred to the mainland over the past year. Of those more than 3,500 were transferred in the last month alone. But islanders say more action is needed due to growing tensions in the reception centers and among the local communities as arrivals from Turkey have increased.

Hopes that a European Union refugee relocation program could ease some of the pressure have been largely frustrated as the process is a slow one. European Migration Commissioner Dimitris Avramopoulos has said the so-called Dublin Regulation, which dictates that refugees apply for asylum in the first EU country they enter, must be reformed for pressure on countries such as Greece and Italy to ease. In a related development on Monday, a court on Lesvos indicted 16 North African migrants who participated in the occupation of a central square in Mytilene, the main port of Lesvos. Authorities on the island detained a total of 25 protesters late on Sunday but the other nine were released as they are minors. The migrants had staged the protest in a bid to press authorities to accelerate their asylum applications and their transfer to mainland Greece.

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No question there.

The World’s Oceans Are Under The Greatest Threat In History – Attenborough (G.)

The world’s oceans are under the greatest threat in history, according to Sir David Attenborough. The seas are a vital part of the global ecosystem, leaving the future of all life on Earth dependent on humanity’s actions, he says. Attenborough will issue the warning in the final episode of the Blue Planet 2 series, which details the damage being wreaked in seas around the globe by climate change, plastic pollution, overfishing and even noise. Previous BBC nature series presented by Attenborough have sometimes been criticised for treading too lightly around humanity’s damage to the planet. But the final episode of the latest series is entirely dedicated to the issue. “For years we thought the oceans were so vast and the inhabitants so infinitely numerous that nothing we could do could have an effect upon them. But now we know that was wrong,” says Attenborough.

“It is now clear our actions are having a significant impact on the world’s oceans. [They] are under threat now as never before in human history. Many people believe the oceans have reached a crisis point.” Attenborough says: “Surely we have a responsibility to care for our blue planet. The future of humanity, and indeed all life on Earth, now depends on us.” BBC executives were reportedly concerned about the series appearing to become politicised and ordered a fact-check, which it passed. The series producer, Mark Brownlow, said it was impossible to overlook the harm being caused in the oceans: “We just couldn’t ignore it – it wouldn’t be a truthful portrayal of the world’s oceans. We are not out there to campaign. We are just showing it as it is and it is quite shocking.”


Strict management of the herring fishery in Norway has saved it from collapse. Herring now draw in humpback whales and orca. Photograph: Audun Rikardsen

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Dec 042017
 
 December 4, 2017  Posted by at 1:44 pm Finance Tagged with: , , , , , , , , , ,  8 Responses »
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Saul Leiter Raining on two 1957

 

First of all, let me reiterate that I don’t think Brexit is a bad thing per se. Getting rid of Brussels is at least as much of a relief as it is a headache. Moreover, Britain needed a makeover, badly, as has ironically been shown especially after the referendum. But as an outsider it is still top class theater to see it playing out. And the real high value drama hasn’t even started.

But we can already hear the orchestra changing tone, and mood, and the fat lady’s warming up her voice. To see the whole negotiating process being led and conducted by a woman who voted against initiating it in the first place is a guaranteed added bonus. Not sure Shakespeare would have found it a credible plotline, but there you go.

It’s much less amusing to see that poverty in Britain is soaring and a fifth of the population is now poor, including an additional 400,000 children in the past 5 years. But that is a strong indicator of how much of a failed state the country has become, and it makes the Brexit vote outcome that much easier to explain. Still, whether the vote had been Leave or Remain, the real damage had been done long before.

The people doing the negotiations are to a large extent accountable for that damage, they’re all Tories from the Cameron era, and Tony Blair, who’s just as much to blame, is speaking up again as well. The Brexit mess thus functions to expose the abject failure of the entire British political system as much as Donald Trump’s ascent to the US presidency does in America.

It’s now just a matter of learning the right lessons from these events. And that is not that the US would be fine if Trump were not there, or that Brexit itself is the main problem in the UK. It’s that these are the consequences of systems failing across the board, with Blair turning UK’s Labour party into a right wing force, and the DNC doing the same with the Democrats.

Try to take away people’s voices along with their money, and they will speak up. It’s one easy step from there for the other side of the spectrum to claim they are the real voice of the people, and getting the benefit of the doubt. Not that it will end there, but until and unless the left has re-defined itself as actual left again, representing people instead of themselves, there will be no easy way out.

That said, both Trump and Brexit will become mired in cesspools, just not because of Russia but because both turn against their fast impoverishing populations. But even then, redefining is a crucial issue.

 

As Theresa May is in Brussels to hold talks aimed merely at just getting negotiations started, something she will have to make hefty concessions for, the majority her party had before she called a snap election keeps slip sliding away. Labour would now get that majority. If she were smart, she’d call another election today, lose it and let Corbyn deal with the mess, but she won’t, the Tories are addicted to the smell of power in the morning, and so is May herself.

May seems to have reached some shaky sounding deal with the EU about the Irish border issue (“regulatory alignment”), but that will only lead to more problems (as will all deals she manages to reach in the talks). In this case, her coalition with Northern Ireland DUP party, which keeps her in power to begin with, comes under strain. Every solution will lead to another problem, and she can’t keep everybody happy.

Brexit is Pandora’s gift to Britain. Suppose the DUP accepts open borders with EU member Ireland, why would not Scotland, for instance, demand a similar deal?

 

Labour Open Up 8-Point Lead Over Conservatives In Latest Opinion Poll

Jeremy Corbyn’s Labour party has extended its lead over the Conservatives to eight points, according to a new poll that will provide grim reading for the Prime Minister. The poll by Survation puts Labour on 45%, with Theresa May’s Conservatives trailing behind on 37%, and the Liberal Democrats under Vince Cable on six%. An eight point lead, the polling company added, would likely put Labour into overall majority territory if such vote share totals were reflected at the ballot box.

Meanwhile, ever more people want a say in what Brexit will look like, via another referendum. Before the negotiations are finished, someone will add up how much Brexit will really cost, and that’ll be the end of it, unless the Tories prevent that second referendum. There will come a point that the Tories realize this whole process will push them out of power for a long time, but it’ll be too late then.

 

Second Brexit Referendum Has 16-Point Lead As Half Of Britons Back New Vote

Half of Britons want a public vote on the UK’s final Brexit deal with the EU once the Government’s negotiations are over, a new poll suggests. Of the 1,003 people surveyed in the Survation poll , 497, or 50%, said they would “support holding a referendum asking the public if they will accept or reject the deal”. A total of 343, or 34%, said they were against the idea of a public vote, while 164 (16%) said they did not know. Of the people who were in favour of a referendum on the UK’s deal for exiting the EU, 271 (54.5%) had voted Remain in the 2016 Brexit vote, while 145 (29%) voted Leave.

Jeremy Corbyn is set to become UK PM, if he can shake off Tony Blair, but he hasn’t quite screwed up the courage to turn his back on the Brexit vote, so he’s as much in an impossible split as May is. It’s all he can do is to wait until she makes ever more mistakes and then stumbles over them. Meanwhile, he can carefully open up the second referendum option, because it doesn’t directly contradict the outcome of the first.

 

Corbyn Signals Labour Could Be Open to Second Brexit Referendum

U.K. Labour Party leader Jeremy Corbyn hinted that he could be open to holding a second referendum on Brexit as the consequences of leaving the European Union become clearer. Asked if he was prepared to rule out a second vote after meeting with Portuguese Prime Minister Antonio Costa in Lisbon on Saturday, Corbyn said his party hasn’t fixed its position on the issue. “We’ve not made any decision on a second referendum,’’ Corbyn said at a European Socialist Party conference in the Portuguese capital. “What we’ve said is that we would respect the result of the first referendum.”

And May’s own people are starting to turn their backs on her, slowly at first but that will pick up, because they start fearing for their own future careers if they back her for too long. She has to balance this with her fanatical Brexiteers who are only looking to replace her.

 

Theresa May Faces New Crisis After Mass Walkout Over Social Policy

Theresa May was plunged into a new crisis on Saturday night after the government’s social mobility adviser revealed he and his team were quitting, warning that the prime minister was failing in her pledge to build a “fairer Britain”. In a major blow to No 10, Alan Milburn, the former Labour cabinet minister who chairs the government’s social mobility commission, said that he and all three of his fellow commissioners were walking out – including a leading conservative, Gillian Shephard. The move will be seen as a direct challenge to May’s vow in Downing Street to place fairness and social justice at the heart of her premiership. In his resignation letter, seen by the Observer, Milburn warns that dealing with Brexit means the government “does not seem to have the necessary bandwidth to ensure the rhetoric of healing social division is matched with the reality.

An interesting suggestion from commission chair Milburn was that while he thought May might actually want to tackle inequality and connected issues, he doesn’t think the government has the time to do that, because all its attention is most be focused on Brexit. That suggests the country effectively has no functioning government at the moment, and perhaps for years to come. Great prospect for a country deep in doodoo.

And it’s not a big surprise in this climate that May tries to keep all kinds of things secret. Not a big surprise, but certainly a big mistake.

 

Theresa May Under Growing Pressure To Reveal True Cost Of Divorce Bill

Senior Conservatives are demanding Theresa May be clear about how much the British public will be forced to pay to settle the Brexit “divorce bill”. MPs and peers, including former cabinet ministers, say that with the bill agreed this week and likely to be between £40bn and £50bn, the time has come for the Prime Minister to be completely open on how much Brexit will cost. Labour is threatening to bring the matter to a head by calling on Tory MPs to back a plan to let the UK’s spending watchdogs assess the financial settlement and give Parliament a vote on it, The Independent can reveal.

It comes 24 hours before Ms May will sit down with European Commission President Jean-Claude Juncker to secure an agreement-in-principle on the withdrawal terms of Brexit – including the divorce bill, Irish border and EU citizens’ rights. But despite any deal being likely to gain approval at the European Council in mid-December, the British public have not been told by the Government how big the divorce bill is likely to be, or how it is being worked out.

Indeed, secrecy is a policy in Tory Britain.

 

Irish warn Theresa May: Change Course Or Risk Brexit Chaos

Ministers are under mounting pressure to come clean over the extent of economic damage that a “no deal” outcome could cause to the economy. In the budget, Philip Hammond announced that the Office for Budget Responsibility revised downwards forecasts for UK growth over the next few years, mainly because of concerns of low productivity growth. But the OBR made clear that these downgrades were premised on a benign outcome to Brexit negotiations. Both the Treasury, privately, and leading independent economists recognise that actual growth will be considerably lower than the gloomy budget projections if the UK does not achieve most of its negotiating goals, or if there is a “no deal” result.

Government sources said ministers would this week release sections of assessments into the potential economic impact of Brexit carried out across Whitehall, which until recently they had tried to keep secret. Many MPs believe the published sections will be heavily redacted and will not make clear the extent of potential economic damage. Last night Nicky Morgan, who chairs the Treasury select committee, said it was essential that as many projections as possible were made public.

The latest work by economists at the London School of Economics estimates that, if the UK crashes out of the EU with no deal, the impact will be far more severe than the projections in the budget suggested. Thomas Sampson of the LSE’s Centre for Economic Performance said Brexit could reduce UK living standards by up to 9% in the most pessimistic case.

The best thing by a mile that May could possible do is to get out of the way before the way steamrollers all over her. But as I said, she won’t. And that is as tragic for her as it is for Britain. It’ll be entertaining to see the show -and May- go down. As long as you don’t live in Britain.

 

 

Dec 032017
 
 December 3, 2017  Posted by at 9:47 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Nicolas de Staël Paris la nuit 1954

 

Are We Too Optimistic On Global Growth? (Saxo Bank)
The Government Is Coming For Your Bitcoin (Black)
Bitcoin & Tax: The Coming Coinbase Fiasco (Mike Maloney)
Theresa May Faces New Crisis After Mass Walkout Over Social Policy (O.)
Corbyn Signals Labour Could Be Open to Second Brexit Referendum (BBG)
Theresa May Has Got To Come Clean About The Cost Of Brexit (Ind.)
The Coming Days Will Stretch The Politics Of Brexit To The Limit (RTE)
EU’s Net Starts To Close On Tax Havens (G.)
Greece, Creditors Strike Deal on the Conditions for Fresh Cash (BBG)
Islanders To Descend On Athens Over Refugee Crisis (K.)
US Pulls Out of UN’s Global Compact on Migration (AFP)
Why Did We Start Farming? (LRB)

 

 

Bits and pieces from A Saxo banks missive.

First graph: China credit impulse in the world economy plummeted 25% in Q2.

Second graph: Saxo smokes funny stuff. It says: Global trade but also non-construction investment in Western countries has been catching up with the pre-crisis long-term trend.. Well, not that I can see there.

Third graph: Stuff about inflation. Look, velocity is sinking through the floor. And Broad Money is not rising much (despite QE). Ergo: no inflation.

Are We Too Optimistic On Global Growth? (Saxo Bank)

Is economic growth on a solid footing?We have a contrarian view on global growth in 2018 and consider that the consensus is a bit too rosy. We expect lower GDP growth in the second and third quarters due to the contraction in the credit impulse in China. As mentioned by the IMF, China still represents one-third of the global growth impulse. In Q2’17, China’s credit impulse declined by 25% year-on-year, therefore reaching a new post-crisis low. Since this index leads the real economy by nine to 12 months, we expect worse data next year for China, but also for the global economy.

The global economic situation has been improving over the past years. Global trade but also non-construction investment in Western countries has been catching up with the pre-crisis long-term trend.

[..] Will inflation ever come back? Lowflation has been one of the main macroeconomic issues in recent years and it is expected to remain a thorn in the foot of central bankers for longer yet. Since September 2016, China – the main exporter of deflation – has started to export inflation along with higher global commodity prices (up 3% in October 2017 year-on-year, based on data from the World Bank), but global inflation still remains subdued. Central bankers, and particularly ECB president Mario Draghi, consider that low inflation is only a transitory phenomenon linked to hysteresis and underemployment and that job gains will eventually push inflation to target. Those elements certainly play a role in the short and medium terms but as pointed out by Benoit Coeuré, the problem is that the Phillips curve is “flatter, non-linear, mid-specified”.

We don’t expect that inflation will significantly pick up next year since, in our view, lowflation is primarily a structural phenomenon. More and more economists are agreeing with that take, including outgoing Federal Reserve chair Janet Yellen who recently confirmed that we don’t properly understand inflation dynamics. Monetarists explain low inflation by the slow rate of growth in broad money since the great recession. This might be part of the problem, but it is not completely convincing since the money stock has not been constant and has started to decrease since 1997 in the United States.

Read more …

Two pieces on the same issue: the IRS and bitcoin. First Simon Black, then Mike Maloney.

The Government Is Coming For Your Bitcoin (Black)

The same day Bitcoin cracked its all-time high above $11,000, the government dealt its first blow to the crypto world… On Wednesday, a federal judge in San Francisco ordered the popular Bitcoin exchange, Coinbase, to provide the IRS with information on over 14,000 account holders. The taxman noticed that only 800-900 people reported gains related to Bitcoin in each of the years between 2013-2015. It seemed unusual given Bitcoin’s meteoric rise. So the IRS went for its pound of flesh. Initially, the government wanted complete data on every Coinbase user that transacted between 2013 and 2015. The exchange’s website says it has 13 million users (more than the number of Schwab brokerage accounts).

But Coinbase pushed back… and the government agreed to only take limited data (including name, date of birth, address, tax ID number, transaction statements and account logs) for accounts that have bought, sold, sent or received at least $20,000 worth of Bitcoin in a given year. Don’t say I didn’t warn you about Coinbase. I told Sovereign Man: Confidential readers last month: “If you’re tempted to purchase Bitcoin from the popular Coinbase exchange, don’t bother. They’ve sold out to regulators.” The IRS is calling this a “partial win.” But you can be sure, there will be a public beheading. This is something governments almost always do. [..] Now that it’s at all-time highs, the government wants its piece.

I read the 400+ pages of the proposed tax code. How many lines in there do you think deal with cryptocurrency? ZERO. How many lines deal with e-commerce? ZERO. The government had every opportunity to set the rules for the 21st century. And they failed miserably. So the rules remain as clear as mud. Instead of trying to make it clear, their tactic is intimidation, force and coercion. This is just the beginning. There will be more. And my advice is don’t be one of those guys. Every transaction that you make in Bitcoin is potentially a taxable event.

Read more …

“And guess what they’re going to have to sell to come up with the cash [to pay the IRS]; because you can’t pay your taxes with bitcoin…

Bitcoin & Tax: The Coming Coinbase Fiasco (Mike Maloney)

Mike Maloney takes a look at a very important Bitcoin issue that could prove to be a market-mover in the new year: The IRS has realized that Bitcoin is a cash cow for them, but at the same time there is just a small percentage of Coinbase users who are filing gains or losses. What could this add up to?

Read more …

May’s problems grow fast. Her own people are starting to leave her. They fear for their own political futures. Cue Corbyn.

Theresa May Faces New Crisis After Mass Walkout Over Social Policy (O.)

Theresa May was plunged into a new crisis on Saturday night after the government’s social mobility adviser revealed he and his team were quitting, warning that the prime minister was failing in her pledge to build a “fairer Britain”. In a major blow to No 10, Alan Milburn, the former Labour cabinet minister who chairs the government’s social mobility commission, said that he and all three of his fellow commissioners were walking out – including a leading conservative, Gillian Shephard. The move will be seen as a direct challenge to May’s vow in Downing Street to place fairness and social justice at the heart of her premiership. In his resignation letter, seen by the Observer, Milburn warns that dealing with Brexit means the government “does not seem to have the necessary bandwidth to ensure the rhetoric of healing social division is matched with the reality.

“I have little hope of the current government making the progress I believe is necessary to bring about a fairer Britain,” he tells the prime minister. “It seems unable to commit to the future of the commission as an independent body or to give due priority to the social mobility challenge facing our nation.” The resignations come with the prime minister already under pressure, as she faces crunch Brexit talks and questions over the future of her most senior minister, Damian Green. Milburn says failing to deal with the inequalities that fuelled the Brexit vote would simply lead to a rise of political extremes. In a devastating assessment of the lack of progress, Milburn says: “The worst position in politics is to set out a proposition that you’re going to heal social divisions and then do nothing about it. It’s almost better never to say that you’ll do anything about it.

“It’s disappointing at least that the government hasn’t got its shoulder to the wheel in the way it should to deal with these structural issues that lead to social division and political alienation in the country. “In America for 30 years real average earnings have remained flat. Now here the chancellor is predicting that will last for 20 years. That has a consequence for people, but a political consequence as well. It means more anger, more resentment and creates a breeding ground for populism.”

Read more …

Very risky, but once he can make the costs clear, he might pull it off. He’ll need Tory defectors, though, and they won’t want to help him. But if things get bad enough with May, they may.

Corbyn Signals Labour Could Be Open to Second Brexit Referendum (BBG)

U.K. Labour Party leader Jeremy Corbyn hinted that he could be open to holding a second referendum on Brexit as the consequences of leaving the European Union become clearer. Asked if he was prepared to rule out a second vote after meeting with Portuguese Prime Minister Antonio Costa in Lisbon on Saturday, Corbyn said his party hasn’t fixed its position on the issue. “We’ve not made any decision on a second referendum,’’ Corbyn said at a European Socialist Party conference in the Portuguese capital. “What we’ve said is that we would respect the result of the first referendum.”

Britain’s main opposition party is trying to portray itself as a government-in-waiting after gaining seats in June’s general election and stripping Prime Minister Theresa May of her majority. Since going into that vote with a Brexit strategy similar to May’s Conservatives, Labour has diverged in recent months, saying it would keep open the options of remaining in the single market and customs union, both of which the premier has ruled out. “If we were in government, we would immediately legislate to guarantee British residence to all European Union nationals that live and work in Britain, and the right to bring their families to Britain as well,’’ Corbyn told reporters. “We will negotiate the issues of relations with Europe on the basis of a free-trade relationship with Europe.’’

Read more …

This is only about the divorce bill. Someone should ask about the total cost.

Theresa May Has Got To Come Clean About The Cost Of Brexit (Ind.)

We know what the Prime Minister is up to. She wants to keep quiet about the size of the exit fee she is offering to the European Union until after Monday’s lunch with Jean-Claude Juncker, the Europan Commission President, and Michel Barnier, the EU negotiator. Indeed, she does not want her own MPs to know the sum until after the European Council on 14 and 15 December, at which she hopes to secure agreement to move to the next phase of Brexit talks. Once again, the national interest is being subordinated to the higher cause of holding the Conservative Party together – the sort of thing that prompted David Cameron to get us into the mess we are now in.

It is a small consolation, therefore, that the official opposition, led on this question by Sir Keir Starmer, the Shadow Brexit Secretary, is holding the Government to account. Labour is tabling an amendment to the EU (Withdrawal) Bill on Wednesday that would require any financial settlement to be assessed by the Office for Budget Responsibility and the National Audit Office. Of course, The Independent regards the prospect of a settlement amounting to between £45bn and £55bn as reasonable in principle. The reasons Conservative Eurosceptics might find it hard to accept are obvious. One is that they ran a referendum campaign on the assumption that leaving the EU would save the British people vast sums that could be diverted to the health service or other popular causes. The divorce bill gives the opposite impression.

This impression is reinforced by the way the sum, made up of several separate items, is rolled up into one very big number. In fact, of the £45bn-£55bn, about £20bn represents the continuation of our net contributions for the two years of a transition period, in which we would continue to be an EU member in all but name (and influence). The rest, Ms May insists, is similarly money that we owe in any case as a consequence of our membership. f so, there can be no objection to its being scrutinised to confirm it – or to giving Parliament the chance to approve or reject it in a vote. As Lord Heseltine, the former Deputy Prime Minister, told The Independent, “What would a Conservative opposition do if a Labour Party proposed to spend £30bn, £40bn or £50bn without telling Parliament what it was doing with it?”

Read more …

And then there’s the Irish question.

The Coming Days Will Stretch The Politics Of Brexit To The Limit (RTE)

When it comes to the border on the island of Ireland, the coming days will stretch the politics of Brexit to the limit. “For a border community, it impacts on every aspect of everyday life. When you get up in the morning, which road do you go out on?” “In Dublin or Belfast they won’t understand.” These are the views of one resident reported in a comprehensive survey of people living along both sides of the border on how Brexit will impact their lives, economically, socially, and psychologically. The paper, Bordering on Brexit: The Views of Local Communities in the Central Border Region of Ireland/Northern Ireland, has been published by a Queen’s University research team led by Dr Katy Hayward.

“That very close, tight way that it affects everything you think about and everything you do” continues the respondent. “For example, the man who fixes my car lives in Newtownbutler, Co Fermanagh – to drive you’d go out the Cavan road into Co Fermanagh, then into Co Monaghan, then into Co Fermanagh and then you get to his house. I could do that journey in 10 or 15 minutes; what would that be like if crossing an international European border?” These parochial but very real concerns, from Derry to Dundalk, are this weekend the subject of intense international diplomacy, gripping London, Dublin, Belfast and Brussels in a seemingly irreconcilable tug of politics. Donald Tusk, the President of the European Council, has set Monday as an absolute deadline for Theresa May to tell the EU, during a working lunch with the Commission president Jean-Claude Juncker, how she intends to solve the border problem, as well as the issue of Britain’s financial settlement and the rights of EU citizens.

Whether that deadline can be met, and what happens between Monday and the summit of EU leaders on 14 and 15 December, will have untold implications for the history of Ireland and the United Kingdom. The outcome may determine whether there is a hard border, no border, or something in between. It will have ramifications for the civil war in the Conservative Party and the stand-off between Sinn Féin and the DUP in Northern Ireland. It will have implications for millions of euro in cross-border trade, for cross-border healthcare, education, energy, waterways and other daily activities whose very nature is encouraged and facilitated by the Good Friday Agreement (GFA). And it will have implications for the man in Co Cavan who gets his car fixed in Newtownbutler, Co Fermanagh.

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Just not their own., Ireland; Luxembourg; The Netherlands; Malta.

EU’s Net Starts To Close On Tax Havens (G.)

When Europe’s finance ministers sit down to a working breakfast in Brussels on Tuesday, after deciding whether to order the continental or the full English, the British delegation will be faced with an even tougher decision. Chancellor Philip Hammond and his counterparts will be asked to approve a list of those countries, island states and former colonies which the European Union has deemed to be “non-cooperative jurisdictions”. Put more plainly, the EU will be announcing a blacklist of tax havens. Coming as it does less than a month after the publication of the Paradise Papers – an investigation by the Guardian and 95 partners worldwide into a leak of 13.4 million files from two offshore service providers – the announcement is hotly anticipated. Campaigners, lobbyists and politicians on both sides of the offshore debate are on tenterhooks.

For the kind of small island economies whose GDP depends on selling secrecy and tax breaks, a blacklisting could be devastating, particularly if Brussels follows up with a series of sanctions for doing business in these countries. Speculation about who will be placed on the EU’s naughty step has reached fever pitch. The latest draft, according to reports last week, contains 20 names, down from a possible 92 at the beginning of the year. That number could be further whittled down – the horse-trading is continuing up to the wire. So fierce is the debate that some believe publication might be postponed. “The finance ministers of the member states must not let political considerations cloud their judgment when agreeing their final list next week,” says the influential tax reform campaigner and German MEP Sven Giegold.

One of the big questions is how many, if any, members of the UK’s sprawling offshore network will be named. Any decision taken by ministers on Tuesday will have to be unanimous. Britain may be exiting Europe, but it retains its veto until 2019 and Theresa May’s government has been pulling every lever to protect its dependencies. Whitehall sources have confirmed that those Caribbean territories which suffered the most damage during this year’s devastating hurricanes will be given extra time to get their house in order. It has been reported that seven jurisdictions, not all of them British, have been given a temporary reprieve in order to recover from the damage. This is likely to mean the British Virgin Islands, Montserrat and the Turks & Caicos Islands – all of which are UK territories that took a battering from hurricanes Harvey, Irma and Maria – are safe for now.

[..] In a recent report, Blacklist or Whitewash?, Oxfam applied the criteria the EU is using to draw up the blacklist to 92 countries screened by the union and its 28 member states. The criteria exclude EU member states, but if they did not, Oxfam concluded that four countries should be blacklisted: Ireland; Luxembourg; The Netherlands; Malta. It also concluded that 35 non-EU states should be on the list: Albania; Anguilla; Antigua and Barbuda; Aruba; Bahamas; Bahrain; Bermuda; Bosnia and Herzegovina; British Virgin Islands; Cook Islands; Cayman Islands; Curaçao; Faroe Islands; Macedonia; Gibraltar; Greenland; Guam; Hong Kong; Jersey; Marshall Islands; Mauritius; Montenegro; Nauru; New Caledonia; Niue; Oman; Palau; Serbia; Singapore; Switzerland; Taiwan; Trinidad and Tobago; UAE; US Virgin Islands; Vanuatu.

Read more …

Drip drip drip bloodletting.

Greece, Creditors Strike Deal on the Conditions for Fresh Cash (BBG)

Greece and its international creditors agreed on a set of economic overhauls the country must undertake in exchange for fresh loans, paving the way for a payment that will help it build a cash buffer as it seeks to prepare for its bailout exit. The so-called staff level agreement came after a week of talks in Athens saw the two sides reach common ground on politically sensitive issues such as reforms in the energy sector, public administration, the financial system, social-cohesion programs and fiscal performance among others. “We reached the staff-level agreement” Finance Minister Euclid Tsakalotos said after the last meeting with creditor’s representatives in Athens. Greece is going to implement as soon as possible all the measures needed in order to get fresh bailout money, he added.

After January’s Eurogroup, Tsakalotos expects that discussions will start for further debt relief, the fourth bailout review that is expected to conclude in May or June, and for exiting the crisis. The deal marks the completion of a key step in the negotiations between Athens and the auditors of its aid program – representing euro-area governments and the IMF – as the country is starting to prepare for its post-bailout life. A successful conclusion of the current review will not only entail the release of fresh loans but it will also help Greece regain the trust of investors, as it plans to tap financial markets again. The continent’s most indebted state was the first euro-area nation to seek a lifeline from its peers in 2010 and the only one still reliant on such concessional loans to stay afloat. Additional bond sales are a crucial step in the efforts to build up a post-program cash cushion and ensure it can stand on its own feet without external help. “Looking ahead, our baseline remains that Greece will achieve a clean exit from the bailout program when it ends next summer,” Wolfango Piccoli, co-president of Teneo Intelligence said in a note to clients.

“To this aim, Greece would need to build a buffer of around 12-15 billion euros ahead of its exit from the program.” Still, the Greek government will first have to implement a long list of around 100 overhauls before it can receive any fresh disbursements and formally conclude the ongoing audit of its bailout. Some measures will be voted in December while an omnibus bill to implement the remaining prior actions must be voted in parliament before Jan. 11. Once Greece has undertaken the agreed reforms, euro-area finance ministry deputies can examine whether Athens has fully complied with the conditions attached to its bailout at a meeting on Jan. 11 and green-light the disbursement of fresh loans, which could take place by mid-February, an EU official said on Dec. 1.

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Athens will end up bringing thousands to the mainland. And housing many in deplorable conditions.

Islanders To Descend On Athens Over Refugee Crisis (K.)

Protesters will converge outside the Immigration Policy Ministry on Tuesday to demand immediate relief for the eastern Aegean islands of Samos, Lesvos and Chios, where facilities for migrants and refugees are overflowing with thousands of stranded asylum seekers. The rally is being organized by the municipalities of the three islands and aims to publicize the plight of asylum seekers who have been trapped there for more than a year, testing local communities. “We have decided to protest and to demand again the immediate decongestion of our islands, so that the government reacts to the problem,” a joint statement by the municipalities read. To this end, Samos Mayor Michalis Angelopoulos is in contact with islander associations in Athens to get their support.

Currently the islands of the Aegean are home to a total of 15,486 refugees and migrants, of whom 6,520 are at Lesvos’s Moria hotspot, which was designed to hold 2,300 people. Similarly, on Samos there are 2,083 people sheltered at the center near Vathi which has a capacity of just 700, as does the Vial facility on Chios, which is currently sheltering 2,377 people. With winter arriving, hundreds of people – half of whom are children – at the Lesvos and Chios hotspots are still living in summer tents and exposed to the elements, without access to basic hygiene facilities.

Reports said that work to place prefabricated huts next to the Vial hotspot to help ease the crowded conditions at the center and to make improvements to existing facilities was put on hold on Friday by a local court, pending a January 16 trial which will examine a lawsuit filed by the Chios Municipality against the Immigration Policy Ministry over its decision to house migrants and refugees at that specific hotspot. Meanwhile, in a government bid to relieve some of the pressure on the islands, 500 people were transferred in the last two days alone from the islands to the Greek mainland. Nonetheless, 50 more people arrived on the islands’ shores from Turkey on Friday.

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Given what we see of refugee conditions globally, that Compact doesn’t seem to amount to much.

US Pulls Out of UN’s Global Compact on Migration (AFP)

The administration of President Donald Trump has withdrawn the United States from a United Nations pact to improve the handling of migrant and refugee situations, deeming it “inconsistent” with its policies, the US mission to the global body announced Saturday. “Today, the US Mission to the United Nations informed the UN Secretary-General that the United States is ending its participation in the Global Compact on Migration,” the Americans said in a statement. In September 2016, the 193 members of the UN General Assembly unanimously adopted a non-binding political declaration, the New York Declaration for Refugees and Migrants, pledging to uphold the rights of refugees, help them resettle and ensure they have access to education and jobs.

“The New York Declaration contains numerous provisions that are inconsistent with US immigration and refugee policies and the Trump Administration’s immigration principles. As a result, President Trump determined that the United States would end its participation in the Compact process that aims to reach international consensus at the UN in 2018,” the US statement said. US Ambassador Nikki Haley said the country would continue its “generosity” in supporting migrants and refugees around the world, but that “our decisions on immigration policies must always be made by Americans and Americans alone.” “We will decide how best to control our borders and who will be allowed to enter our country. The global approach in the New York Declaration is simply not compatible with US sovereignty.”

Read more …

Great discussion. Many false assumptions. Farming was not exactly a health booster.

Why Did We Start Farming? (LRB)

Fire changed humans as well as the world. Eating cooked food transformed our bodies; we developed a much shorter digestive tract, meaning that more metabolic energy was available to grow our brains. At the same time, Homo sapiens became domesticated by its dependence on fire for warmth, protection and fuel. If this was the start of human progress towards ‘civilisation’, then – according to the conventional narrative – the next step was the invention of agriculture around ten thousand years ago. Farming, it is said, saved us from a dreary nomadic Stone Age hunter-gatherer existence by allowing us to settle down, build towns and develop the city-states that were the centres of early civilisations. People flocked to them for the security, leisure and economic opportunities gained from living within thick city walls.

The story continues with the collapse of the city-states and barbarian insurgency, plunging civilised worlds – ancient Mesopotamia, China, Mesoamerica – into their dark ages. Thus civilisations rise and fall. Or so we are told. The perfectly formed city-state is the ideal, deeply ingrained in the Western psyche, on which our notion of the nation-state is founded, ultimately inspiring Donald Trump’s notion of a ‘city’ wall to keep out the barbarian Mexican horde, and Brexiters’ desire to ‘take back control’ from insurgent European bureaucrats. But what if the conventional narrative is entirely wrong? What if ancient ruins testify to an aberration in the normal state of human affairs rather than a glorious and ancient past to whose achievements we should once again aspire?

What if the origin of farming wasn’t a moment of liberation but of entrapment? Scott offers an alternative to the conventional narrative that is altogether more fascinating, not least in the way it omits any self-congratulation about human achievement. His account of the deep past doesn’t purport to be definitive, but it is surely more accurate than the one we’re used to, and it implicitly exposes the flaws in contemporary political ideas that ultimately rest on a narrative of human progress and on the ideal of the city/nation-state.

[..] But why did it take so long – about four thousand years – for the city-states to appear? The reason is probably the disease, pestilence and economic fragility of those Neolithic villages. How did they survive and grow at all? Well, although farming would have significantly increased mortality rates in both infants and adults, sedentism would have increased fertility. Mobile hunter-gatherers were effectively limited by the demands of travel to having one child every four years. An increase in fertility that just about outpaced the increase in mortality would account for the slow, steady increase in population in the villages. By 3500 BCE the economic and demographic conditions were in place for a power-grab by would-be leaders.

Read more …

Dec 012017
 
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Edward S. Curtis Mosa Mohave girl c. 1903

 

The Mean Reverting History Of Profit Growth (Roberts)
US Household Debt Is Rising 60% Faster Than Wages (ZH)
We Give Up! Government Spending And Deficits Soar Everywhere (Rubino)
Lemmings In Full Stampede Toward The Fiscal Cliff (Stockman)
Brexit Risks Leaving Banks on the Hook for Impossible Contracts (BBG)
I’m Glad Morgan Stanley Has Warned Us About Jeremy Corbyn (Ind.)
US Senate Suspends Tax Bill Votes to Friday Morning (BBG)
Australian Banks Face Public Inquiry Amid String of Scandals
Gold Trader Implicates Erdogan In US Sanctions Breaking Case (BBC)
From The Caucasus To The Balkans, China’s Silk Roads Are Rising (Escobar)
Paris – The Financial Capital Of West And Central Africa (Gefira)
Chinese Satellite Closes In On Dark Matter Mystery (AFP)

 

 

Another great set of graphs from Lance Roberts, who just keep churning them out. I picked these two to show how dependent economies have become on suppressing wages. Problem is, that threatens economies. You need money rolling at the ground level to keep your economy going.

The Mean Reverting History Of Profit Growth (Roberts)

Since 2000, each dollar of gross sales has been increased to more than $1 in operating and reported profits through financial engineering and cost suppression. The next chart shows that the surge in corporate profitability in recent years is a result of a consistent reduction of both employment and wage growth. This has been achieved by increases in productivity, technology, and off-shoring of labor. However, it is important to note that benefits from such actions are finite. (Note the acceleration in profits starting with the Reagan Tax Cuts in the 1989’s. There is no evidence that cutting taxes for corporations leads to higher wages for employees.)

Given the economic landscape of recent years, large offsetting sectoral deficits and surpluses are not surprising, but they should not be taken as evidence that the long-term profitability of the corporate sector has permanently shifted higher. Stocks are not a claim to a few years of cash flows, but decades and decades of them. By pricing stocks as if current profits are representative of the indefinite future, investors have ensured themselves a rude awakening over time. Equity valuations are decidedly a long-term proposition, and from present levels, the implied long-term returns are quite dim.

Read more …

And then you get this…

US Household Debt Is Rising 60% Faster Than Wages (ZH)

The good news: total mortgage debt has decreased since 2008, to $8.743 trillion from $9.29 trillion, but as of the third quarter of 2017, still accounts for 67.5% of overall consumer debt. The bad news: since 2008, the growth in total debt has been attributable to the auto loan and student loan sectors. Auto loan debt has increased by 50% since 2008, to slightly over $1.2 trillion from approximately $800 billion. The most dramatic growth rate, as Zero Hedge readers know well, has been in student loan debt which has grown by 122% since 2008, to $1.357 trillion from $611 billion. But a bigger concern flagged by DBRS is that the growth in consumer debt is raising concerns when viewed in the context of the existing wage stagnation hampering the current economic environment.

The rating agency cites a paper published in October 2017 by the Harvard Business Review which stated that the inflation-adjusted hourly wage has grown by only 0.2% per year since the mid-1970s and labor’s share of income has decreased to its current level of 57% from 65%. Meanwhile, in the second quarter of 2017, wages were only 5.7% higher than they were a decade earlier. In comparison, the Federal Reserve Bank of New York/Equifax data shows that consumer debt growth over the same period was 9.3%. In other words, the purchasing power of US households has been largely a function of rapidly rising debt, which over the past decade has risen 60% faster than wages. There is another concern: while overall delinquency rates have stabilized in recent years, the one stubborn outlier remains student debt, where 90+ day delinquencies have risen to more than 10%.

Read more …

“Obviously debts of this magnitude can’t and therefore won’t be repaid. Which means the coming decade will be defined by how — and how quickly — we end up defaulting.”

We Give Up! Government Spending And Deficits Soar Everywhere (Rubino)

A recurring pattern of the past few decades involves governments promising to limit their borrowing, only to discover that hardly anyone cares. So target dates slip, bonds are issued, and the debts keep rising. This time around the timing is especially notable, since eight years of global growth ought to be producing tax revenues sufficient to at least moderate the tide of red ink. But apparently not. In Japan, for instance, government debt is now 250% of GDP, a figure which economists from, say, the 1990s, would have thought impossible. Over the past decade the country’s leaders have proposed a series of plans for balancing the budget, and actually did manage to shrink debt/GDP slightly in 2016. But now they seem to have given up, and are looking for excuses to keep spending.

[..] To put the above in visual terms, here’s an infographic from Howmuch.com that shows per-capita government debt for the world’s major countries. Note that a Japanese family of five’s share of its government’s debt is close to $450,000 while in the US a similar family owes $300,000. That’s in addition to their mortgages, car loans, credit cards, etc. Obviously debts of this magnitude can’t and therefore won’t be repaid. Which means the coming decade will be defined by how — and how quickly — we end up defaulting.

Read more …

More of that same story.

Lemmings In Full Stampede Toward The Fiscal Cliff (Stockman)

The lemmings are now in full stampede toward the cliffs. You can literally hear the cold waters churning, foaming and crashing on the boulders far below. From bitcoin to Amazon, the financials, the Russell 2000 and most everything else in between, the casinos are digesting no information except the price action and are relentlessly rising on nothing more than pure momentum. The mania has gone full retard. Certainly earnings have nothing to do with it. As of this morning, the Russell 2000, for instance, was trading at 112X reported LTM earnings. Likewise, Q3 reporting is all over except for the shouting and reported LTM earnings for the S&P 500 came in $107 per share. That’s of signal importance because fully 36 months ago, S&P earnings for the September 2014 LTM period posted at $106 per share.

That’s right. Three years and $1 of gain. They talking heads blather about “strong earnings” only because they think we were born yesterday. What happened in-between, of course, was the proverbial pig passing through the python. First, the global oil, commodities and industrial deflation after July 2014 took earnings to a low of $86.44 per share in the March 2016 LTM period. After that came the opposite—the massive 2016-2017 Xi Coronation Stimulus in China. The new Red Emperor and his minions pumped out an incredible $6 trillion wave of new credit, thereby artificially stimulating a global rebound and a profits recovery back to where it started three years ago.

The difference of course is that $106 of earnings back then were priced at an already heady (by historical standards) 18.6X, whereas $107 of earnings today are being priced at a truly lunatic 24.6X. After all, nothing says earnings bust ahead better than an aging business cycle, a cooling Red Ponzi, an epochal shift toward central bank QT (quantitative tightening) and a massive Washington Fiscal Cliff. Yet every one of those headwinds are self-evident and have made their presence known with a loud clang in the last few days.

Read more …

For good measure, let’s throw in some Catch 22.

Brexit Risks Leaving Banks on the Hook for Impossible Contracts (BBG)

As far as Brexit headaches go, John McFarlane, who chairs Barclays and London’s bank lobby, says that while his firm is on top of job moves, he’s more concerned about rewriting “hundreds of thousands” of contracts. He’s not alone. Andrew Bailey, head of the U.K. Financial Conduct Authority, said “contract continuity” was among the biggest potential disruptions from a no-deal, no-transition Brexit. Both men were testifying to lawmakers Wednesday. Bank of England Governor Mark Carney and ECB President Mario Draghi have also expressed concern about the issue and the dearth of time left for a fix. A week ago, data from the European Banking Authority showed the scope of the issue, and that money is already on the move for precisely this reason: European banks have slashed their U.K. assets by $425 billion, driven by a 35% drop in derivatives exposures.

Insurance policies are affected too: Carney estimates about 20 billion pounds of insurance liabilities in Britain could be affected without swift action. The issue arises because one side or the other of a contract can meet its obligations only thanks to an authorization that’s set to disappear once the U.K. leaves the European Union in 2019. This might result in a firm being obliged by contract law to do something that regulation prohibits it from carrying out, and impossibility generally isn’t a defense against non-performance of a contract, said Simon Gleeson at Clifford Chance in London. “A bank which enters into a contract which becomes illegal to perform by reason of Brexit may well be liable in damages for its non-performance to the counterparty,” said Gleeson. “Dealing with this is so much in everyone’s interest that I’m amazed it hasn’t been addressed.”

[..] Cross-border revolving credits – credit lines that can be drawn down, repaid, then drawn down again – are among such contracts. Many of these are issued to EU companies by syndicates with members based in the U.K. For example, lenders to Volkswagen Financial Services’s €2.5 billion ($3 billion) line include London-based entities for Bank of America and Citigroup, as well as the U.K. units of the major British banks, data compiled by Bloomberg show. A lender that lost its authorization but made an advance to the company under the revolver might find itself in breach of local law in jurisdictions including Germany and France, according to Clifford Chance. On the other hand, it might be in breach of contract if it failed to make the loan.

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Because Morgan Stanley exposes itself this way. As Corbyn himself said: Yes, we’re a threat. To you.

I’m Glad Morgan Stanley Has Warned Us About Jeremy Corbyn (Ind.)

This week, Morgan Stanley claimed that “Corbyn would be more of a danger to markets than hard Brexit”, something which I saw as supremely ironic. Because the actions of Morgan Stanley, and others like it, laid the foundations for Leave because of their role in the financial crisis: a crisis of capitalism, which ushered in seven years of austerity, falling wages and insecure work. Precisely the conditions that would encourage the majority of British people to vote against the status quo and opt for Leave. Morgan Stanley’s role in the financial crisis cannot be understated; and, given describing things as a “danger to markets” appears to be in fashion right now, let’s remind ourselves what they got up to just over a decade ago.

Essentially, they packaged up sub-prime mortgages as something called Collateralised Debt Obligations (CDOs), got credit ratings agencies – who were entirely conflicted as their clients were the investment banks – to rate these absolute garbage CDOs triple-A investments. Morgan Stanley then misled investors who bought them. Because they knew what those investments were actually worth, Morgan Stanley’s traders bought what are known as “credit default swaps” on those CDOs – effectively amounting to a bet on it defaulting. You can buy or sell a credit default swap even if you don’t own the investment. They did this thousands of times.

[..] the right-wing press, which gleefully reported on this Corbyn/Brexit warning, clearly has a short memory about what really happened. After all, the lie that Labour caused the financial crisis, and not investment banks like Morgan Stanley, was a convenient pretext for maintaining the economic status quo while cutting to public spending. This forced ordinary working people to pay for a financial crisis they did not cause. It’s little wonder that people voted Leave having been totally shafted by the system. But the opportunity to do so only arose because the narrative that “Labour crashed the economy” helped secure David Cameron a majority in 2015 on a manifesto that promised a referendum.

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Make it 2018.

US Senate Suspends Tax Bill Votes to Friday Morning (BBG)

Senate Majority Leader Mitch McConnell said votes on the tax bill will resume at 11 a.m. on Friday as the collapse of a key compromise to win a majority for a Senate tax overhaul left Republicans scrambling to salvage the legislation. Debate over the bill may continue into the evening, McConnell said. It’s unclear when the unlimited amendment vote series known as “vote-a-rama” would begin. After seeming to gain momentum during the day, the GOP’s tax cut plan smacked into a decision from the Senate’s rule-making office that said a so-called trigger proposed by GOP holdouts didn’t pass procedural muster. At least three Republicans – Bob Corker of Tennessee, Jeff Flake of Arizona and James Lankford of Oklahoma – had tied their votes to the mechanism, which would have increased taxes if revenue targets weren’t met.

The trio is now demanding that leaders agree to other changes in the bill to avoid a huge deficit increase. Republicans have a slim majority in the Senate and can only afford to lose two members if they want to pass the tax bill without Democratic support. Adding to the difficulty was a ruling by a key fiscal referee that the tax plan would blow a $1 trillion hole in the nation’s debt – even after accounting for economic growth. The day’s events left GOP leaders contemplating a variety of potentially unpalatable measures — including making some tax cuts on the individual and corporate side end within six or seven years. The current version of the Senate bill would sunset individual breaks in 2026.

Read more …

Wait till home priced start to plummet. That’s when the scandals will break.

Australian Banks Face Public Inquiry Amid String of Scandals

Australia’s banks will be subject to a wide-ranging public inquiry after Prime Minister Malcolm Turnbull bowed to pressure to address scandals besetting the industry. The yearlong royal commission will examine the conduct of the nation’s banks, insurers, financial services providers and pension funds, and consider whether regulators have enough power to tackle misconduct, Turnbull said Thursday. He pledged the inquiry would not put “capitalism on trial.” The announcement came just minutes after Commonwealth Bank of Australia, Australia & New Zealand Banking, Westpac and National Australia Bank dropped their opposition to an inquiry, saying in an open letter to the government that months of political squabbling over the issue risked undermining offshore investor confidence.

More than A$8 billion ($6 billion) was wiped off the market value of the big four lenders in early Sydney trading, with Commonwealth Bank declining as much as 2.7%. “Ongoing speculation and fear-mongering about a banking inquiry or royal commission is disruptive and risks undermining the reputation of Australia’s world-class financial system,” Turnbull said. The inquiry will “further ensure our financial system is working efficiently and effectively.” The main opposition Labor party has for months been demanding a royal commission into the finance industry, amid a string of scandals ranging from misleading financial advice, attempted rate-rigging and alleged breaches of anti-money laundering laws. Pressure was growing on Turnbull to hold an inquiry, with some lawmakers in his Liberal-National coalition threatening to force a vote in parliament next week.

Read more …

A big problem for Erdogan. The US takes its sanctions seriously.

Gold Trader Implicates Erdogan In US Sanctions Breaking Case (BBC)

A controversial Turkish-Iranian gold trader has told a US court that Turkish President Recep Tayyip Erdogan personally approved his sanction-breaking deals with Iran. Reza Zarrab, 34, is a key witness in the criminal trial of a Turkish banker whom he allegedly worked with to help Iran launder money. Mr Erdogan has denied that Turkey breached US sanctions on Iran. The case has strained relations between Ankara and Washington. In his testimony, Mr Zarrab implicated Mr Erdogan in an international money laundering scheme that he and the banker, Mehmet Hakan Atilla, ran between 2010 and 2015 that allegedly allowed Iran to access international markets despite US sanctions.

He said that he was told in 2012 by the then economy minister that Mr Erdogan, who was prime minister at the time, had instructed Turkish banks to participate in the multi-million dollar scheme. Mr Erdogan said earlier on Thursday that Turkey did not breach US sanctions on Iran, Turkish media report. His government has described the case as “a plot against Turkey”. The Turkish president is yet to respond to the new allegations about him made in court. Mr Atilla has pleaded not guilty. Nine people have been charged in total. Mr Zarrab was arrested by US officials in 2016 and accused of engaging in hundreds of millions of dollars’ worth of transactions on behalf of the Iranian government, money laundering and bank fraud. But he decided to cooperate with prosecutors and is now their star witness in the New York trial.

On Wednesday, he told the court he paid Zafer Caglayan, then Turkey’s economy minister, bribes amounting to more than €50m to facilitate deals with Iran. Turkey’s Deputy Prime Minister, Bekir Bozdag, responded to the allegations, saying that Mr Zarrab had been “pressured into committing slander”. Speaking to state-run news agency Anadolu, Mr Bozdag called the trial a “theatre”. The Turkish government had previously said that Mr Caglayan acted within Turkish and international law.

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Overcapacity export.

From The Caucasus To The Balkans, China’s Silk Roads Are Rising (Escobar)

The 19th Chinese Communist Party Congress made it clear that the New Silk Roads – aka, the Belt and Road Initiative (BRI) – launched by President Xi Jinping just four years ago, provides the concept around which all Chinese foreign policy is to revolve for the foreseeable future. Up until the symbolic 100th anniversary of the People’s Republic of China, in 2049, in fact. Virtually every nook and cranny of the Chinese administration is invested in making the BRI Grand Strategy a success: economic actors, financial players, state-owned enterprises (SOEs), the private sector, the diplomatic machine, think tanks, and – of course – the media, are all on board. It’s under this long-term framework that sundry BRI projects should be examined. And their reach, let’s be clear, involves most of Eurasia – including everything from the Central Asian steppes to the Caucasus and the Western Balkans.

Representatives of no fewer than 50 nations are currently gathered in Tbilisi, Georgia, for yet another BRI-related summit. The BRI masterplan details six major economic “corridors,” and one of these is the Central Asia-West Asia Economic Corridor. That’s where Georgia fits in, alongside neighboring Azerbaijan: both are vying to position themselves as the key Caucasus transit hub between Western China and the European Union. [..] The action in the Caucasus was mirrored in Europe earlier in the week as Chinese Premier Li Keqiang and Hungary’s Prime Minister Viktor Orban opened the sixth “16+1” summit, involving China and 16 Central and Eastern European nations, in Budapest. “16+1” is yet another of those trademark Chinese diplomatic “away wins.”

Some of these nations are part of the EU, some part of NATO, some neither. From Beijing’s point of view, what matters is the relentless BRI infrastructure and connectivity drive. Beijing may have invested as much as US$8 billion so far in Central and Eastern Europe. China is having a ball in the Western Balkans – especially in Serbia, in Montenegro, and in Bosnia and Herzegovina, where EU financial muscle is absent. China has invested in multiple connectivity and energy projects in Serbia – including the much-debated Belgrade-Budapest high-speed rail link. Construction of the Serbian stretch started this week, with 85% of the total cost (roughly €2.4 billion) coming from the Export-Import Bank of China.

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Dream of power are always costly.

Paris – The Financial Capital Of West And Central Africa (Gefira)

France’s current zone of influence in Africa is the result of the policies of President Charles de Gaulle, who was unable to come to terms with his defeats in Indochina (1954) and Algeria (1962) and therefore sought to achieve the dominance of France in his former colonies. After de Gaulle, however, other presidents did not refrain from using military force and violence in Africa to defend their interests, on the pretext of protecting human rights and democracy. The French often achieved the opposite, because they made the same mistakes in their military actions as Americans made elsewhere in the world: they supported people who later became their enemies or violated human rights.

For example, it was the regime of Juvenal Habyariman in Rwanda that was supported by Paris: the French supplied Hutu combat groups with weapons, thus contributing to the Tutsi massacre. Hollande, who in Paris and Europe was perceived as a weakling, showed the face of a warrior and sent heavy units and fighter planes to Mali in 2013. This would not have been necessary if French President Sarkozy and the USA had not overthrown Qaddafi. It was Sarkozy that initiated the NATO led airstrikes against Libya. The removal of Colonel Qaddafi gave rise to the creation of the Caliphate with the help of Tuaregs in the north of Niger and Mali. After a few years since the start of the mission in Mali one wonders: has it made Europe safer?

Has the flow of migrants been stopped through Sahel countries? Are the Jihadists of African descent a lesser threat in Europe? The cost of the military action in Mali in 2013 amounted to €650 million. Operation Barkhane (as it is called) continues to this day and costs the French budget €500 million per year. Of course, democracy in Mali is a top priority for most Europeans, right? A total of 9,000 French soldiers are currently stationed in Chad, Niger, Mali, Burkina Faso, Senegal, Gabon, the Central African Republic and Djibouti. The growing military presence is intended to support the fight against terrorism and crime, in fact it is about the French elites extending their power to the south, reaching for cheap raw materials and outlet markets.

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“..if we can identify it is dark matter for sure then that is very significant. And if not, it is even more significant because they would be fresh new particles that no one had predicted before..”

Chinese Satellite Closes In On Dark Matter Mystery (AFP)

Scientists have detected cosmic ray energy readings that could bring them closer to proving the existence of dark matter, a mysterious substance believed to comprise a quarter of our universe, a study revealed on Thursday. Likely made up of unknown sub-atomic material, dark matter is invisible to telescopes and can be perceived only through its gravitational pull on other objects in the universe. Beijing’s first astronomical satellite launched two years ago detected 1.5 million cosmic ray electrons and protons, the study said, and unprecedented measurements found curiously low-energy rays. The team of researchers from China, Switzerland and Italy, who published their first results in the journal Nature, said the data may cast light on “the annihilation or decay of particle dark matter”.

“This new unseen phenomena can bring breakthroughs,” Bai Chunli, president of the Chinese Academy of Sciences, said at a briefing. “After collecting more data, if we can identify it is dark matter for sure then that is very significant. And if not, it is even more significant because they would be fresh new particles that no one had predicted before,” Bai added, to applause from fellow scientists. The Dark Matter Particle Explorer (DAMPE) is now collecting more data from space to help researchers figure out what it could be. DAMPE was launched from the Jiuquan Satellite Launch Centre in the Gobi desert in December 2015, after nearly 20 years in development. Its designers boast that DAMPE is superior to its US counterpart, the AMS-02 (Alpha Magnetic Spectrometer) that NASA installed on the International Space Station in 2011.

“Our cosmic ray detection range is 10 times that of AMS-02 and three times as accurate,” said DAMPE chief scientist Chang Jin. “Proving the existence of dark matter takes a lot of time. Now we have worked out the most precise spectrum, but we are not 100% sure that this can lead us to the location of dark matter,” he said.

Read more …

Nov 132017
 
 November 13, 2017  Posted by at 2:17 pm Finance Tagged with: , , , , , , , , , , ,  4 Responses »
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Jackson Pollock Man with knife 1940

 

There can be little doubt that the British, in general, have a sense of humor. And that’s perhaps the lens through which we should view the country these days. After all, what other options do we have? A comment yesterday to a Guardian article sums up the situation quite perfectly in just a few words (note: Dignitas has something to do with assisted dying):

Brexit is rapidly becoming like someone who booked a trip to Dignitas when they were told they were dying and has now been told there’s a cure. But they’re going to Switzerland anyway, because they can’t face dealing with Ryanair’s customer service team.

There are two main British political parties, Tories and Labour, which fight each other whenever and wherever they can. Moreover, each party has several camps that fight each other even more, if at all possible. The George W.- friendly Tony Blair Orchestra in the Labour Party seems to have lost out to the actually left-wing Jeremy Corbynistas for now, but they won’t give up without a fight (power is their only hobby). Blair is still commenting from the sidelines on Corbyn’s perceived follies while his faithful lament about how their Tone was misled by 43 into bombing Iraq.

The Tories have gone full-monty Monty Python. John Cleese et al must feel at least a pang of jealousy. 40 Tory MPs have allegedly gathered to demand for PM Theresa May to quit. A whole bunch of both Labour and Tory lawmakers threaten to tackle her over not allowing them a vote in any Brexit deal (which for now is entirely hypothetical). Other voices across party lines demand the resignation -or sacking- of foreign not-so-very-ministerial Boris Johnson.

One Tory MP, the Rt. Hon. John Redwood MP, who’s also Chief Global Strategist for Charles Stanley, wrote an op-ed in the FT telling investors to pull their money out of the UK. You can’t make that kind of stuff up. Or you can, but no-one would believe a word. The Python crew would have never made a dime if they had started out today, because life in Britain has now seriously trumped art. When the other guys are funnier without even trying, maybe comedy’s not your thing.

And that’s how we slide seamlessly right down into Theresa May and the Holy Grail, the probably best representation of what is going on. May never wanted a Brexit, but she’s so power hungry that she jumped at a chance of defending what she doesn’t believe in. By the way, apart maybe from Corbyn, all the actors in this comedy are in it not because they care for their country, but for themselves, exclusively. Brilliant video, by the way.

 

 

Not that Brexit is necessarily such a terrible thing. Putting distance between yourselves and the European Union may well be the most sensible thing there is. Because Brussels is now defined more than anything by what it has done -and failed to do- to Greece, to the refugees and to Catalonia. And it will never be able to shake that off. The EU, just like the UK, is ruled by people who care only about themselves. Our political systems self-select for sociopaths, with precious few exceptions.

Even if you see Brexit as a purely economical move, which most people do even though it’s very much not true, the British people should rejoice knowing that they won’t be the ones forking over for the next pan-European bank bailout. Then again, they’ll have to bail out their own banks. Which have grown way out of hand, the price paid for wanting to become a global finance center.

Nor will the British people be forced to pay up for the newly-revived, scary-as-hell and unholy idea of a European army, an idea that originated in the 1950s and has re-gained support the very moment Britain voted for Brexit:

 

EU To Sign Defense Pact, May Allow Limited British Role

France, Germany and 20 other EU governments are set to sign a defense pact on Monday they hope marks a new era of European military integration to cement unity after Britain’s decision to quit the bloc. In Europe’s latest attempt to lessen its reliance on the United States, the 22 governments will create a formal club that should give the European Union a more coherent role in tackling international crises.

“We’ve never come this far before,” said a senior EU official said of EU defense integration efforts that date back to a failed bid in the 1950s. “We are in a new situation.” The election of pro-European Emmanuel Macron as France’s president and warnings by U.S. President Donald Trump that European allies must pay more towards their security have propelled the project forward, diplomats said.

[..] A system to spot weaknesses across EU armed forces, in coordination with U.S.-led NATO, is due to start in a pilot stage, while a multi-billion-euro EU fund to support the pact is still under negotiation. Long blocked by Britain, which feared the creation of an EU army, defense integration was revived by France and Germany after Britons voted to leave the EU in June 2016.

[..] London is not part of the initiative but British officials have been pressing for third country involvement. Britain’s aerospace industry and its biggest defense firm BAE Systems fear losing out, diplomats said. Britain may be able to join in, but only on an exceptional basis if it provides substantial funds and expertise.

They don’t even know who’ll be the leader of this European Army. There are plenty of reasons this was voted down 60 years ago and left in the dustbin ever since. A German supreme commander, anyone? The female German minister of defence just yesterday let slip that she supports regime change in Poland. That’s all you should need to know.

This is presented in Brussels as a money saver. European countries have too many different weapons systems, is the reasoning, and need to become ‘more efficient’. I bet you right here and now that it will cost Europe an arm and an extra leg or two-three. But not Britain. Which can also, simultaneously, if and when sensible people are in office, ditch its grandiose notions of being an empire or world power, and cut its armed forces by 50 or 75%.

And while they’re at it, cut its arms industry into little pieces and flush them down the Thames. Brexit can be an opportunity, a chance for the country to fully re-invent itself. But first, the Python-styled tragic comedy starring Theresa and Boris will have to be played to its tragic finale. To that end, and since it just wouldn’t feel fair to leave him out, let’s make sure we reserve a role for George Orwell as well – it comes natural:

 

UK Government Tensions Rise After Leak Of ‘Orwellian’ Memo Sent To May

The tensions in Theresa May’s government intensified on Sunday night ahead of this week’s vital votes on the Brexit bill, as ministers accused Boris Johnson and Michael Gove of sending an “Orwellian” set of secret demands to No 10. As an increasingly weakened prime minister faces the possibility of parliamentary defeats on the bill, government colleagues have said they are aghast at the language used by the foreign secretary and the environment secretary in a joint private letter.

The leaked letter – a remarkable show of unity from two ministers who infamously fell out during last year’s leadership campaign – appeared to be designed to push May decisively towards a hard Brexit and limit the influence of former remainers. It complained of “insufficient energy” on Brexit in some parts of the government and insisted any transition period must end in June 2021 – a veiled attack on the chancellor, Philip Hammond.

A decision as big and defining as Brexit should always have been executed by a government, or a coalition, in which as broad a spectrum of the population as possible is represented. It’s crazy to let just one party push through their version, especially when views are so divergent and tensions run this high. The Tories have just a slight majority.

But really, all Labour have to do is wait until May and Boris and Gove and all the others run out of gas and their engine seizes. They lost two ministers in a week and more will follow. So Labour makes a peace offer, knowing full well it won’t be accepted, but has to be made just for form.

As per tomorrow, May’s EU Withdrawal Bill will be discussed in Parliament and the next episode of Theresa May and the Holy Grail can start. John Cleese will be watching, thinking every five minutes: “Why didn’t I think of that?”. The Bill will be ripped to shreds, between a Hard Brexit and a No Brexit side, and hundreds of amendments, and May will be ripped along with it.

Even her chances of lasting just the week are slim. She has to turn to Labour for support, but she can’t. If she does, Boris will smell his opportunity for the top post. He might even get it, but that would lead to something awfully close to civil war; still, maybe that’s inevitable anyway, and perhaps it would be a good thing. Cards on the table.

 

UK Labour Makes Brexit Offer to May as Future in Balance

Keir Starmer, the party’s Brexit spokesman, wrote to May on Monday telling her there was a “sensible majority” in Parliament to secure a two-year transition deal for after Brexit. That would allow Britain to stay inside the European Union’s single market and customs union after 2019 while it completes trade talks with the bloc. He said the opposition to such an arrangement came from Conservatives.

“Over recent weeks, it has become increasingly clear that you alone do not have the authority to deliver a transitional deal with Europe and to take the necessary steps to protect jobs and the economy,” Starmer wrote in the letter, which was released by his office.

May is unlikely to welcome Labour’s offer, which highlights the fragility of her position. The premier, who lost two cabinet ministers in a week to different scandals, has received a letter from pro-Brexit rival Boris Johnson demanding a bolder approach to the divorce, the Mail on Sunday reported. And 40 Conservative lawmakers back a challenge to her leadership, The Sunday Times said, just eight short of the number that triggers a vote.

[..] May’s landmark Brexit legislation, the EU Withdrawal Bill, returns to Parliament on Tuesday, where it faces hundreds of proposed amendments to be considered over eight days of debate. Even with the backing of Northern Ireland’s Democratic Unionist Party, May only has a slim majority. Tories who want to keep close ties to the EU have put their names on many of the measures, suggesting the government will have to back down or be defeated.

They’re talking about dates and timelines to present proposals to the EU, but they’ll never agree on any. And even if they do, Brussels will be ready to tear them to pieces. It’s hard to see how a Brexit will ever happen, but it’s easy to see that if it ever does, it’ll be an absolutely fabulous mess. And then even John Cleese won’t be laughing anymore.

 

 

Nov 122017
 
 November 12, 2017  Posted by at 9:47 am Finance Tagged with: , , , , , , , , , ,  3 Responses »
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Fifth Avenue at 25th Street. New York City 1905

 

“Bitcoin Cash” Quadruples in 2 Days. Bitcoin Crashes by $35 Billion (WS)
Podesta Group “Will Not Exist At The End Of The Year” (ZH)
Global Banks, City of London Raise “Disorderly Brexit” Alarm (DQ)
Forty UK Conservative Lawmakers Ready To Oust PM May (R.)
Theresa May Faces Defeat By MPs Demanding Vote On Final Brexit Deal (G.)
Sack Boris Johnson For Shaming Our Nation, Jeremy Corbyn Tells PM (G.)
German War Reparations ‘Matter Of Honor’ For Poland (R.)
750,000 Protesters Flood Barcelona Demanding Release Of Catalan Leaders (R.)
EU Has Become A ‘Caricature’ Of Its Founding Values – Puidgemont (RT)
Trafficking Laws ‘Target Refugee Aid Workers In EU’ (G.)
Greece’s Middle Incomes Go Under The Knife (K.)

 

 

Safe to say that Wolf Richter is not a big fan.

“Bitcoin Cash” Quadruples in 2 Days. Bitcoin Crashes by $35 Billion (WS)

I’m writing this Saturday night, Pacific Time, and cryptos never rest. By Sunday morning, “Bitcoin Cash” might have soared another $1,000 or crashed by $1,000; and bitcoin might have soared or crashed by another $1,500. Neither would surprise me, the way these things are going. One thing for sure, you’re not watching grass grow. Bitcoin Cash, which was split from bitcoin in August, began surging from $630 on Thursday mid-day Pacific Time. Within 24 hours, it jumped 50% (or by $320) to $950. It then lost steam. But in the wee hours of Saturday morning, it fired up again and soared another $450 to $1,400 by late morning. It then fell off, but Saturday night, it returned to form and spiked to $2,448 at the moment, nearly quadrupling in two days. Here is what the move looks like in US dollars in a seven-day chart (via WorldCoinIndex):

Its market valuation jumped by $30 billion over the two days, from $10.6 billion to $41 billion. I mean why even bother with the stock market. Bitcoin went the opposite way. It plunged from a peak of $7,771 on November 8 mid-morning to $5,519 at this moment, losing $2,252 or 29% in three days. It’s now back where it first had been in late October. Its market valuation plunged by $35 billion from $127 billion to $92 billion. $35 billion is starting to add up, so to speak (via WorldCoinIndex):

Bitcoin ran into an entanglement on November 8, when developers called off a planned software upgrade, SegWit2x. The upgrade was supposed to have improved transactions speeds. This was blamed for the plunge that started on Wednesday. Then the fun focused on Bitcoin Cash. By Friday, as Bitcoin Cash had soared 50% while bitcoin was crashing, it was blamed on traders that were switching from chasing after bitcoin to chasing after Bitcoin Cash. At the time, Joshua Raymond, a director at the foreign-exchange and CFD broker XTB, told Business Insider: “The delay to Segwit2x has damaged confidence amongst bitcoin investors concerning the much-needed resolution to speed up bitcoin’s slow processing speed.

“Everyone was hoping the Segwit2x would address this but unfortunately, the delay due to a lack of consensus on the mechanics has affected confidence. Confidence on transaction speed in Bitcoin has deteriorated significantly in recent months. As Bitcoin Cash enjoys much faster transaction speeds, we have started to see a recycling of positions out of Bitcoin into Bitcoin Cash as a consequence.” Just don’t call cryptos an investment or asset or asset class or currency. While they could be used as currency, in reality, these kinds of violent moves make their use as currency way too risky and nonsensical. What’s left? The blockchain technology, which underpins these cryptos, is free and open source. Currently a lot of smart brains are trying to figure out how to put the technology to work in all kinds of industries.

Some of them will likely succeed. I’m looking forward to the moment when there is a way of transferring money around the world that is universal, convenient, cheap, fast, not subject to violent fluctuations, and 100% reliable. But that moment isn’t here yet, and neither bitcoin nor Bitcoin Cash will have anything to do with it. Instead of being usable currencies, cryptos – CoinMarketCap lists nearly 1,300 of them, with many of them already worthless – are a form of online betting based on a new technology, and they’re subject to different dynamics than classic online betting, but not regulated or forbidden by governments, unlike classic online betting.

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“..both sides of the swamp should probably control themselves in any premature celebrations as this appears to be far from over..”

Podesta Group “Will Not Exist At The End Of The Year” (ZH)

Just three weeks after we reported that special counsel Mueller was targeting lobbying firm Podesta Group. and just two weeks after Tony Podesta resigned from his position at the firm he founded, The Hill reports that Kimberley Fritts, the Podesta Group’s chief executive, told employees on Thursday that the firm would not exist at the end of the year and that they would likely not be paid through the end of November, sources told CNN. Fritts announced her resignation from the top Washington lobbying group after Podesta left the company amid ties to indictments filed in the Russia investigation. Fritts is beginning work on launching a new firm. Her last day at the company Friday created new uncertainty for the Podesta Group after the departure of Podesta on Oct. 30.

Multiple employees who spoke to The Hill said the mood at the firm was mostly optimistic, though they said many of the firm’s dozens of employees could be in limbo as Fritts sets up the new firm and brings Podesta Group talent and clients with her. As a reminder, Mueller is now investigating whether the Podesta Group properly identified to U.S. authorities its foreign work on behalf of a Ukrainian advocacy group in Europe, CNN reported. An NBC report found that the Podesta Group was one of several firms working on Paul Manafort’s public relations campaign for European Centre for a Modern Ukraine, which the Podesta Group claims it thought was a nonpartisan think tank, something which this site reported first last August. And here is one reason why we suspect more than a few on the left are now concerned…

It goes without saying, that Podesta’s brother, John, is arguably one of the top figure in Democratic politics, serving most recently as chief of staff in the Bill Clinton White House and also as the chairman of Hillary Clinton’s 2016 presidential campaign. What happens next to Tony (and perhaps his brother John) is to be determined, but one thing is clear: both sides of the swamp should probably control themselves in any premature celebrations as this appears to be far from over.

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“..the Brexit vote has presented rival European nations and the ECB with a golden opportunity to undermine the UK’s domination of Europe’s financial industry. They won’t let it go to waste.”

Global Banks, City of London Raise “Disorderly Brexit” Alarm (DQ)

For the City of London Corporation, the prospect of a messy Brexit is even more terrifying than it is for many of the global banks it hosts within its coveted Square Mile. The Bank of England has warned that up to 75,000 jobs could be lost in the financial sector following Britain’s departure from the European Union. But it’s not just jobs that are on the line; so, too, is the Square Mile’s role as the world’s most important financial center, not to mention the backbone of the UK economy. In recent months the European Commission and the European Central Bank have redoubled their efforts to compel financial institutions to move at least some of their operations onto the continent. “I have a very clear message to both smaller and larger banks: the clock is ticking,” said Sabine Lautenschläger, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB.

“No one knows how Brexit will play out, and that’s why all affected banks should prepare themselves with a hard Brexit in mind.” Some banks are already taking action. Goldman has set aside the top eight floors of a 37-story block under construction in Frankfurt which is expected to be ready for occupation in the third quarter of 2019. Just a few months before that, construction work on the bank’s new £350m European headquarters in central London should be completed. Ten days ago, Goldman Sachs CEO Lloyd Blankfein, posted a tweet of an aerial shot of the half-finished construction in London, with the words “expecting/hoping to fill it up, but so much outside our control.” As the head of an organization with alumni at the very top of both the Bank of England and the ECB as well as tentacles that reach out to just about every corner of the old continent, Blankfein is clearly selling Goldman short, if you’ll excuse the pun.

Goldman’s not the only major bank hedging its bets. On Tuesday Germany’s struggling behemoth, Deutsche Bank, announced that it had signed an agreement to occupy at least 469,000 square feet at a site under construction in the City of London. The move comes despite a warning in April that thousands of Deutsche Bank’s UK staff may have to relocate after Brexit. To that end, Deutsche has begun work on a Frankfurt booking center that would take up some of the slack if the German lender was forced to turn its London branch into a subsidiary when Britain leaves the EU.

Most banks would prefer the status quo to continue, with the lion’s share of their operations remaining in London, which already has the physical infrastructure, legal apparatus and friendly political and regulatory culture needed to support the full gamut of global financial services. But the Brexit vote has presented rival European nations and the ECB with a golden opportunity to undermine the UK’s domination of Europe’s financial industry. They won’t let it go to waste.

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It truly is Monty Python by now.

Forty UK Conservative Lawmakers Ready To Oust PM May (R.)

Forty members of parliament from Prime Minister Theresa May’s Conservative Party have agreed to sign a letter of no-confidence in her, the Sunday Times newspaper reported. That is eight short of the number needed to trigger a party leadership contest, the mechanism through which May could be forced from office and replaced by another Conservative. May has been struggling to maintain her authority over her party since a snap election on June 8 which she called thinking she would win by a wide margin but instead resulted in her losing her parliamentary majority. Divided over how to extricate Britain from the European Union and hit by multiple scandals involving ministers, May’s government has failed to assert control over a chaotic political situation that is weakening London’s hand in Brexit talks.

An earlier attempt to unseat May in the wake of her disastrous speech at the annual party conference fizzled out, but many Conservatives remain unhappy with the prime minister’s performance and talk of a leadership contest has not gone away. May has lost two cabinet ministers in as many weeks: Michael Fallon stepped down as defense secretary after becoming implicated in a wider scandal about sexual misconduct in parliament, while Priti Patel resigned as aid minister after she was found to have had secret meetings with top Israeli officials.

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So there’s those who just want her gone, and then there’s the ones who look for a reason.

Theresa May Faces Defeat By MPs Demanding Vote On Final Brexit Deal (G.)

Theresa May faces a devastating Commons defeat over Brexit within weeks if she continues to deny parliament a meaningful vote on the final deal with the EU, Tory and Labour MPs have warned. With the withdrawal bill returning to the Commons on Tuesday, a cross-party group who oppose a hard Brexit and are co-operating on tactics say they believe they have the numbers to defeat the government if they are denied such a vote. While the critical amendments and closest votes are not expected to be taken until next month, Tories who oppose a hard Brexit insist there is no softening of their position and that they are biding their time ready to strike before Christmas. Some Tories say they are even more determined to insist on parliament’s right to veto a bad or no deal because the prime minister appears not to have responded to any of their concerns over recent weeks.

Instead, in what was seen by many as a provocative move, she announced last week that the government had tabled its own amendment that would commit the UK to formally leaving on 29 March 2019, whatever the outcome of negotiations and even if there were no deal. Meanwhile, a secret memo to May written by Boris Johnson and Michael Gove dictating terms for a hard Brexit has emerged. In blunt terms, the pair tell the prime minister to “underline her resolve” to achieve a total break with Brussels, and name 30 June 2021 as the fixed end of Britain’s transition period after leaving the EU in March 2019. The missive will undoubtedly lead critics to say the prime minister is being held hostage by the leading Brexiters. A Commons defeat for May over Brexit, at a time when her government is reeling from the loss of two cabinet ministers in six days – and may lose more – would raise further questions over her ability to survive as prime minister.

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She better be quick then, or she won’t have the job anymore.

Sack Boris Johnson For Shaming Our Nation, Jeremy Corbyn Tells PM (G.)

jeremy Corbyn has fired an extraordinary broadside against Boris Johnson, calling for him to be sacked immediately as foreign secretary for “undermining our country” and “putting our citizens at risk”. The blistering attack – and demand that Theresa May fire him – was delivered exclusively in a statement to the Observer on Saturday night, as pressure mounted on Johnson over his diplomatic blunder in the case of Nazanin Zaghari-Ratcliffe, the British mother imprisoned in Iran. The Labour leader cites a litany of undiplomatic and ill-chosen statements from Johnson since his appointment by May as foreign secretary in July last year. Corbyn accuses him of having a “colonial throwback take on the world”, and of repeatedly “letting our country down”.

It is the mishandling of the “heartbreaking” case of Zaghari-Ratcliffe that persuaded Corbyn to call for his dismissal. His statement ends: “We’ve put up with Johnson embarrassing and undermining our country with his incompetence and colonial throwback views and putting our citizens at risk for long enough. It’s time for him to go.” The intervention places both May and Johnson under renewed pressure after 10 days in which the prime minister has been forced to dismiss defence secretary Sir Michael Fallon for inappropriate behaviour towards women, and the international development secretary, Priti Patel, for conducting a freelance aid policy in the Middle East without informing No 10 or the Foreign Office.

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Get in line.

German War Reparations ‘Matter Of Honor’ For Poland (R.)

Demanding reparations from Germany for its actions in Poland during World War Two is a matter of honor for Warsaw, Jaroslaw Kaczynski, the leader of Polish ruling Law and Justice (PiS) party, said on Saturday. The issue of reparations, revived by Poland’s eurosceptic PiS after decades of improving relations with Germany, could escalate tensions between the two European Union members. In September Polish parliamentary legal experts ruled that Warsaw has the right to demand reparations from Germany, although Poland’s foreign minister indicated that no immediate claim would be made. “The French were paid, Jews were paid, many other nations were paid for the losses they suffered during World War Two. Poles were not,” Kaczynski said.

“It is not only about material funds. It is about our status, our honor … And this is not theater. This is our demand, a totally serious demand,” added Kaczynski, Poland’s de facto leader. The PiS government, deeply distrustful of Germany, has raised calls for wartime compensation in recent months but Foreign Minister Witold Waszczykowski has said further analysis was needed before any claims were lodged. Six million Poles, including three million Polish Jews, were killed during the war, and the capital Warsaw was razed to the ground in 1944 after a failed uprising in which 200,000 civilians died.

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They’ll have to do a lot more demonstrating.

750,000 Protesters Flood Barcelona Demanding Release Of Catalan Leaders (R.)

Hundreds of thousands of Catalan independence supporters clogged one of Barcelona’s main avenues on Saturday to demand the release of separatist leaders held in prison for their roles in the region’s banned drive to split from Spain. Wearing yellow ribbons on their lapels to signify support, they filled the length of the Avenue Marina that runs from the beach to Barcelona’s iconic Sagrada Familia church, while the jailed leaders’ families made speeches. Catalonia’s two main grassroots independence groups called the march, under the slogan “Freedom for the political prisoners,” after their leaders were remanded in custody on charges of sedition last month. The protest is seen as a test of how the independence movement’s support has fared since the Catalan government declared independence on Oct. 27, prompting Spanish Prime Minister Mariano Rajoy to fire its members, dissolve the regional parliament and call new elections for December.

An opinion poll this week showed that pro-independence parties would win the largest share of the vote, though a majority was not assured and question marks remain over ousted regional head Carles Puigdemont’s leadership of the separatist cause. “Look at all the people here,” said 63-year-old Pep Morales. “The independence movement is still going strong.” Barcelona police said about 750,000 people had attended, many from across Catalonia. The protesters carried photos with the faces of those in prison, waved the red-and-yellow striped Catalan independence flag and shone lights from their phones. The Spanish High Court has jailed eight former Catalan government members, along with the leaders of the Catalan National Assembly (ANC) and Omnium Cultural, while investigations continue.

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That’s true in many ways.

EU Has Become A ‘Caricature’ Of Its Founding Values – Puidgemont (RT)

Sacked Catalan leader Carles Puigdemont has lashed out against the European Union (EU) over its response to the Catalan crisis, in which Brussels sided with Madrid in suppressing the independence drive of the region. Puigdemont criticized the EU as a “caricature of what Europe is and of what we want Europe to be,” claiming, there is “no will to help solve the politics of the conflict.” Catalonia staged a regional independence referendum on October 1, amid a massive crackdown by police on voters in which nearly 900 people were injured. Following the ‘yes’ vote, Barcelona attempted to initiate dialogue with the central government, hoping the EU would step in and act as mediator to help defuse tensions.

Leaders of European nations, as well as the EU’s main institutions, sided with the Spanish Prime Minister Mariano Rajoy instead, and refused to recognize Catalonia’s self-determination call, referring to the crisis as an internal Spanish matter. The former Catalan leader sees it as a betrayal of the fundamental “values that took us to constitute Europe.” Puigdemont believes the EU leadership, which he said comprises “four or five governments,” are “probably not the most appropriate to lead the EU.” “What will the EU become in hands of this people?” the former Catalan leader asked, pointing out that he does not want the EU’s leadership to “confuse” traditional European values with “their political and economic interests.”

Just this week, European Commission President Jean-Claude Juncker called on all member nations to fight against separatist tendencies in Europe, apparently in reference to Scotland, Lombardy, Venice and other regions throughout the continent which have expressed strong self-determination ambitions. “Nationalisms are a poison that prevent Europe from working together,” Juncker said Thursday in the Spanish city of Salamanca. “We cannot stay with our arms crossed because it is time for us to do what needs to be done. I say ‘no’ to any form of separatism that weakens Europe and further widens the existing fissures.” [..] “To be treated like a criminal, like a drug-trafficker, like a paedophile, like a serial killer, I think this is abuse,” the Catalan leader lamented. “This isn’t politics, this is using the courts to do politics.”

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The shame of the EU keeps getting bigger and deeper.

Trafficking Laws ‘Target Refugee Aid Workers In EU’ (G.)

Aid workers are being targeted throughout Europe as countries including the UK use laws aimed at traffickers and smugglers to discourage humanitarian activity, a study claims. A six-month investigation by the London-based Institute of Race Relations documented the prosecutions of 45 individual “humanitarian actors” under anti-smuggling or immigration laws in 26 separate actions over the past two years. Examples include a 25-year-old British volunteer with a refugee support group, who last January sought to bring an Albanian mother and two children to the UK in the boot of her car so they could join their husband and father. She was sentenced in March to 14 months in jail, although the sentence was suspended to take into account her “misguided humanitarianism”.

UK law does not distinguish between humanitarian and commercial motives in such prosecutions, but does take such factors into account in sentencing. In Switzerland, a 43-year-old woman known to refugees as Mother Teresa for her work in providing food for those stranded on the Italian side of the border, was sentenced in September to a fine and a suspended 80-day jail term for helping unaccompanied children into the country. In France, British volunteers helping refugees in Calais have frequently been harassed by the authorities. In October 2015, former British soldier Rob Lawrie was arrested at the border for hiding a four-year-old Afghan child in his van in response to her father’s pleas to take her to relatives in Leeds. Lawrie, from West Yorkshire, avoided jail after a French court found him guilty of the lesser charge of endangerment rather than assisting illegal entry.

And in March this year three French and British volunteers with charity Roya Citoyenne were arrested for distributing food to migrants. The 68-page IRR report chronicles a culture of criminalisation in which volunteers for charities and aid groups, attempting to fill the gaps in state provision, are targeted for providing food, shelter and clean water to migrants in informal encampments or on streets. The EU’s border force, Frontex, has accused aid groups including Médecins Sans Frontières of co-operating with migrant traffickers in the Mediterranean. The report criticises senior Frontex officials for “attempts to bully and delegitimise” NGO search and rescue missions in the Mediterranean by accusing aid groups of working with smugglers and encouraging trafficking. The IRR’s vice-chair, Frances Webber, said: “Across the continent, criminal laws designed to target organised smuggling gangs and profiteers are distorted and stretched to fit an anti-refugee, anti-humanitarian agenda, and in the process criminalise decency itself.”

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Disposable income down by 50%. Taxes and social security up 96.8%. The Troika is taxing Greece to death. On purpose. It’ll be a tourist destination only. And a refugee camp.

Greece’s Middle Incomes Go Under The Knife (K.)

The disposable income of Greece’s average earners has been slashed by more than 50% due to overtaxation in recent years, according to the latest data examined by Kathimerini, which also paints a grim picture for the coming years. What’s more, the reduction of the income tax threshold is expected to further impact the disposable income of households. Brussels expects Greece’s primary surplus to beat its target of 3.5% of GDP again next year, rising to 3.9%, and then to 3.7% in 2019. However, the primary surpluses Greece has posted in the last two years are largely due to exorbitant taxes rather the result of growth. Moreover, while the European Commission’s statistics point to a disproportionate increase in taxation in Greece, at a time when the economy was shrinking, the country’s industrialists and political opposition say overtaxation has led to more tax evasion and the failure of the tax system.

Those hardest hit have been freelance professionals, who since 2009 have been subjected to unprecedented raids by the tax office, and more recently by social insurance contribution hikes, resulting in the gradual exhaustion of their income. And high taxes, including property taxes, are the reason why both freelancers and self-employed professionals submitted incomes last year that were 20% lower than their actual earnings. A telling example of overtaxation concerns freelance professionals who own a car and an apartment and earn 50,000 euros a year: In 2009 they had to pay 16,333 euros of their annual income to the tax office and their social security fund, leaving them with a net income of 33,667 euros. Five years later, their clear income dropped by a further 4,344 euros to 29,323.

The situation today is even more dire as the same self-employed professional making 50,000 euros must pay 32,151 euros in taxes and contributions, leaving them with a disposable income of 17,849. Taxes and social security contributions have rocketed by 96.8% since 2009, while compared to 2014 they have risen by 55.5%.

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Oct 202017
 
 October 20, 2017  Posted by at 7:54 am Finance Tagged with: , , , , , , , , ,  1 Response »
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René Magritte Youth 1924

 

Fed Flunks Econ 101: Understanding Inflation (MW)
Meet The Bears Predicting Stock Market Doom (CNN)
Catalan Groups Call For Mass Withdrawal Of Money From Bank ATMs (CN)
The World’s Largest ICO Is Imploding After Just 3 Months (ZH)
Scandal-Hit Nissan Suspends All Production For Japan Market (AFP)
End Of Australia Auto-Making Sector As Holden Closes Doors (AFP)
Top Startup Investors See Mounting ‘Backlash’ Against Tech (R.)
Native American Tribe Holding Patents Sues Amazon And Microsoft (R.)
Putin Slams West for Lack of Respect and Broken Trust (BBG)
Ditch Neoliberalism To Win Again, Jeremy Corbyn Tells EU’s Center-Left (Ind.)
Merkel Comes to May’s Aid on Brexit (BBG)
Italian Regions To Vote In Europe’s Latest Referendums On Autonomy (G.)
Greece Plans Billion Euro Handout For The Poor (R.)
Tensions Rise On Aegean Islands As Migrants Continue To Arrive (K.)
Global Pollution Kills Millions, Threatens ‘Survival Of Human Societies’ (G.)

 

 

As I’ve said 1000 times.

Fed Flunks Econ 101: Understanding Inflation (MW)

The Federal Reserve’s illusive quest to achieve 2% inflation over the medium term is becoming a long-term problem. The institutional anxiety over the chronic inflation undershoot is evident in daily news stories, Fed speeches and the increased focus in internal discussions, as reflected in the minutes of the Sept. 19-20 meeting of the Federal Open Market Committee (FOMC). One doesn’t have to read between the lines to appreciate the degree to which policy makers fear the onset of the next recession without adequate “room” to lower interest rates. Hence, normalizing interest rates is “on track,” as the headline above noted, even though the relationship — between unemployment and inflation — is decidedly off track.

So what gives? The persistence of sub-2% inflation in the face of nine years of near-zero interest rates and an economy at what is perceived to be full employment has led to an array of silly explanations, embarrassing excuses and a host of pseudo-theories. Just maybe the Fed’s internal guidance system is flawed. The inverse correlation between unemployment and wages in the U.K. from 1861 to 1957 initially observed by New Zealand economist A.W. Phillips has morphed into a model of causation for Fed chief Janet Yellen and the current crop of U.S. policy makers. It’s not clear why. Just eyeballing the graph of the Fed’s preferred inflation measure and the civilian unemployment rate, one might conclude that the relationship broke down in the 1970s and has yet to reassert itself. Is a half-century malfunction enough to declare a theory null and void?

One would think so. Yet the notion of cost-push inflation as (supposedly) expressed by Phillips Curve lives, although faith in it has started to wane, even among ardent devotees like labor-economist Yellen. Instead, we are confronted with headlines such as, “Nobody seems to know why there is no inflation.” Really? Have they all forgotten Milton Friedman’s axiom that inflation is always and everywhere a monetary phenomenon? When the central bank creates more money than the public wants to hold, people spend it. The increased demand for goods and services eventually exceeds the economy’s ability to produce or provide them. The result is higher economy-wide prices, or inflation.

That isn’t happening, not just in the U.S. but across the globe. For all the sturm und drang about the Fed debasing the dollar and sowing the seeds of the next great inflation, the public’s demand for money has increased. The increased desire to hold cash and checkable deposits has risen to meet the increased supply. Velocity, or the rate at which money turns over, has plummeted.

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“.. it’s central banks that typically end the party. And central banks are telling you it’s last call.”

Meet The Bears Predicting Stock Market Doom (CNN)

The red-hot stock market may continue its rapid ascent, especially if Trump delivers his promise for “massive” corporate tax cuts. And even if not, healthy economic fundamentals and corporate profits should continue to support stocks. Nonetheless, some bears are fighting the herd mentality on Wall Street by warning of serious trouble brewing just beneath the surface of the stock market. These market skeptics are reassured by the fact that betting against stocks wasn’t popular in 2007, either. “The best time to be a bear is the loneliest time,” Jesse Felder, a money manager and founder of The Felder Report, told CNNMoney. Here are some of the red flags these bears are warning about, including similarities between now and 30 years ago:

In 2007 and 2008, Chris Cole presciently bet that market volatility would skyrocket to levels no one had seen before. He took those crisis-era winnings and started Artemis Capital, a hedge fund that has amassed $210 million. Today, the stock market is unusually quiet. The VIX, a popular barometer of market fear, recently hit a record low. Cole thinks it’s a mirage, partly because popular trading strategies allow investors to bet on the low volatility itself. All those bets lead to even lower volatility – until something unexpected happens, like suddenly higher interest rates. “Any shock to the system could cause this to unravel in the opposite direction, where higher volatility drives higher volatility,” Cole told CNNMoney. “This is a massive risk to the system. The only thing we’re missing is a fire.” [..] “This is a disaster waiting to happen,” said Cole. “In the event there is a fire, this can cause a massive explosion.”

Kyle Bass, founder of Hayman Capital Management, is also having a flashback to 30 years ago. “If you look at the all of the different constituencies of the market today, it resembles the portfolio insurance debacle of 1987 on steroids,” Bass told Real Vision TV in an interview released on Wednesday. Bass fears that, once stock prices decline 4% to 5%, that will quickly morph into a 10% to 15% plunge. He isn’t sure about timing, but pointed to geopolitical trouble and central banks as potential triggers. “Buckle up, because I think you’re going to see a pretty interesting air pocket. And I don’t think investors are ready for that,” he said.

Peter Boockvar, chief market analyst at The Lindsey Group, predicts the “overvalued” stock market will run into serious trouble as central banks hit the brakes on the stimulus measures they used to prop up economies after the crisis. He pointed to the Federal Reserve shrinking its balance sheet and the European Central Bank slowing its bond purchases. “Historically speaking, central banks put us into recessions and bear markets. The same will happen this time,” Boockvar said. He estimates that central banks will be pumping $1 trillion less money into markets. “The liquidity spigot is going to be dripping instead of flowing. That’s a really big deal,” said Boockvar. He conceded that stocks could run higher before eventually reversing. “When it happens, I’m not sure,” Boockvar said. “But it’s central banks that typically end the party. And central banks are telling you it’s last call.”

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Chaos.

Catalan Groups Call For Mass Withdrawal Of Money From Bank ATMs (CN)

Civil society organizations in Catalonia call for a mass withdrawal of money from bank ATMs on Friday at 8am in order to pressure the Spanish government. Organizers don’t especify how much money should be taken out nor what to do with it. The action targets the five main banks in Catalonia: Caixa Bank, Sabadell, Bankia, BBVA and Santander. Organizers call on clients of Caixa Bank and Sabadell to show their disagreement with the banks’ recent decision to move their headquarters out of Catalonia due to the escalating political crisis between governments in Barcelona and Madrid.

This is the first “direct and peaceful” action organized by Crida per la Democràcia (Call for Democracy). This is an umbrella group which includes among others the two main pro-independence organizations in Catalonia: the Catalan National Assembly (ANC) and Òmnium Cultural. The mass withdrawal is also aimed at condemning the imprisonment of ANC and Òmnium presidents, Jordi Sánchez and Jordi Cuixart, held in custody on sedition charges since Monday.

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All’s not well in crypto land.

The World’s Largest ICO Is Imploding After Just 3 Months (ZH)

Earlier this summer, Tezos smashed existing sales records in the white-hot IPO market after the company’s pitch to build a better blockchain for cryptocurrencies made it one of the buzziest ICOs in the world. As we noted at the time, the company capitalized on that buzz by courting VC firms and other institutional investors with a $50 million token pre-sale. After the company opened up selling to the broader public, demand soared as investors greedily bought up tokens in spite of glitches that threatened to derail the sale early on. By the end of its weeks-long token sale in July, Tezos had sold more than $230 million. Now, Tezos is proving that authorities in the US and China were on to something when they decided to crack down on the ICO market, which has become a cesspool of fraud and abuse.

To wit, the company’s management revealed this week that progress on its vaunted product has stalled as it has struggled to recruit engineering talent, and an acrimonious dispute between several of the company’s leading figures has spilled out into the open. As WSJ’s Paul Vigna reports, “a battle between the founders of the company and the head of the Swiss foundation they installed to give it more independence has put most trading of Tezos coins on ice, possibly until early next year.” The shakeup started after Tezos founders Arthur and Kathleen Breitman reported the delays in a blog post published Wednesday. But even more alarming, the pair accused Johann Gevers, the head of a Swiss foundation which oversees their funds, of attempting to overpay himself using the massive pot of investor capital – despite the fact that the company will likely blow through its promised deadline of allocating tokens to buyers by December (the tokens have yet to be created).

In early September we became aware that the president of the Tezos Foundation, Johann Gevers, engaged in an attempt at self-dealing, misrepresenting to the council the value of a bonus he attempted to grant himself. We have been working with the Tezos foundation to resolve the matter and have advocated for his removal from the foundation council. We are confident in the council’s ability to handle this sensitive matter with care and diligence. In the meantime, Johann’s operational role in the foundation has been suspended, pending an investigation by the council’s auditor. The news sent Tezos futures contracts trading on BitMex, an exchange known for its cryptocurrency futures products, tumbling more than 50% as traders unwound bets the project would be launched before the end of the year, as Bloomberg pointed out.

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The final nail in the Made in Japan coffin.

Scandal-Hit Nissan Suspends All Production For Japan Market (AFP)

Nissan said Thursday it was suspending all production destined for the local market, as Japan’s number-two automaker grapples with a mounting inspection scandal that has already seen it recall some 1.2 million vehicles. “Nissan decided today to suspend vehicle production for the Japan market at all Nissan and Nissan Shatai plants in Japan,” it said in a statement, referring to an affiliate. The announcement comes weeks after the company announced the major recall as it admitted that staff without proper authorisation had conducted final inspections on some vehicles intended for the domestic market before they were shipped to dealers. On Thursday, it said a third-party investigator found the misconduct had continued at three of its six Japanese plants even after it took steps to end the crisis.

“Nissan regards the recurrence of this issue at domestic plants – despite the corrective measures taken – as critical,” it said. “The investigation team will continue to thoroughly investigate the issue and determine measures to prevent a recurrence.” Nissan president Hiroto Saikawa offered a blunt assessment, saying that “old habits” were to blame. “You might say it would be easy to stop people who are not supposed to inspect from inspecting,” he told reporters Thursday. “But we are having to take (new measures) in order to stop old habits that had been part of our routine operations at the factories.”

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Lost skills.

End Of Australia Auto-Making Sector As Holden Closes Doors (AFP)

The last car rolled off the production line of Australian automaker Holden on Friday, marking the demise of a national industry unable to stand up to global competition. The closure of the Elizabeth plant in South Australia is the end of an era for Holden, which first started in the state as a saddlery business in 1856 and made the nation’s first mass-produced car in 1948. The brand has long been an Australian household name, with 1970s commercials singing that “football, meat pies, kangaroos and Holden cars” were part of the nation’s identity. “I feel very sad, as we all do, for it’s the end of an era, and you can’t get away from the emotional response to the closure,” Prime Minister Malcolm Turnbull told Melbourne radio station 3AW on Friday.

Holden was marketed as “Australia’s Own Car” and became a symbol of post-war prosperity Down Under despite being a subsidiary of US giant General Motors. At its peak in 1964, Holden employed almost 24,000 staff. But just 950 were able to watch the final car leave the factory floor Friday. “There are a number of people who have been here since the seventies and today will be a very emotional day for some people and a very sad day,” Australian Manufacturing Workers Union state secretary John Camillo told reporters. The union blamed the federal government for causing the closure by withdrawing support to the auto sector. The death of the industry was always on the cards after subsidies were cut off in 2014. Some Aus$30 billion (US$24 billion) in assistance was handed out between 1997 and 2012, according to the government’s Productivity Commission.

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The rich get scared. It’s about power as much as money.

Top Startup Investors See Mounting ‘Backlash’ Against Tech (R.)

Two of the technology industry’s top startup investors took to the stage at a conference on Wednesday to decry the power that companies such as Facebook had amassed and call for a redistribution of wealth. Bill Maris, who founded Alphabet’s venture capital arm and now runs venture fund Section 32, and Sam Altman, president of startup accelerator Y Combinator, said widespread discontent over income inequality helped elect U.S. President Donald Trump and had put wealthy technology companies in the crosshairs. “I do know that the tech backlash is going to be strong,” said Altman. “We have more and more concentrated power and wealth.” The market capitalization of the so-called Big Five technology companies – Alphabet, Apple, Amazon, Microsoft and Facebook – has doubled in the last three years to more than $3 trillion.

Silicon Valley broadly has amassed significant wealth during the latest tech boom. Altman and Maris spoke on the final day of The Wall Street Journal DLive technology conference in Southern California. Facebook’s role in facilitating what U.S. intelligence agencies have identified as Russian interference in last year’s U.S. presidential election is an example of the immense power the social media company has amassed, the investors said. “The companies that used to be fun and disruptive and interesting and benevolent are now disrupting our elections,” Maris said.

Altman said people “are understandably uncomfortable with that.” Altman, who unequivocally rebuffed rumors that he would run for governor of California next year, said he expects more demands from both the public and policy makers on data privacy, limiting what personal information Facebook and others can collect. Maris said regulators would have good cause to break up the big technology companies. “These companies are more powerful than AT&T ever was,” he said. [..] Altman and Maris offered few details of how to accomplish a redistribution of wealth. Maris proposed shorter term limits for elected officials and simplifying the tax code. Altman has advocated basic income, a poverty-fighting proposal in which all residents would receive a regular, unconditional sum of money from the government.

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Curious legal battle.

Native American Tribe Holding Patents Sues Amazon And Microsoft (R.)

A Native American tribe sued Amazon.com and Microsoft in federal court in Virginia on Wednesday for infringing supercomputer patents it is holding for a technology firm. The Saint Regis Mohawk Tribe was assigned the patents by SRC Labs LLC in August, in a deal intended to use the tribe’s sovereign status to shield them from administrative review. SRC is also a plaintiff in the case. The tribe, which would receive a share of any award, made a similar deal in September to hold patents for Allergan on its dry eye medicine Restasis. SRC and Allergan made the deals to shield their patents from review by the Patent Trial and Appeal Board, an administrative court run by the U.S. patent office that frequently revokes patents.

The tribe would get revenue to address environmental damage and rising healthcare costs. Companies sued for patent infringement in federal court often respond by asking the patent board to invalidate the asserted patents. Both Microsoft and Amazon have used this strategy to prevail in previous disputes. A federal court in Texas separately invalidated Allergan’s Restasis patents on Monday. The company responded that it would appeal that ruling.Allergan’s deal with the tribe has drawn criticism from a bipartisan group of U.S. lawmakers, some of whom have called it a “sham.” Missouri Senator Claire McCaskill on Oct. 5 introduced a bill to ban attempts to take advantage of tribal sovereignty.

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“The biggest mistake our country made was that we put too much trust in you; and your mistake was that you saw this trust as a lack of power and you abused it..”

Putin Slams West for Lack of Respect and Broken Trust (BBG)

President Vladimir Putin has yet to declare his candidacy for re-election next year, but on Thursday the outlines of his campaign were clear, beginning from his strongest suit as the man who restored power and respect to Russia. Putin spent much of his address to an annual gathering of foreign-policy specialists from Russia and abroad recounting his country’s perceived humiliation following the collapse of the Soviet Union, singling out the West and the U.S. for special criticism. “The biggest mistake our country made was that we put too much trust in you; and your mistake was that you saw this trust as a lack of power and you abused it,’’ he said during a question-and-answer session that was carried on national television. What was needed, he said, was “respect.’’

In its portrayal of the U.S., “it was the most negative speech Putin has given’’ at the annual Valdai Club meeting, said Toby Gati, a former U.S. National Security Council and State Department official who is a regular at the event. At the same time, the Russian leader appeared to leave a door open to a rapprochement with U.S. President Donald Trump, saying that he, too, deserved respect as the elected choice of the American people. [..] Even during the Cold War, the U.S. and the Soviet Union had always treated each other with respect, said Putin, lamenting how the Russian flag was recently torn from the country’s consulate in California. “Respect has been the underbelly of the whole conference,’’ said Wendell Wallach, chairman of technology and ethics studies at Yale University.

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The only leftist in Europe left standing. Oh irony.

Ditch Neoliberalism To Win Again, Jeremy Corbyn Tells EU’s Center-Left (Ind.)

Jeremy Corbyn has warned centre-left parties across Europe that they must follow his lead and abandon the neoliberal economics of the imagined “centre ground” if they want to start winning elections again. The Labour leader was given a hero’s welcome at the Europe Together conference of centre-left parties in Brussels, where he was introduced as “the new Prime Minister of Britain” and received two standing ovations from a packed auditorium. Continental centre-left leaders are looking to Mr Corbyn’s Labour as a model to reinvigorate their movement. Across Europe from France to Germany, Austria to Netherlands, and Spain to Greece, once powerful social-democratic parties have been reduced to a shadow of their former selves – with Labour a notable exception.

Mr Corbyn said low taxes, deregulation, and privatisation had not brought prosperity for Europe’s populations and that if social democratic parties continued to endorse them they would continue to lose elections. He berated the longstanding leadership of the centre-left, telling delegates from across the EU: “For too long the most prominent voices in our movement have looked out of touch, too willing to defend the status quo and the established order. “In a desperate attempt to protect what is seen as the centre-ground of politics: only to find the centre ground has shifted or was never where the elites thought it was in the first place.” Citing the rise of the far-right in countries like Austria and France, Mr Corbyn said the abdication of the radical end of politics by the left had created space for reactionary parties.

“Our broken system has provided fertile ground for the growth of nationalist and xenophobic politics,” he said. “We all know their politics of hate, blame and division and not the answer, but unless we offer a clear and radical alternative of credible solutions for the problem we face, unless we offer a chance to change the broken system, and hope for a more prosper future we are clearing the path for the extreme right to make even more far-reaching inroads into our communities. Their message of fear and division would become the political mainstream of our discourse. But we can offer a radical alternative, we have the ideas to make progressive politics the dominant force of this century. But if we don’t get our message right, don’t stand up for our core beliefs, and if we don’t stand for change we will founder and stagnate.”

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Does Angela not like what Corbyn has to say?

Merkel Comes to May’s Aid on Brexit (BBG)

German Chancellor Angela Merkel offered Theresa May the political cover she’s been asking for to take further steps in Brexit talks, calling on both sides to move so that a deal can be reached by year-end. The U.K. prime minister signaled she’s willing to offer more on the divorce bill, according to a U.K. official. May urged leaders at a European summit to help her find a deal she could sell to skeptics at home, and her counterparts responded with words of encouragement – though no concrete concessions. Merkel said there’s “zero indication” that Brexit talks won’t succeed and she “truly” wants an agreement rather than an “unpredictable resolution.” She welcomed the concessions May made in a landmark speech in Florence last month and said she’s “very motivated” to get talks moved on from the divorce settlement to trade by December.

“Now both sides need to move,” she told reporters after hearing May speak at dinner, in a shift of rhetoric for the EU side, which has previously insisted that it’s up to the U.K. alone to make the next move. [..] he chancellor’s upbeat tone on Brexit was in marked contrast to Germany’s portrayal in the U.K. media as the principle obstacle to Britain’s attempts to shift negotiations onto trade and a transition period. In reality, Merkel has rarely commented on Brexit in the past two months or more as she fought for re-election to a fourth term. Even when she has weighed in, the chancellor tended to adopt a matter-of-fact approach that stuck to the facts. “So what I heard today was a confirmation of the fact that, in contrast to what you hear in the British press, the process is moving forward step by step,” Merkel said. “You get the impression that after a few weeks you already have to announce the final product, and I found that – to be very clear – absurd.”

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it’s not about borders, but about decentralizing power. Unstoppable.

Italian Regions To Vote In Europe’s Latest Referendums On Autonomy (G.)

Two of Italy’s richest regions are holding referendums on greater autonomy on Sunday, in the latest push by European regions to wrest more power from the centre. Lombardy and Veneto, between them home to a quarter of Italy’s population, are seeking semi-autonomy, giving them more control over their finances and administration. Although legally non-binding, the exercise is the latest ripple in a wave of votes on greater autonomy across Europe in recent years, from Scotland in 2014 to Brexit last year and Catalonia in September. Although both regions have in the past campaigned for complete independence from Rome, their leaders have made it clear the ballots are about autonomy and not secession.

Some insight into the dynamics can be gleaned from the example of Sappada, a mountainous town in Veneto that straddles the regional border with Friuli-Venezia Giulia. A skiing and hiking paradise, the town is on the verge of becoming the first in Italy to switch regions to become part of Friuli-Venezia Giulia, one of Italy’s five semi-autonomous regions. The plan was approved by the Italian government in September after a lengthy bureaucratic process. “The reasons for people wanting to be part of Friuli are varied: we have our own dialect, which originates from German, and culturally we feel closer to Friuli,” Manuel Piller Hoffer, the mayor of Sappada, told the Guardian. “But the main one is economic: living next door to a semi-autonomous region, people see advantages that they don’t have. They see finances being controlled better, a better health service and sustainable investments being made – they see a better standard of living.”

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Do you need to call it a ‘handout’, Reuters?

Greece Plans Billion Euro Handout For The Poor (R.)

Greece plans to offer handouts worth 1 billion euros to poor Greeks who have suffered during the seven-year debt crisis after beating its budget targets this year, the government said on Thursday. Greece expects to return to nearly 2% growth this year and achieve a primary surplus – which excludes debt servicing costs – of 2.2% of GDP, outperforming the 1.75% bailout target. “The surplus outperformance which will be distributed to social groups that have suffered the biggest pressure during the financial crisis, will be close to 1 billion euros,” government spokesman Dimitris Tzanakopoulos told reporters. It is not yet clear who would be eligible for what the leftist-led government calls a “social dividend.” Hundreds of thousands of Greeks have lost their jobs during a six-year recession that cut more than a quarter of the country’s GDP.

With unemployment 21.3% and youth unemployment at 42.8% many households rely on the income of grandparents – although they have lost more than a third of the value of their pensions since 2010, when Athens signed up to its first international bailout. The government will make final decisions in late November, once it gets full-year budget data, Tzanakopoulos said. Greece’s fiscal performance this year and its 2018 budget is expected to be discussed with representatives from its European Union lenders and the International Monetary Fund next week when a crucial review of its bailout progress starts. Tzanakopoulos reiterated that Athens aims to wrap up the review as soon as possible, ruling out new austerity measures.

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We’re really going to see this play out all over again?

Tensions Rise On Aegean Islands As Migrants Continue To Arrive (K.)

As dozens of migrants continue to land daily on the shores of eastern Aegean islands, and tensions rise in reception centers, local communities are becoming increasingly divided over growing migrant populations. A total of 438 people arrived on the islands aboard smuggling boats from Turkey in the first three days of the week, with another 175 people arriving on the islet of Oinousses yesterday morning. The latter were transferred to a center on nearby Chios which is very cramped with 1,600 people living in facilities designed to host 850. The situation is worse on Samos, where a reception center designed to host 700 people is accommodating 2,850.

The Migration Ministry said around 1,000 migrants will be relocated to the mainland next week. But island authorities said that this will not adequately ease conditions at the overcrowded facilities. Samos Mayor Michalis Angelopoulos on Thursday appealed for European Union support during a meeting of regional authority officials in Strasbourg. He said the Aegean islands “cannot bear the burden of the refugee problem which is threatening to divide Europe.” There are divisions on the islands too. On Sunday rival groups are planning demonstrations on Samos – far-right extremists to protest the growing migrant population and leftists to protest the EU’s “anti-migrant” policy.

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When you think money is more valuable than life.

Global Pollution Kills Millions, Threatens ‘Survival Of Human Societies’ (G.)

Pollution kills at least nine million people and costs trillions of dollars every year, according to the most comprehensive global analysis to date, which warns the crisis “threatens the continuing survival of human societies”. Toxic air, water, soils and workplaces are responsible for the diseases that kill one in every six people around the world, the landmark report found, and the true total could be millions higher because the impact of many pollutants are poorly understood. The deaths attributed to pollution are triple those from Aids, malaria and tuberculosis combined. The vast majority of the pollution deaths occur in poorer nations and in some, such as India, Chad and Madagascar, pollution causes a quarter of all deaths. The international researchers said this burden is a hugely expensive drag on developing economies.

Rich nations still have work to do to tackle pollution: the US and Japan are in the top 10 for deaths from “modern” forms of pollution, ie fossil fuel-related air pollution and chemical pollution. But the scientists said that the big improvements that have been made in developed nations in recent decades show that beating pollution is a winnable battle if there is the political will. “Pollution is one of the great existential challenges of the [human-dominated] Anthropocene era,” concluded the authors of the Commission on Pollution and Health, published in the Lancet on Friday. “Pollution endangers the stability of the Earth’s support systems and threatens the continuing survival of human societies.”

Prof Philip Landrigan, at the Icahn School of Medicine at Mount Sinai, US, who co-led the commission, said: “We fear that with nine million deaths a year, we are pushing the envelope on the amount of pollution the Earth can carry.” For example, he said, air pollution deaths in south-east Asia are on track to double by 2050. Landrigan said the scale of deaths from pollution had surprised the researchers and that two other “real shockers” stood out. First was how quickly modern pollution deaths were rising, while “traditional” pollution deaths – from contaminated water and wood cooking fires – were falling as development work bears fruit. “Secondly, we hadn’t really got our minds around how much pollution is not counted in the present tally,” he said. “The current figure of nine million is almost certainly an underestimate, probably by several million.”

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Oct 162017
 
 October 16, 2017  Posted by at 2:00 pm Finance Tagged with: , , , , , , , , ,  16 Responses »
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Marc Riboud Zazou, painter of the EIffel Tower 1953

 

Central bankers have never done more damage to the world economy than in the past 10 years. One may argue this is because they never had the power to do that. If their predecessors had had that power, who knows? Still, the global economy has never been more interconnected than it is today, due mostly to the advance of globalism, neoliberalism and perhaps even more, technology.

Ironically, all three of these factors are unremittingly praised as forces for good. But living standards for many millions of people in the west have come down and/or are laden with uncertainty, while millions of Chinese now have higher living standards. People in the west have been told to see this as a positive development; after all, it allows them to buy products cheaper than if they had been made in domestic industries.

But along with their manufacturing jobs, their entire way of life has mostly disappeared as well. Or, rather, it is being hidden behind a veil of debt. Still, we can no longer credibly deny that some three-quarters of Americans have a hard time paying their bills, and that is very different from the 1950s and 60s. In western Europe, this is somewhat less pronounced, or perhaps it’s just lagging, but with globalism and neoliberalism still the ruling economic religions, there’s no going back.

What happened? Well, we don’t make stuff anymore. That’s what. We have to buy our stuff from others. Increasingly, we lack the skills to make stuff too. We have become dependent on nations half a planet away just to survive. Nations that are only interested in selling their stuff to us if we can pay for it. And who see their domestic wage demands go up, and will -have to- charge ever higher prices for their products.

And we have no choice but to pay. But we can only pay with what we can borrow. As nations, as companies, and as individuals. We need to borrow because as nations, as companies, and as individuals we don’t make stuff anymore. It’s a vicious circle that globalization has blessed us with. And from which, we are told, we can escape only if we achieve growth. Which we can’t, because we don’t make anything.

 

So we rely on central bankers to manage the crisis. Because we’re told they know how to manage it. They don’t. But they do pretend to know. Still, if you read between the lines, they do admit to their ignorance. Janet Yellen a few weeks ago fessed up to the fact that she has no idea why inflation is weak. Mario Draghi has said more or less the same. Why don’t they know? Because the models don’t fit. And the models are all they have.

Economic models are more important in central banking than common sense. The Fed has some 1000 PhDs under contract. But Yellen, their boss, still claims that ‘perhaps’ the models are wrong, with it comes to inflation, and to wage growth. They have no idea why wages don’t grow. Because the models say they should. Because everybody has a job. 1000 very well paid PhDs. And that’s all they have. They say the lack of wage growth is a mystery.

I say that those for whom this is a mystery are not fit for their jobs. If you export millions of jobs to Asia, take workers’ negotiating powers away and push them into crappy jobs with no benefits, only one outcome is possible. And that doesn’t include inflation or wage growth. Instead, the only possible outcome is continuing erosion of economies.

The globalist mantra says we will fill up the lost space in our economies with ‘better’ jobs, service sector, knowledge sector. But reality does not follow the mantra. Most new jobs are definitely not ‘better’. And as we wait tables or greet customers at Wal-Mart, we see robots take over what production capacity is left, and delivery services erase what’s left of our brick and mortar stores. Yes, that means even less ‘quality’ jobs.

 

Meanwhile, the Chinese who now have taken over our jobs, have only been able to do that amidst insane amounts of pollution. And as if that’s not bad enough, they have recently, just to keep their magical new production paradise running, been forced to borrow as much as we have been -and are-, at state level, at local government level, and now as individuals as well.

In China, credit functions like opioids do in America. Millions of people who had never been in touch with the stuff would have been fine if they never had, but now they are hooked. The local governments were already, which has created a shadow banking system that will threaten Beijing soon, but for the citizens it’s a relatively new phenomenon.

And if you see them saying things like: “if you don’t buy a flat today, you will never be able to afford it” and “..a person without a flat has no future in Shenzhen.”, you know they have it bad. These are people who’ve only ever seen property prices go up, and who’ve never thought of any place as a ghost city, and who have few other ways to park what money they make working the jobs imported from the US and Europe.

They undoubtedly think their wages will keep growing too, just like the ‘value’ of their flats. They’ve never seen either go down. But if we need to borrow in order to afford the products they make in order to pay off what they borrowed in order to buy their flats, everyone’s in trouble.

 

And then globalization itself is in trouble. The very beneficiaries, the owners of globalization will be. Though not before they have taken away most of the fruits of our labor. What are you going to do with your billions when the societies you knew when you grew up are eradicated by the very process that allowed you to make those billions? It stops somewhere. If those 1000 PhDs want to study a model, they should try that one.

 

Globalization causes many problems. Jobs disappearing from societies just so their citizens can buy the same products a few pennies cheaper when they come from China is a big one. But the main problem with globalization is financial: money continually vanishes from societies, who have to get ever deeper in debt just to stand still. Globalization, like any type of centralization, does that: it takes money away from the ‘periphery’.

The Wal-Mart, McDonald’s, Starbucks model has already taken away untold jobs, stores and money from our societies, but we ain’t seen nothing yet. The advent of the internet will put that model on steroids. But why would you let a bunch of Silicon Valley venture capitalists run things like Uber or Airbnb in your location, when you can do it yourself just as well, and use the profits to enhance your community instead of letting them make you poorer?

I see UK’s Jeremy Corbyn had that same thought, and good on him. Britain may become the first major victim of the dark side of centralization, by leaving the organization that enables it -the EU-, and Corbyn’s idea of a local cooperative to replace Uber is the kind of thinking it will need. Because how can you make up for all that money, and all that production capacity, leaving where you live? You can’t run fast enough, and you don’t have to.

This is the Roman Empire’s centralization conundrum all over. Though the Romans never pushed their peripheries to stop producing essentials; they instead demanded a share of them. Their problem was, towards the end of the empire, the share they demanded -forcefully- became ever larger. Until the periphery turned on them -also forcefully-.

 

The world’s central bankers’ club is set to get new leadership soon. Yellen may well be gone, so will Japan’s Kuroda and China’s Zhou; the ECB’s -and Goldman’s- Mario Draghi will go a bit later. But there is no sign that the economic religions they adhere to will be replaced, it’ll be centralization all the way, and if that fails, more centralization.

The endgame of that process is painfully obvious way in advance. Centralization feeds central forces, be they governmental, military or commercial, with the fruits of labor of local populations. That is a process that will always, inevitably, run into a wall, because too much of those fruits are taken out. Too much of it will flow to the center, be it Silicon Valley or Wall Street or Rome. Same difference.

There are things that you can safely centralize (peace negotiations), but they don’t include essentials like food, housing, transport, water, clothing. They are too costly at the local level to allow them to be centralized. Or everybody everywhere will end up paying through the nose just to survive.

It’s very easy. Maybe that’s why nobody notices.

 

 

Aug 012017
 
 August 1, 2017  Posted by at 6:43 pm Finance Tagged with: , , , , , , , , ,  2 Responses »
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Jackson Pollock The Deep 1943

 

 

The western world is mired in a mile-deep political crisis and nary a soul seems to notice, or rather: everyone just sees their own little preferred echochamber tidbits of it. Which is not a good thing, because that crisis is bound to trigger other bigger crises that are much more damaging. And I’m sorry to say it, but Donald Trump is not your main problem. Not even close.

The main problem is the collapse of western political systems. While that is what brought Trump to power in the first place, he didn’t cause the collapse. The collapse is also what ‘gave you’ Brexit, and Trump didn’t cause that either. Moreover, in the next step, on the far end of all this, Trump may well be the only thing standing between you and CIA warfare. I know, who wants to hear that, right?! Who’s ready for that next step?

But it’s not that crazy. Trump was the one who stopped the CIA from arming Syrian ‘rebels’, which are just a bunch of extremists gathered by that same CIA in its attempts to unseat Assad, and who Trump saw laughingly beheading a child. And who was it that had previously, and enthusiastically, decided to support these crazies? The US Republican and Democratic parties, in unison, while Obama was president and Hillary slash Joe Biden was Secretary of State. Remember the Chelsea Manning footage of videogame-like drone killings? What did Obama do about that?

Still, that’s not where the core of the demise of our political systems lies. Though it does gave us a flavor of their priorities. The core can be found in economic issues. In both president Bush II and president Obama bailing out banks while letting people’s incomes and wealth tank, and not sueing any banker for anything at all. Obviously, the same scenario played out in Britain as well. And in many other nations.

 

Now look at the parties themselves. Trump is not a Republican, but he took over the party with hardly any opposition. The only people the GOP could come up with to run against Trump were a full dozen full-blown yokels. And today, they still have no credible leadership. The healthcare vote last week, if we look at it separate from its merits, showed us that the same yokeldom is still in charge. Embarrassing doesn’t cover the feeling.

The Democrats are in the same conundrum. They have no credible candidates either. It’s Hillary or nothing. Which adds up to nothing. And then there’s a whole slew of suspicious ‘operatives’, Rice, Wasserman-Schultz et al, who make the picture even worse, and may soon find themselves on the wrong end of an investigation. Who’s going to vote for that bunch?

Yes, there’s Bernie Sanders, but he will never be allowed near the top as long as these other folk are there (and sorry, but he’s too old too). And there’s the core of the problem: both parties have been run by the same clique for ages, and you can only be part of it if you vote and agree with them (the made men model). Which in turn is why they don’t get the votes. And why Trump could become president. Who pledged to limit their terms and shut the revolving doors but still hasn’t.

That, too, is reflected one on one in Britain. If Theresa May is the best you can come up with as a leader, you have a queen-size problem. And Labour’s Jeremy Corbyn has a long way to go anywhere at all yet, especially since he refuses to change his anti-EU stance and all the media are against what the people voted for. Though as far as I can see, the problem with Brexit is not so much the issue itself, but the utter incompetence with which it’s being handled. Which is staggering. You feel like asking for these people’s IDs to check their age.

The only thing I ever see discussed is how much Brexit is going to cost. As if voting for Brexit was always about money only. But the EU is about a lot more. Steve Keen presented it the other day in a much different way. He said that -paraphrased- the UK was the country perhaps hardest hit of all by neoliberalism, and that’s why people voted Brexit. And that Brexit could be its way out of the whole neoliberal austerity nightmare, if used well. Let’s talk about that instead.

 

But the Tories are not going to interpret Brexit that way. They will instead use it for more austerity, and more neoliberal policies. What they do at the moment is they try and push through as many of those policies as they can, and to cement them in laws and deals with the EU, who will love that. That way when May is voted out of office, Corbyn or whoever will be faced with a whole parade of things (s)he can no longer change or adapt. Fait accompli.

What everyone who is sick of these people, and of the policies, should do, is what Emmanuel Macron did in France: start a new party. Because France suffers from the same disease: the old guard doesn’t represent anyone but themselves anymore. Not that Macron is necessarily such a great alternative, but he has pointed the way to go, the way out of the staleness and the stalemate.

When you look at the US, all these senators and congresspeople talk more to lobbyists than they talk to anyone else. They’re all so beholden to financial backers and campaign funding, they have nothing left for their voters. They get votes, the ones they do still get, through tens of millions worth of slick TV ads in which they promise things they will never deliver. They paint shiny pictures and regurgitate lofty narratives. But they’ve been found out. Enter Trump stage left.

This happens all over the place. Japan PM Shinzo Abe is the latest trophy to be added, and to join Holland, Italy, France, the US etc., in the list of ‘traditional’ parties and politicians being voted, if not out, then certainly down, way down. You can’t run a country in the midst of a crisis like that. The old guard has a solution for that too: they deny the crisis, and their respective housing bubbles, and claim their countries are in a recovery. Which, wouldn’t you know, they claim to have, themselves, cleverly engineered for their people.

 

All that’s needed in both the UK and US are credible alternatives, and for the ruling classes to be cut down to size. But all we see are voices that derive their identity from pointing out what’s wrong with ‘the others’, be it Trump or Hillary, May or Corbyn. And in the case of Trump, anyone he’s ever talked to.

But now that even the WaPo has declared the Russian collusion story bogus, albeit without identifying its own role in developing that story, maybe it’s time for more pressing matters. Maybe brighter people on all sides of all spectrums can now build their identities on actual policies. And then discuss them, in all due respect, with others who do the same from their point of view.

Because make no mistake about it, with countries essentially ungovernable, as many are, as the US and UK are these days, risks of things like wars emerging ‘out of nowhere’ increase exponentially. If Trump must spend half his time talking about one story after another about someone maybe having met someone who may or may not be not 100% on the up and up, he doesn’t have enough time left to talk to Putin or Xi.

And really, that’s what the American president, any American president, should be doing right now. That alone would be a full-time day-job. Because alphabet soup ingredients like the CIA have created potential mayhem in so many locations around the globe, any one of them might blow anytime now.

Venezuela, North Korea, Ukraine, Iran, Syria, it’s a list that is impossible to complete. How about Bolivia, where Evo Morales once again has called for independence from the IMF and World Bank. The two-party, two pronged, two forked-tongued US political class, and its CIA handlers, don’t like that sort of thing. Not one bit.

 

Sure, you can argue that perhaps it’s Trump who’s most likely to start a war, but the evidence so far doesn’t point to that. The evidence points to all sorts of Shakespearean antics in the Oval Office, I told you!, plenty of Scaramouches, but not that one, not trigger-happiness. That’s all the other guys and gals, lest you forget. The evidence points to a two-party war machine, which hopes to be able to do its thing while you wallow in your self-righteous attitudes about Trump and Priebus and Scaramucci and Don Jr.

You want war? Denounce Trump. You don’t? Think again.

The risk of all this is that Da Donald will see no other way to stay in the White House than to start a war, somewhere, anywhere. Even the New York Times will declare him the greatest president since the last one who went to battle.

The risk embedded within that risk is that neither he nor anyone else will have any idea where it may lead. The risk is that the CIA, perhaps more than ever, will decide US -foreign- policy. And believe you me, that’s not what we should want. None of us.

 

 

Jul 102017
 
 July 10, 2017  Posted by at 9:15 am Finance Tagged with: , , , , , , , ,  4 Responses »
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Fred Lyon Anne Lyon getting into her Riley on Nob Hill, San Francisco 1950s

 

Propaganda-ville (Robert Parry)
Trump Cannot Improve Relations With Russia (PCR)
Comey’s Leaked Trump Memos Contained Classified Information (ZH)
Tales from the FOMC Underground (PT)
Stock Market Tsunami Siren Goes Off (WS)
America Is Struggling With Economic Rot (BBG)
May Appeals To Corbyn For Help In Coming Up With New Ideas (Ind.)
US-Russian Ceasefire Deal Holding In Southwest Syria (R.)
The Lynx Could Return To UK Within Months After 1,300-Year Absence (Ind.)

 

 

When slow news becomes no news. I must have seen 100 different versions of the non-story of one of Trump’s not-so-bright sons meeting with a Russian lady, a story that’s supposed to prove what nothing else has yet proven, not even Bob Mueller, Russian meddling. Yeah, Russia spies, and it hacks, and so does everyone else. But that’s clearly not news, and you can’t make it so be endlessly repeating it. That Comey leaked classified information is apparently much less newsworthy. Only, it is not. It just serves the machine to a lesser degree. Be careful, America, or you’ll have no news sources left soon. Not a great prospect.

Propaganda-ville (Robert Parry)

As much as the U.S. mainstream media wants people to believe that it is the Guardian of Truth, it is actually lost in a wilderness of propaganda and falsehoods, a dangerous land of delusion that is putting the future of humankind at risk as tension escalate with nuclear-armed Russia. This media problem has grown over recent decades as lucrative careerism has replaced responsible professionalism. Pack journalism has always been a threat to quality reporting but now it has evolved into a self-sustaining media lifestyle in which the old motto, “there’s safety in numbers,” is borne out by the fact that being horrendously wrong, such as on Iraq’s WMD, leads to almost no accountability because so many important colleagues were wrong as well.

Similarly, there has been no accountability after many mainstream journalists and commentators falsely stated as flat-fact that “all 17 U.S. intelligence agencies” concurred that Russia did “meddle” in last November’s U.S. election. For months, this claim has been the go-to put-down whenever anyone questions the groupthink of Russian venality perverting American democracy. Even the esteemed “Politifact” deemed the assertion “true.” But it was never true. It was at best a needled distortion of a claim by President Obama’s Director of National Intelligence James Clapper when he issued a statement last Oct. 7 alleging Russian meddling. Because Clapper was the chief of the U.S. Intelligence Community, his opinion morphed into a claim that it represented the consensus of all 17 intelligence agencies, a dishonest twist that Democratic presidential candidate Hillary Clinton began touting.

However, for people who understand how the U.S. Intelligence Community works, the claim of a 17-agencies consensus has a specific meaning, some form of a National Intelligence Estimate (or NIE) that seeks out judgments and dissents from the various agencies. But there was no NIE regarding alleged Russian meddling and there apparently wasn’t even a formal assessment from a subset of the agencies at the time of Clapper’s statement. President Obama did not order a publishable assessment until December – after the election – and it was not completed until Jan. 6, when a report from Clapper’s office presented the opinions of analysts from the Central Intelligence Agency, Federal Bureau of Investigation and the National Security Agency – three agencies (or four if you count the DNI’s office), not 17.

The report also contained no hard evidence of a Russian “hack” and amounted to a one-sided circumstantial case at best. However, by then, the U.S. mainstream media had embraced the “all-17-intelligence-agencies” refrain and anyone who disagreed, including President Trump, was treated as delusional. The argument went: “How can anyone question what all 17 intelligence agencies have confirmed as true?” It wasn’t until May 8 when then-former DNI Clapper belatedly set the record straight in sworn congressional testimony in which he explained that there were only three “contributing agencies” from which analysts were “hand-picked.”

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Paul Craig Roberts lays it on. A bit much if you ask me, but then so is everything else.

Trump Cannot Improve Relations With Russia (PCR)

On the same day that President Donald Trump said “it is time to move forward in working constructively with Russia,” and the day after he said “I had a tremendous meeting yesterday with President Putin,” the ignorant, stupid, Nikki Haley, who Trump appointed as US UN Ambassador, publicly contracted her president, forcefully stating: “we can’t trust Russia and we won’t ever trust Russia.” The ignorant stupid Haley is still in office, a perfect demonstration of Trump’s powerlessness. The ignorant stupid Haley has gone far beyond Obama’s crazed UN Ambassador, neocon Smantha Power in doing everything in her power to ruin the prospect of normal relations between the two major nuclear powers. Why does Nikki Haley work in favor of a confrontation between nuclear powers that would destroy all life on earth?

What is wrong with Nikki Haley? Is she demented? Has she lost her mind, assuming she ever had one? How can President Trump normalize relations with Russia when every one of his appointees wants to worsen the relations to the point of nuclear war? How is President Trump going to improve relations with Russia when President Trump stands powerless in face of his dressing down by his UN Ambassador? Clearly, Trump is powerless, a mere cipher. Joining Nikki Haley was Trump’s Secretary of State, Rex Tillerson. Tillerson, allegedly a friend of Russia, is also working overtime to worsen relations between the two nuclear powers by publicly contradicting the President of the United States, thereby making it clear that Trump is barely even a cipher.

Tillerson, a disgrace, said that Putin’s refusal to admit that Putin elected Trump by interferring in the US election “stands as an obstacle to our ability to improve the relationship between the US and Russia and it needs to be addressed in terms of how we assure the American people that interference into our eletions will not occur by Russia or anyone else.” Trump’s incompetence is illustrated by his appointments. There is no one in “his” government that supports him. Everyone of them works to undermine him. And he sits there and Twitters. So, what is President Putin’s belief that an understanding can now be worked out with Washington worth? Not a plugged nickel. Trump has zero authority over “his” government. He can be contradicted at will by his own appointees. The President of the United States is a joke.

You can find him on Twitter, but nowhere else, not in the Oval Office making foreign or military policy. The president Twitters and thinks that that is policy. The Trump administration was destroyed when the weak Donald Trump allowed the neoconservatives to remove his National Security Advisor, General Flynn. Trump has never recovered. “His” administration is staffed with violent Russophobes. Wars can be the only outcome. We know two things about the alleged Russian inteferrance in the Trump/Hillary presidential election. One is that John Brennan, Obama’s CIA director, and Comey, Obama’s FBI director, implied repeatedly that Trump was elected by Russian interference in the election, but neither the CIA nor the FBI have provided any evidence whatsoever that any such interference occurred. Indeed, months into the case, the special prosecutor, the former FBI director, can produce no evidence.

The whole thing is a sham, but it is ongoing. There will be no end to it as it is designed to undermind President Trump with the people who elected him. The message is: “Trump is not for America. Trump is for Russia.”

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Is Muelller going to investigate Comey soon?

Comey’s Leaked Trump Memos Contained Classified Information (ZH)

Comey’s troubles started when he testified under oath last month that he considered the memos he prepared to be personal documents and that he shared at least one of them with a Columbia University lawyer friend. As Comey later disclosed, he asked that lawyer to leak information from one memo to the news media in hopes of increasing pressure to get a special prosecutor named in the Russia case after Comey was fired as FBI director. The Hill recounts that particular exchange with Senator Roy Blunt: “So you didn’t consider your memo or your sense of that conversation to be a government document?,” Sen. Roy Blunt (R-Mo.) asked Comey on June 8. “You considered it to be, somehow, your own personal document that you could share to the media as you wanted through a friend?”

“Correct,” Comey answered. “I understood this to be my recollection recorded of my conversation with the president. As a private citizen, I thought it important to get it out.” Comey insisted in his testimony he believed his personal memos were unclassified, though he hinted one or two documents he created might have been contained classified information. “I immediately prepared an unclassified memo of the conversation about Flynn and discussed the matter with FBI senior leadership,” he testified about the one memo he later leaked about former national security adviser Lt. Gen. Michael Flynn. Additionally, he added, “My view was that the content of those unclassified, memorialization of those conversations was my recollection recorded.”

That’s when the problems escalated, because according to The Hill – which for the first time disclosed that the total number of memos linked to Comey’s nine conversations with Trump – when the seven memos Comey wrote regarding his nine conversations with Trump about Russia earlier this year were shown to Congress in recent days, the FBI claimed all were, in fact, deemed to be government documents. Oops. As The Hill reveals, four, or more than half, of the seven memos had markings making clear they contained information classified at the “secret” or “confidential” level, according to officials directly familiar with the matter. This is a major problem for Comey because FBI policy forbids any agent from releasing classified information or any information from ongoing investigations or sensitive operations without prior written permission, and mandates that all records created during official duties are considered to be government property.

“Unauthorized disclosure, misuse, or negligent handling of information contained in the files, electronic or paper, of the FBI or which I may acquire as an employee of the FBI could impair national security, place human life in jeopardy, result in the denial of due process, prevent the FBI from effectively discharging its responsibilities, or violate federal law,” states the agreement all FBI agents sign. FBI policy further adds that “all information acquired by me in connection with my official duties with the FBI and all official material to which I have access remain the property of the United States of America” and that an agent “will not reveal, by any means, any information or material from or related to FBI files or any other information acquired by virtue of my official employment to any unauthorized recipient without prior official written authorization by the FBI.”

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“..Not since Herbert C. Hoover has there been a more perfect scapegoat for an economic depression of the Fed’s making.”

Tales from the FOMC Underground (PT)

“What should we do?” began Yellen. “A decade of easy monetary policies has turned financial markets into a Las Vegas casino while the economy’s lazed around like my smelly house cats. What the heck was Bernanke thinking?” “Hell, Janet,” remarked New York Fed President William Dudley. “He wasn’t thinking. He soiled his pantaloons and then he soiled them again.” “So now we must clean up his stinky pile while he promotes his revisionist courage to act shtick. The reality is we must orchestrate a take-down of financial markets, and we must do it by year’s end.” “Well, gawd damn Bill!” barked St. Louis Fed President James Bullard. “With the exception of Neel, the $700 billion dollar bailout boy, don’t you think we all know that?”

“Hey, now!” interjected Minneapolis Fed President Neel Kashkari. “Don’t blame me. I was just carrying out Hank Paulson’s will, right Bill? Saving our boys’ bacon back at Goldman so they could continue doing god’s work.” “Besides Fish, it was you all who lined up behind Bernanke and tickled the poodle with his crazy QE experiment while I was busy chopping wood at Donner Pass and getting my fanny spanked in the California Governor’s race by retread Jerry Moonbeam Brown, of all people.” “Fair enough,” continued Bullard. “The point is, taking down the stock market will cause an extreme upset to the economy’s applecart. The mobs will come after us with torches and pitchforks.” “You see, the real trick is to do the dirty deed then disappear behind a fog of confusion. That’s what Greenspan would do. How can we pull that off?”

After a moment of silent contemplation, and a licked finger held up to the cool political winds drafting across the country… “Eureka! We can pin it on President Donald J. Trump!” exclaimed Chicago Fed President Charles Evans. “Could our good fortune be any better? Not since Herbert C. Hoover has there been a more perfect scapegoat for an economic depression of the Fed’s making.” “Hear, hear!” approved Yellen. “Damn the economy,” they bellowed in harmony… minus Kashkari. “This one’s on Trump!” “Bill, one last thing,” closed Yellen. “After the meeting, remember to give the public that shake n’ bake you dreamed up about crashing unemployment. We have to give off an air of being data dependent.” “That misdirection should twist them up until NFL football starts. Shortly after that, our work will be done…” “…and by the New Year, Congress and Joe public will be begging us to rescue the economy from the Fed’s… I mean… Trump’s disastrous economic program.”

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Earnings vs S&P. Something will give.

Stock Market Tsunami Siren Goes Off (WS)

Everyone who’s watching the stock market has their own reasons for their endless optimism, their doom-and-gloom visions, their bouts of anxiety that come with trying to sit on the fence until the very last moment, or their blasé attitude that nothing can go wrong because the Fed has their back. But there are some factors that are like a tsunami siren that should send inhabitants scrambling to higher ground. Since July 2012 – so over the past five years – the trailing 12-month earnings per share of all the companies in the S&P 500 index rose just 12% in total. Or just over 2% per year on average. Or barely at the rate of inflation – nothing more. These are not earnings under the Generally Accepted Accounting Principles (GAAP) but “adjusted earnings” as reported by companies to make their earnings look better.

Not all companies report “adjusted earnings.” Some just stick to GAAP earnings and live with the consequences. But many others also report “adjusted earnings,” and that’s what Wall Street propagates. “Adjusted earnings” are earnings with the bad stuff adjusted out of them, at the will of management. They generally display earnings in the most favorable light – hence significantly higher earnings than under GAAP. This is the most optimistic earnings number. It’s the number that data provider FactSet uses for its analyses, and these adjusted earnings seen in the most favorable light grew only a little over 2% per year on average for the S&P 500 companies over the past five years, or 12% in total. Yet, over the same period, the S&P 500 Index itself soared 80%.

And these adjusted earnings are now back where they’d been on March 2014, with no growth whatsoever. Total stagnation, even for adjusted earnings. And yet, over the same three-plus years, the S&P 500 index has soared 33%. This chart shows those adjusted earnings per share for all S&P 500 companies (black line) and the S&P 500 index (blue line). I marked July 2012 and March 2014:

Given that there has been zero earnings growth over the past three years, even under the most optimistic “adjusted earnings” scenario, and only about 2% per year on average over the past five years, the S&P 500 companies are not high-growth companies. On average, they’re stagnating companies with stagnating earnings. And the price-earnings ratio for stagnating companies should be low. In 2012 it was around 15.5. Now, as of July 7, it is nearly 26. In other words, earnings didn’t expand. The only thing that expanded was the multiple of those earnings to the share prices – the P/E ratio. Such periods of multiple expansion are common. They’re part of the stock market’s boom and bust cycle. And they’re invariably followed by periods of multiple contraction. How long can this period of multiple expansion go on? That’s what everyone wants to know. Projections include “forever.” But “forever” doesn’t exist in the stock market. The next segment of the cycle is a multiple contraction.

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The incessant call far a return to normal. There’s no such thing. The economy never recovered.

America Is Struggling With Economic Rot (BBG)

The Great Recession, and the financial crisis that preceded it, were such enormous and terrible events that they occupied most of our economic thinking for a decade. But now that the smoke has cleared and the economy has returned to a semblance of normality, we’re starting to think more about long-term trends. And evidence is mounting that the Great Recession may have drawn attention away from a slow rot that has been eating the U.S. economy since the turn of the century. Some of the top macroeconomists in the business have a new paper that reaches this conclusion. In “The Disappointing Recovery of Output after 2009,” John G. Fernald, Robert E. Hall, James H. Stock and Mark W. Watson break down the declines in growth and employment into a structural, long-term component and a short-term part related to the crash.

That’s an inherently hard thing to do, since there’s no universally accepted theory of how recessions work. But Fernald et al. use two accounting methods, and find basically the same thing – although the recession hurt the economy a lot, it happened to coincide with two trends that were slowly eroding the U.S.’s fundamentals. Those two trends are slowing productivity and reduced labor-force participation. Slow productivity growth is hardly news – Bloomberg View recently ran a whole series of articles about the phenomenon. This unhappy trend appears to have begun three years before the financial crisis:

As for labor-force participation, this has been falling since the turn of the century, though the last two years have seen a small uptick:

Both of these trends might have been exacerbated by the Great Recession. That economic disaster caused businesses to stop investing, which may have deprived them of the technology needed to increase productivity. Workers thrown out of employment by the recession might have seen their skills, connections and work ethic degrade, preventing them from going back to work even after the economy recovered.

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His advise: call a snap election.

May Appeals To Corbyn For Help In Coming Up With New Ideas (Ind.)

Theresa May is to insist she has the right vision for Britain and an “unshakeable sense of purpose” to build a fairer nation as she launches a fightback after her General Election gamble backfired. The Prime Minister will acknowledge that the loss of her Commons majority means she will have to adopt a different approach to government, signalling she is prepared to “debate and discuss” ideas with her opponents. But amid rumours of unrest within Tory ranks about her position, Ms May will insist her commitment is “undimmed” almost 12 months after entering Number 10 as Prime Minister. Her comments in a speech on Tuesday will be viewed as an attempt to relaunch her premiership after the humiliation of the election result and the need to strike a deal with the Democratic Unionist Party to prop up her administration in the Commons.

Ms May will return to her core message from when she succeeded David Cameron: a “commitment to greater fairness” and tackling “injustice and vested interests” in recognition that the EU referendum result was a “profound call for change across our country”. She will say: “Though the result of last month’s General Election was not what I wanted, those defining beliefs remain, my commitment to change in Britain is undimmed; my belief in the potential of the British people and what we can achieve together as a nation remains steadfast; and the determination I have to get to grips with the challenges posed by a changing world never more sure. “I am convinced that the path that I set out in that first speech outside Number 10 and upon which we have set ourselves as a Government remains the right one.

“It will lead to the stronger, fairer Britain that we need.” The fragile nature of Ms May’s position in the Commons will not stop her being “bold”, she will insist. “I think this country needs a Government that is prepared to take the bold action necessary to secure a better future for Britain and we are determined to be that Government. “In everything we do, we will act with an unshakeable sense of purpose to build the better, fairer Britain which we all want to see.”

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Hard to believe.

US-Russian Ceasefire Deal Holding In Southwest Syria (R.)

A U.S.-Russian brokered ceasefire for southwest Syria held through the day, a monitor and rebels said on Sunday, in the first peacemaking effort of the war by the U.S. government under President Donald Trump. The United States, Russia and Jordan reached the “de-escalation agreement,” which appeared to give Trump a diplomatic achievement at his first meeting with Russian President Vladimir Putin at the G20 summit in Germany this week. The Syrian Observatory for Human Rights, a Britain-based war monitor, said “calm prevailed” in the southwest since the truce began at noon (0900 GMT) on Sunday despite minor violations. Combatants briefly exchanged fire in Deraa province and in Quneitra around midnight, but this “did not threaten the ceasefire,” said Observatory Director Rami Abdulrahman.

Major Issam al Rayes, spokesman of the Southern Front coalition of Western-backed rebel groups, said “a cautious calm” continued into the evening. “The situation is relatively calm,” Suhaib al-Ruhail, a spokesman for the Alwiyat al-Furqan faction in Quneitra, said earlier. Another rebel official, in Deraa city, said there had been no significant fighting. It was quiet on the main Manshiya front near the border with Jordan, which he said had been the site of some of the heaviest army bombing in recent weeks. “Syrian ceasefire seems to be holding … Good!” Trump tweeted on Sunday. A Syrian official indicated that Damascus approved of the ceasefire deal, describing the government’s silence over it as a “sign of satisfaction.” “We welcome any step that would cease the fire and pave the way for peaceful solutions,” the government official told Reuters.

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Majestic animal. But 1,300 years is a big gap.

The Lynx Could Return To UK Within Months After 1,300-Year Absence (Ind.)

The Eurasian lynx could be stalking through British woodlands within months after plans were submitted to reintroduce the species, absent from Britain for about 1,300 years. Campaigners have applied for a licence to import six of the wildcats, which were hunted to extinction in the UK, and release them in Northumberland’s Kielder Forest. The Lynx Trust said the animals, which can grow to 1.3m in length, “belong” in Britain and there was a “moral obligation” to bring them back. The cats’ return would also generate millions of pounds for rural communities by attracting tourists, according to the group. But the proposal has met with opposition from sheep farmers, who claim their livestock would be put at risk.

The scheme would initially involve six lynx, four females and two males, being imported from Sweden and fitted with GPS tracking collars for a five-year trial. The trust applied to Natural England for permission to release the cats after it carried out an 11-month consultation. No date has been set for the proposed reintroduction but they cats could return to the UK by the end of 2017 if the plans are approved. The trust said in a statement: “In many other countries Eurasian lynx reintroduction has proven exceptionally low-conflict and wonderfully beneficial for the local communities that live alongside them, and we do sincerely hope that these cats, which thrived here for millions of years, do have the opportunity to prove they can still fit into both our ecology, and alongside local communities like those across the Kielder region.”

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