May 222017
 
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Pable Picasso Le Pengouin 1907

 

US Loan Creation Crashes To Six-Year Low (ZH)
UK Has All The Ingredients For A New Credit Crunch (G.)
Media To Trump: Only Cozy Up To The Right Dictators (FAIR)
America’s Cash Cow: ‘Trump Does Not Value The Saudis, Only Their Money’ (RT)
Nassim Taleb Tells Ron Paul: “We’ll Destroy What Needs To Be Destroyed” (ZH)
How Did Russiagate Start? (Matt Taibbi)
Jeremy Corbyn Defies His Critics To Become Labour’s Best Hope Of Survival (G.)
UK Labour Pledges To Abolish Tuition Fees As Early As Autumn 2017 (G.)
China’s Tide Of Internal Migration Is Shifting (BBG)
Commodity Traders Are Stuck in a World Where Everybody Knows Everything (BBG)
Interest-Only Loans Could Be ‘Australia’s Subprime’ (AFR)
Greek Creditors Seek to Break Impasse on Stalled Bailout Review (BBG)
Syphilis Is On The Rise Because Penicillin Isn’t Profitable (Qz)

 

 

Our economies cannot function without constant new money creation by banks on the back of mortgages and other loans.

US Loan Creation Crashes To Six-Year Low (ZH)

According to the latest Fed data, the all-important C&I loan growth contraction has not only continued, but over the past two months, another 50% has been chopped off, and what in early March was a 4.0% annual growth is now barely positive, down to just 2.0%, and set to turn negative in just a few weeks. This was the lowest growth rate since May 2011, right around the time the Fed was about to launch QE2. At the same time, total loan growth has likewise continued to decline, and as of the second week of May was down to 3.8%, the weakest overall loan creation in three years.

Another loan category that has seen a dramatic slowdown since last September, when Ford’s CEO aptly predicted that “sales have reached a plateau.” Since then auto loan growth has been slashed by more than 50% and at this runrate, is set to turn negative some time in late 2017. Needless to say, that would wreak even further havoc on the US car market. For a while, despite numerous attempts at explanation, there was no definitive theory why this dramatic slowdown was taking place. It even prompted the WSJ to inquire “who hit the brakes?” Well, after the latest Fed Senior Loan Officer Survey, we may have the answer.

First, recall that in late April we showed another very troubling trend: consumer credit card default rate as tracked by S&P/Experian Bankcard had surged to the highest level since June 2013, suggesting that contrary to reports otherwise, the US consumer is increasingly unwell. A quick look at the latest Fed Senior Loan officer survey revealed even more disturbing trends. According to the report, “banks reported tightening most credit policies on Commercial Real Estate loans over the past year…. On balance, banks reported weaker demand for CRE loans in the first quarter.” Even more troubling was the continued drop in demand for C&I loans among small, medium and large corporations, with “inquiries for C&I lines of credit remained basically unchanged” staying at a modestly depressed rate.

This stark admission that in addition to declining bank supply due to tighter standard (i.e., worries about further losses), there was less demand by businesses and consumers for loans, has explained once and for all the ongoing collapse in commercial bank loan creation, both total, C&I and auto. Of the two, the declining demand for loans businesses, is by far the most concerning aspect of an economy that is supposedly growing, and where companies should be willing to take out new credit to fund expansion (instead of merely issuing bonds to buyback their stock).

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Position very similar to US. And many others, obviously.

UK Has All The Ingredients For A New Credit Crunch (G.)

A credit crunch is brewing and when it happens, the UK is going to get hurt. That is the message emerging from senior executives in the financial services industry, who do not think Britain has changed that much since the 2008 credit disaster and the devastating crash that followed. Three developments lie at the heart of this disturbing analysis: spectacular growth in the sale of second mortgages, car loans and credit cards. Second mortgages are widely seen as a signal of consumers taking on risky levels of debt that leave them vulnerable to a downturn in the economy. It was the same before the last banking crash. Tens of thousands of households, many of them struggling to pay monthly mortgage payments, used second mortgages to bypass borrowing limits set by their mortgage lender.

The latest industry figures show the number of people opting to saddle themselves with a second mortgage leapt 22% in March to its highest level since 2008. Car loans are already on the regulator’s radar. Like second mortgages, they are considered secured credit on the basis that lenders have a claim against an asset when borrowers can no longer pay monthly instalments. But cars depreciate from the moment they are bought, so they rank low down the scale of secure credit. And loans have turned in recent years into leases that have customers renewing contracts every three years, keeping them in effect permanently hooked. The main consumer regulator for the financial services industry, the Financial Conduct Authority, is reviewing the market for car leasing, which now accounts for more than 90% of car sales, to check for mis-selling to poorer households who will be vulnerable to default.

The Bank of England is also on the case. More importantly, it is also looking at the big picture and what happens if unemployment suddenly rises and a large number of households default on payments. Officials at the Bank have a growing list of concerns. Not only is there the second mortgage problem and the number of car loans: figures show consumer spending on unsecured credit has also rocketed in the last year. In March alone, the amount UK consumers owed on loans and cards grew by £1.9bn, the highest figure in 11 years. Households are known to have increased their reliance on short-term unsecured loans to buy cars and furniture, and to kit out new kitchens. Some use them to maintain their lifestyle in the face of a decade of flat wages.

Unfortunately, another group use credit to pay the monthly rent. Shelter, the homelessness charity, says one in three renters – around half a million people – on low incomes are having to borrow money to pay the rent. It said the borrowing is often from family and friends, but also on credit cards and through loans.

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Why US mainstream media are on their last legs.

Media To Trump: Only Cozy Up To The Right Dictators (FAIR)

After a series of friendly gestures by President Donald Trump toward Filipino President Rodrigo Duterte and Egypt’s Abdel Fattah el-Sisi over the past few months, US media have recoiled with disgust at the open embrace of governments that ostensibly had heretofore been beyond the pale. “Enabling Egypt’s President Sisi, an Enemy of Human Rights,” was the New York Times‘ editorial position (4/4/17)—followed by “Donald Trump Embraces Another Despot” (5/1/17). A week later, Sen. John McCain (R.-Ariz.) lectured Secretary of State Rex Tillerson on the Times op-ed page (5/8/17) on “Why We Must Support Human Rights.” “How Trump Makes Dictators Stronger” was Washington Post columnist Anne Applebaum’s lament (5/1/17). “Trump keeps praising international strongmen, alarming human rights advocates,” reported an upset Philip Rucker (Washington Post, 5/2/17).

Post contributor Tom Toles (5/2/17) added, “Trump invites ruthless dictators to the White House.” Trump had gone too far, was the media message, crossing a line with his enthusiastic outreach to brutal tyrants. So the Trump administration’s announcement of a plan for not just a friendly visit to Saudi Arabia—scheduled for May 20–21—but also the sale of up to $300 billion in weapons to the oppressive regime, must have provoked the same outcry from these critics, right? Actually, no. Thus far, the LA Times, CNN, NBC, MSNBC, CNN, ABC and CBS haven’t reported on Trump’s massive arms deal with Saudi Arabia, much less had a pundit or editorial board condemn it. Saudi Arabia’s war on Yemen has killed at least 10,000 civilians, resulted in near-famine conditions for 7 million people and led to a deadly cholera epidemic—all made possible with US weapons and logistical support.

John McCain, whose New York Times op-ed was unironically shared by dozens of high-status pundits, aggressively backs Saudi Arabia’s brutal bombing of Yemen, and has called for increased military support to the absolute monarchy. The New York Times hasn’t written an editorial about Saudi Arabia since October of last year (10/1/16), when, for the second time in the span of a week, the paper defended the regime against potential lawsuits over its role in the 9/11 attacks. When the Times does speak out on the topic of Saudi Arabia, it does so to run interference for its possible connection to international terrorism.

Nice words to the wrong dictators unleash a torrent of outrage from our pundit class. Nice words to the right dictators—along with billions in military hardware, which unlike nice words will be used to continue to slaughter residents of a neighboring country and suppress domestic dissent–result in uniform silence. Not a word from Anne Applebaum, no condemnation from Philip Rucker, no moral preening from Sen. John McCain, no sense that any line had been crossed from the New York Times editorial board. The US’s warm embrace and arming of the Saudis is factored in, it’s bipartisan, and thus not worthy of outrage.

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NassimNicholasTaleb on Twitter:

“What @realDonaldTrump is doing: sucking in the last $100 billion before the bankruptcy of SaudiBarbaria. If anything, cruel to the Saudis.”

America’s Cash Cow: ‘Trump Does Not Value The Saudis, Only Their Money’ (RT)

RT: Trump signed a $110-billion dollar arms deal with Saudi Arabia. How do you think this is going to be received in the US and in the wider international community?

Sharmine Narwani: Not very well. We’ve seen what the Saudis have done with arms in the last six years or so. To understand why this administration is upping arms sales to the Saudis, we have to go back a little bit. In 2010, 2011 at the start of the Arab Spring, the Saudis signed contracts for over $65 billion at that time, the largest ever. And then here we are a number of years later. And the numbers are 110, possibly up to $300 billion. And the reason behind this is basically after the failures of the US intervention in Iraq and invasion of Afghanistan, the Americans were no longer willing to sacrifice blood and treasure, and moving forward they were going to use local proxies to fight their wars. And Saudi Arabia is willing and able to fight wars in Syria, in Iraq, in Yemen on behalf of the American administration. But unfortunately, to no avail; these are not winnable wars. And at this point, I think Trump is looking at them as a cash cow.

RT: Trump says he wants to help bring peace to the Middle East. But does striking such a huge arms deal right off the bat send the right signal?

SN: Peace is a relative term. What do the Americans and what does the Trump administration mean by peace, for starters? Peace means the status quo, it means the Americans continue to exercise hegemony over the region, and that is not possible with an empire in decline. So, I think right now what we are seeing with the Trump administration headed by Jared Kushner, his son-in-law, spearheading an effort to create what they are calling the Arab NATO, which is a peace deal struck over the Israel-Palestine conflict in which the Saudis and the Gulf States and other Sunni states will agree to some kind of a solution there in order to cooperate with Israel to target Iran. So, in fact, we are going to see an escalation, not peace.

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“We have today so many people sitting in the New York Times Washington office, in an air conditioned office, who can dictate foreign policy with zero risk.”

Nassim Taleb Tells Ron Paul: “We’ll Destroy What Needs To Be Destroyed” (ZH)

Just how homogenous is the U.S. foreign policy elite? Remember that through the end of Hillary Clinton’s tenure as Secretary of State in 2013, either a Bush or a Clinton held one of the three highest offices in the U.S. – the presidency, vice presidency or secretary of state – for eight straight terms. Another reason why interventionist foreign policy often fails is because federal-government bureaucrats and other outsiders don’t have “skin in the game” – an entrenched interest, financial or of another sort, in the conflict – and therefore, are incapable of achieving a comprehensive understanding of the situation. That goes for both elected leaders, beauracrats, and the media. “We have today so many people sitting in the New York Times Washington office, in an air conditioned office, who can dictate foreign policy with zero risk.”

Dr. Paul seized the opportunity to criticize the “Chickenhawks” who advocate interventionism, but avoided serving in the military during Vietnam. “I don’t fault them for trying to avoid the war, but I fault them for advocating war,” Paul said. Many still haven’t internalized the lesson of the 2007-2008 economic crash and how the monetary policy missteps made by former Fed Chairman Alan Greenspan helped cause the crash. As a result, throughout human history, “we’ve never had so many people transferring risk to others,” Taleb asserts. One reason these actors have been allowed to remain in power is that it’s difficult to assign blame to individuals when you’re dealing with “macro” conflicts like the Syrian conflict that involve many different state actors.

This is one reason the policy elite at the State Department – whom Taleb compared to doctors from ancient times, who inflicted more harm than healing on their patients – have managed to stay in power, while a modern-day doctor who was causing an unusual number of patient deaths would quickly be barred from practicing. Turning the conversation toward the asset bubbles that have continued growing since the last crisis, Taleb explained how Greenspan’s discovery that he could stabilize markets by slashing interest rates has led to our current struggle with unprecedented debt creation and a belief in “perpetual wealth and perpetual growth.” “Lowering rates in such a manner leads to distortions. If we didn’t have a Fed, we’d be better off because the price of money would be negotiated between people.”

[..] Whatever happens to the Federal Reserve -if it’s allowed to continue monetizing debt or not – it may not matter. Because digital currencies like bitcoin, which are quickly growing in popularity and value, could one day supplant the use of fiat currencies altogether, Taleb said. During the last U.S. election, people showed that they aren’t “victims of the New York Times.” Moreover, Twitter has helped upend the media power structure in favor of the people and independent thought. “Trump was elected in spite of 264 top newspapers wanting him to lose,” Taleb noted, adding that he believes the future will be “a libertarian dream.” “We will destroy what needs to be destroyed, and build what needs to be built,” he said.

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Taibbi is crawling back a little.

How Did Russiagate Start? (Matt Taibbi)

[..] there was no way to listen to the March 5th interview and not come away feeling like Clapper believed he would have known of the existence of a FISA warrant, or of any indications of collusion between the Trump campaign and Russia, had they existed up until the time he left office on January 20th of this year. Todd went out of his way to hammer at the question of whether or not he knew of any evidence of collusion. Clapper again said, “Not to my knowledge.” Here Todd appropriately pressed him: If it did exist, would you know? To this, Clapper merely answered, “This could have unfolded or become available in the time since I left the government.” That’s not an unequivocal “yes,” but it’s close. There’s no way to compare Clapper’s statements on March 5th to his interviews last week and not feel that something significant changed between then and now.

Clapper’s statements seem even stranger in light of James Comey’s own testimony in the House on March 20th. In that appearance, Comey – who by then had dropped his bombshell about the existence of an investigation into Trump campaign figures – was asked by New York Republican Elise Stefanik when he notified the DNI about his inquiry. “Good question,” Comey said. “Obviously, the Department of Justice has been aware of it all along. The DNI, I don’t know what the DNI’s knowledge of it was, because we didn’t have a DNI – until Mr. Coats took office and I briefed him his first morning.” Comey was saying that he hadn’t briefed the DNI because between January 20th, when Clapper left office, and March 16th, when former Indiana senator and now Trump appointee Dan Coats took office, the DNI position was unfilled.

But Comey had said the counterintelligence investigation dated back to July, when he was FBI director under a Democratic president. So what happened between July and January? If Comey felt the existence of his investigation was so important that he he had to disclose it to DNI Coats on Coats’ first day in office, why didn’t he feel the same need to disclose the existence of an investigation to Clapper at any time between July and January? Furthermore, how could the FBI participate in a joint assessment about Russian efforts to meddle in American elections and not tell Clapper and the other intelligence chiefs about what would seemingly be a highly germane counterintelligence investigation in that direction?

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If Corbyn doesn‘t beat May, it’ll be due to his own party members. Corbyn equals Sanders in many ways. Left wing parties, to avoid oblivion, must be drastically changed and rebuilt. But vested interests make that very hard in both the UK and US.

Jeremy Corbyn Defies His Critics To Become Labour’s Best Hope Of Survival (G.)

In 2009 the Greek Socialist party, Pasok, entered government with 44% of the vote; by 2015 it was down to seventh, with just 5%. The party’s demise coincided with, and was arguably precipitated by, the rise of the more leftwing Syrza, which went from 5% and fifth place to 36% and government within the same period. This dual trajectory gave rise to the term Pasokification: the dramatic decline of a centre-left party that is eclipsed by a more leftwing alternative. A word was needed for it because there’s a lot of it about. Earlier this month the French Socialist party came fifth in the first round of the presidential election with just 6% of the vote, while the hard left won 20%; back in 2012 the Socialists came first with 28% and went on to win the presidency. In Holland the PvdA, the mainstream social democratic party, won 6% in March and came 7th while the GreenLeft coalition won 9%; back in 2012 the PvdA came second, with 25%.

Less pronounced versions of the same dynamic have occurred across the continent. When parties created to represent the interests of working people in parliament decide instead to make working people pay for the crisis in capital they get punished, and ultimately may be discarded. Anyone who believes that Labour is immune from this contagion just needs to take a look at Scotland, where the party went from 41 seats in 2010 to just one in 2015, before Corbyn was elected leader. To understand the Labour party’s fortunes in this election outside of this trend would be like looking at each national uprising during the Arab spring in 2011, or the collapse of Eastern bloc dictatorships in 1989, as being somehow wholly discrete from each other.

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Bold move. But there’s only two weeks left.

UK Labour Pledges To Abolish Tuition Fees As Early As Autumn 2017 (G.)

New university students will be freed from paying £9,000 in tuition fees as early as this autumn if Labour wins the election, Jeremy Corbyn will say on Monday. The Labour leader and Angela Rayner, his shadow education secretary, will say tuition fees will be completely abolished through legislation from 2018 onwards. But students starting courses in September will have fees for their first year written off retrospectively so as not to encourage them to defer their studies for a year. Labour said it would seek to provide free tuition for EU students and push for reciprocal arrangements at EU universities as part of the Brexit negotiations. Students who are partway through their courses would no longer have to pay tuition fees from 2018, meaning those starting their final year of study in September would be the last cohort liable for the £27,000 of debts to be paid back when graduates pass an earnings threshold.

Labour said those students would be protected from above-inflation interest rate rises on their debts and the party would look for ways to reduce the burden for them in future. “The Conservatives have held students back for too long, saddling them with debt that blights the start of their working lives. Labour will lift this cloud of debt and make education free for all as part of our plan for a richer Britain for the many not the few,” Corbyn will say. “We will scrap tuition fees and ensure universities have the resources they need to continue to provide a world-class education. Students will benefit from having more money in their pockets, and we will all benefit from the engineers, doctors, teachers and scientists that our universities produce.”

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And then they run out of ‘cheaper’ areas. But at least there’s new space to build ghost cities in.

China’s Tide Of Internal Migration Is Shifting (BBG)

Growth in China’s economy has long centered on the coast, where Shanghai and the Pearl River Delta form some of the world’s most productive regions on their own. But now that tide of internal migration that drew hundreds of millions of workers from the farm to factory is shifting, and lifting the economic prospects of the country’s interior.As big-city living costs rise and job openings become less abundant, more migrants are now leaving China’s urban centers than new ones arriving, according to Oxford Economics. “Labor costs on the East Coast are now too high for industries further down the value chain to remain competitive internationally,” London-based economist Alessandro Theiss wrote in a report, citing an 8 million decline in the migrant population from 2014 to 2016.

The shift should benefit inland provinces, especially in southwest regions like Sichuan, as companies move production to take advantage of lower costs while remaining connected to coastal export hubs and industrial clusters, he said. Southern and northwestern provinces are are likely to keep expanding relatively fast as they benefit from catch-up growth, fiscal support and geographic location, while the northeast is likely to remain the slowest-growing region as population declines and coal mining consolidates more in inland provinces, according to Theiss. While the east coast was hit by slower global trade in recent years, conditions are now improving. Specialized manufacturing clusters and export hubs are innovating and moving up the value chain, and research activity is boosting the region.

That’s good news for some of China’s biggest drivers: Coastal Guangdong, Jiangsu and Shandong provinces each account for around 10% of national output and all had output last year that exceeded Mexico’s, Theiss said. The future looks favorable for east coast provinces with more mature economies, as well as those in central China.

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If “Everybody Knows Everything”, the markets must be rigged if anyone wants to make any money.

Commodity Traders Are Stuck in a World Where Everybody Knows Everything (BBG)

For commodity traders operating in the Information Age, just good old trading doesn’t cut it anymore. Unlike the stock market in which transactions are typically based on information that’s public, firms that buy and sell raw materials thrived for decades in an opaque world where their metier relied on knowledge privy only to a few. Now, technological development, expanding sources of data, more sophisticated producers and consumers as well as transparency surrounding deals are eroding their advantage. “Everything is transparent, everybody knows everything and has access to information,” Daniel Jaeggi, the president of Mercuria Energy Group, said on Thursday at the Global Trader Summit organized by IE Singapore, a government agency that promotes international trade.

Sitting next to him at a panel discussing ‘What’s Next for Commodity Trading: Drivers, Disruptors and Opportunities’, Sunny Verghese, the chief executive officer of food trader Olam International Ltd., lamented declining margins. “The consumers and producers are trying to eat our lunch. So we got to be smart about differentiating ourselves,” he said. As market participants’ access to information increases, the traders highlighted the need to more than simply buy and sell commodities as profits from arbitrage – or gains made from a differential in prices – shrinks. That means getting involved in the supply chain by potentially buying into infrastructure that’s key to the production and distribution of raw materials, and also providing financing for the development of such assets.

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Interest only loans are deadly weapons. Lots of them in various EU countries too.

Interest-Only Loans Could Be ‘Australia’s Subprime’ (AFR)

High-risk mortgage loans to young families, professionals and other over-extended borrowers amounting to more than six times household incomes could wipe out 20% of the major banks’ equity base, institutional investment fund JCP Investment Partners has warned. The fund manager’s study warns that official estimates of average household indebtedness are depressed by the sizeable number of mortgages that are effectively full paid off. In a proprietary study of the nation’s record high-and-growing household debt mountain, the Melbourne-based fund said Irish-style housing losses for the bigger-than-recognised pool of riskier borrowers could wipe out half of the banks’ equity capital.

Interest-only loans, said JCP – which is one of three Australian equities managers appointed by the Future Fund – could be “Australia’s sub-prime”. As regulators crack down on interest-only lending and the Turnbull government’s decision to introduce a bank levy drives up the cost of loans, “only time will tell if such households can afford the mortgages they have”. The dramatic warning echoes concerns raised by Reserve Bank of Australia governor Philip Lowe this month that rising household debt had made the economy more vulnerable, and that it was unclear how stretched consumers might behave in a crisis.

It also follows a review by Australian Prudential Regulation Authority chairman Wayne Byres of bank capital requirements for housing exposures, given the “notable concentration in housing”, announced at The Australian Financial Review Banking and Wealth Summit last month. Among the biggest concerns is what may happen when households feel they can no longer service their loans, for instance, as borrowing costs are reset higher or those with interest only mortgages are forced to repay the principal as well. That creates a negative feedback loop – experienced by Ireland after the financial crisis – in which stressed borrowers slash their spending, in turn crunching the economy, driving up unemployment and adding to downward pressure on house prices.

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They seek to break Greece, not the impasse.

Greek Creditors Seek to Break Impasse on Stalled Bailout Review (BBG)

Euro-area finance ministers gather in Brussels on Monday to try to clinch a deal on easing Greece’s debt burden, which would resolve a stalled review of the country’s bailout and pave the way for a new set of rescue loans. While Greece and its bailout supervisors have agreed on economic overhauls, the completion of the country’s review has been held back by disagreements between key creditors over how much debt relief is needed. At the heart of the impasse lies the IMF’s reluctance to participate in a bailout unless the euro area takes further steps to ensure the country’s €315 billion ($353 billion) debt load becomes sustainable. Some nations like Germany, which is resisting changes to Greece’s debt profile, won’t release any new funds until the IMF joins the program. Athens needs its next aid installment of around €7 billion before it has to repay lenders in July.

A global agreement on Greek debt “is within reach and it’s vital,” EU Economic and Monetary Affairs Commissioner Pierre Moscovici said in an interview on France Inter radio on Sunday. Additional debt relief is also necessary for the ECB to include Greek bonds in its asset purchases program, which would ease the country’s access to bond markets. EU officials see chances for a deal on Monday at 50-50, and point to a meeting of euro-area finance ministry deputies ahead of the ministers’ gathering, which will determine the likelihood of an accord. A key issue of contention is the outlook for Greece’s economy after 2018, when the current bailout expires. The IMF has raised doubts about Greece’s ability to maintain such an optimistic budget performance for decades, while key creditors have been pushing for a more positive outlook. Less ambitious fiscal targets would increase the amount of debt relief needed.

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Celebrate capitalism. While you’re alive.

Syphilis Is On The Rise Because Penicillin Isn’t Profitable (Qz)

At least 18 countries, including South Africa, the US, Canada, Portugal, France, and Brazil, have faced shortages of benzathine penicillin G over the last three years, according to the World Health Organization (WHO). With only a few companies in the world still manufacturing the medicine, countries can’t find enough supply of the drug that changed modern medicine 76 years ago. Penicillin was discovered in 1928, but it really took off during World War II. In the early 1940s, a US government-led program brought together around 20 commercial firms, plus government and academic research laboratories, who collaborated to scale up penicillin production to supply the military. The goal, according to the book Sickness and Health in America, was to have enough penicillin for the troops landing in France in June 1944.

In March 1945, penicillin was, for the first time, made available for consumers across the US. It’s efficacy made it popular: by 1949, the US annual production of penicillin was 1.3 trillion units—compared to the relative pittance of 1.7 billion units in 1944.\ Penicillin was one of the great achievements of modern medicine. It was the first drug of its kind, considered a miracle, and ushered in the era of antibiotics. Before penicillin, any cut could kill if it got infected; surgeries of any kind could be fatal; and bacterial infections such as strep throat could kill. Gonorrhea, syphilis, and other sexually transmitted illnesses were basically a death sentence. But a single shot of benzathine penicillin G was enough to kill the first stages of syphilis, which had plagued humankind for over 500 years. It could also cure gonorrhea and other infectious disease. Today, benzathine penicillin G is still the most effective drug against deadly diseases such as rheumatic heart disease and syphilis.

[..] Today, just four companies in the world still produce the active ingredient for benzathine penicillin G. Three are in China: North China Pharmaceutical; CSPC Pharmaceuticals; Jiangxi Dongfeng Pharmaceutical. Austria-based Sandoz is the only producer of the active ingredient for benzathine penicillin G in the Western world. Together, these producers have the capacity to deliver up to 600 metric tons of benzathine penicillin G a year, but they produce less than 20% of that. “There is no money in penicillin,” says Amit Sengupta, the New Delhi-based global coordinator of the People’s Health Movement. A shot of benzathine penicillin G typically costs between $0.20 and $2.00, and usually all you need is one—strep throat and syphilis are both cured with a single injection of penicillin.

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May 192017
 
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Jean-Michel Basquiat Untitled 1982

 

Swedish Prosecutors Drop Julian Assange Rape Investigation (AP/R.)
Australia Economy Among ‘Walking Dead Of Household Debt’ – Steve Keen (NCA)
US Household Debt Hit Record in First Quarter (WSJ)
Why Government Surpluses Is A Terrible Idea – Steve Keen (Renegade)
How Can The Greeks Save More Money? A Monetary Parable. (Steve Keen)
Greek Parliament Approves More Austerity Measures Amid Protests (DW)
Trump Aims to Balance Budget With Deep Cuts, Bullish Growth Projections (WSJ)
Get Ready for Quantitative Tightening (Rickards)
ECB Tapering to Cause “Disorderly Restructuring” of Italian Debt, Return to Lira (DQ)
Russia-US Relations Have Become ‘Extremely Paranoid’ – Sberbank CEO (CNBC)
Western Democracy – As Represented By The US – Is Crumbling (Global Times)
Secret Plans To ‘Protect’ France In The Event Of Le Pen Victory Emerge (G.)
What Jeremy Corbyn Whispered In My Ear (Ind.)
Study Of Healthcare Quality In 195 Countries Names The Best And Worst (AFP)
50 Years Since Indigenous Australians First ‘Counted’, Little Has Changed (G.)

 

 

Time for legal action against Sweden and the prosecutors.

Swedish Prosecutors Drop Julian Assange Rape Investigation (AP/R.)

Swedish prosecutors said on Friday they would drop a preliminary investigation into an allegation of rape against WikiLeaks founder Julian Assange, bringing to an end a seven-year legal standoff. “Chief Prosecutor Marianne Ny has today decided to discontinue the preliminary investigation regarding suspected rape concerning Julian Assange,” the prosecutors office said in a statement. Assange, 45, has lived in the Ecuadorian Embassy in London since 2012, after taking refuge there to avoid extradition to Sweden over the allegation of rape, which he denies. He has refused to travel to Stockholm, saying he fears further extradition to the US over WikiLeaks’ release of 500,000 secret military files on the wars in Afghanistan and Iraq. In 2015 lawyers for Julian Assange have claimed victory after a Swedish prosecutor bowed to pressure from the courts and agreed to break the deadlock in the WikiLeaks founder’s case by interviewing him in London.

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“Stop making housing into an asset.” “Make housing a place for people to actually live.”

Australia Economy Among ‘Walking Dead Of Household Debt’ – Steve Keen (NCA)

Australia has become the “walking dead of debt” due for a financial reckoning that could shock the housing market “bubble” within months. That’s according to “anti-economist” Professor Steve Keen who defines Australia as a “zombie to be” given soaring personal debt that has created a government-induced property bubble ripe to burst. “Australia has simply delayed its day of reckoning,” he told news.com.au in reference to the global financial crisis that shocked many countries around the world from 2008 but left the lucky country relatively unscathed after a series of government interventions. The Kingston University Professor claims first homeowners grants rolled out by successive governments have artificially kept prices high creating a form of “instant prosperity” that politicians are loath to stop.

“The housing bubble makes the politicians look good because A, people are feeling wealthier, and B … people are borrowing money to spend,” he said. “Then the government runs a balanced budget and looks like it really knows what it’s doing” “It hasn’t got a f***ing clue frankly, because what’s actually happening is the reason it’s making that money is credit is expanding,” he said. “It’s the old classic story, you’re criticising a party because someone’s laced the punchbowl. You try to take the punchbowl away from the party you’re a very unpopular person but you need to because what’s actually happening is people are getting intoxicated with credit”. His latest book, Can We Avoid Another Financial Crisis? argues Australia, along with Belgium, China, Canada and South Korea, is a “zombie” economy sleepwalking into a crunch that could come between 2017 and 2020.

“Both [Australia and Canada] will suffer a serious economic slowdown in the next few years since the only way they can sustain their current growth rates is for debt to continue growing faster than GDP,” he writes. [..] For Prof Keen, the solution for governments to an overheated housing market is obvious: “Stop making housing into an asset.” “Make housing a place for people to actually live. So you go back to saying ‘what’s desirable is affordable houses’ and affordable means it doesn’t cost a first homebuyer more than three or four years’ income to get a property,” he said. As for those struggling to get on the ladder in the meantime? “The only thing you can do in the middle is say I’m just not going to join in, and if it happens on a collective level …. it’s game over for the bubble because the bubble only works if more people keep taking out more leverage.”

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Wait till house prices start falling.

US Household Debt Hit Record in First Quarter (WSJ)

The total debt held by American households reached a record in early 2017, exceeding its 2008 peak after years of retrenchment against a backdrop of financial crisis, recession and modest economic growth. Much has changed over the past 8.5 years. The economy is larger, lending standards are tighter and less debt is delinquent. Mortgages remain the largest form of household borrowing but have become a smaller share of total debt as consumers take on more automotive and student loans. “The debt and its borrowers look quite different today,” New York Fed economist Donghoon Lee said. He added: “This record debt level is neither a reason to celebrate nor a cause for alarm.” The total-debt milestone, announced Wednesday by the Federal Reserve Bank of New York, was a long time coming.

Americans reduced their debts during and after the 2007-09 recession to an unusual extent: a 12% decline from the peak in the third quarter of 2008 to the trough in the second quarter of 2013. New York Fed researchers, looking at data back to the end of World War II, described the drop as “an aberration from what had been a 63-year upward trend reflecting the depth, duration and aftermath of the Great Recession.” In the first quarter, total debt was up about 14% from that low point as steady job gains, falling unemployment and continued economic growth boosted households’ income and willingness to borrow. The New York Fed report said total household debt rose by $149 billion in the first three months of 2017 compared with the prior quarter to a total of $12.725 trillion.

The pace of new lending slowed from the strong fourth quarter. Mortgage balances rose from the final three months of 2016, while home-equity lines of credit were down. Automotive loans rose, as did student loans, but credit-card debt fell along with other types of debt. The data weren’t adjusted for inflation, and household debt remains below past levels in relation to the size of the overall U.S. economy. In the first quarter, total debt was about 67% of nominal gross domestic product versus roughly 85% of GDP in the third quarter of 2008. Balance sheets look different now, with less housing-related debt and more student and auto loans. As of the first quarter, about 68% of total household debt was in the form of mortgages; in the third quarter of 2008, mortgages were roughly 73% of total debt. Student loans rose from about 5% to around 11% of total indebtedness, and auto loans went from roughly 6% to about 9%.

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Can we finally try to understand this, all of us?

Why Government Surpluses Is A Terrible Idea – Steve Keen (Renegade)

In this Renegade Short, Professor Steve Keen explains why the government isn’t supposed to balance its accounts like a household.

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TomDickHaria.

How Can The Greeks Save More Money? A Monetary Parable. (Steve Keen)

The EU’s “Stability and Growth Pact” has as one of its primary rules that “The Member States undertake to abide by the medium-term budgetary objective of positions close to balance or in surplus…” I explore what this objective implies in the context of a model of the economy of “TomDickHaria”: what happens to its collective GDP where one member tries to achieve the surplus goal set out in the “Stability and Growth Pact?

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The Troika makes sure Greece will keep drowning.

Greek Parliament Approves More Austerity Measures Amid Protests (DW)

All 153 lawmakers in Prime Minister Alexis Tsipras’ governing coalition backed the legislation that includes new pension cuts and lower tax breaks, which are expected to save Greece €4.9 billion ($5.4 billion) until 2021. All opposition lawmakers present in the 300-seat chamber rejected the package required by international lenders before the release of more aid. Athens needs the bailout funds to repay €7.5 billion of debt maturing in July this year. Relief measures will only kick in if Greece meets fiscal targets stipulated by its creditors. “Our country is being turned into an austerity colony,” leading opposition conservative Kyriakos Mitsotakis said during debate on the bill, describing added cuts as a “nightmare” for low-earners.

Tsipras countered that its passage would enable Greece from summer next year to stand on its own feet, without the intervention of creditors such as the IMF. He accused the opposition of constantly warning of a catastrophe that “hasn’t come.” Government spokesman Dimitris Tzanakopoulos told Skai TV that Greek creditors the IMF and Germany were “in the final stretch of very tough negotiations” over a compromise that should allow Greece to return to bond markets in 2018. Thursday’s austerity package lowers the income tax exception from €8,600 down to about €5,700 but increases benefits for low-income tenants, parents with children and subsidies for child care. Public stakes are to be reduced through sales of holdings in Greece’s PPC electricity utility, railways, Athens’ international airport and the Thessaloniki port.

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Same as it ever was. Fantasy numbers have ruled the day for many years.

Trump Aims to Balance Budget With Deep Cuts, Bullish Growth Projections (WSJ)

President Donald Trump next week will propose the U.S. can balance the federal budget over 10 years with substantial cuts to safety-net programs such as food stamps and other anti-poverty efforts, combined with a tax and regulatory overhaul that speeds up the nation’s economic growth rate, a senior White House budget official said. The president’s budget, due for release Tuesday, will spare the two largest drivers of future spending—Medicare and Social Security—leaving trillions in cuts from other programs. That includes discretionary spending cuts to education, housing, environment programs and foreign aid already laid out by the administration, in addition to new proposed reductions to nondiscretionary spending like food stamps, Medicaid and federal employee-benefit programs.

The budget release, which will be unveiled while Mr. Trump is visiting Europe and the Middle East, shows how his economic policy team is trying to forge ahead on his agenda even as distracting political controversies, such as the recent firing of FBI director James Comey, swirl around Washington. On Thursday, Treasury Secretary Steven Mnuchin testified on Capitol Hill, his first such appearance since his February confirmation, where he expressed confidence Congress could advance a revamp of the tax code this year. House Republicans held their first hearing on the proposed tax overhaul, following a series of meetings between lawmakers and top administration officials Wednesday.

The White House’s budget proposal next week builds upon an earlier outline in March that called for a nearly 10% boost in defense funding next year, offset by around $54 billion in cuts for nondefense programs. [..] Among the more controversial elements of the budget will be the administration’s growth forecasts. The White House projects the nation’s economic growth rate will rise to 3% by 2021, compared with the 1.9% forecast under current policy by the Congressional Budget Office. It’s unusual to see the White House’s growth forecasts differ from the CBO and other blue-chip projections by such a large margin over such a long stretch of the 10-year budget window.

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Another crazy experiment by the Fed bookworms.

Get Ready for Quantitative Tightening (Rickards)

Despite yesterday’s market sell-off, the Fed is still on track to raise interest rates in June. Wednesday’s action is no more than a speed bump for the Fed. It will not stop the Fed from moving forward with another 0.25% rate increase. The Fed is embarking on a new path, a path that started several years with QE (quantitative easing). QE is the name for the method the Fed uses to ease monetary conditions when interest rates are already zero. Conventional monetary policy calls for interest rate cuts to stimulate growth and inflate asset prices when the economy is in a recession. What does a central bank do when interest rates are already at zero and you can’t cut them anymore? One solution is negative interest rates, although the evidence from Japan and Europe indicates that negative rates do not have the same effect as rate cuts from positive levels. The second solution is to print money! The Fed does this by buying bonds from the big banks.

The banks deliver the bonds to the Fed, and the Fed pays for them with money from thin air. The popular name for this is quantitative easing, or QE, although the Fed’s technical name is long-term asset purchases. The Fed did QE in three rounds from 2008 to 2013. They gradually tapered new purchases down to zero by 2014. Since then, the Fed has been stuck with $4.5 trillion of bonds that it bought with the printed money. When the bonds mature, the Fed buys new ones to maintain the size of its balance sheet. But now the Fed wants to “normalize” its balance sheet and get back down to about $2 trillion. They could just sell the bonds, but that would destroy the bond market. Instead, the Fed will let the old bonds mature, and not buy new ones. That way the money just disappears and the balance sheet shrinks. The new name for this is “quantitative tightening,” or QT. You’ll be hearing a lot about QT in the months ahead.

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Tapering, QT, it’s all just more ‘uncharted territory’.

ECB Tapering to Cause “Disorderly Restructuring” of Italian Debt, Return to Lira (DQ)

Here’s the staggering scale of the Italian government’s dependence on the ECB’s bond purchases, according to a new report by Astellon Capital: Since 2008, 88% of government debt net issuance has been acquired by the ECB and Italian Banks. At current government debt net issuance rates and announced QE levels, the ECB will have been responsible for financing 100% of Italy’s deficits from 2014 to 2019. But now there’s a snag. Last month, the size of the balance sheet of the ECB surpassed that of any other central bank: At €4.17 trillion, the ECB’s assets have soared to 38.8% of Eurozone GDP. The ECB has already reduced the rate of purchases to €60 billion a month. And it plans to further withdraw from the super-expansionary monetary policy. To do this, according to Der Spiegel, it wants to spread more optimistic messages about the economic situation and gradually reduce borrowing.

[..] By the halfway point of 2018 the ECB would have completed tapering and it would then use the second half of the year to move away from negative interest rates. So far, most current ECB members have shown scant enthusiasm for withdrawing the punch bowl. The reason most frequently cited for not tapering more just yet is their lingering concern about the long-term sustainability of the Eurozone’s recent economic turnaround. The ECB’s binge-buying of sovereign and corporate bonds has spawned a mass culture of financial dependence across Europe, while merely serving to paper over the cracks that began forming — or at least became visible — in some Eurozone economies during the sovereign debt crisis. In many places the cracks are even bigger than they were back then. This is the elephant in the ECB’s room, and by now it’s too big to ignore.

In one country alone, the cracks are so large that they could end up fracturing the entire single currency project. That country is Italy. Astellon Capital’s report on Italy’s dependence on ECB bond purchases poses the question: If the ECB tapers its purchase of Italian bonds further, who would pick up the slack? The Italian banks, which are themselves deep in crisis mode and whose balance sheets are already filled to the gills with Italian bonds? Hardly. When QE ends, the banks are more likely to become net sellers, rather than net buyers, of Italian debt. The only way for the game to continue is if over the next six years non-banks increase their purchase activity up to seven times that of the past nine years. In other words, the very same investors who have used QE as the perfect opportunity to offload the immense risk of holding Italian liabilities onto the Bank of Italy’s, and then onto the Eurosystem’s, would need to step back into the market in a massive way, just at a time that the country in question is on the verge of a full-blown banking crisis.

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No kidding.

Russia-US Relations Have Become ‘Extremely Paranoid’ – Sberbank CEO (CNBC)

Diplomatic relations between America and Russia have deteriorated to such an extent that contacts between the two countries have become extremely paranoid of one another, the chief executive of Russia’s largest bank has told CNBC. “From what we see here in Russia and from the programs we see from the U.S., the unfolding situation is fairly complex. And there are certain signs of a certain… paranoid attitude to Russia and to every single contact with Russia real or imagined,” Herman Gref, Sberbank CEO, said via a translator. [..] When asked whether Gref harbored any concerns about the consequences of having met with Trump in the past, he replied, “I think the situation has become extremely paranoid for one to suspect that these sort of contacts could lead to political consequences.”

Speaking in January at the World Economic Forum in Davos, Sberbank’s CEO had predicted the Trump administration could re-establish close ties with the Kremlin and expressed his hope the newly-elected U.S. president could mark a “new beginning” for the two countries. On Friday, Gref suggested it was still too early to judge the success of Trump’s presidency however conceded that, for the time-being at least, relations between American and Russia were unlikely to change for the better. Moscow is currently enduring the sharp end of tough international sanctions from Washington[..] . “Well, I have to say that this has had an effect on us in the last two years… The inability to access international markets is painful for us,” Gref said. “You know, sanctions were put in place for political reasons and most likely their removal will also be motivated by politics…

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China’s official government paper.

Western Democracy – As Represented By The US – Is Crumbling (Global Times)

The American elite still refuse to accept Trump after his 100 days in the Oval Office. He is at odds with the mainstream media; insiders have constantly leaked information to the media. Now some commentators have compared the exposure of the Comey memo to the Watergate scandal. As Congress is under Republican control, few believe there will be a move to impeach the president, but these latest revelations will certainly further erode Trump’s presidential authority. At the beginning of the corruption scandal, few believed that South Korean president Park Geun-hye would be impeached either. Could this be a reference for Trump’s case? But evidence of Park’s illegal activities was solid, while it will be more complicated to make determinations over whether Trump obstructed justice and leaked classified intelligence.

To impeach Trump will need more evidence from further investigation. To completely discredit Trump among voters, the present scandal is not enough as it does not add to the negative image of Trump. Many just think Trump often speaks off the cuff, which ends up in silly blunders. If there is a major substantive scandal over and above him speaking out of turn then that will be another thing. But this is not the case at the moment. Every country has its own troubles. The US model represents Western democracy, but it is crumbling, and the resulting social division has become more and more serious. The US Deputy Attorney General Rod J. Rosenstein appointed a special counsel to oversee the investigation into link between Russia and the 2016 US presidential election and related matters on Wednesday.

More juicy details will continue to appear and the rifts may become wider. Trump will become one of the most frequently accused Americans. The US won’t be engulfed by chaos if its president is caught in a lawsuit. Someone has pointed out that no matter how chaotic the White House and Capitol Hill are, the overall operation of the US will not be a major problem as long as the enterprises and social organizations in the country are stable. This is seen as an advantage of the American system. Although American society is relatively stable, the political tumult can’t be taken as an advantage of the US system. The fact is that US politics is in trouble, and the benefits brought by its system are being squandered.

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Democracy as a threat to the state.

Secret Plans To ‘Protect’ France In The Event Of Le Pen Victory Emerge (G.)

It was never written down and never given a name, but France had a detailed plan to “protect the Republic” if far right leader Marine Le Pen was elected president, French media have reported. “It was like a multi-stage rocket,” an unnamed senior official told l’Obs magazine. “The philosophy, and the absolute imperative, was to keep the peace, while also respecting our constitutional rules.” [..] L’Obs cited three anonymous sources with knowledge of the emergency plan that would have been put into effect had Le Pen reached the Elysée palace, saying it was devised by a small group of ministers, chiefs of staff and top civil servants. The magazine said the plan was aimed mainly at preventing serious civil unrest and “freezing” the political situation by convening parliament in emergency session and maintaining the outgoing prime minister in office.

Police and intelligence services were particularly concerned by the threat of “extreme violence” from mainly far left protesters in the event of a Le Pen victory as the country would have found itself “on the brink of chaos”. Even before the first round of voting on 23 April, a confidential note drawn up by the intelligence services announced that “without exception, every local public safety directorate has expressed its concern”, Le Parisien reported. Regional police chiefs were asked on 21 April to detail their crowd control and deployment plans, l’Obs said. Under France’s ongoing state of emergency, more than 50,000 police and gendarmes and 7,000 soldiers were already on duty. On 5 May, two days before the second round that Macron won by 66% to Le Pen’s 34%, the national public safety directorate warned in another note that protesters were ready to use “fireworks, mortars and incendiary bombs”.

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“If you do what you believe in, you’re strong. It’s when you don’t do what you believe in that you’re weak. And we are strong.”

What Jeremy Corbyn Whispered In My Ear (Ind.)

When I shook his hand, I told him that I work for a charity and freelance as a journalist, writing on politics and social justice issues. I expressed my disappointment that Labour (and particularly Corbyn himself) doesn’t get a fair hearing from many news outlets. He spoke in my ear: “If you do what you believe in, you’re strong. It’s when you don’t do what you believe in that you’re weak. And we are strong.” The unveiling of Labour’s manifesto today was a display of strength. Labour is promising a Britain that works for everyone, where whole swathes of society aren’t left behind. The transformative manifesto will take the financial burden from the shoulders of those who can least afford to carry it, and place it upon the top 5% of earners and arrogantly tax-dodging corporations.

The Britain we currently live in is untenable for young people, university students, teachers, NHS workers, policemen, the disabled, people with long-term illnesses, people who can’t find work, first-time buyers, and those living in rented accommodation. Britain is working for a wealthy few, and Labour’s manifesto highlights the fact, often forgotten, that this is not inevitable. At Bradford University, a huge cheer went up when Corbyn promised to scrap tuition fees and end hospital parking charges. The scandal of zero hours contracts would be a thing of the past under Labour, as will NHS cuts and rises in VAT and income tax for 95% of earners. The manifesto is a document filled with long-overdue, common sense policies.

It addresses the important questions that accompany the Brexit process, including concerns about the protection of jobs and hard-won workers’ rights. It puts children and young people first, promising to invest in them through a National Education Service rather than rely on the failed academies experiment or a ridiculous and divisive reintroduction of grammar schools. In-work poverty is unacceptable. My partner and I both work two jobs and we struggle to make ends meet. We don’t indulge in avocado toast but finding enough for a deposit on a mortgage is sadly out of reach. The pledge to build one million new homes and introduce a £10 living wage by 2020 is crucial for young couples and for anyone working in poorly paid or part-time jobs, notably in care work and service industry roles. If Labour’s manifesto and the promise of more public ownership will transport us to the 1970s, where do we currently live? 1870, perhaps?

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Single payer rules. Supreme.

Study Of Healthcare Quality In 195 Countries Names The Best And Worst (AFP)

Neither Canada nor Japan cracked the top 10, and the United States finished a dismal 35th, according to a much anticipated ranking of healthcare quality in 195 countries, released Friday. Among nations with more than a million souls, top honours for 2015 went to Switzerland, followed by Sweden and Norway, though the healthcare gold standard remains tiny Andorra, a postage stamp of a country nestled between Spain (No. 8) and France (No. 15). Iceland (No. 2), Australia (No. 6), Finland (No. 7), the Netherlands (No. 9) and financial and banking centre Luxembourg rounded out the first 10 finishers, according to a comprehensive study published in the medical journal The Lancet.

Of the 20 countries heading up the list, all but Australia and Japan (No. 11) are in western Europe, where virtually every nation boasts some form of universal health coverage. The United States – where a Republican Congress wants to peel back reforms that gave millions of people access to health insurance for the first time – ranked below Britain, which placed 30th. The Healthcare Access and Quality Index, based on death rates for 32 diseases that can be avoided or effectively treated with proper medical care, also tracked progress in each nation compared to the benchmark year of 1990.

Virtually all countries improved over that period, but many – especially in Africa and Oceania – fell further behind others in providing basic care for their citizens. With the exceptions of Afghanistan, Haiti and Yemen, the 30 countries at the bottom of the ranking were all in sub-Saharan Africa, with the Central African Republic suffering the worst standards of all. “Despite improvements in healthcare quality and access over 25 years, inequality between the best and worst performing countries has grown,” said Christopher Murray, director of the Institute for Health Metrics and Evaluation at the University of Washington, and leader of a consortium of hundreds of contributing experts.

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“Dogs and cats and pigs and sheep were counted in Australia before Aboriginal people”

50 Years Since Indigenous Australians First ‘Counted’, Little Has Changed (G.)

Sol Bellear, a former rugby league player for South Sydney Rabbitohs and Aboriginal rights activist, sits in the soft autumn sunshine at a cafe intersecting Redfern Park and the oval that remains the spiritual home of his beloved club. He sips a Red Bull “heart starter” and English breakfast tea. And he shakes his head while contemplating the anniversaries of what ought to have been transformative moments for Aboriginal and Torres Strait Islander people – starting with the 1967 “citizenship” referendum that first made their existence in Australia “official”. “Things should be so much better for Aboriginal people. I think the country saw 1967 as the end of the fight,” Bellear says.

“Before 1967, we weren’t counted in the census or anything as people. Dogs and cats and pigs and sheep were counted in Australia before Aboriginal people.” Indigenous people had never previously been officially included among the Australian citizenry, nor counted in the Commonwealth census – so the federal government could not legislate for them. But on 27 May 1967, more than 90% of the Australian electorate voted at the “citizenship” referendum to effectively bring Indigenous people into the Commonwealth. “After the referendum, though, it was like the work was done for the rest of the country and governments – when it was actually just the bloody beginning,” Bellear says. “Every little thing we’ve won since, we’ve had to fight for.”

2017 is also the 25th anniversary of two more critical moments in the story: the Mabo decision – a High Court ruling that led to native title land rights, and former prime minister Paul Keating’s landmark “Redfern speech” (“We committed the murders – we took the children from their mothers”). It was Bellear who introduced Keating at Redfern Park. This was the first time an Australian prime minister had frankly, without qualification, acknowledged the violence, sickness, dispossession and ongoing oppression that colonialism had imposed on Indigenous people. Yet a quarter of a century on, Bellear says his country remains deaf to all the non-government reports into Indigenous lives – and to the savage critiques of Commonwealth policies that purported to make them better.

[..] Aboriginal and Torres Strait Islanders constitute some 3% of the country’s overall population – yet in 1991, they comprised 14% of Australia’s prisoners. A quarter of a century later, that figure was up to 27% – while more than 150 Indigenous people had died in custody in the intervening 25 years. In some parts of Australia, many more young Indigenous men complete prison terms than high school. The Indigenous rate of imprisonment is 15 times the age-standardised non-Indigenous rate. As Thalia Anthony pointed out in her 2015 book Indigenous People, Crime and Punishment, rates of Indigenous incarceration in Australia today match those of black imprisonment in apartheid South Africa.

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May 172017
 
 May 17, 2017  Posted by at 8:54 am Finance Tagged with: , , , , , , , , ,  3 Responses »
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Arrest of Gavrilo Princip, the man who shoot Franz Ferdinand June 28 1914

 

Britain’s Labour Party Unveils ‘Radical’ Election Manifesto (AFP)
UK Media Trying Incredibly Hard To Keep Corbyn Out Of Number 10 (Can.)
The American Dystopia Didn’t Begin With Trump (MW)
Democratic Party Image Dips, GOP Ratings Stable (Gallup)
Chelsea Manning Set For Release After 7 Years In Prison (AP)
Hong Kong Rejects Asylum for Snowden Helpers (HRW)
The Everything Bubble: Stocks, Real Estate & Bond Implosion (Mike Maloney)
New Theory Behind Stalled Economy: Retirees Are Hoarding Too Much Cash (ZH)
Australia Needs Housing Slowdown for Stability on AAA – S&P (BBG)
Can China Afford Its Belt and Road? (Balding)
Erdogan’s Bodyguards Beat Up US Protestors in DC After He Met With Trump (Qz)
EU Warns Turkey After It Violates Greek Airspace 141 Times In One Day (EuAct)
Abe Divides Japan With Plan to Change Pacifist Constitution (BBG)
NATO Builds Infrastructure for Permanent Presence Near Russia’s Borders (SCF)
Eastern Europe Turns Its Back On Single Market (Pol.)
Germany and Italy Want EU To Halt Migrants In Libya (EuO)

 

 

Looking at the incredible mess built up by the likes of Trump and Hillary, Farge and Theresa May, Angela Merkel and Marine Le Pen, Jeremy Corbyn looks better all the time. He’s an actual person, and he sticks to his guns.

Maybe what goes against him most is that people in this day and age don’t recognize him as a politician anymore; politicians are supposed to stab backs, tell lies and conspire against anyone threatening their shot at power.

Is there anyone who would argue that the world would have been a worse place with Bernie Sanders in the White House and Jeremy Corbyn at no. 10?

As the left has moved, and become, right, we need a left just for balance in our societies. Nothing to do with if you are a socialist or not, just balance.

Britain’s Labour Party Unveils ‘Radical’ Election Manifesto (AFP)

Britain’s opposition Labour Party pledged to raise taxes on the well-off, renationalise key industries and end austerity in its manifesto on Tuesday, presenting voters with their starkest choice in decades in next month’s election. Labour leader Jeremy Corbyn called the programme “radical and responsible”, saying the country had been run “for the rich, the elite and the vested interests” in seven years of Conservative government. “It will change our country,” he will say in his speech at the presentation of the manifesto in Bradford in northwest England, according to extracts released by the party’s press office. “It will lead us through Brexit while putting the preservation of jobs first,” he said. The manifesto is expected to include a tax increase from 40% to 45% for salaries of between ££80,000 (€94,000, $103,000) and ££150,0000 a year, according to The Times and The Daily Telegraph.

The current 40% tax rate applies to people earning between ££31,500 and ££150,000. There would also be a new top rate of income tax of 50%, the reports said. Labour has said the rise would fund increased investment in the state-run National Health Service (NHS) and would only affect 5% of earners. The Guardian reported that the party was also planning a levy on businesses with staff earning large salaries, set at 2.5% on those earning over ££330,000 and 5.0% on those earning more than ££500,000. Labour will also promise to renationalise the railways, the Royal Mail postal service and water companies, according to various reports. Labour has also promised it will increase corporation tax to 26% by 2022 and impose a “Robin Hood tax” on financial transactions. “It’s a programme that will reverse our national priorities to put the interests of the many first,” Corbyn is expected to say. “This is a programme of hope. The Tory campaign, by contrast, is built on one word: fear.”

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Three weeks before the elections, Corbyn is still reported to lose in a landslide. Will Britain wake up in time? Theresa May is a sure bet for deterioration.

UK Media Trying Incredibly Hard To Keep Corbyn Out Of Number 10 (Can.)

An academic investigation has caught the UK media trying incredibly hard to keep Jeremy Corbyn out of Number 10. The mainstream TV and newspaper media are pushing the agenda of the Conservative Party within their coverage, according to an investigation from Loughborough University. The Conservatives are the “most frequently reported” and “most extensively quoted” party, while issues pushed by Labour are “marginalised”, say the report’s authors. In newspapers, for example, the Conservatives received by far the most direct quotation, exceeding Labour by 45%. One of the most striking findings is how much non-political personality pervades the entire media’s election coverage. Last week, Theresa May made a policy-free appearance on The One Show with her husband Philip May. The BBC hosted the personality-driven chat, despite the sitting Prime Minister refusing to debate her record on TV.

Then, according to the content analysis, the broader media amplified the appearance and sidelined the real issues. And this is precisely the aim of a Conservative Party opting for cosy sofa chats over serious policy debate. The sheer weight of reporting on the sanitised family affair propelled the Conservative leader’s husband into the fifth most covered political figure during the study’s time frame. He received nearly double the coverage of the SNP’s Nicola Sturgeon, who leads a party controlling 56 out of the 59 Scottish seats. The Conservative leader’s husband, a family figure irrelevant to the election, also received nearly as much coverage as Labour’s Shadow Chancellor. John McDonnell was the fourth most covered political figure, reported on in 6.1% of all the election news items analysed. Theresa May was easily the most prominent, featuring in 32.4% – over a third of all news items analysed. Corbyn received much less coverage across TV and newspaper media, appearing in 21.4%.

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And it won’t end there. Someone should be able to write it up better than this though.

The American Dystopia Didn’t Begin With Trump (MW)

Dystopia is here. It’s not just the “imagined place” of the dictionary definition or a future state of dystopian novels. It is very real and right now, at least for those of us trying to follow national politics. And it’s not just Donald Trump. It’s Barack Obama, it’s Ted Cruz, it’s the New York Times, it’s Breitbart News. It is an alternate universe detached from the world we live in but intruding into it in painful and dangerous ways. It is a media narrative of political conspirators colluding with a dictatorial archenemy, of an intemperate and delusional leader overturning the institutions of democracy, of a “deep-state” resistance to constitutional authority. It is a dystopia of rampant hypocrisy, where obstructing legislation, supporting a law-enforcement official who strays beyond the limits of his authority, or boycotting a president’s appointments is evil and undemocratic until it’s your party that wants to do it.

Two dystopian classics have shot back to the top of best-seller lists because the media suggest the authoritarian surveillance societies they portray have arrived. The 1948 novel “1984” and the 1985 novel “The Handmaid’s Tale” are touted as descriptions of where we are headed under Trump. While the author of “Handmaid,” Margaret Atwood, and the cast of the Hulu miniseries based on it see a Trump administration as the realization of the misogyny depicted in the novel, it’s obvious the U.S. is not about to become a Puritanical theocracy like that in the book. Critics on both the left and the right dispute the media meme that “Handmaid” is a depiction of the Trump era. Irish feminist Angela Nagle writes in the left-wing Jacobin magazine that it is neoliberal market forces that are oppressing women, not an imaginary theocratic state.

“The real-world dystopia for the majority of women in the age of Trump is not that they are being forced to have children by a repressive traditionalist state,” she wrote last week, “but that they’re being compelled not to by far more insidious forces, and those that do are financially and socially punished at every turn.” We are ruled by myths, she continues, but not those in the miniseries. “The mythologies of our age in the West are not enforced by repressive theocratic regimes,” Nagle says, “but by the market command to be free, to be creative, to be flexible, to love what you do for even the most uninspiring of jobs.”

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They’re all still well ahead of François Hollande. But imagine what a viable third party could do. Better let that be Bernie.

Democratic Party Image Dips, GOP Ratings Stable (Gallup)

Americans’ opinions of the two major political parties are now similar after the Democratic Party’s ratings slipped to 40% – from 45% last November – while the Republican Party’s image is essentially unchanged at 39%. The latest update on the party’s images is based on a May 3-7 Gallup poll, which asked Americans whether they have a favorable or an unfavorable opinion of each party. Throughout last year’s contentious presidential election campaign, U.S. adults rated neither party highly. In fact, more rated each party unfavorably than favorably. But Democrats maintained a slight edge in favorable ratings, including 45% to 40% in Gallup’s prior measurement, conducted last November after Donald Trump’s victory in the 2016 presidential election.

So far, Trump’s unpopularity as president has done little to erode Americans’ views of the GOP, perhaps because they were already quite negative. However, Americans are now less positive toward the Democratic Party than they were last fall. The decline in Democratic Party favorability is mostly a result of lower ratings from self-identified Democrats. In November, 83% of Democrats had a positive opinion of the Democratic Party; now, 77% do. Independents are also slightly less positive toward the Democratic Party, while Republicans’ negative views of the opposing party are steady.

[..]Americans are quite negative toward both of the major political parties at this time. Trump’s unpopularity and the GOP’s challenges in governing a divided nation have done little to weaken the party’s poor image further. But those same factors have also done little to cast the opposing party, the Democrats, in a more favorable light. If anything, the Democratic Party’s positioning appears weakened, largely because its own supporters now hold a less positive view of the party. That could indicate Democrats are frustrated with the party’s minority status in Washington. Not since 2003 through 2006 have Democrats failed to control the presidency, House of Representatives or Senate. Prior to that, Democrats had control of either Congress or the presidency for more than 50 years.

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Bless you.

Chelsea Manning Set For Release After 7 Years In Prison (AP)

Pvt. Chelsea Manning, the transgender soldier convicted of giving classified government materials to WikiLeaks, is due to be released from a Kansas military prison on Wednesday after serving seven years of her 35-year sentence. President Barack Obama granted Manning clemency in his final days in office in January. Though she’s set to be released from Fort Leavenworth, Manning’s lawyers and the Army have refused to say when and how she’ll be freed due to potential security concerns. Manning, who was known as Bradley Manning before transitioning in prison, was convicted in 2013 of 20 counts, including six Espionage Act violations, theft and computer fraud. She was acquitted of the most serious charge of aiding the enemy.

The Crescent, Oklahoma, native tweeted after being granted clemency that she plans to move to Maryland. Neither she nor her attorneys explained why, but she has an aunt who lives there. Manning, a former intelligence analyst in Iraq, has acknowledged leaking the materials, which included battlefield video. She said she wanted to expose what she considered to be the U.S. military’s disregard of the effects of war on civilians and that she released information that she didn’t believe would harm the U.S. Critics said the leaks laid bare some of the nation’s most-sensitive secrets and endangered information sources, prompting the State Department to help some of those people move to protect their safety. Several ambassadors were recalled, expelled or reassigned because of embarrassing disclosures.

Manning, who was arrested in 2010, filed a transgender rights lawsuit in prison and attempted suicide twice last year, according to her lawyers. Obama’s decision to commute Manning’s sentence to about seven years, including the time she spent locked up before being convicted, drew strong criticism from members of Congress and others, with Republican House Speaker Paul Ryan calling the move “just outrageous.” In a statement last week — her first public comments since Obama intervened — Manning thanked that former president and said that letters of support from veterans and fellow transgender people inspired her “to work toward making life better for others.” “For the first time, I can see a future for myself as Chelsea,” she said.

“I can imagine surviving and living as the person who I am and can finally be in the outside world. Freedom used to be something that I dreamed of but never allowed myself to fully imagine.” Her attorneys have said Manning was subjected to violence in prison and argued the military mistreated her by requiring her to serve her sentence in an all-male prison, restricting her physical and mental health care and not allowing her to keep a feminine haircut. The Army said Tuesday that Manning would remain on active duty in a special, unpaid status that will legally entitle her to military medical care, along with commissary privileges. An Army spokeswoman, Lt. Col. Jennifer Johnson, said Manning will be on “excess leave” while her court-martial conviction is under appellate review.

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Seems like every country punishes its best and bravest.

Hong Kong Rejects Asylum for Snowden Helpers (HRW)

Seven people who sheltered the whistleblower Edward Snowden in June 2013 are at risk of return to torture and persecution at home, Human Rights Watch said today. On May 11, 2017, the Hong Kong Immigration Department rejected their asylum claim; their lawyers are in the process of appealing the decision and pursuing a separate case for entry and asylum in Canada, where sponsors are ready to assist them. “Those who helped Edward Snowden in Hong Kong when he was seeking asylum now find themselves at dire risk if sent back to their countries,” said Dinah PoKempner, general counsel at Human Rights Watch. “Canada has the opportunity to a prevent a terrible outcome and should act immediately.”

The asylum-seekers include two men and a woman from Sri Lanka, and a woman from the Philippines, along with their three children who were born in Hong Kong and are stateless. The adults allege that they suffered torture and persecution in their home countries, and have been pursued by powerful people or officials who have tracked or threatened them. Their asylum lawyer, Robert Tibbo, brought Snowden, another client, to their homes in 2013 after he revealed he had disclosed classified information to the press. The families each freely allowed Snowden to stay with them for a short time after his disclosures became public but before his arrest was sought.

Neither the asylum-seekers nor their lawyer revealed their role in Snowden’s journey. However, journalists independently discovered their identities shortly before the release of an Oliver Stone movie about Snowden that shows him being hidden among asylum-seekers in Hong Kong. At that point, the asylum-seekers went public in an effort to have some control over how they were portrayed in the media.

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The Automatic Earth doesn’t promote any specific kind of investments, but Mike is a good friend of ours, and he’s right here.

The Everything Bubble: Stocks, Real Estate & Bond Implosion (Mike Maloney)

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No, they’re not.

New Theory Behind Stalled Economy: Retirees Are Hoarding Too Much Cash (ZH)

[..] we were somewhat shocked to come across a report from money manager United Income which effectively argues that American retirees are saving too much money rather than too little. To summarize the thesis, United Income argues that retirees become more conservative as they grow older which causes them to save more and allocate less to equities…which is, of course, a somewhat self-serving conclusion but never mind that.

“Innovations in medicine and technology have extended human life by over 30 years since 1900. This has helped to double the amount of time the average adult now spends in retirement compared to several decades ago. But, the benefits of longer lives and retirement may be limited if older households curb their consumption or investment in preventive health measures because they are overly pessimistic about their future financial health. Overly negative viewpoints toward the future may also create self-fulfilling economic problems if it leads to an overly aggressive fixed-income portfolio.”

Unfortunately, when combined with the fact that “Median Net Wealth” is actually shrinking, it’s easy to deduce that while the majority of American retirees are actually spending their retirement income (and then some), there is a group of super wealthy old folks who simply can’t spend enough money to offset annual investment income growth….which speaks more to the growing wealth gap than to some economic fear that is causing retirees to hoard cash. In this context, it’s not too difficult to understand why aggregate YoY spending trends collapse as old folks get older. The most wealthy retirees can only find so many ways to burn their massive nest eggs which means that, at least for these folks, YoY spending doesn’t grow but retirement balances do…while the overwhelming majority of people simply run out of cash and have to cut every corner possible to survive….

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Perfect irony.

Australia Needs Housing Slowdown for Stability on AAA – S&P (BBG)

Australia’s prized AAA rating will only rest on a firm footing once there’s a “meaningful moderation” in housing and credit, S&P Global Ratings said as it maintained a negative outlook on the country’s sovereign score. The country’s rating was affirmed by the credit assessor after the latest federal government budget projected a return to surplus by 2021, although S&P noted that revenue could disappoint and lawmakers may struggle to implement fiscal repair policies. It also highlighted risks stemming from Australia’s high level of external indebtedness. S&P has maintained a negative outlook on the country since last July when it issued a warning in the wake of a knife-edge federal election.

“The ratings could stabilize if we were to see a significant and sustained improvement in the medium-term budget outlook, leading to a return to a general government surplus,” S&P said in a statement Wednesday. “A stabilization of the ratings would also require a meaningful moderation of the credit and house price boom.” Home prices in Sydney and Melbourne have surged in the wake of unprecedented interest-rate cuts by the Reserve Bank of Australia as the country navigates its way through the aftermath of a mining boom. Regulators have progressively tightened lending restrictions amid concerns about financial stability.

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Debt and Road.

Can China Afford Its Belt and Road? (Balding)

China’s just-completed conference touting its Belt and Road initiative certainly looked like a triumph, with Russian President Vladimir Putin playing the piano and Chinese leaders announcing a string of potential deals and massive financial pledges. Underneath all the heady talk about China positioning itself at the heart of a new global order, though, lies in uncomfortable question: Can it afford to do so? Such doubts might seem spurious, given the numbers being tossed around. China claims nearly $900 billion worth of deals are already underway, with estimates of future spending ranging from $4 trillion to $8 trillion, depending on which Chinese government agency is doing the talking. At the conference itself, Chinese President Xi Jinping pledged another $78 billion for the effort, which envisions building infrastructure to link China to Europe through Asia, the Middle East and Africa.

From no other country in the world would such pledges be remotely plausible. Yet even for China, they’ll be difficult to fulfill without clashing with the country’s other objectives. The first question is what currency to use for all this lending. Denominating loans in renminbi would accelerate China’s stated goal of internationalizing its currency. But it would also force officials to tolerate higher levels of offshore renminbi trading and international price-setting. So far, they’ve shown little appetite for either. Additionally, countries along the Belt-and-Road route would need to run trade surpluses with China in order to generate the currency needed to repay such loans. In fact, as Bloomberg Intelligence economist Tom Orlik has noted, China ran a $250 billion surplus with Belt-and-Road countries in 2016.

It will be mathematically impossible for Sri Lanka and Pakistan to repay big yuan-denominated loans when they’re running trade deficits with China close to $2 billion and $9 billion, respectively. Financing projects in dollars is no panacea either. Unless China conducts U.S. dollar bond offerings to fund these investments, it’ll have to tap its official foreign-exchange reserves. Those now hover around $3 trillion. That sounds like a lot. But outside estimates suggest anywhere from a few hundred billion to nearly $1 trillion of that money is illiquid. China needs nearly $900 billion to cover short-term external debt and another $400 to $800 billion to cover imports for three to six months. Pouring additional billions into Central Asian infrastructure projects would only tie up money China needs to defend the yuan.

And, borrowers would need to run significant dollar surpluses in order to repay dollar-denominated loans. Obviously, not every country can do so, or undervalue its currency to try and build up a surplus. Beyond the specific mechanisms, it’s unclear whether China has the financial capacity to lend at these levels to borrowers of dubious creditworthiness. As French bank Natixis S.A. has noted, in order to finance $5 trillion in projects, China “would need to see growth rates of around 50% in cross-border lending.” This would wreak havoc on Chinese creditworthiness and raise external debt from a “very comfortable” level (around 12% of GDP) to “more than 50%” if China can’t bring in other lenders.

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Violence in a myriad forms is being normalized one step at a time.

Erdogan’s Bodyguards Beat Up US Protestors in DC After He Met With Trump (Qz)

“The relations between Turkey and the United States have been erected upon common democratic values and common interests.” That’s what Turkey’s president Recep Tayyip Erdogan said at a White House press conference with US president Donald Trump on Tuesday (May 16). But shortly after the event, Erdogan’s bodyguards proceeded to beat and kick people outside the Turkish ambassador’s residence in Washington DC. The altercation was captured on camera, and resulted in nine people being hurt, Voice of America said.

A photojournalist at the site said it seemed to be a pro-Turkey gathering at first, while some witnesses said the group outside the residence included a person carrying a flag of a Kurdish party in Syria allied with a militia the US plans to aid, over Turkey’s objections. [..] It’s not the first time Erdogan’s security has roughed up protesters on American soil. In 2016, the Washington Post reported clashes between protesters and the Turkish leader’s security detail. And in 2014, in New York, Turkish security threatened and pushed around journalists working for a newspaper perceived to be critical of Erdogan.

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This has been going on for years. And only know Brussels peeps.

EU Warns Turkey After It Violates Greek Airspace 141 Times In One Day (EuAct)

Turkish aeroplanes and helicopters illegally entered Greece’s airspace 141 times yesterday (15 May), the Hellenic National Defence General Staff reported. According to Greek press reports, 20 Turkish F-16, 5 CN-235 maritime surveillance aircraft and 19 helicopters entered the Athens flight information region (FIR) without submitting a flight plan. In all cases, Turkish aircraft were identified and intercepted by Greek fighters, while in nine cases the interception process resulted in near combat situations. In addition, two Turkish missile boats entered Greek territorial waters off the southeast Aegean island of Agathonisi. The vessels, which were taking part in a maritime exercise code-named Denizkurdu (Seawolf), stayed in Greek territorial waters for about 20 minutes.

As Kathimerini journal reported, last month Agathonisi was described as a “Turkish island” by Turkey’s Minister of European Union Affairs Omer Celik. While the EU and the international community recognise the sovereignty of Greece over the Greek Aegean islands, Turkey has a list of issues regarding the delimitation of territorial waters, national airspace, exclusive zones, etc. Ankara also claims “grey zones” of undetermined sovereignty over a number of small islets, most notably the islets of Imia/Kardak. The serious incidents occurred just a few hours after the meeting of Greek premier Alexis Tsipras with Turkish President Tayyip Erdogan in Beijing. The Greek Ministry of Foreign Affairs issued a strong communique saying that the incident “constitutes a flagrant violation of international law”.

“It is clear that there are forces in Turkey that do not want understanding and good neighbourly relations between the two countries,” the Greek ministry added. In the meantime, tensions between Ankara and Berlin also escalated. The German government is exploring the possibility of moving its troops out of Turkey’s Incirlik air base, which is crucial for the fight against ISIS, after a second German parliamentary delegation was prevented from visiting the Incirlik facility. German news agency dpa quoted Wolfgang Hellmich, the chairman of the Bundestag Defense Committee, as saying “we’re not going to be blackmailed” by the Ankara government.

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Another form of violence normalized. Abe is the proverbial nationalist.

Abe Divides Japan With Plan to Change Pacifist Constitution (BBG)

Prime Minister Shinzo Abe’s sudden rush to change the pacifist constitution that has defined Japan’s security policy since World War II risks eroding his popularity before an election due by the end of next year. This month, Abe proposed an amendment to recognize the existence of Japan’s Self-Defense Forces while maintaining Article 9, which renounces the right to war and prohibits land, sea and air forces. He wants the change to take effect by 2020, when Tokyo hosts the Olympics. Rewriting the constitution has been a longstanding goal of the ruling Liberal Democratic Party, whose original members – including Abe’s grandfather, who was a prime minister – saw the document as a U.S. imposition that humiliated Japan after World War II.

For Abe, the timing appears opportune: not only are tensions high over North Korea, but his opponents are weak. Yet it also carries risks. The public is divided on changing the constitution, and even some members of his own party don’t support it. The issue could galvanize the opposition and potentially hurt Abe’s chances of becoming Japan’s longest-serving prime minister. “It’s going to be very difficult for him to pull this off,” said Gerald Curtis, an emeritus professor of political science at Columbia University who is currently in Tokyo. “It will eat away at his support. Whether it eats away enough to threaten his third term – that’s unlikely.”

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Insanity rules.

NATO Builds Infrastructure for Permanent Presence Near Russia’s Borders (SCF)

A group of about 50 combat engineers based at Canadian Forces Base Gagetown were deployed to Latvia on April 29 as part of Operation Reassurance. The mission is to build a town for 500 soldiers. According to commanding officer Lt.-Col. Chris Cotton, the installation will have «everything you would expect in a small town, from its kitchen to its quarters, its electrical distribution system, water distribution system, internet, gym facilities that would allow people to survive over the long term in Latvia». Obviously, this is an element of vast infrastructure to provide for a long-term commitment. In early April, a US-led battle group of 1,350 soldiers for NATO’s Enhanced Forward Presence in Eastern Europe arrived at its base near Orzysz in northeastern Poland.

It took place just a few days after a NATO-Russia Council meeting took place on March 30. Secretary-General Jens Stoltenberg called the talks with Moscow «frank» and «constructive». Then the usual song and dance followed under the slogan of Russian threat. British RAF fighters are scheduled to be stationed to Romania this May. In March the first of 800 UK troops arrived in Estonia supported by around 300 armed vehicles. Along with French and Danish forces they’ll be stationed there on what NATO leadership calls «rotational basis». In January, German and Belgian forces arrived in Lithuania near the Russian enclave of Kaliningrad. The UK leads the Estonia Battlegroup while other NATO members are deploying forces to Latvia, Lithuania and Poland as part of the bloc’s Enhanced Forward Presence battalion.

All in all, 4,000 NATO troops with tanks, armored vehicles, air support, and high-tech intelligence centers deployed to Poland, Latvia, Lithuania, and Estonia. In accordance with the fiscal year 2017 European Reassurance Initiative budget proposal, the US Army is reopening or creating five equipment-storage sites in the Netherlands, Poland, Belgium and two locations in Germany. Last September, the service began to assemble more Army Prepositioned Stocks (APS) for permanent storage in Europe. Those stocks will be sufficient for another armored brigade to fall in on. The rotating brigade will bring its own equipment. The move will add hundreds of the Army’s most advanced weapons systems to beef up the US European Command’s combat capability. It will also free up an entire brigade’s worth of weapons currently being used by US forces training on the continent to enable more American troops to be rushed in on short notice.

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The EU is an instrument for German, Dutch, French power and profits.

Eastern Europe Turns Its Back On Single Market (Pol.)

The EU’s newest members are the fiercest opponents of its single market. As with so many of the toughest fights in Brussels, it all boils down to farmers and food. Central Europeans say big Western European landowners and multinational supermarkets are wiping out their farmers and shopkeepers. Protecting smallholders from powerful investors like banks has leapt to the top of the political agenda. Eastern European governments have rolled out a complex web of new laws to stop foreigners buying out swaths of ultra-cheap farmland. The European Commission regards this new legislation in the former communist countries as an existential threat to the EU’s free flow of goods, people and capital — the single market, in short — and struck back with infringement cases intended to preserve its sanctity.

In Bulgaria, for example, the European Commission launched an infringement proceeding last year over a law that investors should be resident for more than five years before they can buy farmland. In Romania, Brussels objected this year to rules that supermarkets should source 51 percent of fresh produce from local suppliers. There has been no decision on either case. It is in Poland, the regional heavyweight, that the battle over respect for the single market is fought the hardest. Brussels has already ordered the authorities to halt a tax on the retail sector on the grounds it grants a selective advantage to small, local shops with a low turnover over big foreign-owned supermarkets. All eyes are now focusing on how the European Commission will react to a growing chorus of complaints in Poland over the rights of foreigners to buy farmland.

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The ‘safe zones’ notion in northern Libya blew up in their faces. So now they’re moving the empty idea to the south. Meanwhile, people keep drowning, and that serves Europe’s purposes.

Germany and Italy Want EU To Halt Migrants In Libya (EuO)

Italy and Germany are reportedly seeking an EU mission to stabilise Libya’s 5,000km southern border with neighbouring countries and curb migration. German newspaper Welt am Sonntag reported on Sunday (14 May) that the German interior minister, Thomas de Maiziere, and his Italian counterpart, Marco Minniti, want the mission set up between Libya and Niger. The ministers sent a joint-letter last week to the European Commission, saying that an EU mission at the border between the two nations was needed “as soon as possible.” “The first months of this year have shown that our efforts up to this point have been insufficient. We must prevent hundreds of thousands of people who are in the hands of smugglers from risking their lives in Libya and the Mediterranean,” the letter states.

The letter, also seen by the French news agency AFP, says greater development and local support is needed for people living along the border. It also calls for “technical and financial support” to Libyan authorities. Abdulsalam Kajman, the vice president of the UN and EU-backed government seated in Tripoli, had also told Italy’s Corriere della Sera newspaper on Sunday that Libya was willing to launch patrols with the help of other countries. “If we don’t resolve southern Libya’s problems, we will not resolve the migrant issue,” he said. Kajman added that Italy was prepared to help train a new patrol guard for the task. The plans are part of a broader effort to prevent people from leaving Libya on boats towards the EU and crack down on migrant smugglers. The exodus from the coast has increased by over 44% – when compared to the same period last year – with some 45,000 people having disembarked between January and mid-May so far.

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May 072017
 
 May 7, 2017  Posted by at 6:46 pm Finance Tagged with: , , , , , , , , ,  5 Responses »
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J.M.W. Turner Old London Bridge 1794

 

The French election, won just now by Emmanuel Macron, put several segments of the French population opposite one another in a pretty fierce contest. And that contest will continue. Because Macron won’t be able to lift the French economy out of its doldrums any more than Le Pen could have, or than Trump can life the US, and the new president will have the honor of presiding over a further and deepening downturn. The French political dividing line was aptly described by Simon Kuper recently:

The ultra-nationalist writer Charles Maurras believed there were “two Frances”. The one he loved was the “pays réel”, the real country: a rural France of church clocks, traditions and native people fused with their ancestral soil. Maurras loathed the “pays légal”, the legal country: the secular republic, which he thought was run by functionaries conspiring for alien interests.

Maurras was born in 1868 and died in 1952. But if he returned on Sunday to witness the French presidential run-off, he would instantly recognise both candidates. He would cast Emmanuel Macron as the incarnation of the “legal France” and Marine Le Pen as embodying the “real” one.

Maurras may have been a questionable character, but that description is not half bad. Once enough people in the country understand the failure of ‘legal’ France, they will want ‘real’ France back. That will be true in countries all over Europe; to a large extent it already is. Marine Le Pen summed up the key issue really well a few days ago when she said of the country post election: “France will be led by a woman, me or Mrs. Merkel.”

There is only one reason the French people would ever tolerate Germany having an outsized influence in their politics and economics: that they feel they benefit from it financially. And yes, if you put it that way, it’s already quite something that they haven’t revolted more and earlier.

The generous unemployment benefits are undoubtedly part of that. But those can’t last. And since the Germans owe their influence in Paris to the EU, it’s obvious how the French will feel they can stop that influence. And then the EU will turn out to be not a peacemaker, but the opposite.

 

Still, as much as France is divided, and as serious as that division is, the country is a shining beacon of unity compared to the UK, where the dividing lines are as manifold as they are laced with toxins. The snap election PM Theresa May called, in just over a month, can do nothing to resolve any of it. That means the EU can do what they want in the Brexit negotiations. Which will therefore be an unparalleled disaster for May and the UK.

The EU can and will ‘have its way’ with the UK for one simple reason: the United Kingdom is anything but United. It makes no difference what the EU does to the UK, the British won’t blame them for it. They will blame each other instead. No matter what happens these days, the British always know in advance who’s to blame, and it’s never themselves; it’s always another group of Brits.

The Tories are deeply divided between pro- and anti-Brexit forces. Labour is divided along those same lines, and adds pro- and anti-Corbyn sentiments for good measure. Other parties don’t really matter much, but they have similar dividing lines as well.

Anti-Corbyn Labour MPs have convinced themselves they know better than pro-Corbyn party members. They’ve kept claiming for so long that Corbyn is unelectable it’s become a self-fulfilling prophecy. They’ll be lucky not to face the fate of their former brethren in François Hollande’s Parti Socialiste, who ended up with just 6% of the vote in the 1st round of the French elections.

PM Theresa May called the snap election for June 8 to hide some of the divisions behind, to make them appear less relevant, or even to profit from them and grab more power. But the very fact that Brexit was voted in, already makes the election nigh irrelevant.

Whoever wins, and it looks certain to be May herself. will open themselves to being scapegoated in a big way. Which won’t keep them from seeking victory, because the loser can expect the same fate. The trenches have been dug, and deeply. Governable? Don’t count on it. It feels more like 40 years later we’re back to Johnny Rotten ‘singing’ Anarchy in the UK.

 

If May threatens to leave the EU ‘cold’ and trigger a ‘Hard Brexit’, she will simultaneously trigger a whole lot more, and much wider, divisions in the country (or is that countries?!), and that’s even without mentioning an entire minefield of legal, and potentially constitutional, issues. The latter especially because Britain doesn’t have an actual -written- constitution.

For Brussels, it’s easy pickings, and pick they will. This week, they casually raised the UK’s cost of leaving the EU to €100 billion, from estimates varying from €40 billion to €60 billion before. Paddy Power and its equally powerful bookie ilk soon won’t be taking any bets below, say, €150 billion. In that regard, and many others, the EU will do to the UK what it is doing to Greece.

The only way to stand up against that is to show a common front. But there will be no such thing in the Divided Kingdom, not for a long time. Everyone has their favorite scapegoat, for some it’s Nigel Farage, for others David Cameron, George Osborne, Tony Blair, Jeremy Corbyn or Theresa May. And nobody is going to leave their blame trenches. They’re the only places they feel somewhat comfortable, less scared, in.

 

Theresa May, if the polls are to be believed -and given the divisions we might for once-, will have to sit down and negotiate with the multi-headed Hydra that is the EU, ‘strengthened’ by a major election victory, but she will find it the ultimate Pyrrhic victory, because Brussels will have a ball playing her divided ‘nation’.

Scotland can probably easily be seduced with the carrot of EU membership, but more importantly, Juncker and his people can cast doubt on the entire Brexit vote, and they will have many interested takers.

The Brexit negotiations will take at least 2 years. But it could be 3 or 4 years, who knows? May has no power over that duration, unless she walks. She won’t. And as things are drawn out, Juncker et al have all the time and opportunities they want to tell both May and the British public that Brussels has no intention of punishing them, but will have to do so anyway.

After all, Brexit is a threat to the entire European project, and all the leaders of the 27 remaining nations, as well as the vast majority of their domestic opposition parties, are behind that project, no questions asked. And the many thousands of people working their very well-paid jobs in Brussels and Strasbourg are not too critical either.

All in all, the British need to wake up and smell the roses as long as there are any left, and before they have been replaced with less savory odors. Or they will have to seriously wonder whether the Kingdom, united or not, can outlive the Queen, aka the London Bridge.

 

 

“London Bridge is Down” was recently revealed as the secret UK government code for the moment the Queen dies.

 

 

 

 

Jan 172017
 
 January 17, 2017  Posted by at 9:17 am Finance Tagged with: , , , , , , , , ,  5 Responses »
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Arthur Rothstein Texas Panhandle Dust Bowl Mar 1936

The Cheeto Cometh (Jim Kunstler)
Donald Trump Must Stop Cheering For Brexit, Says Top EU Official (Pol.)
Abolish The CIA (Rozeff)
Theresa May To Confirm UK Exit From EU Single Market (G.)
Corbyn Labeled Russian ‘Collaborator’ for Questioning NATO Troop Build-Up (I’C)
Carney: UK Rates Could Rise Or Fall (BBC)
France Is The Least-Trusted Country In The World (CNBC)
Deutsche Bank Holding Back 90% Of Bonuses This Year (NYP)
China To Target Around 6.5% Growth In 2017 (R.)
China’s Found a New Way to Pump Record Credit (BBG)
China’s Oil Collapse Is Unintentionally Helping OPEC (BBG)
Size Matters – No Country Should Be Bigger Than This (Mises Inst.)
Greek Migration Ministry Running Out Of Options On Islands (Kath.)
Second Man Dies On Freezing Migrant Route Near Turkey In Greece (AP)

 

 

Vinatage Jim. “I’m not aware that George Washington, Thomas Jefferson, James Madison, or Andrew Jackson put their slaves in a blind trust after they became president.

The Cheeto Cometh (Jim Kunstler)

I dunno about you, but I rather enjoy watching the praetorian Deep State go batshit crazy as the day of Trump’s apotheosis approacheth. I imagine a lot of men and women running down the halls of Langley and the Pentagon and a hundred other secret operational redoubts with their hair on fire, wondering how on earth they can neutralize the fucker in the four days remaining. What’s left in their trick-bag? Bake a poison cheesecake for the inaugural lunch? CIA Chief John Brennan has been reduced to blowing raspberries at the incoming president. Maybe some code cowboys In the Utah NSA fortress can find a way to crash all the markets on Friday as an inauguration present. What does it take? A few strategic HFT spoofs? There will be lots of police sharpshooters on the DC rooftops that day. What might go wrong?

Civil War Two is underway, with an interesting echo of Civil War One: Trump dissed Civil Rights sacred icon Georgia congressman John Lewis, descendant of slaves, after said icon castigated Trump as “not a legitimate president.” That now prompts a congressional walk-out of the swearing-in ceremony. The New York Times is acting like a Manhattan socialite in a divorce proceeding, with fresh hysterics every day, reminding readers in a front-page story on Monday that “[Martin Luther] King’s birthday falls within days of the birthdays of two Confederate generals, Robert E. Lee and Stonewall Jackson.” Jeez! Who you gonna call? Ghostbusters? There’s not much Trump can do until Friday noon except tweet out his tweets, but one can’t help but wonder what the Deep State can do after that magic moment passes.

I’ve maintained for nearly a year that, if elected, Trump would be removed by a coup d’état within sixty days of assuming office, and I still think that’s a pretty good call — though I hope it doesn’t come to that, of course. My view of this was only confirmed by Trump’s performance at last week’s press conference, which seemed, shall we say, a little light on presidential decorum. Perhaps it befits this particular Deep State to go down in the manner of an opéra bouffe. History repeats itself, first as tragedy, then as farce, old Karl Marx observed. What does the Union stand for this time? The rights of former SEC employees to sell their services to CitiBank? The rights of competing pharma companies to jack the price of insulin up from $20 to $250 a vial? The rights of DIA subcontractors to sell Semtex plastic explosives to the “moderate” jihadis of the Middle East?

So the theme of the moment is that Donald Trump is a bigger crook than the servants and vassals of the Deep State. He ran for president so he could sell more steaks and whiskey under the Trump brand. He’s in violation of the emoluments clause in the constitution. Well, I’m not aware that George Washington, Thomas Jefferson, James Madison, or Andrew Jackson put their slaves in a blind trust after they became president. Anyway, at this point in our history, nobody can beat the Deep State for financial turpitude, certainly not a single real estate and hotel magnate.

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Is this an invitation to double down? Because something tells me it might just work.

Donald Trump Must Stop Cheering For Brexit, Says Top EU Official (Pol.)

US President-elect Donald Trump’s praise for Brexit and cheerleading for further divisions between European states are unacceptable, a top EU official said Monday. “Having an [U.S.] administration that hopes for the dismantling of Europe is simply not possible,” Pierre Moscovici, European commissioner for economic and financial affairs, taxation and customs, told reporters in Paris. “I don’t accept this vision of things, and I don’t think that comments which in some way glorify the division of the [European] Union, including by predicting further departures, is the best thing for Euro-Atlantic relations.” He added: “I expect from President Trump that he will be at Europe’s side in this strong relationship. I hope we will not always have to debate in this fashion.”

Moscovici was reacting to a joint interview that Trump gave to the U.K.’s Times and Germany’s Bild in which the president-elect called Brexit a “great thing” and said he expected that other EU peoples would also seek to assert their identity. He also repeated his assertion that the NATO military alliance was “obsolete,” and that he wanted the United States to sign a bilateral trade deal with Britain. Moscovici retorted that no free trade deal between the United States and Britain was conceivable until Brexit actually happened. “Even in the case of a hard Brexit, this will take plenty of time,” he said, adding: “We would expect our American partners not to rejoice over this [Brexit].”

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Abolish NATO, the EU, and the CIA. And abolish Schumer while you’re at it. That was ONE DUMB remark. And he’s the Democrats’ Senate leader? Boy, they have problems.

“Let me tell you: You take on the intelligence community, they have six ways from Sunday at getting back at you. For a practical, supposedly hard-nosed businessman, he’s being really dumb to do this.”

“Schumer is saying that the CIA is so powerful that a president should not attempt to control it or else!”

Abolish The CIA (Rozeff)

Every American who looks at the CIA objectively or in a balanced way and judges it by any number of criteria, such as moral, legal and pragmatic, should reach the conclusion that the CIA should be abolished. JFK wanted to break it into a million pieces. Trump is right to dismiss its intelligence reports about DNC hacking. The CIA war on Trump shows us immediately that the CIA is a rogue organization within the U.S. government and a severe threat to America. The CIA is an internal threat to the rule of law and to the government that it supposedly serves. Senator Schumer acknowledges the CIA’s unbridled power, its subversive power, its power to undermine even a president, especially one that wishes to control or alter the organization, when he says:

“Let me tell you: You take on the intelligence community, they have six ways from Sunday at getting back at you. For a practical, supposedly hard-nosed businessman, he’s being really dumb to do this.” Schumer is saying that the CIA is so powerful that a president should not attempt to control it or else! The CIA is so powerful that elections do not matter when it comes to the CIA. The CIA stands alone. The Constitution that empowers the president as the Executive, the boss of government operations, does not matter. Basic American institutions and laws must bow before the threats that the CIA possesses. This is the assessment of a Senator beginning his 4th term and who is the highest ranking Democrat in the Senate in his post as minority leader.

The CIA is an organization that perpetually undermines traditional American values and moral values. It consistently kills innocent people. It continually causes instability and wars. It undermines other societies and our own. It interferes constantly in foreign nations, to the detriment of them and us. It is an unelected power that challenges elected officials. It favors abuses of power, including torture. Its actual value at generating usable intelligence is minimal, often wrong, often misleading, inaccurate and harmful as in the WMD that were never found in Iraq.

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Britain is incapable of conducting a grown up discussion on Brexit. Makes me fearful.

Theresa May To Confirm UK Exit From EU Single Market (G.)

Theresa May is expected to use the most important speech of her premiership to confirm that Britain will be leaving the single market while insisting that it wants to remain “the best friend” to European partners. In remarks that critics will cite as evidence that the government is pursuing a hard Brexit, the prime minister will set out 12 key priorities for the EU negotiations, with no compromise over the ability to control borders and regain sovereignty. Speaking to an audience at Lancaster House, Westminster, including ambassadors from across the world, May will stress her ambition to reach out beyond the continent to build new trading relationships in a move that suggests the UK will also leave the customs union.

However, the prime minister is likely to restate an argument that she does not see it as an either/or choice and say that whatever final deal on trade and customs duties is struck, lorries will be able to pass through Dover and other ports unhindered, despite warnings from others on the issue. “We seek a new and equal partnership – between an independent, self-governing, global Britain and our friends and allies in the EU. Not partial membership of the European Union, associate membership of the European Union or anything that leaves us half-in, half-out,” May is expected to say. “We do not seek to adopt a model already enjoyed by other countries. We do not seek to hold on to bits of membership as we leave. The United Kingdom is leaving the European Union. My job is to get the right deal for Britain as we do.”

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To wit. The guy who said it of course should have been fired right away, but these days such comments are fully acceptable.

Corbyn Labeled Russian ‘Collaborator’ for Questioning NATO Troop Build-Up (I’C)

The leader of the UK’s Labour Party, Jeremy Corbyn, called for a “de-escalation” of tensions between NATO and Russia, adding in a BBC interview on Thursday: “I want to see a de-militarisation of the border between them.” Along with the U.S., the UK has been rapidly building up its military presence in the Baltic region, including states which border Russia, and is now about to send another 800 troops to Estonia, 500 of which will be permanently based. In response, Russia has moved its own troops within its country near those borders, causing serious military tensions to rise among multiple nuclear-armed powers. Throughout 2016, the Russian and U.S. militaries have engaged in increasingly provocative and aggressive maneuvers against one another. This week, the U.S. began deploying 4,000 troops to Poland, “the biggest deployment of US troops in Europe since the end of the cold war.”

It was in this context that Corbyn said it is “unfortunate that troops have gone up to the border on both sides,” adding that “he wanted to see better relations between Russia, NATO and the EU.” The Labour leader explained that while Russia has engaged in serious human rights abuses both domestically and in Syria, there must be a “better relationships between both sides . . . there cannot be a return to a Cold War mentality.” The response to Corbyn’s call for better relations and de-escalation of tensions with Moscow was swift and predictable. The armed forces minister for Britain’s right-wing government, Mike Penning, accused Corbyn of being a collaborator with the Kremlin:

“These comments suggest that the Labour leader would rather collaborate with Russian aggression than mutually support Britain’s Nato allies. As with Trident, everything Labour says and does shows that they cannot be trusted with Britain’s national security.” This is the same propagandistic formulation that has been used for decades in the west to equate opposition to militarism with some form of disloyalty or treason: if you oppose military confrontation with a foreign adversary or advocate better relations with it, then you are accused of harboring secret sympathy and even support for those foreign leaders, and are often suspected of being an active “collaborator” with (or “stooge” for) them.

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Obviously, worth every penny of his salary. Razor-sharp analysis.

Carney: UK Rates Could Rise Or Fall (BBC)

UK households have continued spending strongly since the referendum, but face headwinds this year, Bank of England governor Mark Carney has warned. Consumers appeared to be “entirely looking through Brexit-related uncertainties”, he said in a speech at the London School of Economics. However, Mr Carney again warned that consumer spending could be hit by rising prices from the weaker pound. He also sounded a cautionary note on the growth in household debt. Mr Carney said that in the year to November, total household borrowing had risen 4%, while consumer credit had gone up by more than 10%, ” the fastest rate since 2005″. Increasingly, the UK was relying on consumer spending for economic growth – rather than exports or investment – which boded poorly for the future, Mr Carney said on Monday.

Gerard Lyons, a UK economist who backed Brexit, said Mr Carney “did rightly highlight the extent to which growth has become more consumer led”. The UK had one of the world’s fastest-growing advanced economies last year, but the Bank of England has forecast growth will slow in 2017 as higher inflation weighs on consumer spending. “We do see a slowing in the economy and household spending this year… that’s a slowing, not a stopping,” he emphasised. Economic forecasters have predicted that inflation could rise above the Bank’s 2% target as a result of the pound’s weakness since the Brexit vote. Sterling fell against most major currencies on Monday as markets anticipated that Prime Minister Theresa May would use a major speech on Tuesday to advocate a so-called “hard Brexit” in which the UK would leave the EU’s single market and customs union. The UK was entering a “period of somewhat higher consumer price inflation”, Mr Carney said. As a result, the next interest rate move could be either up or down, he said.

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By its own people. Brilliant! And people claim Le Pen doesn’t stand a chance.

France Is The Least-Trusted Country In The World (CNBC)

France has claimed the position of the country least trusted by its people, according to an influential survey by the world’s largest public relations firm. A thumping 72% of the French population agree that the institutional system is failing them, placing the country in joint last position alongside neighboring Italy, according to the 2017 Edelman Trust Barometer. Immigration, globalization and eroding social values are highlighted as underpinning the negative results, revealing a disheartening sentiment ahead of this spring’s French presidential election.

The research warns of the consequences playing out in both France and other countries where public disillusion is heightened. “Countries that combine a lack of faith in the system with deep societal fears, such as France, Italy, South Africa, the U.S. and Mexico, are electing or moving towards populist candidates,” reads the research. The disappointment also extends beyond the least enfranchised to the better-off elements of French society. While only a very weak 38% of the mass population trust institutions in France, a mere 56% of the category described as the ‘informed public’ still maintains its faith in the same institutions.

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Don’t worry, the big boys rescued their own: “Only the top 10% of revenue generators may get a bonus for 2016..”

Deutsche Bank Holding Back 90% Of Bonuses This Year (NYP)

Deutsche Bank, the former Wall Street powerhouse, may hold back on giving out bonuses to as many as 90% of bankers and traders, The Post has learned. Only the top 10% of revenue generators may get a bonus for 2016 — and even then it will be paid out over the next five years, according to a source briefed on internal discussions. The bonus plans are still in discussion, another source cautioned, and could still change in the coming weeks. Deutsche was hit hard last month when it settled a mortgage bond probe with the Justice Department for $7.2 billion — which was only about half of what the government initially wanted. While reports have suggested that the settlement could affect the bank’s ability to pay bonuses, it couldn’t be confirmed if the bank had used incentive compensation for the settlement. This wouldn’t be the first time that John Cryan, Deutsche’s CEO, has cut bonuses since taking over in 2014. Last year, the bank cut the bonus pool by 11% and delayed paying its employees until March.

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And just to make sure, they’ll print and borrow it. Can’t miss. AKA fake news.

China To Target Around 6.5% Growth In 2017 (R.)

China will lower its 2017 economic growth target to around 6.5% from last year’s 6.5-7%, policy sources said, reinforcing a policy shift from supporting growth to pushing reforms to contain debt and housing risks. The proposed target was endorsed by top leaders at the closed-door Central Economic Work Conference in mid-December, according to four sources with knowledge of the meeting outcome. “The target will be around 6.5%, which indicates that slightly slower growth is acceptable,” said one of the sources, a policy adviser. The world’s second-largest economy likely grew around 6.7% last year – roughly in the middle of the government’s target range – but it faces increasing uncertainties in 2017, the head of China’s state planning agency said on Jan. 10.

Policy stimulus measures – evident in record lending from mostly state-owned banks and increased government spending – have fueled worries among top leaders about high debt levels and an overheating housing market that could threaten financial stability if not addressed, the sources said. Under the central bank’s recently announced “prudent and neutral” stance, it is expected to guide market interest rates higher to help put the brakes on flush credit conditions, which should also support the weakening yuan CNY=CFXS, the sources said. “They’ve put more emphasis on controlling risks, and monetary policy could be a bit tighter,” said a second policy source, though he characterized the change as ‘fine-tuning’ ahead of a key party meeting in the autumn at which there will be a change in the top leadership. “They are keen to keep economic growth stable before the 19th party congress,” the source said.

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How to get 6.5% growth.

China’s Found a New Way to Pump Record Credit (BBG)

China is increasingly managing the flow of credit with more finely-tuned instruments than its old method of changing how much of their deposits lenders must keep locked away. Banks’ required reserve requirements haven’t changed for almost a year. Instead, the central bank has used short-term lending channels to add almost six times as much funding than would have been added by lowering banks’ RRRs by half a percentage point. With the new tool playing its part in stabilizing the economy – data Friday is estimated to show a 6.7% expansion for 2016 – the People’s Bank of China is switching its focus to risk management. Another advantage of targeted lending: it adds funds without signaling broad easing that adds to downward pressure on the yuan and fuels further capital flight.

The PBOC pumped in a net 270 billion yuan ($39 billion) through open-market operations on Tuesday, the most in a year, data compiled by Bloomberg show. That followed last week’s 305.5 billion yuan of MLF operations, the main short-term lending tool used to meet banks’ medium-term cash demand. Analysts said the efforts can help stabilize liquidity before the week-long Chinese New Year holiday at the end of this month. The PBOC increased the total outstanding of its Medium-term Lending Facility last month to a record 3.46 trillion yuan. That compares with the 600 billion yuan that economists estimate was added to the banking system after the last required reserve ratio cut in February, when it was lowered by half a%age point. Bank deposits stood at 155 trillion yuan in December, greater than U.S. GDP.

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And now imagine a large devaluation of the yuan vs the dollar.

China’s Oil Collapse Is Unintentionally Helping OPEC (BBG)

OPEC’s campaign to prop up oil prices is getting unlikely support from its biggest customer. China’s production is forecast to fall by as much as 7% this year, extending a record decline in 2016, according to analysts at CLSA, Sanford C. Bernstein and Nomura. That’s about the same size as the output cut agreed by Iraq, the second-biggest producer in OPEC, which late last year reached a deal to trim supply to support prices. “China’s domestic crude output decline will certainly help OPEC’s plan to reduce global supply,” said Nelson Wang, a Hong Kong-based oil and gas analyst at CLSA, who sees a 7% slide this year. ”Even if that isn’t China’s intention, it’s just the reality that China can’t produce more under the current circumstances.” While China consumes more oil than almost any other country, it’s also one of the world’s biggest producers, with fields stretching from offshore its southern coast to the far north east.

The collapse in prices that began in 2014 is taking its toll, and the nation’s output suffered a record decline last year. That plays into the hands of OPEC as it seeks to prop up the global oil market, forcing China to depend more heavily on imports. Brent crude, benchmark for half of the world’s oil, averaged about $45 a barrel last year, more than 50% below levels in 2014, the year OPEC decided to tackle a global glut by keeping the taps open. The crash in prices triggered a rethink by the group, which banded together with 11 non-member countries late last year and agreed to a collective cut of almost 1.8 million barrels a day. Prices have since rallied above $58 a barrel. China’s output slumped in 2016 as state-owned firms shut wells at mature fields that had become too costly to operate after the crash. Crude production fell 6.9% in the first 11 months of 2016 to about 4 million barrels a day, the first decline since 2009 and the biggest in data going back to 1990.

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Very interesting discussion, but I would want to see a much stronger link to the pros and cons of centralization itself.

Size Matters – No Country Should Be Bigger Than This (Mises Inst.)

For Mises, individuals associate with each other voluntarily in order to take advantage of the division of labor. Writing in Human Action, Mises notes: “Every step by which an individual substitutes concerted action for isolated action results in an immediate and recognizable improvement in his conditions. The advantages derived from peaceful cooperation and division of labor are universal. They immediately benefit every generation, and not only Iater descendants. For what the individual must sacrifice for the sake of society he is amply compensated by greater advantages. His sacrifice is only apparent and temporary; he foregoes a smaller gain in order to reap a greater one later.” Mises continues: [H]uman action itself tends toward cooperation and association; man becomes a social being not in sacrificing his own concerns for the sake of a mythical Moloch, society, but in aiming at an improvement in his own welfare.”

In Mises’s view, these efforts to enhance trade and cooperation among human beings lead to the creation of cities and other population centers. Moreover, for Mises, the state — properly limited to the function of protecting private property — can potentially assist in creating conditions that facilitate the cooperative behavior he envisioned. Thus, it is the cost of acting as an administrator of law that leads Mises to conclude that certain “compelling technical considerations” are are likely to keep states above a certain minimum size. A problem arises, however, when we recognize that this vision of the state exists in tension with the fact that — as illustrated by Raico — the physical and geographical growth of states tends to facilitate the expansion of state power well beyond the role imagined by Mises.

When contained at a municipal or metropolitan level, state power is one thing. Relocation to a neighboring metropolitan area remains relatively easy. Once states begin to take control of sizable frontiers and multiple municipal areas, however, the situation becomes far different, and states begin to limit and regulate trade and free movement, rather than facilitate it. Thus, even if we accept Mises’s idea that there is some level at which economies of scale for state administration may be beneficial, those assumed benefits are increasingly threatened the larger a state becomes. The answer lies in limiting state size to a human scale in which human beings can still associate, travel, and trade across jurisdictional boundaries without incurring a great cost. The standard for “great cost” is subjective, of course, and over time has changed substantially.

The cost of traveling 50 miles in the 16th century, for example, is significantly different form the cost of traveling the same distance today. There are ongoing attempts by geographers, however, to determine the “natural” size of a region that encompasses a population’s economic, political, and social institutions. In a recent study, for example, Garret Dash Nelson and Alasdair Rae attempted to identify regions that “have been substantively tied together by the forces of urban development, telecommunications, the frictionless circulation of capital, and the consolidation of both public and private institutions.” Basing their standard of scale on tolerance for commute times, the geographers selected 50-mile commutes as an indicator of how closely tied together is a specific region. The end result was this:

The authors then create a suggested map of political units based on the scale of megaregions:

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Tsipras needs to grow a pair.

Greek Migration Ministry Running Out Of Options On Islands (Kath.)

The Migration Ministry appears to be at a dead end over how to manage the growing number of migrants trapped on the country’s eastern Aegean islands after an adverse court ruling on Chios and a clash with the mayor of Lesvos. On Chios, a magistrate on Monday upheld a complaint against the development of a holding facility for migrants exhibiting delinquent behavior, leaving the ministry with few options over how to separate troublemakers from the general population at the processing center in Souda, where violence has erupted on several occasions in the past few months.

On Lesvos, tensions rose during a meeting between Migration Minister Yiannis Mouzalas and Mayor Spyros Galinos on Sunday over the installation of portable toilets at the island’s harbor for migrants temporarily housed on a ship after their tents at Moria camp were snowed in last week, with the local official accusing Mouzalas of putting him on a collision course with the community. Mouzalas has sought – and largely failed – to muster support for building more camps on the islands to help ease the pressure on existing facilities that are struggling to accommodate tens of thousands of refugees and migrants, but is running into increasing opposition.

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We are beyond shame and humanity. Beyond God.

Second Man Dies On Freezing Migrant Route Near Turkey In Greece (AP)

Police in a region of Greece that borders Turkey say another person has died of hypothermia on a route used by migrant smugglers despite freezing temperatures. Authorities said the body of a man was discovered buried in snow outside a Greek village on Monday. They think he probably died over the weekend. The man was the second to succumb to the cold in less than two weeks. Another died of hypothermia in the same area on January 3. In a separate incident, a migrant man was being treated at a nearby hospital for symptoms of frostbite. Greek authorities have reported a recent surge in the number of people attempting to reach Europe while avoiding detention on the Greek islands by crossing a river that divides Turkey and Greece.

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 August 21, 2016  Posted by at 9:13 am Finance Tagged with: , , , , , , , , ,  10 Responses »
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Dorothea Lange ‘A season’s work in the beans’, Marion County, Oregon 1939

Neo-Liberalism Has Had Its Day. So What Happens Next? (G.)
BOJ’s Kuroda Says Won’t Rule Out Deepening Negative Rate Cut (R.)
EU Officials Ignored Years of Emissions Evidence (Spiegel)
The Sound of Blairite Silence (Paul Mason)
53% Of Clinton Foundation Donors Would Be Barred Under Proposed Rule (ZH)
Leaked Memo Proves Soros Ruled Ukraine In 2014 (Duran)
The Aleppo Poster Child (Paul Craig Roberts)
Refugees In Greek Camps Targeted By Mafia Gangs (G.)
Hundreds Rescued From Overcrowded Migrant Boats In Med (EN)
‘Next Year Or The Year After, The Central Arctic Will Be Free Of Ice’ (G.)

 

 

Long, not terrible but not terribly convincing either.

Neo-Liberalism Has Had Its Day. So What Happens Next? (G.)

The western financial crisis of 2007-8 was the worst since 1931, yet its immediate repercussions were surprisingly modest. The crisis challenged the foundation stones of the long-dominant neoliberal ideology but it seemed to emerge largely unscathed. The banks were bailed out; hardly any bankers on either side of the Atlantic were prosecuted for their crimes; and the price of their behaviour was duly paid by the taxpayer. Subsequent economic policy, especially in the Anglo-Saxon world, has relied overwhelmingly on monetary policy, especially quantitative easing. It has failed. The western economy has stagnated and is now approaching its lost decade, with no end in sight.

After almost nine years, we are finally beginning to reap the political whirlwind of the financial crisis. But how did neoliberalism manage to survive virtually unscathed for so long? Although it failed the test of the real world, bequeathing the worst economic disaster for seven decades, politically and intellectually it remained the only show in town. Parties of the right, centre and left had all bought into its philosophy, New Labour a classic in point. They knew no other way of thinking or doing: it had become the common sense. It was, as Antonio Gramsci put it, hegemonic. But that hegemony cannot and will not survive the test of the real world.

The first inkling of the wider political consequences was evident in the turn in public opinion against the banks, bankers and business leaders. For decades, they could do no wrong: they were feted as the role models of our age, the default troubleshooters of choice in education, health and seemingly everything else. Now, though, their star was in steep descent, along with that of the political class. The effect of the financial crisis was to undermine faith and trust in the competence of the governing elites. It marked the beginnings of a wider political crisis. But the causes of this political crisis, glaringly evident on both sides of the Atlantic, are much deeper than simply the financial crisis and the virtually stillborn recovery of the last decade. They go to the heart of the neoliberal project that dates from the late 70s and the political rise of Reagan and Thatcher, and embraced at its core the idea of a global free market in goods, services and capital.

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Yada yada Kuroda.

BOJ’s Kuroda Says Won’t Rule Out Deepening Negative Rate Cut (R.)

The Bank of Japan will not rule out deepening a cut to negative rates it introduced in February, the Sankei newspaper quoted Governor Haruhiko Kuroda as saying, even as the controversial policy has failed to spur inflation or economic growth. In an interview with the daily, Kuroda said the BOJ’s negative rate policy has not reached its limits. “The degree of negative rates introduced by European central banks is bigger than Japan. Technically there definitely is room for a further cut,” Kuroda told the Sankei. The BOJ stunned markets in January when it set a minus 0.1% rate on some deposits that banks place at the central bank, with the move taking effect from February.

While the BOJ hoped the shift to negative rates would encourage banks to lend more, spurring higher spending and inflation, none of that has happened as yet. The BOJ will also consider whether to make any changes to the 80 trillion yen ($798 billion) per year massive asset-purchase plan once the outcome of a comprehensive assessment of its monetary policies is out in September, Kuroda said. The asset purchases are a key plank of the central bank’s “quantitative and qualitative easing” program deployed in 2013, aimed at achieving its 2% inflation target. Despite the aggressive easings, however, inflation is well off the target and growth remains anemic.

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Just another way to signal the failure of the EU. It’s endemic.

EU Officials Ignored Years of Emissions Evidence (Spiegel)

Meeting minutes, correspondence and conversation records that SPIEGEL ONLINE and the Swedish daily Svenska Dagbladet have obtained now show that the European Commission and member states knew, since 2010 at the latest, that the extremely harmful emissions from diesel cars were strikingly higher than legal levels. But apparently none of the officials wanted the automakers to tell them why this was the case. According to EU officials, pressure from countries with a strong auto industry, most notably Germany, significantly reduced interest in an investigation. Instead of doing something about the environmental policy violation, the Commission and the member states passed the buck to each other.

This undignified back-and-forth even continued after the VW scandal about manipulated diesel cars in the United States was exposed in September 2015. The EU bureaucracy was one of the first to be informed, through its research organizations, about the high nitric oxide emissions of the VW vehicle fleet. In 2007, experts with European Commission’s Joint Research Centre (JRC) tested the emissions from operating diesel cars. Additional tests using the so-called PEMS method were performed in 2011 and 2013. The results were the same each time: Nitric oxide (NOX) emissions were several times higher than the levels measured in type approval tests in the laboratory.

Volkswagen was already making an unfavorable impression at the time. The biggest nitric oxide emitter in the 2011 and 2013 tests was a VW Multivan with a diesel engine. This emerges from the list of names of the car models involved, which were not published at the time but has been obtained by SPIEGEL ONLINE. The other eight diesel cars, however, that were randomly selected by the JRC engineers for the PEMS test had the same problem. Be it the Fiat Scudo, Bravo or Punto, the VW Golf or Passat, the Renault Clio or the BMW 120d, not a single model even remotely complied with nitric oxide limits in normal operation.

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The UK won’t let the US get away with claiming the title of ugliest political story.

The Sound of Blairite Silence (Paul Mason)

With Owen Smith it is never clear where, on the road from BBC Wales, via Pfizer, via the years as a special adviser in Belfast surrounded by all those nice members of MI5, via losing Blaenau Gwent to an independent because he was too identified with Blair … at what point did Owen become converted to Jeremy Lite left radical socialism? This combination of high personal ambition and the lack of a permanent belief system is exactly the right attribute for someone whose purpose is to be a placeholder for the Blairite counter-revolution. Who can forget, after all, that Angela Eagle -the original placeholder- launched her campaign without a single policy. Smith is there to remove the grip of Corbyn, and Corbynism on those few parts of the Labour machine it controls.

After that the money amassed by Saving Labour, Progress and Labour Tomorrow will be used to fund the party’s re-conversion to a safe tool of the global elite. It will be back to normal. At every stage, the pro-1% Labour machine has tried to suppress democracy: it tried to force Corbyn off the ballot paper; it tried to debar new, pro-Corbyn members from voting; it tried to produce a new Labour leader without a vote; it imposed an arbitrary cut-off date for new members voting. At the same time the Labour right is promoting an series of largely unfounded victim narratives: that ‘Corbyn is antisemitic’ (backed up with a defamatory attack on Shami Chakrabarti). It’s promoted the narrative of misogyny, of physical threats, of ‘Trotskyist entrism’, of Corbyn ‘sabotaging’ the Remain campaign.

We must anticipate the outcome of this on the principle that Chekov outlined in theatre: if a gun appears in Act I, by the end of Act III someone is going to get shot. Every signal from the Labour right appears to point towards a second coup against Corbyn, once he wins the leadership election, which will make Owen Smith s current effort look like a sideshow.

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There is simply too much wrong about this. A Hillary presidency would damage the reputation of America’s political system too severely. Even Trump Jr of all people makes a valid point.

And no, that does not mean I support Trump. Air everyone’s dirty laundry, by all means. Investigate Trump with all you got. But don’t ignore this.

53% Of Clinton Foundation Donors Would Be Barred Under Proposed Rule (ZH)

On Thursday evening, alongside Trump’s unexpected statement of “regret”, Bill Clinton made another just as important announcement when he said that should Hillary become president, the $2 billion Clinton Family foundation will no longer accept money from any corporate and foreign donors and will bring an end to its annual Clinton Global Initiative meeting regardless of the outcome of the November election. To this we responded that this was to be expected: after all “once Hillary is president, she will no longer need a backdoor way of legally receiving Saudi and other foreign money: at that moment, billions in Saudi dollars will be deemed perfectly acceptable for passage through the front door, mostly in exchange for weapons and ammo.”

Other had similar reactions, with the announcement drawing skepticism on Friday mostly from the right left as critics wondered why the Clintons have never before cut off corporate and overseas money to their charity, and more importantly why they would wait until after the election to do so. RNC Chairman Reince Priebus tweeted Friday that the Clintons’ continued acceptance of those dollars during the presidential campaign is a “massive, ongoing conflict of interest.” The left also spoke up, when Nina Turner, a former Ohio state senator who was a leading surrogate for Clinton’s rival in the Democratic primary race, Bernie Sanders, said the restrictions were a good step but should be imposed immediately. “In my opinion, and in the opinion of lots of Americans, this should have been done long ago,” she said.

As it turns out, the self-impossed restrictions would be more stringent than those put in place while Clinton was secretary of state – ironically when the temptation to bribe the top US diplomat was far higher – when the foundation was merely required to seek State Department approval to accept new donations from foreign governments, permitting the charity to accept millions of dollars from governments and wealthy interests all over the world. They would also be stricter than the policy adopted when Clinton launched her campaign that placed some limits on foreign government funding but allowed corporate and individual donations, for the simple reason that Hillary was willing the accept cash for any and all future favors.

Others questioned why Clinton had now decided that the foundation should rule out donations that she apparently thought were acceptable during her tenure as the country’s top diplomat. “Is it ok to accept foreign and corporate money when Secretary of State but not when POTUS???” Donald Trump Jr., son of the Republican nominee, tweeted Thursday night.

Read more …

A man so old he could die any moment now gets to shape a future he will not live to see, just because he has some money. If that’s not a damning verdict of our political systems, what is?

Leaked Memo Proves Soros Ruled Ukraine In 2014 (Duran)

We noted in a previous post how important Ukraine was to George Soros, with documents from DC Leaks that show Soros, and his Open Society NGO, scouring the Greek media and political landscape to push the benefits of his Ukraine coup upon a Russian leaning Greek society. Now more documents, in the massive 2,500 leaked tranche, show the immense power and control Soros had over Ukraine immediately following the illegal Maidan government overthrow. Soros and his NGO executives held detailed and extensive meetings with just about every actor involved in the Maidan coup: from US Ambassador Geoffrey Pyatt, to Ukraine’s Ministers of Foreign Affairs, Justice, Health, and Education. The only person missing was Victoria Nuland, though we are sure those meeting minutes are waiting to see the light of day.

Plans to subvert and undermine Russian influence and cultural ties to Ukraine are a central focus of every conversation. US hard power, and EU soft power, is central towards bringing Ukraine into the neo-liberal model that Soros champions, while bringing Russia to its economic knees. Soros’ NGO, International Renaissance Foundation (IRF) plays a key role in the formation of the “New Ukraine”…the term Soros frequently uses when referring to his Ukraine project. In a document titled, “Breakfast with US Ambassador Geoffrey Pyatt”, George Soros, (aka GS), discusses Ukraine’s future with: Geoffrey Pyatt (US Ambassador to Ukraine); David Meale (Economic Counsellor to the Ambassador); Lenny Benardo (OSF); Yevhen Bystrytsky (Executive Director, IRF); Oleksandr Sushko (Board Chair, IRF); Ivan Krastev (Chariman, Centre for Liberal Studies); Sabine Freizer (OSF); Deff Barton (Director, USAID, Ukraine)

The meeting took place on March 31, 2014, just a few months after the Maidan coup, and weeks before a full out civil war erupted, after Ukraine forces attacked the Donbass. In the meeting, US Ambassador Pyatt outlines the general goal for fighting a PR war against Putin, for which GS is more than happy to assist. “Ambassador: The short term issue that needs to be addressed will be the problem in getting the message out from the government through professional PR tools, especially given Putin’s own professional smear campaigns.” “GS: Agreement on the strategic communications issue—providing professional PR assistance to Ukrainian government would be very useful. Gave an overview of the Crisis Media Center set up by IRF and the need for Yatseniuk to do more interviews with them that address directly with journalists and the public the current criticisms of his decision making.”

Pyatt pushes the idea of decentralization of power for the New Ukraine, without moving towards Lavrov’s recommendation for a federalized Ukraine. GS notes that a federalization model would result in Russia gaining influence over eastern regions in Ukraine, something that GS strictly opposes.

Read more …

How many more years of this?

The Aleppo Poster Child (Paul Craig Roberts)

Washington’s media presstitutes are using the image of the child to bring pressure on Russia to stop the Syrian army from retaking Alleppo. Washington wants its so-called moderate rebels to retain Alleppo so that Washington can split Syria in two, thereby keeping a permanent pressure against President Assad. As for the little boy in the propaganda picture, he does not seem to be badly injured. Let us not forget the tens of thousands of children that Washington’s wars and bombings of 7 Muslim countries have killed without any tears shed by CNN anchors, and let us not forget the 500,000 Iraqi children that the United Nations concluded died as a result of US sanctions against Iraq, children’s deaths that Clinton’s Secretary of State Madeleine Albright said were worth it.

Let us not forget that Washington’s determination to overthrow the Syrian government has brought many deaths to Syrians of all age groups. Washington alone is responsible for the deaths. The evil Obama regime has stated over and over that “Assad must go” and is prepared to destroy the country and much of the population in order to get rid of him. According to the Obama regime, Assad must go because he is a dictator. Washington tells this lie despite the fact that Assad was elected and re-elected and has far higher support among Syrians that Obama has among Americans. Moreover, whatever Washington accuses Assad of doing to Syrians is nothing compared to the death and destruction that Washington brought to Syria.

Perhaps the tragedy of Aleppo could have been avoided if the Russian government had not prematurely declared “mission accomplished” in Syria and withdrawn only to have to rush back after the Russian government was again deceived by Washington.

Read more …

The EU, Europe as a whole, fails dramatically, and nothing is improving.

Greece by then had already received €181m to help deal with the crisis from Brussels.

Look, Greece estimated the cost to its budget at €2 billion at least 6 months ago. Now, all the money goes to NGOs. Whose track record is not great, to say the least.

Refugees In Greek Camps Targeted By Mafia Gangs (G.)

Fresh evidence is emerging that refugees stranded in camps across Greece are falling victim to rising levels of vice peddled by mafia gangs who see the entrapped migrants as perfect prey for prostitution, drug trafficking and human smuggling. Details of the alarming conditions present in many of the facilities comes as the Greek government – facing criticism after the Observer’s exposé of sexual abuse in camps last week – announced urgent measures to deal with the crisis. A further four refugee centres, it said, would be set up in a bid to improve severe overcrowding, a major source of tensions in the camps. Aid workers say an estimated 58,000 migrants and asylum seekers in Greece are increasingly being targeted by Greek and Albanian mafias.

Tales of criminals infiltrating camps to recruit vulnerable women and men are legion. “If nothing is done to improve the lifestyle of these refugees and to use their time more productively, I see a major disaster,” warned Nesrin Abaza, an American aid worker volunteering at the first privately funded camp known as Elpida (Greek for hope) outside Thessaloniki. “These camps are a fertile breeding ground for terrorism, gangs and violence. It seems like the world has forgotten about them. They are not headline news any more, so therefore they do not exist … but the neglect will show its ugly head.” With an estimated 55 centres nationwide – including “hotspots” on the Aegean islands within view of Turkey – Greece has effectively become a huge holding pen for refugees since EU and Balkan countries closed their borders to shut them out earlier this year.

[..] the EU released €83m in April to improve living conditions for refugees stranded in the country. The UN refugee agency, the International Federation of the Red Cross and six international NGOs were given the bulk of the funding. Greece by then had already received €181m to help deal with the crisis from Brussels. Announcing the emergency support, the EU commissioner for humanitarian aid and crisis management, Christos Stylianides, claimed the assistance was “a concrete example of how the EU delivers on the challenges Europe faces”. “We have to restore dignified living conditions for refugees and migrants in Europe as swiftly as possible,” he said. But four months later, as allegations of sexual abuse and criminal activity envelop the camps, questions are mounting over whether the money was properly administered. In addition to bad sanitary conditions and lack of police protection, the latest revelations have shone a light on whether the humanitarian system is working at all.

“There is no emphasis on humanity, it is all about numbers,” Amed Khan, a financier turned philanthropist who funded Elpida, told the Observer. Elpida, also established in a former factory near Thessaloniki, has a tea room and yoga centre and, seeing itself as a pioneering initiative, encourages refugees to regard it as a home. In the month since the camp opened its doors, it has won plaudits for being the most humane refugee centre in Greece. “Nobody is using money here efficiently or effectively,” lamented Khan. “The humanitarian system is the same one that has been in place since the second world war, it lacks intellectual flexibility and is totally broken. The real question to be asked is, has the aid that has been given been appropriately utilised?”

Read more …

3000 dead so far this year.

Hundreds Rescued From Overcrowded Migrant Boats In Med (EN)

More than 300 people have been rescued from the Mediterranean Sea after migrant boats capsized off the coast of Libya. One small vessel packed with 27 Syrians flipped over and sank, according to humanitarian group Migrant Offshore Aid Station. The bodies of two women and one man were recovered. Among the dead were two girls, aged eight months and five years. The survivors were taken to the Sicilian port of Trapani. Migrants from North Africa are favouring the dangerous voyage toward Italy after last year’s prefered route from Turkey to the Greek islands has been largely shut down. According to the International Organization for Migration, about three thousand migrants have died in the Med so far this year.

Read more …

“You will be able to cross over the North Pole by ship.”

‘Next Year Or The Year After, The Central Arctic Will Be Free Of Ice’ (G.)

Peter Wadhams has spent his career in the Arctic, making more than 50 trips there, some in submarines under the polar ice. He is credited with being one of the first scientists to show that the thick icecap that once covered the Arctic ocean was beginning to thin and shrink. He was director of the Scott Polar Institute in Cambridge from 1987 to 1992 and professor of ocean physics at Cambridge since 2001. His book, A Farewell to Ice, tells the story of his unravelling of this alarming trend and describes what the consequences for our planet will be if Arctic ice continues to disappear at its current rate. “You have said on several occasions that summer Arctic sea ice would disappear by the middle of this decade. It hasn’t. Are you being alarmist?”

No. There is a clear trend down to zero for summer cover. However, each year chance events can give a boost to ice cover or take some away. The overall trend is a very strong downward one, however. Most people expect this year will see a record low in the Arctic’s summer sea-ice cover. Next year or the year after that, I think it will be free of ice in summer and by that I mean the central Arctic will be ice-free. You will be able to cross over the North Pole by ship. There will still be about a million square kilometres of ice in the Arctic in summer but it will be packed into various nooks and crannies along the Northwest Passage and along bits of the Canadian coastline. Ice-free means the central basin of the Arctic will be ice-free and I think that that is going to happen in summer 2017 or 2018.

Read more …

Jul 092016
 
 July 9, 2016  Posted by at 2:59 pm Finance Tagged with: , , , , , , , ,  4 Responses »
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Ann Rosener San Francisco, California. The Bank of America 1943

The post-Brexit ‘conversation’ in Britain is taking on grotesque proportions. Nobody seems to know how to react, at least not in a rational manner. They all look to be stuck in phase one of Kübler Ross’s Five Stages of Grief, i.e. Denial. Phase two is supposed to be Anger, and while there’s plenty of that, the shape is takes makes one think Angry Denial, instead of a progression between phases.

That is to say, I don’t think I’ve seen one voice expressing anger at themselves. It’s all somebody else’s fault. And it just keeps going. After Farage, Johnson, Gove et al had been blamed for all there’s wrong with everyone else’s lives, now the anger is pointed at the two women who are supposed to be competing for the poisoned chalice of UK prime minister. That both belong to the clique which has just been voted down 2 weeks ago doesn’t seem to bother anyone. That is not smart.

But if you must insist on calling 17 million of your neighbors ‘racist’ and ‘stupid’ just to feel better about yourself, perhaps there’s no denying that the Five Stages insist on taking their time. Problem with that is there is no such time, before you know what’s happened the nation will be stuck with another ‘leader’ that far too many people are not going to be listening to. A game of ‘who said what about whom’ is not helping.

A main issue would seem to be the Anglo(-Saxon) disease version 2.0, as I label it: whereas numerous countries around the world have seen new political parties rise to the fore, Britain, the US, Australia etc. are sticking with the same old same old, even if that makes them essentially ungovernable. What Britain needs is Podemos or a Five-Star movement, and so do the US, Canada, Australia.

The global economic system is now collapsing so overtly that nothing incumbent powers do can hide it any longer. A more flexible system, and a less ‘let’s stick with what we got’ view of life, can be very helpful during times like these, because they can ease the friction of established powers losing their power, no matter how painful that process still will be.

In many if not most countries there is hardly any difference anymore between what used to be right and left in politics. Barack Obama, Tony Blair and soon perhaps Hillary Clinton were voted in by what used to be the left wing of their countries, but they might just as well have come from the other side of the aisle. They all represent the establishment, not the people.

That has worked to an extent so far, but now it is over, simply because too many people have too little left to feel comfortable in their lives. In that regard it’s interesting to see how Labour leader Jeremy Corbyn gets treated by his own party for wanting to take it ‘too far’ to the left, i.e. to represent the people. This may split up the party after all, and Corbyn would and should be happy to be rid of the right wing of the party, but he has caught Anglo Disease 2.0 too.

If Bernie Sanders or Jeremy Corbyn, even Donald Trump for that matter, were Italian, Spanish or even German, they would have started another party, not try to ‘reform’ an existing one. It doesn’t work, or it’s too much trouble trying. The disconnection is too great, between what the parties once stood for and stand for now, and between what they say and what they do.

 

Anglo Disease 1.0, by the way, is the government-induced blowing of housing bubbles in London, Vancouver, Sydney, Auckland etc etc. Take a good look at this graph and you can see what Beautiful Brexit (think I should patent the term?) is set to do to UK home prices: make then affordable again. Why do so many people apparently think that’s a terrible thing?

And Anglo Disease 1.0 is plenty contagious. Look at private debt levels in the Netherlands, where in the years after the graph below, 2015-6, home prices have kept rising and so have sales. Private debt at 800% (900% now?) of GDP is not a healthy thing no matter how you twist it, but they’ll all tell you they’re making smart investments and money hand over fist.


EA=Euro Area

Government and/or central bank induced bubbles are criminal. They make an economy look better temporarily, but people will have hefty prices to pay when they pop. And pop is just what Brexit does with the UK housing bubble. Whether that’s a good or a bad thing is perhaps up to one’s own personal judgment, but no thinking body would say yes when asked if they prefer living in a bubble.

For me, sitting inside a 10-year central bank liquidity bubble, I’m mostly afraid for those who have ever less left. The jobless, pensioners, anyone relying on benefits or fixed income, have yet to realize how much worse off they will be, but they will. ‘Homeowners’ with huge mortgages, even if they’re at low rates, will see ‘values’ plunge to the point where lenders will come with margin calls. And what then? More bank bail-outs?

Central banks and governments have been blowing their bubbles with one goal in mind: to keep incumbent powers in place. That part has succeeded, but it’s the only part, and the price to be paid by everyone else will be horrendous. And in the end the incumbents will be gone regardless, albeit with many pockets full of loot.

The last move the ‘rulers’ have left up their sleeves is perhaps to go to war with Russia, but I don’t see the people of Europe, despite 10+ years of heavy anti-Putin propaganda, allowing it. Europe might instead come to resemble the US, where people have another sort of battle to fight, a domestic one, which if not properly approached could lead to -more and increasing- very ugly confrontations.

Trump may not be the best person to lead his country into that, but the establishment, represented by Hillary, looks a much worse choice. Trump doesn’t owe nearly as much to those behind the curtains who have so much to lose. Hey, I wish there were better people available, but they’re not. Bernie Sanders has been outpropagandized and outmaneuvered, and he’s not perfect either.

America, too, will have to reinvent itself, just like so many nations across the planet. At least Trump will give the country a shot at not being dragged down into another war it can’t win, in or with Russia or China. Still, the art of propaganda on all sides and in all media has reached such dizzying heights and contortions that not a lot will seem obvious anymore.

One thing will though: increasing poverty. That will be the main factor to drive out the old and vote in the new. But the new will have two faces, one of which is Podemos, Sanders, Grillo or Corbyn, and one of which is some form or another of extreme right wing voices. Who come with their own Denial and Anger and other never completed Five Stages of Grief.

 

 

Elizabeth Kübler Ross: On Death and Dying – 1969

1 – Denial. Denial is a conscious or unconscious refusal to accept facts, information, reality, etc., relating to the situation concerned. …
2 – Anger.
3 – Bargaining.
4 – Depression. Also referred to as preparatory grieving. …
5 – Acceptance.

 

 

Jun 292016
 
 June 29, 2016  Posted by at 12:46 pm Finance Tagged with: , , , , , , ,  15 Responses »
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Marion Post Wolcott Coal miner waiting for lift home, Capels, West Virginia 1938

George Osborne declared on Monday that the UK “is in a position of strength” (he meant the economy, not the football team). No, it is not. That’s why he and his ilk lost the vote. But Osborne’s actually thick enough to look in the mirror and tell himself he did a good job. Utterly blind to the people he keelhauled over the past 6 years.

And no doubt while he’s at it, he’s at least tempted to label all 17 million Britons who voted ‘Leave’, uneducated racists. George’s well-to-do friends may be in “a position of strength”, but the British people who paid for these friends of George’s to be comfortable, are nowhere near “a position of strength”.

The only way to protest the wringer they have been put through was to vote against anything Osborne and Cameron represent. And so they did.

Most of the “Brexit is the end of the world” claims that have followed Friday’s referendum result are as stunning as Osborne’s blind spot for this own people (who he doesn’t even see as ‘his own’). And most of them come from people who until recently claimed to detest ‘Gideon’.

In the eyes of a vast majority of commentators, all hell is busy imminently breaking loose in UK society and its economy because those 17 million dumb racists voted No to the EU, which was in reality simply a No to Osborne and Cameron -and Juncker et al-, and all they stand for, something just about entirely overlooked; for most of these voters, it was not a Yes to anyone else, just a NO!.

At the same time the Leave campaign claims endless streams of milk and honey are in the offing, an equally unlikely proposition (is it perhaps an idea to not only talk about money or race; how about physics?).

Fact is nobody knows where Brexit will lead, for the simple reason that there are no precedents or other comparisons. Everybody on all sides just makes things up. Since most of the media outlets that have any pretense left of serious journalism are on the Remain train, it would be easy to be fooled by them.

The whole ‘discussion’ -it’s more an endless parade of monologues- has turned into the metaphorical hammer looking for a nail in embarrassing ways.

Who do all these people have to blame but themselves? Weren’t they the ones who felt up to the very last moment that there would be no Brexit? And isn’t that why they decided to keep calm and carry on? Let’s see some denials of that, please.

The “I was asleep but that’s not really my fault, is it?” kind of thing. Bring it on. The Guardian has the audacity to ask for donations from those who “appreciate their Brexit coverage”. Granted, they publish some 826 pieces a day on the topic. But I’d consider paying them just to stop doing that.

 

Hillary Clinton’s reaction to Brexit was to call for ‘steady, experienced leadership’. Which sounds sort of reasonable but is in reality just another way of saying ‘more of the same’. And that in turn happens to be exactly what Brexit was a reaction against.

Clinton’s simply and obviously aiming for those Americans who are afraid of change. But that doesn’t mean she has the power to prevent it. Nor that it’s a wise track to be on, given that Trump is where he is because so many people clearly want change, not ‘more of the same’.

European Parliament president Martin Schulz was quoted as saying: “The British have violated the rules. It is not the EU philosophy that the crowd can decide its fate.” Still wondering what the source of that quote is. Saw Prof. Richard Werner quote it, but without the source.

Jean-Claude -‘You have to lie’- Juncker told European Parliament members yesterday that he has imposed a ‘Presidential’ ban on EU commissioners holding informal or secret talks with the British about the country’s exit from the EU, until the UK government formally invokes Article 50. I bet you he’s holding secret talks right now.

A Bloomberg headline: “EU Chiefs ‘Held Hostage’ by UK Tell Cameron to Spell Out Goals”. Err, guys and dolls, Cameron resigned. He’s in no position to spell out anything, and he wants it even less; Georgy ain’t even touching that hot potato just to pass it on. He’ll take a pig’s head any day.

 

As Jeremy Corbyn faces a Labour Party rebellion, George Monbiot says “I fear that may be the end of the Labour party. Just when we need it most.“ No, that’s not what you need, George, you need a party or other organization that stands up for you and ‘yours’. And when’s the last time Labour has done that for the majority of British people?

Also, beware of economists who talk politics; they think these are separate fields. Some even think there’s science involved. Brexit is not “Britain’s democratic failure”, as economist Kenneth Rogoff suggests, that failure came a long time ago, when corporatism fascism came in, first through Labour’s own Tony Blair, and was subsequently perfected by Cameron and Osborne.

If anything, it’s the opposite, that is to say, Brexit is Britain’s democratic resurgence, though it has arguably come in a repulsively distorted shape. But perhaps that is inevitable once real democracy has had its head held underwater for so many years.

Through all the insistence that Britain must stay inside the EU, I can’t help wondering when ‘Britain can’t stand on its own two legs’, which is what all these commentaries come down to, came to be perceived as a winning argument, but all but a few ‘expert voices’ insist this is true.

‘Britain faces an uncertain future’. How awful is that? Still, I bet you, when next time it sounds even halfway convenient, uncertainty will get to mean ‘opportunity’. Oh, and don’t you, too, hate the implications of a word like ‘nervousness’, as in: “everyone’s nervous”? Well, unless one’s favorite musician or athlete talks about the ‘healthy nervousness‘ necessary to perform well.

Much respected economist/writer Edward Harrison says on Twitter: “.. this is the part I HATE. We are, what, 5 days into this. No one knows how severe the Market reaction will be. It’s ludicrous..”

And I’m like, chill, mate, why is it ludicrous that you can’t predict what ‘The Markets’ reaction to something, anything will be? If that’s something you HATE, maybe you should not be in the game, or in the kitchen for that matter.

The markets are not supposed to be predictable, and when they are, it means someone is manipulating them, and someone else is paying for that predictability, and that second someone is invariably not in on ‘the game’.

Kids say the darndest things. So do investors and economists.

Just because you want want certainty, doesn’t mean you have a right to it, democratic or not. And neither does anyone else. But if you want some regardless, here goes: you can be certain the economy will collapse at some point. That’s not the certainty you were looking for, is it? So what would you prefer, accepting that certainty, or to let someone tell you that this negative prediction is still uncertain? I’ll give you a few minutes to think about it.

 

Mariana Mazzucato, another economist, says:

The third challenge is green growth. EU legislation has improved the quality of British beaches and the air we breathe. But green policies will also form the next industrial wave that will lead to future prosperity. Today green spending is an option for governments and businesses; soon it will be a necessity. Those who have chosen to invest will be in a strong position.

And I’m thinking: where to begin? A wave of future prosperity? You mean as in Elon Musk prosperity? Using public money to blow pipe dreams? Green spending is a big ruse meant to allow the formerly rich -yeah, that’s you- lay their worried consciences to rest, and pay for it through their noses.

But there is so much debt burying us all, inside our own societies, that we will never be able to afford any transition to a green economy, even if it were possible from a physics point of view. Which it is definitely not. All the rest is just propaganda.

Our future consists of using a lot less energy -try 90% on for size-; how we get there is partly up to us -but only partly-, we can do it wisely and voluntarily or stupidly through hard set limitations, but that’s the only choice we have. We will never replace even a fraction of fossil fuels with wind or sun or algea or project X.

That same species of certainty applies to the European Union, even if it may appear -even- less obvious. The grandiose EU project of an ever closer union is running into the limits of economics as well as physics. European nations can work together, but not when they’re forced to give up their sovereignty, their independence and their livelihoods.

That will lead them to turn on each other. There’s no escaping it. The EU is the sack the cats will fight in.

The EU is a monstrosity with no parallel in modern times, as evidenced in how it bulldozed the Greek economy, and in how it allowed many hundreds of promising young lives to drown in the Mediterranean, and you Britons want to not just belong to that monstrosity, you’re willing to fight one another over the privilege?

I’m afraid I don’t get it.

 

 

 

Jun 262016
 
 June 26, 2016  Posted by at 8:57 am Finance Tagged with: , , , , , , ,  2 Responses »
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NPC Dedication of Francis Asbury statue, Washington, DC 1924

Cameron Has Snookered Boris On Brexit, Article 50 (G.)
Brexit: ‘Half’ Of Labour Shadow Cabinet Set To Resign (BBC)
How David Cameron -And Jeremy Corbyn- Blew It (Pol.)
Brexit Is A Bear Stearns Moment, Not A Lehman Moment (Hunt)
Why the UK Said Bye Bye to the EU (Escobar)
Brexit ‘Perfect Storm’ For South Africans Overloaded With Debt (Fin24)
The Other Side To The UK’s Housing Crisis (O.)
Revolts of the Debtors: From Socrates to Ibn Khaldun (Michael Hudson)
Vital Refugee Centre On Lesbos Forced To Close (Mirror)

A reader’s comment at the Guardian. Interesting.

Cameron Has Snookered Boris On Brexit, Article 50 (G.)

If Boris Johnson looked downbeat yesterday, that is because he realises that he has lost. Perhaps many Brexiters do not realise it yet, but they have actually lost, and it is all down to one man: David Cameron. With one fell swoop yesterday at 9:15 am, Cameron effectively annulled the referendum result, and simultaneously destroyed the political careers of Boris Johnson, Michael Gove and leading Brexiters who cost him so much anguish, not to mention his premiership. How? Throughout the campaign, Cameron had repeatedly said that a vote for leave would lead to triggering Article 50 straight away. Whether implicitly or explicitly, the image was clear: he would be giving that notice under Article 50 the morning after a vote to leave.

Whether that was scaremongering or not is a bit moot now but, in the midst of the sentimental nautical references of his speech yesterday, he quietly abandoned that position and handed the responsibility over to his successor. And as the day wore on, the enormity of that step started to sink in: the markets, Sterling, Scotland, the Irish border, the Gibraltar border, the frontier at Calais, the need to continue compliance with all EU regulations for a free market, re-issuing passports, Brits abroad, EU citizens in Britain, the mountain of legistlation to be torn up and rewritten … the list grew and grew. The referendum result is not binding. It is advisory. Parliament is not bound to commit itself in that same direction.

The Conservative party election that Cameron triggered will now have one question looming over it: will you, if elected as party leader, trigger the notice under Article 50? Who will want to have the responsibility of all those ramifications and consequences on his/her head and shoulders? Boris Johnson knew this yesterday, when he emerged subdued from his home and was even more subdued at the press conference. He has been out-maneouvered and check-mated. If he runs for leadership of the party, and then fails to follow through on triggering Article 50, then he is finished. If he does not run and effectively abandons the field, then he is finished.

If he runs, wins and pulls the UK out of the EU, then it will all be over – Scotland will break away, there will be upheaval in Ireland, a recession … broken trade agreements. Then he is also finished. Boris Johnson knows all of this. When he acts like the dumb blond it is just that: an act. The Brexit leaders now have a result that they cannot use. For them, leadership of the Tory party has become a poison chalice. When Boris Johnson said there was no need to trigger Article 50 straight away, what he really meant to say was “never”. When Michael Gove went on and on about “informal negotiations” … why? why not the formal ones straight away? … he also meant not triggering the formal departure. They both know what a formal demarche would mean: an irreversible step that neither of them is prepared to take.

All that remains is for someone to have the guts to stand up and say that Brexit is unachievable in reality without an enormous amount of pain and destruction, that cannot be borne. And David Cameron has put the onus of making that statement on the heads of the people who led the Brexit campaign.

Read more …

Corbyn says: ‘I did all I could’. But that’s not a defense, that is a problem, if that’s all you got.

Brexit: ‘Half’ Of Labour Shadow Cabinet Set To Resign (BBC)

Up to half of the shadow cabinet is set to resign in a bid to force Labour leader Jeremy Corbyn to step down, the BBC’s Laura Kuenssberg understands. It follows the sacking of shadow foreign secretary Hilary Benn by Labour leader Jeremy Corbyn overnight. Shadow health secretary Heidi Alexander has said “with a heavy heart” that she is resigning. Mr Corbyn faces a vote of no confidence over claims he was “lacklustre” during the EU referendum. A Labour source told the BBC Mr Corbyn had “lost confidence” in Mr Benn. Mr Benn, who is to appear on the Andrew Marr Show shortly, said there was concern about Mr Corbyn’s “leadership and his ability to win an election”. He added: “There is no confidence to win the next election if Jeremy continues as leader.

“In a phone call to Jeremy I told him I had lost confidence in his ability to lead the party and he dismissed me.” The Labour party campaigned for Remain during the referendum, which saw the UK voting to leave the EU by 52% to 48% on Thursday. Ms Alexander, who joined Mr Corbyn’s shadow cabinet last year, tweeted: “It is with a heavy heart that I have this morning resigned from the shadow cabinet.” In a letter to the Labour leader, she wrote: “Our country needs an effective opposition which can hold the government to account.” The letter continued: “As much as I respect you as a man of principle, I do not believe you have the capacity to shape the answers our country is demanding and I believe that if we are to form the next government, a change of leadership is essential.”

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Blinders.

How David Cameron -And Jeremy Corbyn- Blew It (Pol.)

Jeremy Corbyn never budged. Not even Barack Obama could have convinced the Labour leader to help David Cameron make the case against Brexit. Less than a month before the historic EU referendum, the team assembled by Cameron to keep Britain in the EU was worried about wavering Labour voters and frustrated by the opposition leader’s lukewarm support. Remain campaign operatives floated a plan to convince Corbyn to make a public gesture of cross-party unity by appearing in public with the prime minister. Polling showed this would be the “number one” play to reach Labour voters. Senior staff from the campaign “begged” Corbyn to do a rally with the prime minister, according to a senior source who was close to the Remain campaign.

Corbyn wanted nothing to do with the Tory leader, no matter what was at stake. Gordon Brown, the Labour prime minister whom Cameron vanquished in 2010, was sent to plead with Corbyn to change his mind. Corbyn wouldn’t. Senior figures in the Remain camp, who included Cameron’s trusted communications chief Craig Oliver and Jim Messina, President Obama’s campaign guru, were furious. Even at more basic levels of campaigning, Labour were refusing to cooperate. The party would not share its voter registration lists with Stronger In, fearing the Tories would steal the information for the next general election. “Our data is our data,” one senior Labour source said when asked about the allegation.

In desperation, the Remain strategists discussed reaching out to the White House to intervene directly. Obama had met Corbyn during a trip to London in April, when the American president argued forcefully for Remain. They wondered: Maybe Obama could call the Labour leader and convince him to campaign with Cameron? Don’t bother, Labour aides told them. Nobody was going to coax their boss into sharing a public platform with Cameron. The idea was dropped before it reached the White House. “We can’t stand there every week and wail away at you for prime minister’s questions and then get on stage with you,” a senior Corbyn aide said at one tense meeting three weeks before the vote, according to a Remain source.

By that point in the campaign, Cameron’s team was starting to panic. Their once-comfortable polling lead, at one time around 10 percentage points, was falling. The tide seemed to turn. Remain had built its case around a sober message centered on the economic risks of a so-called Brexit from the EU. Suddenly in the final month of the race, the message was drowned out by a rancorous argument over migration.

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Would tend to agree, but there’s no reason why the same distance in time should apply.

Brexit Is A Bear Stearns Moment, Not A Lehman Moment (Hunt)

Brexit is a Bear Stearns moment, not a Lehman moment. That’s not to diminish what’s happening (markets felt like death in March, 2008), but this isn’t the event to make you run for the hills. Why not? Because it doesn’t directly crater the global currency system. It’s not too big of a shock for the central banks to control. It’s not a Humpty Dumpty event, where all the Fed’s horses and all the Fed’s men can’t glue the eggshell back together. But it is an event that forces investors to wake up and prepare their portfolios for the very real systemic risks ahead. There are two market risks associated with Brexit, just as there were two market risks associated with Bear Stearns.

In the short term, the risk is a liquidity shock, or what’s more commonly called a Flash Crash. That could happen today, or it could happen next week if some hedge fund or shadow banking counterparty got totally wrong-footed on this trade and — like Bear Stearns — is taken out into the street and shot in the head. In the long term, the risk is an acceleration of a Eurozone break-up, which is indeed a Lehman moment (literally, as banks like Deutsche Bank will become both insolvent and illiquid). There are two paths for this. Either you get a bad election/referendum in France (a 2017 event) or you get a currency float in China (an anytime event). Brexit just increased the likelihood of these Humpty Dumpty events by a non-trivial degree.

What’s next? From a game theory perspective, the EU and ECB need to crush the UK. It’s like the Greek debt negotiations … it was never about Greece, it was always about sending a signal that dissent and departure will not be tolerated to the countries that matter to the survival of the Eurozone (France, Italy, maybe Spain). Now they (and by “they” I mean the status quo politicians throughout the EU, not just Germany) are going to send that same signal to the same countries by hurting the UK any way they can, creating a Narrative that it’s economic death to leave the EU, much less the Eurozone. It’s not spite. It’s purely rational. It’s the smart move.

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“..financial services companies have flocked to London because it lets them do what they cannot do at home..”

Why the UK Said Bye Bye to the EU (Escobar)

Brexit defeated an overwhelming array of what Zygmunt Bauman defined as the global elites of liquid modernity; the City of London, Wall Street, the IMF, the Fed, the European Central Bank (ECB), major hedge/investment funds, the whole interconnected global banking system. The City of London, predictably, voted Remain by over 75%. An overwhelming $2.7 trillion is traded every day in the “square mile”, which employs almost 400,000 people. And it’s not only the square mile, as the City now also includes Canary Wharf (HQ of quite a few big banks) and Mayfair (privileged hang out of hedge funds). The City of London – the undisputed financial capital of Europe — also manages a whopping $1.65 trillion of client assets, wealth literally from all over the planet.

In Treasure Islands, Nicholas Shaxson argues, “financial services companies have flocked to London because it lets them do what they cannot do at home”. Unbridled deregulation coupled with unrivalled influence on the global economic system amount to a toxic mix. So Brexit may also be interpreted as a vote against corruption permeating England’s most lucrative industry. Things will change. Drastically. There will be no more “passporting”, by which banks can sell products for all 28 EU members, accessing a $19 trillion integrated economy. All it takes is a HQ in London and a few satellite mini-offices. Passporting will be up for fierce negotiation, as well as what happens to London’s euro-denominated trading floors.

I followed Brexit out of Hong Kong – which 19 years ago had its own Brexit, actually saying bye bye to the British Empire to join China. Beijing is worried that Brexit will translate into capital outflows, “depreciation pressure” on the yuan, and disturbance of the Bank of China’s management of monetary policy. Brexit could even seriously affect China-EU relations, as Beijing in thesis might lose influence in Brussels without British support. It’s crucial to remember that Britain backed an investment pact between China and the EU and a joint feasibility study on a China-EU free trade agreement.

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Ouch: “..most consumers owe more than 75% of their monthly salary to financial institutions..”

Brexit ‘Perfect Storm’ For South Africans Overloaded With Debt (Fin24)

Brexit does not bode well for SA consumers who are already heavily in debt and SA is on the eve of a perfect storm, which is going to affect everybody – especially the poorest of the poor, who spend more than 50% on food” cautioned Neil Roets, CEO of debt management firm Debt Rescue, on Friday. Roets said the fact that most consumers owed more than 75% of their monthly salary to financial institutions, showed just how dire the situation in SA actually is. In his view, the decision by British voters to exit the European Union is going to have far-reaching negative economic consequences for South Africa and South Africans should prepare themselves for hard times ahead.

“The United Kingdom is the biggest single investor in the SA economy and with the massive uncertainty about the actual impact of the UK leaving the EU, we can expect severe volatility in the markets and quite possibly a further slowdown in the economy,” said Roets. “This is going to have a direct impact on the workforce in the form of rising prices and possible layoffs. With the rand already under pressure, imported goods are going to significantly increase in price. These goods include things like crude oil and maize meal, which is in short supply from local growers.” Roets pointed out that virtually everything South Africans consume is transported by road and, therefore, one can expect the prices of commodities such as food to increase further still.

On top of that increases in the fuel and diesel prices are predicted. Ian Wason, CEO of DebtBusters, said on Friday Brexit could just be the last straw that breaks the back of SA consumers overloaded with debt. He pointed out that the immediate impact of the Brexit announcement saw the rand drop 6% from midnight to Friday morning at 06:30. “A vulnerable rand impacts all South Africans, but those with high levels of debt will feel it most. In addition to currency volatility, SA would have to renegotiate its trade relations with the UK, which accounts for over 25% of SA’s total trade,” said Wason.

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Intensely sad story. This is why there is a Brexit. The dismantling of the entire economy by Cameron. The referendum was the only way people could have a say.

The Other Side To The UK’s Housing Crisis (O.)

Visiting houses with estate agents, you get a sense of the place the second the door opens. You breathe it in. This particular house smelled of the woods. It was a hot day but it was cold inside and as the door shut behind us our daughter reached up quickly to be carried. The first odd thing was how the rooms were seemingly interchangeable: a bath, a chair, an empty glass. “There’s nobody actually… living here, is there?” we asked. “Doesn’t look like it!” the agent chuckled. The wires were exposed. Damp climbed the paint. The second odd thing was that all the doors were locked. It was only when one opened that we realised why: every silent room was occupied by a different tenant. People were living here, but barely.

It was when we turned to go up to the first floor (another unplugged oven, a broken window) that I saw the man’s legs. I realised immediately I was waiting for a corpse – the house was dying, it expected a corpse. So it was almost worse when I saw that he wasn’t dead; he was terrified. Fiftyish, crouched, cowering behind the bannisters, he was scared to see strangers in his house, and he was blindly pissed, or high, or ill, and he was shaking. It wasn’t until my partner quietly told him we’d leave that I realised we could. At the door we bumped into a woman with a dog. She said she was the owner’s sister. Did she know that people were living there, we asked. “Don’t worry about them,” she smoked. “They’re all on two-week contracts.”

I asked the estate agent if he was as shocked by what we’d seen as I was. “Yes,” he said. “It shouldn’t have been on for that price.” Shocking. Would we be interested in making an offer? I was a bit shaky when I got on the train. Later, I was shaky, too, when we talked about what might happen to that cowering man. We talk so much in tuts and despair about the housing crisis in London, my friends resigned to the knowledge that they’ll never afford a flat, destined to spend half their salaries on rent and be moved on at a landlord’s whim. But while I’d seen the upheaval, the lives diluted into three blue Ikea bags, I hadn’t yet seen this up close. It’s not quite homelessness; it’s not quite not.

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Hudson. Always. Good.

Revolts of the Debtors: From Socrates to Ibn Khaldun (Michael Hudson)

In Book I of Plato’s Republic (380 BC), Socrates discusses the morality of repaying debts. Cephalus, a businessman living in the commercial Piraeus district, states the typical ethic that it is fair and just to pay back what one has borrowed or received. Socrates replies that it would not be just to return weapons to a man who has turned into a lunatic. Because of the consequences, paying back the debt would be the wrong thing to do. At issue is not the micro-economic morality of paying a debt, but how this act affects society. If a madman is intent on murder, returning his weapon to him will enable him to commit unjust acts. The morality of paying back all debts is not necessarily justice. We need to take the overall consequences into account.

A similar logic may apply to today’s debate over whether Greece should pay back the IMF and ECB for the money that they have provided since 2010 to save bondholders from losses on loans (largely by French and German banks). The terms oblige the Greek government to pay in full instead of writing down debts to reflect the actual ability to pay. The IMF staff calculated repeatedly that Greece had no way of paying off these debts, so the IMF violated its own articles of agreement (and its “No More Argentinas” rule) that it should not lend to countries which, in the judgment of its research staff, have no foreseeable means to pay. IMF board members also protested to the bondholder bailout – all to no avail.

The morality of paying off the IMF and ECB is analogous to paying off the madman discussed by Socrates. At issue is what should be saved: wealthy creditors from loss (and the morality that all debts should be paid), or the overall economy from unemployment and misery leading to emigration, worse health and shorter lifespans. They have used their debt leverage to demand that Greece impose austerity, increase unemployment (now running at an enormous 25% for IV-2015 – I-2016), scale back pensions to retirees, and privatize public infrastructure to pay creditors – while running a budget surplus to suck even more money out of the economy. [..]

What really is at issue is the selfish and abusive behavior of creditors. Later in the Republic (Book VIII, 555d-556b), Socrates talks with Glaucon, pointing to the “negligence and encouragement of licentiousness in oligarchies.” Their greed, Socrates explains, inserts the parasitic “sting of their money into any of the remainder who do not resist.” The effect is to burden many Athenians with debt, to suffer foreclosure on their land and disenfranchisement, fostering “the drone and pauper element in the state.” This leaves the people (the demos) to “conspire against the acquirers of their estates and the rest of the citizens, and be eager for revolution.”

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Been following Kempson off and on. He seems a good guy. But I don’t know exactly what happened. Asked our friend Kostas, who was on Lesbos a few days last week, to contact Eric, see if he could help. Haven’t heard back yet.

Vital Refugee Centre On Lesbos Forced To Close (Mirror)

Neck deep in freezing waves, Philippa Kempson battled to pull a little boy from a sinking boat crammed with 80 people. Terrified six-year-old Mohammed, who had arrived at the Greek island of Lesbos after a perilous 1,600-mile journey from Syria, was just one of thousands of refugees Philippa and her husband Eric have helped. But now the British expat couple, who run a beachside refuge for migrants called Hope Centre, face being closed down after a ruling by local authorities. They have been told their 20-room centre – a former holiday hotel – can no longer be used to provide shelter, food or clothing. It cannot even be used as a warehouse to store supplies so everything in it has to be removed by a deadline of tomorrow.

The couple, who are also being hit with a €10,000 penalty for running a hotel without a licence, claim they are the victims of an island backlash against the migrants. They even say they have received threats on Facebook such as “There are three roads out of town, pick one” and that some locals want to “erase” them from existence. Philippa, 43, said: “The authorities are using the law on hotel licensing to seal the Hope Centre so we won’t be allowed back in. “To do this when people continue to risk their lives travelling to Europe is inhumane. “We are not running a hotel – we don’t have a functioning swimming pool or a bar. “We are a refuge offering a warm place for those arriving off the boats. “There is a loss of humanity here. It’s clear the tide is turning against the influx of refugees and some people don’t want them. “It’s a case of ‘Not in my backyard’.”

Read more …

Jun 242016
 
 June 24, 2016  Posted by at 10:16 am Finance Tagged with: , , , , , , ,  9 Responses »
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Stephen Green 18×24 inches. 2016. Acrylic on canvas. MuseumofAwesomeArt.com

Well, they did it. A majority of Britons made clear they’re so fed up with David Cameron and everything he says or does, including promoting the EU, that they voted against that EU. They detest Cameron much more than they like Nigel Farage or Boris Johnson. It seems that everyone has underestimated that.

Cameron just announced he’s stepping down. And that points to a very large hole in the ground somewhere in London town. Because going through a list of potential leaders, you get the strong impression there are none left. Not to run the country, and not to negotiate anything with Brussels. Which has a deep leadership -credibility- hole of itself, even though the incumbents are completely blind to that.

But first Britain. The Leave victory was as much a vote against Chancellor George Osborne as it was against Cameron. So Osborne is out as potential leader of the Conservatives. Boris Johnson? Not nearly enough people like him, and he fumbled his side of the Leave campaign so badly his credibility, though perhaps not being fully shot, is far too much of an uncertainty for the Tories to enter the upcoming inevitable general elections with.

Who else is there? Michael Gove? Absolute suicide. Likeability factor of zero Kelvin. That bus these guys drove around which proclaimed they could get £350 million extra a week for the NHS health care system in case of a Brexit will come back to haunt all of them. Just about the first thing Farage said earlier when the win became clear, was that the £350 million was a mistake.

I guess you could mention Theresa May, who apparently wants the post, but she’s an integral part of the Cameron clique and can’t be presented as the fresh start the party so badly needs.

 

Talking about Farage, who’s not Tory, but Ukip, he’s done what he set out to do, and that means the end of the line for him. He could, and will, call for a national unity government, but there is no such unity. He got voted out of a job today -he is/was a member of the European Parliament- and Ukip has only one seat in the British parliament, so he’s a bit tragic today. There is no place nor need for a UK Independence Party when the UK is already independent.

Then there’s Labour, who failed to reach their own constituency, which subsequently voted with Farage et al, and who stood right alongside Cameron for Remain, with ‘leader’ Jeremy Corbyn reduced to the role of a curiously mumbling movie extra. So Corbyn is out.

Shadow finance minister John McDonnell has aspirations, but he’s a firm Remain guy as well, and that happens to have been voted down. Labour has failed in a terrible fashion, and they better acknowledge it or else. But they already had a very hard time just coming up with Corbyn last time around, and the next twist won’t be any easier.

Cameron, Osborne, Corbyn, they have all failed to connect with their people. This is not some recent development. Nor is it a British phenomenon, support for traditional parties is crumbling away everywhere in the western world.

 

The main reason for this is a fast fading economy, which all politicians just try to hide from their people, but which those same people get hit by every single day.

A second reason is that politicians of traditional parties are not perceived as standing up for either their people nor their societies, but as a class in themselves.

In Britain, there now seems to be a unique opportunity to organize a movement like (Unidos) Podemos in Spain, the European Union’s next big headache coming up in a few days. Podemos is proof that this can be done fast, and there’s a big gaping hole to fill.

Much of what’s next in politics may be pre-empted in the markets. Though it’s hard to say where it all leads, this morning there’s obviously a lot of panic, short covering etc going on, fact is that as I write this, Germany’s DAX index loses 6% (-16.3% YoY), France’s CAC is down 7.7% (-18.5%) and Spain’s IBEX no less than 10.3% (-30%). Ironically, the losses in Britain’s FTSE are ‘only’ 4.5% (-11%).

These are numbers that can move entire societies, countries and political systems. But we’ll see. Currency moves are already abating, and on the 22nd floor of a well-protected building in Basel, all of the relevant central bankers in the world are conspiring to buy whatever they can get their hands on. Losses will be big but can perhaps be contained up to a point, and tomorrow is Saturday.

By the way, from a purely legal point of view, Cameron et al could try and push aside the referendum, which is not legally binding. I got only one thing on that: please let them try.

As an aside, wouldn’t it be a great irony if the England soccer (football) team now go on to win the Euro Cup? Or even Wales, which voted massively against the EU?

 

Finally, this was of course not a vote about the -perhaps not so- United Kingdom, it was a vote about the EU. But the only thing we can expect from Brussels and all the 27 remaining capitals is damage control and more high handedness. It’s all the Junckers and Tusks and Schäubles and Dijsselbloems are capable of anymore.

But it’s they, as much as David Cameron, who were voted down today. And they too should draw their conclusions, or this becomes not even so much about credibility as it becomes about sheer relevance.

Even well before there will be negotiations with whoever represents Britain by the time it happens, the Brussels court circle will be confronted with a whole slew of calls for referendums in other member states. The cat is out of Pandora’s bag, and the genie out of her bottle.

Many of the calls will come from the far-right, but it’s Brussels itself that created the space for these people to operate in. I’ve said it before, the EU does not prevent the next battle in Europe, it will create it. EC head Donald Tusk’s statement earlier today was about strengthening the union with the remaining 27 nations. As if Britain were the only place where people want out…

Holland, France, Denmark, Italy, Spain, Hungary, they will all have calls for referendums. Greece already had one a year ago. The center cannot hold. Nor can the system. If referendums were held in all remaining 27 EU member states, the union would be a lot smaller the next morning. The Unholy Union depends on people not getting a say.

The overwhelming underlying principle that we see at work here is that centralization is dead, because the economy has perished. Or at least the growth of the economy has, which is the same in a system that relies on perpetual growth to ‘function’.

But that is something we can be sure no politician or bureaucrat or economist is willing to acknowledge. They’re all going to continue to claim that their specific theories and plans are capable of regenerating the growth the system depends on. Only to see them fail.

It’s high time for something completely different, because we’re in a dead end street. If the Brexit vote shows us one thing, it’s that. But that is not what people -wish to- see.

Unfortunately, the kinds of wholesale changes needed now hardly ever take place in a peaceful manner. I guess that’s my main preoccupation right now.

 

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
Yeats