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

 

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

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

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

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

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

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

 

 

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

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

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

 

EU To Sign Defense Pact, May Allow Limited British Role

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

 

UK Labour Makes Brexit Offer to May as Future in Balance

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

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

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

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

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

 

 

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

 

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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It truly is Monty Python by now.

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

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

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

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

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

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

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

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

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

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

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

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Get in line.

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

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

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

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They’ll have to do a lot more demonstrating.

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

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

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

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That’s true in many ways.

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

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

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

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

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The shame of the EU keeps getting bigger and deeper.

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

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

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

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

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

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

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

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

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

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

 

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

 

 

As I’ve said 1000 times.

Fed Flunks Econ 101: Understanding Inflation (MW)

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

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

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

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

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

Meet The Bears Predicting Stock Market Doom (CNN)

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

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

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

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

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Chaos.

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

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

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

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All’s not well in crypto land.

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

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

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

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

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The final nail in the Made in Japan coffin.

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

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

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

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Lost skills.

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

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

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

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

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

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

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

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

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Curious legal battle.

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

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

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

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

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

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

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

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The only leftist in Europe left standing. Oh irony.

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

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

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

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

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Does Angela not like what Corbyn has to say?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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When you think money is more valuable than life.

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

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

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

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

Read more …

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

 

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

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

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

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

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

 

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

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

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

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

 

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

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

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

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

 

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

 

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

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

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

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

 

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

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

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

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

 

 

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

 

 

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

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

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

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

 

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

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

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

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

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

 

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

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

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

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

 

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

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

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

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

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

 

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

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

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

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

 

 

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

 

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

 

 

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

Propaganda-ville (Robert Parry)

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

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

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

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

Read more …

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

Trump Cannot Improve Relations With Russia (PCR)

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

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

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

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

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

Read more …

Is Muelller going to investigate Comey soon?

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

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

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

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

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

Read more …

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

Tales from the FOMC Underground (PT)

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

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

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

Read more …

Earnings vs S&P. Something will give.

Stock Market Tsunami Siren Goes Off (WS)

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

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

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

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

Read more …

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

America Is Struggling With Economic Rot (BBG)

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

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

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

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

Read more …

His advise: call a snap election.

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

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

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

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

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Hard to believe.

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

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

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

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

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

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

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

Read more …

Jun 122017
 
 June 12, 2017  Posted by at 9:42 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
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Adam West died last week. This was his phone book listing in Ketchum, ID where he lived.

 

New Economic Woes Put Theresa May Under Fresh Pressure (Tel.)
EU Threatens Year-Long Delay In Brexit Talks Over UK Negotiating Stance (G.)
Donald Trump’s State Visit To Britain Put On Hold (G.)
It’s The Calm Before A Gigantic, Horrendous Storm: David Stockman (CNBC)
The Risk To The “Bull” Thesis (Roberts)
Big Tech Stocks Under Pressure After Apple Shares Downgraded (CNBC)
China’s $5 Trillion Asset Pile Could Still Expand (BBG)
When Currencies Fall, Export Growth Is Supposed to Follow (WSJ)
Aldi Fires $3.4 Billion Shot In US Supermarket Wars (R.)
France’s Macron Set For Landslide Majority In Parliament (R.)
Naomi Klein: ‘Trump Is An Idiot, But He’s Good At That’ (G.)
Chelsea Manning Explains Why She Went to Prison for You (TAM)
Over 2,500 Migrants Rescued In Mediterranean In 2 Days, Over 50 Missing (RT)

 

 

Even the -Tory- Telegraph has turned on the ‘winner’: Another one of their headlines: “Theresa May arrogantly abandoned Thatcherism – this is her reward”.

New Economic Woes Put Theresa May Under Fresh Pressure (Tel.)

Theresa May has been hit by a series of economic blows, with consumers tightening their belts and businesses increasingly showing fears of a sharp slowdown as she attempts to cling on to power. The crucial services sector stands on the brink of a contraction, new data shows, and credit card spending has fallen for the first time in four years. High Street footfall has also gone sharply into reverse and manufacturing and construction companies in the English regions report a widespread slowdown in activity. Most of the gloomy figures published today were gathered prior to Mrs May’s disastrous snap election. It has further undermined confidence, according to the Institute of Directors (IoD). The hung parliament has triggered a massive swing towards negativity among the business leaders.

Before the election, IoD members’ net confidence, which offsets economic pessimism and optimism, was almost balanced at minus three. In the aftermath of the election it has plunged to minus 37. Businesses were increasingly ready to openly criticise Mrs May over the weekend after her interventionist manifesto failed to inspire strong public support. Stephen Martin, IoD director general, said last night: “It was disheartening that the only reference the Prime Minister made to prosperity in her Downing Street statement was to emphasise the need to share it, rather than create it in the first place.” Official figures later this week are expected to show a tightening squeeze on consumers. Economists estimate that wages grew by 2pc the year to April, down from 2.1pc a month earlier. Meanwhile inflation is expected to remain at 2.7pc, with rises to come.

Shoppers are curbing their spending in response, according to data from Visa. The credit card company said household expenditure in May was gown 0.8pc on last year, the first decline since 2013. Consumers cut back on clothing and household goods especially. Visa UK managing director Kevin Jenkins said the data “clearly shows that with rising prices and stalling wage growth, more of us are starting to feel the squeeze”.

Read more …

All Jeremy Corbyn has to do is tell Europe that he won’t feel bound by anything they negotiate with May.

EU Threatens Year-Long Delay In Brexit Talks Over UK Negotiating Stance (G.)

Theresa May is to be told the EU will take a year to draft a new mandate for its chief negotiator, Michel Barnier, effectively killing the Brexit negotiations, if she insists on discussing a future trade relationship at the same time as the UK’s divorce bill. In a sign of growing impatience with the shambolic state of the British side of the talks, senior EU sources said that if London insisted on talking about a free trade deal before the issues of its divorce bill, citizens rights and the border in Ireland were sufficiently resolved, it would be met with a blunt response. “If they don’t accept the phased negotiations then we will take a year to draw up a new set of negotiating guidelines for Barnier,” one senior EU diplomat said, adding that the EU could not understand Britain’s continued claim that it would be able to discuss trade and the divorce terms in parallel.

The EU’s 27 leaders formally agreed to give Barnier a narrow set of tasks at a summit in April and they have no intention of rethinking the so-called phased approach when they meet May at a European summit on 22-23 June. Formal Brexit talks are due to begin on 19 June, the same day as the Queen’s speech, at which point it will be known whether May has secured the support of a majority of MPs for her policy agenda. The Department for Exiting the European Union (DExEU) sent a note to the European commission on Friday evening to signal that the government was operational and pre-negotiation talks about logistics should begin this week as planned. Olly Robbins, May’s EU adviser, told his European counterparts: “The prime minister has directed that the procedures for preparing the negotiations for the formal withdrawal from the European Union should start as soon as possible.” There is some scepticism in Brussels, however, about the ability of May’s minority administration to make effective decisions.

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But they keep all their own clowns in Parliament? Government, even?

Donald Trump’s State Visit To Britain Put On Hold (G.)

Donald Trump has told Theresa May in a phone call he does not want to go ahead with a state visit to Britain until the British public supports him coming. The US president said he did not want to come if there were large-scale protests and his remarks in effect put the visit on hold for some time. The call was made in recent weeks, according to a Downing Street adviser who was in the room. The statement surprised May, according to those present. The conversation in part explains why there has been little public discussion about a visit.

May invited Trump to Britain seven days after his inauguration when she became the first foreign leader to visit him in the White House. She told a joint press conference she had extended an invitation from the Queen to Trump and his wife Melania to make a state visit later in the year and was “delighted that the president has accepted that invitation”. Many senior diplomats, including Lord Ricketts, the former national security adviser, said the invitation was premature, but impossible to rescind once made.

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“Stockman believes the S&P 500 could easily fall to 1,600, about a 34% drop from current levels.”

It’s The Calm Before A Gigantic, Horrendous Storm: David Stockman (CNBC)

If David Stockman is right, Wall Street should hunker down. “This is one of the most dangerous market environments we’ve ever been in. It’s the calm before a gigantic, horrendous storm that I don’t think is too far down the road,” he recently said on “Futures Now.” Stockman, who was director of the Office of Management and Budget under President Ronald Reagan, made his latest prediction after lawmakers grilled former FBI Director James Comey over whether President Donald Trump tried to influence the Russia investigation. “This is a huge nothing-burger, but you don’t take comfort from that. You get worried about that because the system is determined to unseat Donald Trump,” said Stockman. Stockman argues the latest drama on Capitol Hill is a distraction from the real problems facing the economy.

“If the Senate can involve itself in something this groundless, it’s just more hysteria about Russia-gate for which there is no evidence. If they can bog themselves down in this, then we have a dysfunctional, ungovernable situation in Washington,” he said, noting there are just seven weeks until lawmakers go home for the August recess. Stockman contends it’s unlikely tax reform and an infrastructure package will become reality in this environment — two business-friendly policies seen as a huge benefit to Wall Street. In fact, he warns, the country could see a government shutdown in a matter of months. A scenario like that could wipe out all of the stock market gains since the election and more, according to Stockman.

“I don’t know what Wall Street is smoking. They ought to be getting out of the casino while it’s still safe. Yet there’s this idea that since he [Trump] wasn’t incriminated, that proves that we can move on,” he said. “I think it’s crazy.” Stockman believes the S&P 500 could easily fall to 1,600, about a 34% drop from current levels. He’s made similar calls like this in the past, but they haven’t materialized. “There is nothing rational about this market. It’s just a machine-trading-driven bubble that’s nearing some kind of all-time craziness, mania,” he said.

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Buybacks again. And again.

The Risk To The “Bull” Thesis (Roberts)

Following the election, the markets began pricing in a strongly recovering economic environment driven by a wave of legislative policies. While the market has indeed advanced, the economic and fundamental realities HAVE NOT changed since the election. As noted on Friday: “Economic data is not buying it either. Headline after headline, as of late, has continued to disappoint from new and existing home sales to autos, inventories, and employment. This also puts the Fed at risk of further rate hikes this year. ‘It appears traders are losing faith in the rest of the year as the odds of a hike occurring in December is now above that of September (as both drop to around 25%). As economic data has crashed since The Fed hiked rates in March, so the markets expectations has dropped to just 1.44 rate-hikes this year (one in June guaranteed), well below The Fed’s guidance of 2 more rate-hikes minimum.’”

Another huge risk going forward, as well, is the risk to further stock buybacks to support higher EPS as the lack of legislative reforms to boost the bottom line fade. As noted by Goldman just after the election: “We expect tax reform legislation under the Trump administration will encourage firms to repatriate $200 billion of overseas cash next year. “A significant portion of returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004.” – Goldman Sachs. But it is not just the repatriation but lower tax rates that will miraculously boost bottom line earnings, but as noted from Deutsche Bank tax cuts are the key. “Every 5pt cut in the US corporate tax rate from 35% boosts S&P EPS by $5. Assuming that the US adopts a new corporate tax rate between 20-30%, we expect S&P EPS of $130-140 in 2017 and $140-150 in 2018. We raise our 2017E S&P EPS to $130.”

Maybe not so fast. Here is the problem. While you may boost bottom line earnings from tax cuts, the top line revenue cuts caused by higher interest rates, inflationary pressures, and a stronger dollar (as expected would be the result of tax reform) will exceed the benefits companies receive at the bottom line. I am not discounting the rush by companies to buy back shares at the greatest clip in the last 20-years to offset the impact to earnings by the reduction in revenues. However, none of the actions above go to solving the two things currently plaguing the economy – real jobs and real wages. Economic realities and wishful fantasies eventually reconnect and generally in the worst possible way.

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Bubble? Hell, no.

Big Tech Stocks Under Pressure After Apple Shares Downgraded (CNBC)

After a drop in big technology stocks Friday caused the Nasdaq composite to post its worst week of the year, the shares were likely to come under pressure again on Monday after Apple shares were downgraded. Mizuho Securities’ Abhey Lamba downgraded the iPhone maker to neutral from buy on Sunday, saying the best case scenario is priced into the shares. The analyst echoed a common concern of investors taking profits in big technology stocks last week. “The stock has meaningfully outperformed on a YTD basis and we believe enthusiasm around the upcoming product cycle is fully captured at current levels, with limited upside to estimates from here on out,” wrote Lamba, who cut his 12-month price target to $150, which is about one dollar above where Apple closed Friday.

A Friday selloff pushed the Nasdaq down more than 1.5% last week, but the selling was worse among the biggest stocks. Apple, Alphabet, Microsoft, Facebook and Amazon lost nearly $100 billion in market value on Friday on no specific headlines, but rather investors questioning whether valuations for the names were getting ahead of themselves. Nasdaq-100 futures were lower Sunday evening following the Apple downgrade. [..] Apple, Facebook and Amazon are still up more than 27% so far in 2017. Alphabet is up 20% and Microsoft shares are 11% higher for the year. By comparison, the S&P 500 is up more than 7% year-to-date.

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The graph indicates balance sheet change, not total numbers. Bit misleading when a $5 trillion asset pile, with the Fed at $4.5 trillion, is the topic.

China’s $5 Trillion Asset Pile Could Still Expand (BBG)

Investors who fret about when and how global central banks will run down their crisis-era balance sheets can be relaxed about the biggest of them all – China’s. Whereas the Fed’s $4.5 trillion asset pile is set to be shrunk and the ECB’s should stop growing by the end of this year as the outlook brightens, China’s $5 trillion hoard is here to stay for the time being – and could even still expand, according to the majority of respondents in a Bloomberg survey. The PBOC balance sheet is a fundamentally different beast from its global peers – run up through years of capital inflows and trade surpluses rather than hoovering up government bonds – but it still matters for the global economy. Changes in the amount of base money in the world’s largest trading nation are having a bigger impact than ever, making the variable key for stability in a year when political transition in Beijing is in the cards.

“China is more than a couple of years away from balance-sheet contraction,” said Ding Shuang, chief China economist at Standard Chartered, pointing out that the growth in the broad money supply is still behind the government’s target. The balance sheet has broadly leveled off, and contracted in the first quarter of this year, though that was mostly through seasonal factors related to liquidity operations around the Lunar New Year, when the demand for cash surges. Now, with the Fed set to raise rates this year, the PBOC is still wary of accelerating cash outflows from China and may need to use reserves to support the currency even as trade surpluses keep piling up. Most economists said they predict that the balance sheet will be around the same size or bigger by the end of the year, in the survey of 21 institutions including Bank of China, Nomura and SocGen.

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No, you don’t get inflation from a falling currency. But you just might get higher prices.

When Currencies Fall, Export Growth Is Supposed to Follow (WSJ)

For decades, economics textbooks argued that suddenly weaker currencies are a boon to growth, because they make a country’s exports more competitive or profitable on the global stage, which in turn boosts domestic production and employment. What if that theory no longer holds? Economists and government officials are increasingly wondering if that effect is diminishing, especially among advanced Western economies with shrinking manufacturing capacity and supply chains increasingly interwoven with the rest of the world. The new idea is that much of the benefit from a falling currency is offset by the higher prices paid for components imported from overseas. The U.K. is emerging as a test case for whether globalization has diminished the effect.

Although its currency has been battered by the financial crisis, the Brexit vote to leave the European Union—which took place a year ago June 23—and the country’s fresh bout of political uncertainty, its exporting power hasn’t responded as textbooks might suggest. Chemicals made at Chemoxy’s factory in Middlesbrough are worth about 20% more in the export market after last June’s fall in sterling, given the beefed-up value of the currencies used to buy those goods overseas. Higher costs for imported materials, however, all but erased that advantage. “We have a huge interdependency on international markets,” says Chemoxy Chief Executive Ian Stark. The company exports more than 60% of its products and imports about 85% of its chemical raw materials. A weaker pound, he says, “isn’t revolutionary.”

British businesses ranging from car makers to food processors to lumber mills are discovering the same thing. Adam Posen, president of the Peterson Institute for International Economics, and a member of the Bank of England’s rate-setting monetary policy committee between 2009 and 2012, says the effects of currency moves on exports have faded over time. After the financial crisis in 2008, a big sterling depreciation didn’t result in the pickup in exports “we would have expected,” he says. “You just don’t get as much bang for your pound as you used to,” said Mr. Posen. Whether or how the relationship between a currency’s strength and economic growth still holds has ramifications for international politics.

In the U.S., manufacturers have long complained about the impact of a strong dollar. President Donald Trump has accused Japan and China of keeping their currencies artificially low, hampering U.S. exports. In 1992, the pound fell by around 11% between September and the end of that year after the U.K. crashed out of the European exchange rate mechanism—a precursor to the euro that required a stronger pound than the government could sustain. The U.K. economy then went on an export tear, which turned a trade deficit into a five-year surplus and jump-started a recovery.

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“Aldi’s prices were also up to 50% lower than traditional grocery chains, a move that appeared to follow rival Lidl’s announcement on prices.”

Aldi Fires $3.4 Billion Shot In US Supermarket Wars (R.)

German grocery chain Aldi said on Sunday it would invest $3.4 billion to expand its U.S. store base to 2,500 by 2022, raising the stakes for rivals caught in a price war. Aldi operates 1,600 U.S. stores and earlier this year said it would add another 400 by the end of 2018 and spend $1.6 billion to remodel 1,300 of them. The investment, which raises Aldi’s capital expenditure to at least $5 billion so far this year, comes at a time of intense competition and disruption in the industry. German rival Lidl will open the first of its 100 U.S. stores on June 15. In May, Lidl said it would price products up to 50% lower than rivals. Wal-Mart, the largest U.S. grocer, is testing lower prices in 11 U.S. states and pushing vendors to undercut rivals by 15%. Wal-Mart, the world’s biggest retailer, is expected to spend about $6 billion to regain its title as the low-price leader, analysts said.

The furious pace of expansion by Aldi and Lidl is likely to further disrupt the U.S. grocery market, which has seen 18 bankruptcies since 2014. The two chains are also upending established UK grocers like Tesco and Wal-Mart’s UK arm, ASDA. In May, Aldi CEO Jason Hart told Reuters the chain intended to have prices at least 21% lower than rivals and would focus on adding in-house brands to win over price-sensitive customers. “We’re growing at a time when other retailers are struggling,” Hart said in a statement. Hart added that Aldi’s prices were also up to 50% lower than traditional grocery chains, a move that appeared to follow rival Lidl’s announcement on prices. The latest store expansion will create 25,000 U.S. jobs and make Aldi the third-largest grocery chain operator in the country behind Wal-Mart and Kroger, the German chain said in a statement. Aldi’s 2,500 stores would equal about 53% of Wal-Mart’s U.S. outlets.

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As I said yesterday, highly curious. When he won on May 7, just 5 weeks ago, there were no candidates, no apparatus, and no money: word was the candidates even had to pay for their own campaigns. And look now.

Note: France is still under a state of emergency.

France’s Macron Set For Landslide Majority In Parliament (R.)

French President Emmanuel Macron’s party is set for a giant majority in parliament, opinion pollsters said on Sunday after a first round of voting. According to two pollsters, his Republic On the Move (LREM) party and its ally Modem were set to win well over 400 seats in the 577-seat National Assembly. The two organisations along with others forecast he had won well over 30% of first round votes as voting closed. A poll by Elabe put the number of seats at between 415 and 445, while a poll by Kantar Sofres put it at between 400 and 445. A second round of voting will determine the actual number of seats Macron wins. The first round for the most part eliminates eliminates candidates who have gathered less than 12.5% of registered voters.

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Long interview for Naomi’s new book “No Is Not Enough”.

Naomi Klein: ‘Trump Is An Idiot, But He’s Good At That’ (G.)

The fact that Naomi Klein predicted the forces that explain the rise to power of Donald Trump gives her no pleasure at all. It is 17 years since Klein, then aged 30, published her first book, No Logo – a seductive rage against the branding of public life by globalising corporations – and made herself, in the words of the New Yorker, “the most visible and influential figure on the American left” almost overnight. She ended the book with what sounded then like “this crazy idea that you could become your own personal global brand”. Speaking about that idea now, she can only laugh at her former innocence. No Logo was written before social media made personal branding second nature. Trump, she suggests in her new book, No Is Not Enough, exploited that phenomenon to become the first incarnation of president as a brand, doing to the US nation and to the planet what he had first practised on his big gold towers: plastering his name and everything it stands for all over them.

Klein has also charted the other force at work behind the victory of the 45th president. Her 2007 book, The Shock Doctrine, argued that neoliberal capitalism, the ideological love affair with free markets espoused by disciples of the late economist Milton Friedman, was so destructive of social bonds, and so beneficial to the 1% at the expense of the 99%, that a population would only countenance it when in a state of shock, following a crisis – a natural disaster, a terrorist attack, a war. Klein developed this theory first in 2004 when reporting from Baghdad and watching a brutally deregulated market state being imagined by agents of the Bush administration in the rubble of war and the fall of Saddam Hussein. She documented it too in the aftermath of the Boxing Day tsunami in Sri Lanka, when the inundated coastline of former fishing villages was parcelled up and sold off to global hotel chains in the name of regeneration.

And she saw it most of all in the fallout of Hurricane Katrina in New Orleans, when, she argued, disaster was first ignored and exacerbated by government and then exploited for the gain of consultants and developers. Friedmanites understood that in extreme circumstances bewildered populations longed above all for a sense of control. They would willingly grant exceptional powers to anyone who promised certainty. They understood too that the combination of social media and 24-hour cable news allowed them to manufacture such scenarios almost at will. The libertarian right of the Republican party, in Klein’s words, became “a movement that prays for crisis the way drought-struck farmers pray for rain”.

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Here’s hoping Chelsea has some peace and perhaps even fun.

Chelsea Manning Explains Why She Went to Prison for You (TAM)

Chelsea Manning has given her first interview since being released from prison last month in which she explains her motivations for making public thousands of military documents. Excerpts of her interview with ABC‘s “Nightline” co-anchor Juju Chang aired Friday on the network’s “Good Morning America.” Asked about why she leaked the trove of documents, she says, “I have a responsibility to the public … we all have a responsibility.” “We’re getting all this information from all these different sources and it’s just death, destruction, mayhem.” “We’re filtering it all through facts, statistics, reports, dates, times, locations, and eventually, you just stop,” she adds. “I stopped seeing just statistics and information, and I started seeing people.” Asked by Hing what she would tell President Obama, Manning, choking up, says, “I’ve been given a chance,” she says. “That’s all I asked for was a chance.”

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Stop bombing. Start rebuilding. There is no other solution.

Over 2,500 Migrants Rescued In Mediterranean In 2 Days, Over 50 Missing (RT)

More than 2,500 migrants were rescued off the Libyan coast in the past 48 hours while attempting to cross the Mediterranean in “flimsy dinghies,” the UN refugee agency has said. At least eight people have died and dozens are feared missing. “Eight corpses have been recovered so far and at least 52 people are feared missing from two incidents involving large numbers of people on flimsy dinghies off the coast of Libya on Saturday,” Director of Europe Bureau of the UN Refugee agency (UNHCR) Vincent Cochetel said in a statement, citing the Italian Coast Guard. In all, over a dozen search-and-rescue operations, coordinated by the Italian Coast Guard, were launched over the weekend. The rescued migrants are expected to be disembarked in Italy over the next few days, the agency added.

“UNHCR applauds the rescue efforts by European government authorities, the Italian Coast Guard and NGOs, but is deeply saddened that the death toll continues to rise,” the statement reads. Over 1,770 people are estimated to have perished or gone missing while trying to cross the Mediterranean so far this year, according to agency’s estimates, while more than 50,000 migrants reached Italian shores, most of them through Libya. The death toll among migrants trying to reach Europe is believed to be much higher, according to the UNHCR, though, as many of them presumably die in the Sahara desert without even making it to the Libyan coast. The migrant death toll is expected to spike in the next few months with the beginning of summer sailing season, the agency warns. While urging to strengthen international efforts to save people attempting to cross the Mediterranean, UNHCR stated that the “solutions cannot just be in Italy.” Italy has on numerous occasions said that it does not enough resources to deal with the migrant influx from Libya.

Read more …

Jun 112017
 
 June 11, 2017  Posted by at 9:30 am Finance Tagged with: , , , , , , , , ,  4 Responses »
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Mondriaan Amaryllis 1910

 

US Weeks Away From A Recession According To Latest Loan Data (ZH)
This Super Bubble Is About to Pop (IM)
Another Spanish Bank about to Bite the Dust (DQ)
“Macron Is Shaping Up As Hyper-Presidency” (BBG)
George Osborne Says Theresa May Is A ‘Dead Woman Walking’ (G.)
Theresa May’s Premiership In Peril As Loose Alliance Agreed With DUP (G.)
UK’s May Isolated Ahead Of Brexit Talks As Key Aides Quit (R.)
The Inconvenient Truth of Consumer Debt (DDMB)
Tesla’s Market Value Zooms Past Another Car Maker (MW)
The Actual Lizard People (Connelly)
Refugee Rescue Ships Not ‘Colluding With People Smugglers’ (Ind.)
Fractal Planting Patterns Yield Optimal Harvests, No Central Control (PhysOrg)

 

 

A huge difference from the overarching narrative.

US Weeks Away From A Recession According To Latest Loan Data (ZH)

While many “conventional” indicators of US economic vibrancy and strength have lost their informational and predictive value over the past decade (GDP fluctuates erratically especially in Q1, employment is the lowest this century yet real wage growth is non-existent, inflation remains under the Fed’s target despite its $4.5 trillion balance sheet and so on), one indicator has remained a stubbornly fail-safe marker of economic contraction: since the 1960, every time Commercial & Industrial loan balances have declined (or simply stopped growing), whether due to tighter loan supply or declining demand, a recession was already either in progress or would start soon. This can be seen on both the linked chart, and the one zoomed in below, which shows the uncanny correlation between loan growth and economic recession.

And while we have repeatedly documented the sharp decline in US Commercial and Industrial loan growth over the past few months (most recently in “We Now Know “Who Hit The Brakes” As Loan Creation Crashes To Six Year Low“) as US loans have failed to post any material increase in over 30 consecutive weeks, suddenly the US finds itself on the verge of an ominous inflection point. After growing at a 7% Y/Y pace at the start of the year, which declined to 3% at the end of March and 2.6% at the end of April, the latest bank loan update from the Fed showed that the annual rate of increase in C&A loans is now down to just 1.6%, – the lowest since 2011 – after slowing to 2.3% and 1.8% in the previous two weeks.

Should the current rate of loan growth deceleration persist – and there is nothing to suggest otherwise – the US will post its first negative loan growth, or rather loan contraction since the financial crisis, in roughly 4 to 6 weeks. An interesting point on loan dynamics here from Wolf Richter, who recently wrote that a while after the 1990/1991 recession was over, the NBER determined that the recession began in July 1990, eight month after C&I loans began to stall. “As such, the current seven-month stall is a big red flag. These stalling C&I loans don’t fit at all into the rosy credit scenario. Something is seriously wrong.”

However, it wasn’t until loan growth actually contracted, that the 1990 recession was validated.  Well, the US economy is almost there again. And this time it’s not just C&I loan growth, or lack thereof, there is troubling. As the chart below shows, after peaking in late 2016, real-estate loan growth has also decelerated by nearly half, to 4.6%.

More troubling still, after flatlining at nearly double digit growth for much of 2016, starting last September there has been a sharp slowdown in commercial auto loans, whose growth is now down to just a third, or 3%, of what it was a year ago.

While it remains to be seen if C&I loans have preserved their uncanny “recession predictiveness” for yet another turn of the business cycle, the charts above confirm that the US economy is rapidly slowing, and validating the poor Q1 GDP print. Furthermore, one thing is clear: absent a substantial rebound in loan growth, whether for commercial, residential or auto loans, there is no reason to expect an imminent uptick in the US economy. We only note this, because next week the Fed plans to hike rates again. If it does so just as US loan growth contracts, it may be doing so smack in the middle of a recession.

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It’s more of a series of bubbles. But yes, Germany’s needs and demands are set to prevail over everyone else’s yet again. The EU’s inherent flaws will do it in.

This Super Bubble Is About to Pop (IM)

Right now, Italy is Europe’s weakest link. Italy has one of the most indebted governments in the world. It’s borrowed over $2.4 trillion. Its debt-to-GDP ratio is north of 130%. (For comparison, the US debt-to-GDP ratio is 104%.) But the situation is actually much worse. GDP measures a country’s economic output. However, it’s highly misleading. Mainstream economists count government spending as a positive when calculating GDP. A more honest approach would count it as a big negative. In Italy, government spending accounts for a whopping 50%-plus of GDP. Remove that from the calculation, and I suspect we’d see how hopelessly insolvent the Italian government truly is. In other words, Italy is flat broke. I don’t see how the Italian government could possibly extract enough in taxes from the productive part of the economy to ever pay back what it’s borrowed.

Meanwhile, Italian government bonds are in a super bubble. They’re currently trading near record-low yields. (When bond prices go up, bond yields do down.) Over $1 trillion worth of Italian bonds actually have negative yields. It’s a bizarre and perverse situation. Lending money to the bankrupt Italian government carries huge risks. So the yields on Italian government bonds should be near record highs, not record lows. Negative yields could not exist in a free market. They’re only possible in the current “Alice in Wonderland” economy created by central bankers. You see, the ECBhas been printing money to buy Italian government bonds hand over fist. Since 2008, the ECB and Italian banks have bought over 88% of Italian government debt, according to a recent study. This is stunning.

It means that Italy’s financial system depends completely on ECB money printing. Italian government bonds are, without a doubt, in super-bubble territory. It won’t be long before a pin pricks this bubble and… pop. That could happen soon. Earlier this month, the credit rating agency Fitch downgraded Italy’s credit rating from BBB+ to BBB. And Mario Draghi, the head of the ECB, recently announced that after five years of manic money printing, he’s finally achieved his wrongheaded goal of 2% inflation. [..] Now that the ECB has reached its 2% inflation target, Germany and other EU countries are pushing the central bank to stop printing so much money. This is the last thing the Italian government wants. Remember, the ECB buys a lot of Italian government bonds with those freshly printed euros.

If the ECB stops buying Italian government bonds, who will step up? The answer is nobody. Italian banks are already completely saturated with government bonds. Germany wants the money printing to stop. Italy wants it to continue. But, since the ECB has reached its stated inflation target and Germany has crucial elections later this year, I think Germany will get its way. This is very bad news for Italy’s government and banking system. Once the ECB—the only large buyer—steps away, Italian government bonds will crash and rates will soar. Soon it will be impossible for the Italian government to finance itself. Italian banks—which are already insolvent—will be decimated. They hold an estimated €235 billion worth of Italian government bonds. So the coming bond crash will pummel their balance sheets.

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Multiple banks. Zombies and dominoes.

Another Spanish Bank about to Bite the Dust (DQ)

After its most tumultuous week since the bailout days of 2012, Spain’s banking system is gripped by a climate of fear, uncertainty and distrust. Rather than allaying investor nerves, the shotgun bail-in and sale of Banco Popular to Santander on Tuesday has merely intensified them. For the first time since the Global Financial Crisis, shareholders and subordinate bondholders of a failing Spanish bank were not bailed out by taxpayers; they took risks in order to make a buck, and they bore the consequences. That’s how it should be. But bank investors don’t like not getting bailed out. Now they’re worrying it could happen again. As Popular’s final days showed, once confidence and trust in a bank vanishes, it’s almost impossible to restore them.

The fear has now spread to Spain’s eighth largest lender, Liberbank, a mini-Bankia that was spawned in 2011 from the forced marriage of three failed cajas (savings banks), Cajastur, Caja de Extremadura and Caja Cantabria. This creature’s shares were sold to the public in May 2013 at an IPO price of €0.40. By April 2014, they were trading above €2, a massive 400% gain. But by April 2015, shares started sinking. By May 2017, they were trading at around €1.20. But since the bail-in of Popular, Liberbank’s shares have seriously crashed as panicked investors fled. Scenting fresh blood, short sellers were piling in. On Friday alone, shares plunged another 17%. At one point, they were down 38% before bouncing at the close of trading, much of it driven by the bank’s own share buybacks:

In the last three weeks a whole year’s worth of steadily rising gains on the stock market have been completely wiped out. The main causes of concern are the bank’s high risk profile and low coverage rate. By the close of the first quarter of 2017, Liberbank’s default rate had reached 13%, over three%age points higher than the national average (9.8%), while its unproductive asset coverage rate was just 42.1%, compared to 47% for Banco Sabadell, 48% for Bankia, 50% for CaixaBank and 55% for Unicaja. Worse still, the vast bulk of the bank’s unproductive assets are real estate investments. After Popular, it is the Spanish entity with most exposure to toxic real estate assets, according to the financial daily El Confidencial — a remarkable feat given the bank already had the lion’s share of its impaired real estate assets transferred onto the balance sheets of Spain’s “bad bank,” Sareb.

[..] Banco Popular’s demise is a stark reminder that Europe’s banking woes are far from resolved, despite the trillions of euros thrown at them. “The message the market is sending is that you have to buy solvent banks and stay away from those that pose high risks,” said Rafael Alonso, an analyst at Bankinter, one of Spain’s more solvent banks. Another Spanish bank that could be considered to pose high risks is Unicaja, the product of another merger of failed cajas that is (or at least was) scheduled to launch its IPO some time in June or July. As things currently stand, the timing could not be worse. The greater the uncertainty over Liberbank’s future, the lower the projected valuation of Unicaja’s IPO falls. Before Popular’s forced bail-in and acquisition, the Unicaja was valued at around €2.3 billion; now, just days later, it’s valued at less than €1.9 billion. If the trend continues, the IPO will almost certainly be shelved.

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From literally zero to a comfortable majority in just weeks. Maybe someday we’ll learn how it was done. We may not like it. Follow the money.

“Macron Is Shaping Up As Hyper-Presidency” (BBG)

Polling stations opened across France on Sunday as voters begin electing a parliament that will determine how much power recently elected President Emmanuel Macron will actually have. If polls are to be believed, it will be a lot. The latest surveys suggest Macron’s Republic on the Move movement, or REM, will win a comfortable majority in the 577-seat National Assembly, allowing him to push through his plans to loosen French labor laws and simplify its tax system. The 39-year-old Macron was elected in May after creating a centrist political movement that took millions of votes away from the two parties that have dominated French politics for decades. During one month in office, he’s further weakened the Socialist Party and the center-right Republicans by poaching some of their leading members for cabinet positions.

“Macron is shaping up as hyper-presidency, with a very strong central authority,” said Dominique Reynie, a politics professor at Sciences Po institute in Paris. “He’s got a party that he founded and fully controls. He’s got opposition parties that risk fragmenting.” Sunday’s ballot is for 539 seats in France. Voting has already closed in 27 constituencies for France’s overseas territories and another 11 to represent French expats. Voting started at 8 a.m. Paris time and most polling booths will close at 6 p.m., though local prefects can allow voting to continue until 8 p.m. The interior ministry will release turnout figures at noon and at again at 5 p.m. In 2012, about 59% of registered voters went to the polls. Little will be settled Sunday night. Under France’s two-round system for the parliamentary elections, any candidate with more than 12.5% of the registered voters goes through to runoffs on June 18, so long as no one gets 50% on Sunday. In the previous election five years ago, only 36, or about 6%, of the constituencies were settled in the first round.

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And he’s right. I wrote that even before the election. But Osborne and Cameron have been as disastrous for the UK as May now is.

A new poll shows that elections today would see Labour at 45% and Tories at 39%.

When will people fully appreciate that Jeremy Corbyn is the one person around who does not smear and gossip and play personal petty politics?

George Osborne Says Theresa May Is A ‘Dead Woman Walking’ (G.)

George Osborne has called Theresa May “a dead woman walking” and suggested the prime minister would be forced to resign imminently. The former chancellor said the campaign had undone the work of himself and former prime minister David Cameron in winning socially liberal seats such as a Bath, Brighton Kemptown and Oxford East, now lost to Labour and the Lib Dems. “She is a dead woman walking and the only question is how long she remains on death row,” the editor of the Evening Standard said, defending his paper’s attacks on May as speaking from a “socially liberal, pro-business, economically liberal position” that he said had been consistent as editor and chancellor. Speaking on the BBC’s Andrew Marr show, Osborne said he and Cameron had spent “years getting back to office, winning in seats like Bath and Brighton and Oxford and I am angry when we go backwards and I am not afraid to say that”.

Political strategist Lynton Crosby, blamed by May’s advisers for an overly negative, presidential-style campaign with robotic slogans, had been undermined by the prime minister’s own flaws, Osborne said. “They are professionals,” he said, blaming May’s “failure to communicate and a disastrous manifesto”. Osborne said blame should be on the shoulders of May, though her advisers Nick Timothy and Fiona Hill resigned on Saturday. “You can’t just blame the advisers. The only person who decides to have an election is the prime minister, the person who decides what’s in the manifesto is the prime minister.” He said the party had been furious with May on her return to Downing Street when she gave a speech that failed to acknowledge party colleagues who had lost their seats, including ministers. “The Tory party was absolutely furious that Theresa May failed to acknowledge the loss and suffering of many MPs,” he said.

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The DUP is a fatally flawed option. May has signed her own political death warrant. Bloomberg: “Theresa May could reportedly face a leadership challenge as soon as Tuesday”

Theresa May’s Premiership In Peril As Loose Alliance Agreed With DUP (G.)

Theresa May’s plan for a loose alliance with the Democratic Unionists to prop up her government was thrown into confusion last night after the Northern Ireland party contradicted a No 10 announcement that a deal had been reached. A Downing Street statement on Saturday said a “confidence and supply” agreement had been reached with the DUP and would be put to the cabinet on Monday. But the DUP last night put the brakes on that announcement, saying talks were continuing, not finalised. The DUP leader, Arlene Foster, said “discussions will continue next week to work on the details and to reach agreement on arrangements for the new parliament”. Following talks between May and the DUP last night, a second statement from No 10 clarified that no final deal had been reached.

[..] The Observer has learned that the DUP was planning to dodge a row when negotiations began by avoiding the inclusion of any controversial social policies, such as opposition to gay marriage or abortion, in its so-called “shopping list” of demands to the Tories. Party sources said it would be seeking commitments from May that there would be no Irish unity referendum and no hard border imposed on the island of Ireland. However, some Tories remained concerned that a pact would damage a brand they have spent years trying to detoxify. “More and more colleagues are becoming distinctly uneasy about the idea of a formal pact with the DUP,” said one senior Conservative. “It is up to the DUP if they want to support a Conservative government and vote for various measures that we put through, but there is a feeling that we are damaged if we are seen to be entering into a formal agreement with a party whose views on a number of things we just don’t share.

“Why should we damage what we painstakingly built up through David Cameron’s work on personal issues, and indeed what the prime minister’s own instincts are, with any form of formal linkage with people who plainly have some views that the vast majority of Conservative MPs would not share?” Nicky Morgan, an education secretary under David Cameron, said: “As a former minister for women and equalities, any notion that the price for a deal with the DUP is to water down our equalities policies is a non-starter.” An online petition calling for May to resign rather than form a coalition with the DUP had attracted more than 500,000 signatures Saturday night. The DUP is opposed to abortion and same-sex marriage. It has also appointed climate change sceptics to senior posts within the party.

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The Tories need internal cleansing even more than Labour.

UK’s May Isolated Ahead Of Brexit Talks As Key Aides Quit (R.)

British Prime Minister Theresa May secured a deal on Saturday to prop up her minority government but looked increasingly isolated after a botched election gamble plunged Britain into crisis days before the start of talks on leaving the EU. Her Conservatives struck an outline deal with Northern Ireland’s Democratic Unionist Party (DUP) for support on key legislation. It was a humiliating outcome after an election that May had intended to strengthen her ahead of the Brexit push. Instead, voters stripped the Conservatives of their parliamentary majority. As May struggled to contain the fallout, her two closest aides resigned. Newspapers said foreign minister Boris Johnson and other leading party members were weighing leadership challenges. But Johnson said he backed May.

May called the early election in April, when opinion polls suggested she was set for a sweeping win. May’s aides, Nick Timothy and Fiona Hill quit on Saturday following sustained criticism within the party of the campaign. Gavin Barwell was named new chief of staff. The Conservative lawmaker who lost his seat on Thursday and has experience working as a party enforcer in parliament. The change was unlikely to significantly quell unrest within the party. Most of May’s cabinet members have kept quiet on the issue of her future, adding to speculation that her days as prime minister are numbered. A YouGov poll for the Sunday Times newspaper found 48% of people felt May should quit while 38% thought she should stay. [..] Britain’s largely pro-Conservative press questioned whether May could remain in power.

The Sun newspaper said senior members of the party had vowed to get rid of May, but would wait at least six months because they feared a leadership contest could propel the Labour party into power under Jeremy Corbyn, who supports renationalization of key industries and higher taxes for business and top earners. Survation, the opinion polling firm that came closest to predicting correctly the election’s outcome, said a new poll it conducted for the Mail on Sunday newspaper showed support for Labour now 6%age points ahead of the Conservatives. “She’s staying, for now,” one Conservative Party source told Reuters. Former Conservative cabinet minister Owen Paterson, asked about her future, said: “Let’s see how it pans out.”

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“Sometime between now and Armageddon, interest rates will go up..”

The Inconvenient Truth of Consumer Debt (DDMB)

Oh, but for the days the hawks had a hero in Sydney. Against the backdrop of a de facto currency war, the Reserve Bank of Australia stood as a steady pillar of strength. The RBA held the line on interest rates, maintaining a floor of 2.5%, even as its global central bank peers drove rates to the zero bound and beyond into negative territory. The abrupt end to the commodities supercycle drove the RBA to join the global currency war. The mining-dependent nation’s economy was so debilitated that policy makers felt they had no choice but to ease financial conditions. In February 2015, after an 18-month honeymoon, the RBA reduced its official rate to 2.25%, marking the start of a cycle that ended last August with the fourth cut to a record low of 1.5%. The Bank of Canada has taken a similar journey in recent years.

It embarked upon a mild tightening campaign in 2010 that raised the overnight loan rate from a record low of 0.25% to 1% in September 2010. The bank maintained that level until early 2015. Two weeks before the RBA’s first cut, the Bank of Canada lowered rates to 0.75%. The January move, which shocked the markets, was followed in July 2015 with an additional ease to 0.5%, where it remains today. Bank of Canada Governor Stephen Poloz, who replaced Mark Carney after he departed to head the Bank of England, explained the moves as necessary to counter the downside risks to inflation emanating from the oil price shock to the country’s economy. Two resource-rich economies reacting similarly to body blows is intuitive enough. They eased the pressure on their given economies. How they’ve landed in their current predicaments is less easy to explain.

Propelled by soaring home prices from Sydney to Toronto to Melbourne to Vancouver, Australia’s household debt-to-income has hit a record 190%, the highest among developed nations; it is trailed closely by Canada, which has a 167% ratio. To put this in perspective, at the peak of the housing bubble, debt-to-income in the U.S. peaked at 130%. Then, economists took perverse pleasure in squelching the alarm these frightening figures elicited. “It’s not the level of debt that matters, it’s the cost to service that debt.” Is it a surprise that economists today are equally dismissive of households’ heavy debt burdens? Mortgages take a lifetime to expunge; incomes flow in every year. That myopic mindset best captures the shackles that bind today’s global economy. Of course it’s acceptable to build infinitely high levels of debt – as long as rates never rise.

But then there’s the inconvenient truth that when the price of the collateral backing those millions of subprime mortgages cratered, those irrelevant debt loads became relevant overnight. The same can be said of today’s delicate dynamic. Australia and Canada will be just fine so long as they don’t suffer a shock in any form to their respective economies. Some policy makers have begun to push back against the conventional stupidity. “Sometime between now and Armageddon, interest rates will go up,” warned Australia’s Treasury Secretary John Fraser on May 30. “That’s something people need to be mindful of.” Bear in mind that household debt has been growing at multiples of income, a disconnect that can only exist in a wonderland of permanently low interest rates.

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Tesla sold less than 84,000 cars in 2016. VW sold 10 million. Guess which is worth more? Time to get free money out of the way, because it only serves to distort valuation, economies and societies.

Tesla’s Market Value Zooms Past Another Car Maker (MW)

Tesla on Friday became the world’s No. 3 car maker by market capitalization, surpassing Germany’s BMW and getting further ahead of U.S. competitors General Motors and Ford. Tesla’s market value now stands at $59.7 billion. The two car makers it has yet to surpass are Toyota, which is still a ways off at $172 billion, and Daimler at $78 billion. Tesla stock has hit a string of records in the past two months, and was slated to hit another closing all-time high on Friday. It reached a closing record of $370 on Thursday, and traded as high as $376.87 on Friday.

The meteoric stock rise pushed Tesla’s market cap to surpass Ford’s and GM’s in April. Tesla sold nearly 84,000 cars in 2016, up 64% from the previous year. The company has set a goal to be able to make cars at an annual rate of 500,000 a year by the end of 2018. The top auto makers by vehicles produced are Volkswagen and Toyota, each of which make about 10 million of the 90 million vehicles produced world-wide, according to the International Organization of Motor Vehicles Manufacturers. Tesla shares are up more than 73% so far this year. That compares with gains of approximately 9% for the S&P 500. The stock has gained more than 62% over the past 12 months, more than four times the gains for the benchmark.

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This is a history lesson that’s part of a longer piece on neo-liberalism and the Shock Doctrine.

The Actual Lizard People (Connelly)

The Mont Pelerin Society was created on 10 April 1947 at a conference organised by the economist Friedrich von Hayek and Swiss businessman Albert Hunold. (By the end of the conference, Hunold would be appointed secretary. He also became editor-in-chief of The Mont Pelerin Quarterly magazine). The Society was basically a union for the rich and powerful, which boasted Prime Ministers and Presidents, journalists, European and American aristocracy, economists, business people, authors and academics. It was backed and funded by The (New York) Foundation for Economic Education, and the William Volker Fund based in Kansas City which provided subsidies. Credit Suisse, then known as The Schweizerische Kreditanstalt, paid for almost all the conference costs.

As the cigar-smoke, whiskey and heady self-righteousness swilled around the ballroom lights, Hayek joined with Milton Friedman and their luminaries, including Austrian-American economist, Ludvig von Mises and noted Austrian-British philosopher, Karl Popper to form a small, exclusive club of free-marketeers, devoted to remaking the world in its image. That night began the systematic deconstruction of Roosevelt’s New Deal which, ironically, was responsible for the greatest expansion of the American middle class up until that point, according to historian Jason A Schwarz which in turn helped bolster middle-class wealth in allied nations. The wealth created during the New Deal endowed three generations with financial and social mobility, the riches that were still being spent and created in the 60s, 70s and 80s, at the cost of a fraction of the wealth of the world’s millionaires and billionaires.

The infrastructure built during the New Deal, cracking and creaking, is in use to this day. The Mont Pelerin group would draft a ten-point statement of aims which claimed “independent freedom can be preserved only in a society in which an effective competitive market is the main agency for the direction of economic activity.” The 10 point statement of aims concludes with: “Complete intellectual freedom is so essential to the fulfillment of our aims that no consideration of social expediency must ever be allowed to impair it”. The decisions made in that Swiss Hotel in 1947 was the formalisation of a long running class war that is still being fought today. Initially their progress was slow. They were in such a defensive mode, they achieved little that was tangible during the 50s and 60s, beyond an attack on the then dominant Neo-Keynesian economic management.

Their first opportunity to take back real power, and shift the world towards the capitalism of the 1920s and earlier decades, came with the US-inspired overthrow of the Allende Government in Chile on September 11th, 1973 which saw hundreds killed, 200,000 people exiled, and many more tortured, kidnapped and disappeared. It is often referred to as the first 9/11. It is estimated more than 10,000 people were killed under Pinochet’s regime. Mass Chilean unemployment persisted for years after Pinochet cut government spending by 27%, with education and health hit hardest, while adopting a “pro-business package” and a move towards “complete free trade” which removed “as many obstacles as possible that now hinder the private market”.

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Another crazy narrative that must be halted. The blame lies in Brussels, not with people trying to prevent other people from drowning.

Refugee Rescue Ships Not ‘Colluding With People Smugglers’ (Ind.)

Humanitarian ships rescuing refugees in the Mediterranean Sea are not acting as a “pull factor” driving increasing refugee boat crossings or “colluding” with smugglers, research has found. A report by the Forensic Oceanography department at Goldsmiths, University of London, rejected a “toxic narrative” seeking to blame NGOs for the worsening crisis. Experts dismantled allegations made by agencies such as Frontex and leading European politicians, who claimed charities were encouraging smugglers to use more dangerous tactics on the treacherous passage between Libya and Italy. The Blaming the Rescuers report’s author, Lorenzo Pezzani, said: “The evidence simply does not support the idea that rescues by NGOs are to blame for an increase in migrants crossing.

“The argument against NGOs deliberately ignores the worsening economic and political crisis across several regions in Africa that has driven up the numbers of crossings in 2016. “The violence against migrants in Libya is so extreme that they attempt the sea crossing with or without search and rescue being available.” The United Nations has documented “slave auctions” where African migrants are openly bought and sold in the war-torn country, as well as endemic rates of rape, abuse, torture and forced labour. Despite the dire situation, the EU has been giving funding, training and equipment to the Libyan coastguard in efforts to turn back migrant boats and prevent the crossings. Humanitarian groups, which have documented the coastguard abusing migrants and attacking their ships, say forcing refugees from international waters back into Libya is a violation of international law.

[..] The Goldsmiths report also placed partial blame on the EU’s Operation Sophia mission, which had a “major impact on smugglers’ tactics” by intercepting and destroying larger and safer wooden boats. “The Libyan coastguard’s use of violence when intercepting vessels also affected smugglers’ tactics and at times led to boats capsizing, endangering everyone on board,” it added. It concluded that those blaming NGOs are choosing to ignore the role other actors, including EU agencies and national governments, have played in making migrant crossings more dangerous. “We believe that the toxic narrative falsely claiming that NGO search and rescue is to blame for the migrant crossing situation is part of a worrying tendency to criminalise solidarity initiatives towards migrants,” Mr Pezzani said.

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Wonderful. I think, however, that saying it contradicts the Tragedy of the Commons is a bridge too far. Because these people do choose what’s best for themselves.

Fractal Planting Patterns Yield Optimal Harvests, No Central Control (PhysOrg)

Bali’s famous rice terraces, when seen from above, look like colorful mosaics because some farmers plant synchronously, while others plant at different times. The resulting fractal patterns are rare for man-made systems and lead to optimal harvests without global planning. To understand how Balinese rice farmers make their decisions for planting, a team of scientists led by Stephen Lansing (Nanyang Technological University) and Stefan Thurner (Medical University of Vienna, Complexity Science Hub Vienna, IIASA, SFI), both external faculty at the Santa Fe Institute, modeled two variables: water availability and pest damage. Farmers that live upstream have the advantage of always having water; while those downstream have to adapt their planning on the schedules of the upstream farmers.

Here, pests enter the scene. When farmers are planting at different times, pests can move from one field to another, but when farmers plant in synchrony, pests drown and the pest load is reduced. So upstream farmers have an incentive to share water so that synchronous planting can happen. However, water resources are limited and there is not enough water for everybody to plant at the same time. As a result of this constraint, fractal planting patterns emerge, which yield close to maximal harvests. “The remarkable finding is that this optimal situation arises without central planners or coordination. Farmers interact locally and take local individual free decisions, which they believe will optimize their own harvest. And yet the global system works optimally,” says Lansing.

“What is exciting scientifically is that this is in contrast to the tragedy of the commons, where the global optimum is not reached because everyone is maximizing his individual profit. This is what we are experiencing typically when egoistic people are using a limited resource on the planet, everyone optimizes the individual payoff and never reach an optimum for all,” he says. The scientists find that under these assumptions, the planting patterns become fractal, which is indeed the case as they confirm with satellite imagery. “Fractal patterns are abundant in natural systems but are relatively rare in man-made systems,” explains Thurner. These fractal patterns make the system more resilient than it would otherwise be. “The system becomes remarkably stable, again without any planning—stability is the outcome of a remarkably simple but efficient self-organized process. And it happens extremely fast. In reality, it does not even take ten years for the system to reach this state,” Thurner says.

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Jun 102017
 
 June 10, 2017  Posted by at 9:22 am Finance Tagged with: , , , , , , , , ,  3 Responses »
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Marshall Hirsh Rue de Steinkerque, Paris 1950

 

Central Banks Have Bought A Record $1.5 Trillion In Assets In 2017 (ZH)
Central Banks Are Poised to Start Rowing in One Direction Again (BBG)
US Household Net Worth Climbs to Record $94.8 Trillion (WSJ)
Trump Lawyer Doubles Down On Comey Perjury Accusation (ZH)
Britain’s Credit Rating At Risk After General Election Outcome (RT)
Jeremy Corbyn: 1, British Mainstream Media: 0 (McDonald)
Tories turn on Theresa (G.)
Who is the DUP? A Brief History of UK Parliament’s New Kingmaker (RT)
5 Things To Know About DUP Politicians And Science (New Scientist)
Without Glass-Steagall America Will Fail (PCR)
Breaking Up the Banks Is Easier Than You Might Think (Nomi Prins)
Australian Households’ Share Of National Economic Pie Nears 50-Year Low (G.)
How Germany’s Three-Tiered Banking System Works (HandelsBlatt)
Greek Pensions Not Enough To Cover Costs Of Medicines, Bills And Food (K.)

 

 

The crime of our times. There’s nobody to stop it.

Central Banks Have Bought A Record $1.5 Trillion In Assets In 2017 (ZH)

One month ago, when observing the record low vol coupled with record high stock prices, we reported a stunning statistic: central banks have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, “the largest CB buying on record” according to Bank of America. Today BofA’s Michael Hartnett provides an update on this number: he writes that central bank balance sheets have now grown to a record $15.1 trillion, up from $14.6 trillion in late April, and says that “central banks have bought a record $1.5 trillion in assets YTD.”

The latest data means that contrary to previous calculations, central banks are now injecting a record $300 billion in liquidity per month, above the $200 billion which Deutsche Bank recently warned is a “red-line” indicator for risk assets.

This, as we said last month, is why “nothing else matters” in a market addicted to what is now record central bank generosity. What is ironic is that this unprecedented central bank buying spree comes as a time when the global economy is supposedly in a “coordinated recovery” and when the Fed, and more recently, the ECB and BOJ have been warning about tighter monetary conditions, raising rates and tapering QE. To this, Hartnett responds that “Fed hikes next week & “rhetorical tightening” by ECB & BoJ beginning, but we fear too late to prevent Icarus” by which he means that no matter what central banks do, a final blow-off top in the stock market is imminent. He is probably correct, especially when looking at the “big 5” tech stocks, whose performance has an uncanny correlation with the size of the consolidated central bank balance sheet.

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There are actually still people who claim central banks have solved problems. They only made them worse, but with a time-lag.

Central Banks Are Poised to Start Rowing in One Direction Again (BBG)

[..] The shift has been gradual and often subtle, yet it marks a sea change. Largely in unison, central banks employed unprecedented, unconventional easing to force their economies back into gear after the global financial crisis spurred widespread unemployment and a decade of sub-par growth. In many, that involved large-scale asset purchase programs. In the euro area and Japan, it included negative rates. The Fed has been reducing accommodation on its own since December 2015. Now, others are beginning to discuss unwinding their policies, restoring a sense of togetherness. “We’re talking about a change from a situation where the central banks were basically pedal to the metal, full throttle, as much monetary stimulus as you could conceivably do,” said Jacob Funk Kirkegaard at the Peterson Institute for International Economics.

“Now, central banks in advanced economies are reacting to a recovering economy.” As hiring hums along and central banks tip-toe toward the exit, the Fed stands to benefit. The dollar has seen upward pressure as the U.S. central bank hikes and other monetary authorities ease, and a strong greenback means cheaper imports and lower inflation. The Fed’s preferred price index continues to undershoot its 2 percent goal. “You don’t want it falling out of bed, but dollar depreciation would lead to higher inflation in the U.S.,” Bryson said. “Frankly, I think the Fed wouldn’t be that unhappy to see higher inflation.” The change is also good news for the nations turning toward the exit, as it signals that business confidence is picking up, more people are working, and the specter of another economic dip is fading from view. “None of the big global central banks is looking to loosen policy,” said Andrew Kenningham at Capital Economics in London. “What has changed is that the fear of outright deflation, or entrenched low inflation, has now faded.”

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That’s not worth or wealth. That’s a bubble.

US Household Net Worth Climbs to Record $94.8 Trillion (WSJ)

The total net worth of U.S. households climbed by $2.3 trillion in the first quarter of 2017, reaching a record $94.8 trillion as the stock market soared and home prices climbed in many parts of the country. Household wealth in the stock market climbed by $1.3 trillion in the quarter, showing just how much the market’s climb to Dow 20000 and beyond has created a swell of wealth on American’s investment statements that is helping underpin consumer confidence. The figures are from a quarterly Federal Reserve report, known as the Flow of Funds, that tracks the aggregate wealth of all U.S. households and nonprofit organizations.

The report showed that the value of household real estate rose by about $500 billion in the quarter, reflecting a continuing increase in national home prices. The sum Americans held in savings accounts rose by about $100 billion in the quarter. Household debts increased by about $46 billion in the quarter. The $2.3 trillion increase, though large, isn’t without precedent. Such large increases were seen in the late 1990s when the stock market was also climbing rapidly, and in 2004 when both markets and home prices were climbing. The last time wealth increased so rapidly was late 2013.

During the 2007-09 recession, when the housing market and stock market both fell, households lost nearly $12 trillion in wealth. But in recent years, households in aggregate have regained that wealth and more as first the stock market, and then the housing market, began to rebound. The U.S. has about 126 million households, meaning the average net worth of U.S. households is about $750,000. The report provides no details of how that wealth is distributed between households. The figures aren’t adjusted for inflation.

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Always risky to tangle with top lawyers.

Trump Lawyer Doubles Down On Comey Perjury Accusation (ZH)

Yesterday, the Twittersphere lit up when Julie Davis of the New York Times sent out a tweet suggesting that Trump’s personal attorney, Marc Kasowitz, had potentially made a serious blunder in mixing up his timeline of when Comey first leaked details of his meetings with Trump to the Times. Here is what Kasowitz said yesterday: Although Mr. Comey testified he only leaked the memos in response to a tweet, the public record reveals that the New York Times was quoting from these memos the day before the referenced tweet, which belies Mr. Comey’s excuse for this unauthorized disclosure of privileged information and appears to entirely retaliatory. Davis, and most of the media, assumed that Kasowitz was referring to an article published on May 16th by the New York Times entitled “Comey Memo Says Trump Asked Him to End Flynn Investigation.”

Of course, given that Trump’s tweet about the Comey tapes was sent 4 days prior, it couldn’t have possibly been triggered by the the NYT’s May 16th story, as Kasowitz suggested, which led Ms. Davis of the Times to publish her ‘gotcha’ tweet. Unfortunately for Davis and the New York Times, Kasowitz has just released a clarifying statement which points out that he was never referring to the May 16th article in his statement yesterday, but rather an article published on May 11, the day before Trump’s tweet, entitled “In a Private Dinner, Trump Demanded Loyalty. Comey Demurred,” which seems to discuss, in detail, the same facts presented in Comey’s now infamous memos. Here is the full statement from Kasowitz:

Statement of Marc Kasowitz, Attorney to President Donald J. Trump:

“Numerous press stories have misreported that our statement yesterday incorrectly claimed that the New York Times was reporting details from Mr Comey’s memos the day before President Trump’s May 12, 2017 Tweet because, according to these reports, the first New York Times story to mention the memos specifically was May 16, 2017, which was after the Tweet. Our statement was accurate and was not referring to the May 16, 2017 story. Rather, Mr. Comey’s written statement, which he testified he prepared from his written memo, describes the details of the January dinner in virtually verbatim language as the New York Times May 11, 2017 story describing the same dinner. That story was the day before President Trump’s Tweet. It is obvious that whomever was the source for the May 11, 2017 New York Times story got that information from the memos or from someone reading or who had read the memos. This makes clear, as our statement said, that Mr Comey incorrectly testified that he never leaked the contents of the memo or details of the dinner before President Trump’s May ’12. 2017 Tweet.”

Meanwhile, a quick review of the New York Times’ May 11 story does seem to suggest that Kasowitz has a point as the language describing Trump’s January dinner with Comey is almost identical to the testimony he presented to Congress yesterday. Therefore, whoever supplied this ‘leak’ to the NYT’s was either in possession of Comey’s memos or had been read them verbatim shortly before they were relayed to the Times.

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A world of pain.

Britain’s Credit Rating At Risk After General Election Outcome (RT)

International rating agencies, closely monitoring the situation in the UK, have warned the country’s creditworthiness faces a downgrade after the Conservative Party’s failure to win a majority in Thursday’s general election. According to the agencies, the UK’s election result could delay negotiations with the European Union over its exit from the bloc and throws the future path of its economic policy into doubt. “In our view, the lack of a majority for any party is likely to delay Brexit negotiations, scheduled to start very soon,” said S&P in a statement, adding it doesn’t “exclude the possibility of another snap election.” “These considerations are reflected in our current negative outlook on the long-term ratings,” added the agency. S&P currently rates the UK at AA, with a negative outlook. The country was stripped of its triple-A rating immediately after the Brexit referendum last year. The negative outlook means Britain is at risk of future downgrades.

S&P’s sovereign chief ratings officer Moritz Kraemer told CNBC the assessment will depend “pretty much on the further outcome of the Brexit negotiations and the reality that the UK will face outside the EU, which is still uncertain.” Brexit negotiations are supposed to begin in less than two weeks. The UK holds the second highest rating Aa1 from another agency, Moody’s. It had held the rating since 2013 when it was downgraded from AAA due to sluggish growth prospects and fiscal challenges. The agency’s lead UK sovereign analyst Kathrin Muehlbronner said on Friday, “Moody’s is monitoring the UK’s process of forming a new government and will assess the credit implications in due course.” “As previously stated, the future path of the UK sovereign rating will be largely driven by two factors: first, the outcome of the UK’s negotiations on leaving the EU and the implications this has for the country’s growth outlook. Second, fiscal developments, given the country’s fiscal deficit and rising public debt,” she said.

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Very much the Guardian too.

Jeremy Corbyn: 1, British Mainstream Media: 0 (McDonald)

From it’s “The Sun Wot Won It” to a vacuum. The Labour Party’s surge this Thursday spells the end of the popular press’ ability to manipulate the outcome of elections. It also proves the relevance of alternative media in the internet age. It was June, 2015. And RT UK’s Afshin Rattansi was interviewing a man in a beige blazer about his unlikely bid to lead British Labour. His name was Jeremy Corbyn, and he spoke a lot of sense. Too much of it to win the leadership contest, it immediately appeared. Over the following weeks, Corbyn’s support increased, and the Labour-leaning mainstream media became more-and-more opposed to his candidacy. Particularly the Guardian, a newspaper which professes to be a leftist organ, but, in reality, will always favor liberal causes over those affecting the poor. [..] Here’s a selection of Guardian comment headlines from the past 24 months or so.

30 July 2015 – Michael White – “If Labour elects Jeremy Corbyn as leader, it will be the most reckless move since choosing the admirable but unworldly pacifist, George Lansbury, in 1932.”

25 June 2016 – Polly Toynbee – “Dismal, spineless, Jeremy Corbyn let us down again.”

28 June 2016 – Editorial – “The question is no longer whether his (Corbyn’s) leadership should end because at Westminster it already has. The challenge for the Labour left is to rescue something from it.”

14 December 2016 – Rafael Behr – “Jeremy Corbyn may be unassailable, but he is not leading Labour.”

11 January 2017 – Suzanne Moore – “Labour’s Corbyn reboot shows exactly why he has to go.”

1 March 2017 – Owen Jones – “Jeremy Corbyn says he is staying. That’s not good enough.”

5 May 2017 – Jonathan Freedland – “No more excuses: Jeremy Corbyn is to blame for this meltdown.” (almost a month before polling day).

Also, 5 May 2017 – Nick Cohen – “Corbyn & (John) McDonnell could limit a Tory landslide by resigning now. That they would rather die, shows the far left is an anti-Labour movement.” (ditto)

And let’s not forget The New Statesman, where Jason Cowley suggested, only on Tuesday, that Corbyn could be leading his party to “its worst defeat since 1935.” Two days before he delivered Labour’s biggest vote share increase since 1945.

And that was the election where Labour’s greatest ever chief, Clement Attlee, stunned a victorious Winston Churchill in the aftermath of World War Two. Or Cowley’s colleague, George Eaton, who told us in March: “Jeremy knows he can’t do the job…. senior figures from all parties discuss the way forward: a new Labour leader, a new party or something else?” Also, worth a mention in this social media era, are Twitter “freelancers” like the author JK Rowling. In September of last year, she described Corbyn as “Utterly deluded,” saying “I want a Labour govt (sic), to help people trapped where I was once trapped. Corbyn helps only Tories.”

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Turning on a dime. Lust for power does that.

Tories turn on Theresa (G.)

Theresa May is fighting for her future as prime minister, according to Britain’s newspapers, which have issued damning verdicts on the Conservatives’ failure to win a majority in the general election. The Sun and the Daily Mail, which heavily supported May and criticised Jeremy Corbyn in the runup to the election, said senior Conservatives had turned on the prime minister and that she could be forced to step down within six months. The Sun’s front page headline, over a photo of May eating chips, was “She’s had her chips”, while the Daily Mail said, “Tories turn on Theresa”. The Mail described the prime minister’s election campaign as “disastrous” and said the Conservatives had been “plunged into civil war”.

The Daily Telegraph and the Times, which, like the Sun and Mail, supported the Conservatives before the election, also warned that May’s future was at risk. The Times’ front page said: “May stares into the abyss.” The Guardian, which backed Labour, said May and the Conservatives had gone from “hubris to humiliation” during the election campaign. May was also criticised for looking to strike a deal with the DUP of Northern Ireland in order to form a government. The Daily Mirror accused May of forming a “Coalition of crackpots” and pointed out that the Northern Irish party opposes gay marriage and abortion. May’s setback will raise questions about the influence of newspapers on the electorate, given that the majority strongly backed her and the Conservatives.

The Guardian reported last week that some of the most shared articles on social media about the general election were from partisan blogs such as Another Angry Voice, The Canary and Evolve Politics, which backed Labour. The Sun had urged its readers not to “chuck Britain in the Cor-bin” in its last edition before the election, provoking a backlash on social media, while on Wednesday the Daily Mail devoted 13 pages to attacking Labour, Corbyn, Diane Abbott and John McDonnell under the headline “Apologists for terror”. The Sun is owned by Rupert Murdoch’s News Corp. John Prescott, the former deputy leader of Labour, tweeted on Thursday night that he had heard from a “very good source” that Murdoch had “stormed out” of the Times’s election party after seeing the exit poll, which predicted that the Conservatives would fail to win a majority.

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Theresa May’s desperate hunger for power endangers the peace process.

Who is the DUP? A Brief History of UK Parliament’s New Kingmaker (RT)

The Democratic Unionist Party (DUP) holds the key to Theresa May remaining in Downing Street but what do we know about this Protestant party drawn from the pro-union side of Northern Ireland’s deeply sectarian political spectrum? As Britons scramble to learn about the party that will prop up May’s mandate to execute Brexit, a swathe of the online conversation has focused on the party’s past comments on homophobia, Islam and creationism. The DUP was at the center of a bloody sectarian divide during Northern Ireland’s Troubles – a conflict involving rival paramilitary groups and the British Army which claimed more than 3,000 lives over 30 years. The Conservatives and the DUP won’t form a formal coalition government but the latter will support the government regardless.

“We want there to be a government. We have worked well with May. The alternative is intolerable. For as long as Corbyn leads Labour, we will ensure there’s a Tory PM,” a DUP source was cited as saying in by the Guardian. The party is the creation of firebrand Protestant Evangelical Minister Ian Paisley. Reverend Paisley also founded the Free Presbyterian Church of Ulster and was characterized by his entrenched Unionist views and his hostile opposition to the Catholic Church. In its early years, the party was heavily involved in a campaign against homosexuality and fiercely opposed gay rights. Paisley, who was famed for his extraordinarily fiery speeches, routinely preached against homosexuality and the party picketed gay rights events as part of their ‘Save Ulster from Sodomy’ campaign.

The campaign was ultimately unsuccessful as homosexuality was decriminalized in 1982. Paisley became infamous in 1988 when, as a member of the European Parliament for Northern Ireland, he caused uproar by interrupting an address by Pope John Paul II. During his protest he shouted: “I refuse you as Christ’s enemy and Antichrist with all your false doctrine,” while brandishing posters reading: “Pope John Paul II ANTICHRIST.”

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Backwaters.

5 Things To Know About DUP Politicians And Science (New Scientist)

Having failed to win an overall majority in the UK’s general election, Theresa May’s Conservative party is hoping to foster an informal coalition with Northern Ireland’s Democratic Unionist Party (DUP). Members of the party have taken controversial stances on everything from climate change to evolution, with one assembly member being unaware that heterosexual people can contract HIV. Here are five things you need to know when it comes to science and the DUP

Climate change The party has a history of speaking out against climate change. Senior member Sammy Wilson has called climate change a “con”, and described the Paris Agreement as “window dressing for climate chancers”. During his time as Northern Ireland’s environment minister, he said that people would eventually “look back at this whole climate change debate and ask ourselves how on Earth we were ever conned into spending billions of pounds” on the issue. It isn’t just Wilson though – in 2014, DUP ministers tried to oppose proposals to introduce local measures against climate change in Northern Ireland.

Abortion Northern Ireland remains the only part of the UK where women cannot access abortion unless their life is endangered by pregnancy – a legal situation that is incompatible with the European Convention on Human Rights, according to a Belfast High Court ruling in 2015. But on taking leadership of the party in 2016, Arlene Foster promised to block any attempt to change these laws, telling reporters “I would not want abortion to be as freely available here as it is in England.” Foster did, however, say she might consider an amendment in cases of rape. But the DUP’s Jim Wells – formerly the health minister for Northern Ireland – opposes abortion even in these circumstances.

Evolution DUP assembly member Thomas Buchanan has previously called for creationism to be taught in schools. In 2016, he voiced support for an evangelical Christian programme that offers “helpful practical advice on how to counter evolutionary teaching”. He has expressed a desire to see every school in Northern Ireland teaching creationism, describing evolution as a “peddled lie”. Buchanan told the Irish News “I’m someone who believes in creationism and that the world was spoken into existence in six days by His power,” adding that children had been “corrupted by the teaching of evolution”.

Green energy The DUP’s leader narrowly survived a no-confidence motion following a disastrous attempt to bolster green energy in Northern Ireland by providing subsidies for wood burners. Arlene Foster introduced the scheme in 2012 when she was head of the Department of Enterprise, Trade and Investment. The original budget was £25 million, but a lack of price controls meant that, over five years, almost £500 million went up in smoke.

HIV Last year, DUP assembly member Trevor Clarke admitted that he had thought only gay people could be infected with HIV, until a charity explained otherwise. He made the comments during a parliamentary debate around a campaign to “promote awareness and prevention” of HIV in Northern Ireland and to increase support for those living with HIV.

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“That any corporation is too big to fail is a contradiction of the justification of capitalism.”

Without Glass-Steagall America Will Fail (PCR)

Not only must Glass-Steagall be restored, but also the large banks must be reduced in size. That any corporation is too big to fail is a contradiction of the justification of capitalism. Capitalism’s justification is that those corporations that misuse resources and make losses go out of business, thus releasing the misused resources to those who can use them profitably. Capitalism is supposed to benefit society, not be dependent on society to bail it out. I was present when George Champion, former CEO and Chairman of Chase Manhattan Bank testified before the Senate Banking Committee against national branch banking. Champion said that it would result in the banks becoming too large and that the branches would suck savings out of local communities for investment in traded financial assets. Consequently, local communities would be faced with a dearth of loanable funds, and local businesses would die or not be born from lack of loanable funds.

I covered the story for Business Week. But despite the facts as laid out by the pre-eminent banker of our time, the palms had been greased, and the folly proceeded. As Assistant Secretary of the US Treasury in the Reagan Administration, I opposed all financial deregulation. Financial deregulation does nothing but open the gates to fraud and sharp dealing. It allows one institution, even one individual, to make a fortune by wrecking the lives of millions. The American public is not sufficiently sophisticated to understand these matters, but they know when they are hurting. Few in the House and Senate are sufficiently sophisticated to understand these matters, but they do know that to understand them is not conducive to having their palms greased. So how do the elected representatives manage to represent those who vote them into office? The answer is that they seldom do.

The question before Congress today is whether they will take the country down for the sake of campaign contributions and cushy jobs if they lose their seat, or will they take personal risks in order to save the country. America cannot survive if excessive risks and financial fraud can be bailed out by taxpayers. US Representatives Walter Jones and Marcy Kaptur and members of the House and staff on both sides of the aisle, along with former Goldman Sachs executive Nomi Prins and leaders of citizens’ groups, have arranged a briefing in the House of Representatives on June 14 about the importance of Glass-Steagall to the economic, political, and social stability of the United States. Let your representative know that you do not want the financial responsibility for the reckless financial practices of the big banks. Let your representative know also that you do not want big banks that dominate the financial arena. Let them know that you want the return of Glass-Steagall.

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“..a fresh bubble is inflating. This time, it’s not US subprime mortgages at the heart of a budding banking crisis, but $51 trillion in corporate debt in the form of bonds, loans, and related derivatives.”

Breaking Up the Banks Is Easier Than You Might Think (Nomi Prins)

Today, a fresh bubble is inflating. This time, it’s not US subprime mortgages at the heart of a budding banking crisis, but $51 trillion in corporate debt in the form of bonds, loans, and related derivatives. The credit ratings agency S&P Global Ratings has predicted that such debt could rise to $75 trillion by 2020 and the defaults on it are starting to increase in pace. Banks have profited by the short-term creation and trading of this corporate debt, propagating even greater risk. Should that bubble burst, it could make the subprime mortgage bubble of 2007 look like a relatively small-scale event. On the positive side, there’s a growing bipartisan alliance in Congress and outside it on restoring Glass-Steagall.

This increasingly wide-ranging consensus reaches from the AFL-CIO to the libertarian Mises Institute, in the Senate from John McCain to Elizabeth Warren, Bernie Sanders, and Maria Cantwell, and in the House of Representatives from Republicans Walter Jones and Mike Coffman to Democrats Marcy Kaptur and Tulsi Gabbard. In fact, just this week, Kaptur and Jones announced an amendment to the pending Financial Choice Act in the House of Representives, that would represent the first genuine attempt to bring to a vote the possibility of resurrecting the Glass-Steagall Act since its repeal. So, Donald, here’s the question: Where do you—the man who, in the course of a few weeks, embraced Middle Eastern autocrats, turned relations with key NATO allies upside down, and to the astonishment of much of the world, withdrew the United States from the Paris climate agreement—stand?

In just a few months in office, you’ve turned the White House into an outpost for your family business, but when it comes to the financial wellbeing of the rest of us, what will you do? Will you, in fact, protect us from another future meltdown of the financial system? It wouldn’t be that hard and you were clear enough on this issue in your election campaign, but does that even matter to you today? I noticed that recently, in an Oval Office interview with Bloomberg News, when asked about breaking up the banks, you said, “I’m looking at that right now. There’s some people that want to go back to the old system, right? So we’re going to look at that.”

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“..the downward trend in labour’s share of GDP over the past 40 years has been more marked in Australia than in those other economies, apart from New Zealand.”

Australian Households’ Share Of National Economic Pie Nears 50-Year Low (G.)

The share of national income going to Australian households is close to a 50-year low, and now “lies towards the bottom of the international ladder”, an economist has warned. Bureau of Statistics data show labour’s share of gross domestic product has fallen to 51.5%, down from 54.2% in the third quarter of last year. At the same time, the profit share of GDP has risen from 24.5% to a five-year high of 27.5%. Paul Dales from Capital Economics said Australian households had not seen “one cent” of the extra income generated by recent soaring commodity prices because “it’s all gone into the pocket of business”. He said the share of national income going to households was now “within a whisker” of a 50-year low and a meaningful cyclical or structural upturn in that share of income was “very unlikely” if jobs growth and wages growth remained so low.

“The share of the economic pie that households currently enjoy isn’t just small by Australia’s own standards, it’s also small by international standards,” Dales wrote in a note to clients. “As a share of GDP, the compensation of Australian employees lies towards the bottom of the international ladder. That’s not always been the case. “Back in 1975, Australia households received a bigger share of the economic pie than households in the US, France and New Zealand. Only in the UK did the compensation of employees account for a larger share of GDP. “But the downward trend in labour’s share of GDP over the past 40 years has been more marked in Australia than in those other economies, apart from New Zealand.” This trend in most economies was mainly because of structural changes that had reduced the bargaining power of employees, including globalisation, the increased flexibility of the labour market and technical innovation, which had flattened firms’ cost curves, Dales said.

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Source of stability?!

How Germany’s Three-Tiered Banking System Works (HandelsBlatt)

[..] In Germany today some 18 million people, or one in four adults, belong to a credit union. And the idea has spread. Some 800 million people around the world belong to cooperatives, and there are even about 6,000 scattered around the United States. Reinhard Siebel of Frankfurt’s Goethe University says that German credit unions have also inspired today’s micro-financing projects in developing countries. The savings banks in the second tier have been copied less and remain more uniquely German, although Cuba and Ireland are interested in importing the concept. They’re sometimes compared to savings-and-loans in the United States. But the difference is that Germany’s savings banks are publicly-owned – either by municipal governments in the case of local Sparkassen or by federal states in the case of the regional Landesbanken.

Credit unions and savings banks have a few things in common. Both are part of networks of cross-guarantees to protect savers in the event that one of them goes bust. And both have mandates that emphasize maximizing the welfare of their members or stakeholders rather than making profit. In the case of savings banks, this means giving back to the municipality that owns the bank. Savings banks typically sponsor local festivals, finance local hospitals and universities and so forth. All this might sound like a leftist dream – putting communities or democratically elected governments in charge of money-lending rather than greedy private bankers. Creating an altruistic financial system was indeed part of the founders’ motivation. But it hasn’t always played out in practice.

Take the 2008 financial crisis. Some of the culprits were private banks like Commerzbank and Deutsche Bank. But the state-backed Landesbanken had also strayed beyond their allegedly conservative remits, investing in shady American mortgage-backed securities and pouring money into Greece, Spain and Portugal during their boom years. Those exposures were considered risks to the whole banking system and therefore required billions in taxpayer bailouts. So being public instead of private didn’t make them better banks. In fact, it may have made them worse, argues Wilhelm Schmundt, a German financial analyst for the consultancy Bain & Company. He thinks the Landesbanken got in trouble precisely because they were being watched over by public officials who had no real expertise in banking.

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“There are pensioners whose original supplementary pensions came to €585.20 per month and today amount to just €138.80. This signifies a reduction of 78%.”

Greek Pensions Not Enough To Cover Costs Of Medicines, Bills And Food (K.)

Three in every four pensioners already find themselves financially crippled, while upcoming cuts to pensions combined with bailout interventions in their allowances are expected to lead to a total reduction of pensioners’ incomes by up to 70%. This is the conclusion of a survey conducted by the United Pensioners network, which paints a picture of pensioners today as poor, demoralized and disappointed. It adds that the pension most retirees receives doesn’t even cover the costs of spending on medications, bills and food. The head of the network, Nikos Hatzopoulos, notes that “the reductions that pensioners’ incomes have suffered are huge. It’s not just the cuts, it’s also the [social security] contribution hikes, tax hikes and all the levies that have impoverished the veterans of the work force.

Pensions corresponding to revenues withheld from a lifetime’s work have been turned into a mere gratuity through the bailout agreement regulations.” The network’s data are quite staggering: Some 1.5 million pensioners with annual incomes up to €4,500 have sunk into poverty while new cuts to current pension will in 2019 have led to a total loss of income of 70% since Greece entered the bailout mechanism in 2010. New main pensions will not exceed €655 per month for average-paid workers. At the same time supplementary pensions have been savaged, as the seven rounds of cuts inflicted on them average at 50% in total. There are pensioners whose original supplementary pensions came to €585.20 per month and today amount to just €138.80. This signifies a reduction of 78%. Of the total figure of 2.89 million pensioners, 2.15 million (or 74%) have to make ends meet on monthly pensions that do not exceed €1,000.

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Jun 092017
 
 June 9, 2017  Posted by at 9:27 am Finance Tagged with: , , , , , , , , , , ,  5 Responses »
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Labour Campaign Poster 1922

 

Trump Accuses Comey Of Lying About Leaked Memo (ZH)
Chris Matthews: “There’s No ‘There’ There” On Trump-Russia ‘Collusion’ (ZH)
Theresa May Has ‘No Intention Of Resigning’ After Losses (BBC)
This Is Where Theresa May’s Arrogance Will Lead Us Next (Ind.)
UK’s Shock Election Result May Hamper Brexit Talks, EU Leaders Warn (G.)
The Myth of “Cash on The Sidelines” (Roberts)
US Household Net Worth Hits Record $95 Trillion… There Is a Catch (ZH)
Opioid Overdoses The Leading Killer Of American Adults Under 50 (ZH)
Trump’s $110 Billion Arms Deal With Saudis Mostly Speculative (RT)
Defense Minister Kammenos Says US Is Greece’s Best International Ally (K.)
European Court Of Justice: Refugee Crisis Trumps Dublin Regulation (K.)
The Shield of Law and Humanism (K.)

 

 

I know the echo chamber won’t agree, but after watching quite a bit of it, four things stood out for me in the Comey testimony, other than the somewhat too loud remarks about how the entire White House lied about him and the FBI:

1) He admitted to leaking information of his private talk with Trump in the Oval Office. Comey said he didn’t understand why Trump asked everyone to leave the room, but, well, perhaps it’s this: that if anything leaked, it would be clear whodunnit. And leaking info about a private talk with your president is not an obvious thing to do. Illegal? Borderline? Comey stated that he did it because he thought it would lead to a special counsel being appointed. But who is he to ‘promote’ such a thing?

2) He finally said in public that Trump himself had not been under investigation, something the president had asked him to do on three occasions. There was some excuse about not doing it because he might have to walk that back later, but the fact remains: no Trump investigation, and despite all other leaks, no public acknowledgement of that.

3) Comey insisted in no uncertain terms that the entire US intelligence community is convinced that Russia interfered in the 2016 elections, and Russia here means the Kremlin, re: Putin. Well, let’s finally see the proof.

4) He recounted how then-AG Loretta Lynch pushed him to relabel the criminal investigation into the Clinton server as a “matter”, a term the Clinton campaign used. But why would an AG do it too, and push the FBI to do the same? Very odd. And then Comey added that this was a reason to call the press conference in which he advised the Department of Justice not to indict Clinton.

Trump Accuses Comey Of Lying About Leaked Memo (ZH)

As we detailed earlier, during his testimony today, former FBI Director Comey testified that he only leaked the memo about his contact with the President AFTER he saw President Trump’s tweet…
COMEY: I asked — the president tweeted on Friday after I got fired that I better hope there’s not tapes. I woke up in the middle of the night on Monday night because it didn’t dawn on me originally, that there might be corroboration for our conversation. There might a tape. My judgement was, I need to get that out into the public square. I asked a friend of mine to share the content of the memo with a reporter. Didn’t do it myself for a variety of reasons. I asked him to because I thought that might prompt the appointment of a special counsel. I asked a close friend to do it. [..] A close friend who is a professor at Columbia law school.

Pretty clear – it was a response to a tweet. But, as President Trump’s personal lawyer Marc Kasowitz states: “Today, Mr. Comey admitted that he unilaterally and surreptitiously made unauthorized disclosures to the press of privileged communications with the President. The leaks of this privileged information began no later than March 2017 when friends of Mr. Comey have stated he disclosed to them the conversations he had with the President during their January 27, 2017 dinner and February 14, 2017 White House meeting. Today, Mr. Comey admitted that he leaked to friends his purported memos of these privileged conversations, one of which he testified was classified.

He also testified that immediately after he was terminated he authorized his friends to leak the contents of these memos to the press in order to “prompt the appointment of a special counsel.” Although Mr. Comey testified he only leaked the memos in response to a tweet, the public record reveals that the New York Times was quoting from these memos the day before the referenced tweet, which belies Mr. Comey’s excuse for this unauthorized disclosure of privileged information and appears to entirely retaliatory. We will leave it the appropriate authorities to determine whether this leak should be investigated along with all those others being investigated”

So the question is – having called President Trump a liar, did Comey just get caught in an even bigger lie… ?

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At least on his personal involvement.

Chris Matthews: “There’s No ‘There’ There” On Trump-Russia ‘Collusion’ (ZH)

If you count yourself among the die-hard, disaffected Hillary supporters still holding out hope that President Trump will be impeached for conspiring with Russian spies to stage a coup in the United States, then you may want to sit down because earlier today one of your biggest cheerleaders just threw in the towel on that whole narrative. Yes, MSNBC’s very own Chris Matthews, the same man who confessed he “got a thrill up his leg” from simply watching Obama speak, admitted today that Comey’s testimony pretty much confirmed that “there’s no ‘there’ there” when it comes to Trump colluding with the Russians.

“The assumption of the critics of the President, of his pursuers, you might say, is that somewhere along the line in the last year is the President had something to do with colluding with the Russians … to affect the election in some way. Some conversation he had with Michael Flynn or Pual Manafort or somewhere.” “And yet what came apart this morning was that theory in two regards…the President said, according to the written testimony of Mr. Comey, go ahead and get any satellites of my operation and nail them. I’m with you on that…” “And then also, Comey said that basically Flynn wasn’t central to the Russian investigation.” “And I’ve always assumed that what Trump was afraid of was that he had said something to Flynn and Flynn could be flipped on that and Flynn would testify against the President that he’d had some conversation with Flynn in terms of dealing with the Russians affirmatively.” “And if that’s not the case, where’s the there-there?”

And when Chris Matthews throws in the towel on a liberal narrative, you know the gig is up. Oh, and by the way, this probably doesn’t help your case either… Burr: “Director Comey, did the President at any time ask you to stop the FBI investigation into Russian involvement in the 2016 U.S. elections?” Comey: “Not to my understanding, no.” Burr: “Did any individual working for this administration, including the Justice Department, ask you to stop the Russian investigation?” Comey: “No.”

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Theresa May can stay until the Tories throw her out; she’s proven to be an awful liability, not a leader. Far too risky. How much would she lose next time around? Their problem is there’s no-one else who’s obvious, there must be dirty fights in dark and rainy alleys first.

So: Tories will throw out May, while Corbyn will have to throw the Blairites out of Labour who made his position a living hell.

Most likely seems Corbyn as PM of a minority government. But that’s a big risk going into Brexit talks.

Theresa May Has ‘No Intention Of Resigning’ After Losses (BBC)

The UK faces the prospect of a hung parliament with the Conservatives as the largest party after the general election produced no overall winner. With nearly all results in, Theresa May faces having fewer seats than when she called the election. The Tories are projected to get 318 seats, Labour 261 and the SNP 35. Jeremy Corbyn has urged the PM to resign but the BBC understands she has no intention of doing so at this stage and will try to form a government. The prime minister has said the country needs stability after the inconclusive election result and the BBC’s political editor Laura Kuenssberg said Mrs May intended to try and govern on the basis that her party had won the largest number of votes and seats.

Labour is set to make 29 gains with the Tories losing 13 seats – and the SNP down by 22 seats in a bad night for Nicola Sturgeon, with her party losing seats to the Tories, Labour and Lib Dems. The Conservatives are forecast to win 42% of the vote, Labour 40%, the Lib Dems 7%, UKIP 2% and the Greens 2%. Turnout so far is 68.7% – up 2% up on 2015 – but it has been a return two party politics in many parts of the country, with Labour and the Conservatives both piling up votes in numbers not seen since the 1990s. UKIP’s vote slumped dramatically but rather than moving en masse to the Tories, as they had expected, their voters also switched to Labour.

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New elections? One positive for the former Empire: the threat of Scottish independence was wiped out.

This Is Where Theresa May’s Arrogance Will Lead Us Next (Ind.)

Despite a lot of the good news streaming out of counts everywhere right now, make no mistake: this is going to be chaos. A deep and growing sense of frustration is about to ripple through the country, because what May has essentially done in her arrogance is take a gamble that could cost us decades of stability and prosperity. It is likely that what awaits us over the next few weeks is, to put it bluntly, a mess. Hung parliament. No clear majority. No willingness to form a coalition. A possible resignation from the Prime Minister (whether she’s pushed or jumps is yet to be seen) and then yet another leadership contest. Boris Johnson is said on the Westminster grapevine to already be positioning himself as a candidate, yet his reputation has turned increasingly sour over the last few years.

Many now regard him as a cynical power-grabber without much regard for the people he claims to represent. The Tories have spent the last two years playing Russian roulette with the electorate in the hope of cementing their credibility, and causing utter shambles along the way. Having barely recovered from a referendum result which caused deep divisions and painful rifts within our society, and as Europe watches us scramble for any sort of political legitimacy, who will now head into the talks that will determine our economic and political future? Theresa May has now shoved us off a cliff into political unknowns just when what we actually needed was, ironically enough, some strong and stable leadership.

Any reassurance from Westminster that the lives of ordinary people in this country mattered more than political point-scoring would be welcome. What we’ll get instead, despite the Labour surge, is yet another election, whether that be in two months’ or two years’ time. It feels inspiring and hopeful that we have so many progressive and wonderful MPs back in the Commons. But until we have a government and a plan of how to get ourselves through this, that hope is limited to a symbolic step in the right direction. In the words of one particularly concise campaign poster: strong and stable, my arse.

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It’s going to get terrible no matter what. But for now the EU has no-one to talk to. They’re not going to sit down with May if she may last only a few more weeks.

UK’s Shock Election Result May Hamper Brexit Talks, EU Leaders Warn (G.)

The EU will force a humiliated Theresa May to explain her intentions at a face-to-face meeting in Brussels as senior diplomats and politicians warned that the hung parliament resulting from the UK election was a “disaster” that hugely increases the chance of a breakdown in the Brexit negotiations. The result is likely to delay the point at which Michel Barnier, the EU’s chief negotiator, has someone with whom to negotiate. Sources said a meeting of the European council on 22 June was the deadline by which time the EU27 would want to know the prime minister’s plans. Guenther Oettinger, the German member of the European commission, said: “We need a government that can act. With a weak negotiating partner, there’s the danger than the negotiations will turn out badly for both sides … I expect more more uncertainty now.”

It had been hoped that officials from both sides would have informal talks next week over the logistics of the negotiations, before formal talks began on the week starting 19 June. With the prime minister needing to both seek to form a minority or coalition government, as well as potentially revise her goals for the talks in the light of the election result, the original timetable seems unrealistic to officials in Brussels. The EU had, until now, believed it understood that May wanted to take the UK out of both the single market and the customs union, but in the early hours of Friday morning the Brexit secretary, David Davis, had suggested the election result could prompt a rethink.

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All on red.

The Myth of “Cash on The Sidelines” (Roberts)

[..] despite 8-years of a bull market advance, one of the prevailing myths that seeming will not die is that of “cash on the sidelines.” To wit: “Underpinning gains in both stocks and bonds is $5 trillion of capital that is sitting on the sidelines and serving as a reservoir for buying on weakness. This excess cash acts as a backstop for financial assets, both bonds and equities, because any correction is quickly reversed by investors deploying their excess cash to buy the dip,” Nikolaos Panigirtzoglou, the managing director of global market strategy at JPMorgan, wrote in a client note. This is the age old excuse why the current “bull market” rally is set to continue into the indefinite future. The ongoing belief is that at any moment investors are suddenly going to empty bank accounts and pour it into the markets.

However, the reality is if they haven’t done it by now after 3-consecutive rounds of Q.E. in the U.S., a 200% advance in the markets, and ongoing global Q.E., exactly what will that catalyst be? However, Clifford Asness previously wrote: “There are no sidelines. Those saying this seem to envision a seller of stocks moving her money to cash and awaiting a chance to return. But they always ignore that this seller sold to somebody, who presumably moved a precisely equal amount of cash off the sidelines.” Every transaction in the market requires both a buyer and a seller with the only differentiating factor being at what PRICE the transaction occurs. Since this must be the case for there to be equilibrium to the markets there can be no “sidelines.”

Each month, the Investment Company Institute releases information related to the mutual fund industry. Included in this data is the total amount of assets invested in mutual funds, ETFs and money market funds. As a rough measure of investor sentiment, this indicator looks at the total assets invested in equity mutual funds and ETFs, and compares it to the total assets invested in the safety of money market funds. The higher the ratio, the more comfortable investors have become holding stocks; the lower the ratio, the more uncertainty there is in the market. Currently, with the ratio at the highest level on record there is little fear of holding stocks. Negative free cash balances also suggest the same as investors have piled on the highest levels of leverage in market history.

Furthermore, with investors once again “fully invested” in equities, it is not surprising to see cash and bond allocations near historic lows. Cash on the sidelines? Not really. Everyone “all in the boat?” Absolutely. Historical outcomes from such situations? Not Great.

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The No Price Discovery Bubble.

US Household Net Worth Hits Record $95 Trillion… There Is a Catch (ZH)

In the Fed’s latest Flow of Funds report, today the Fed released the latest snapshot of the US “household” sector as of March 31, 2017. What it revealed is that with $110.0 trillion in assets and a modest $15.2 trillion in liabilities, the net worth of the average US household rose to a new all time high of $94.835 trillion, up $2.4 trillion as a result of an estimated $500 billion increase in real estate values, but mostly $1.78 trillion increase in various stock-market linked financial assets like corporate equities, mutual and pension funds, as the stock market continued to soar to all time highs . At the same time, household borrowing rose by only $36 billion from $15.1 trillion to $15.2 trillion, the bulk of which was $9.8 trillion in home mortgages.

And the historical change of the US household balance sheet.

And while it would be great news if wealth across America had indeed risen as much as the chart above shows, the reality is that there is a big catch: as shown previously, virtually all of the net worth, and associated increase thereof, has only benefited a handful of the wealthiest Americans. As a reminder, from the CBO’s latest Trends in Family Wealth analysis, here is a breakdown of the above chart by wealth group, which sadly shows how the “average” American wealth is anything but.

While the breakdown has not caught up with the latest data, it provides an indicative snapshot of who benefits. Here is how the CBO recently explained the wealth is distributed: In 2013, families in the top 10% of the wealth distribution held 76% of all family wealth, families in the 51st to the 90thpercentiles held 23%, and those in the bottom half of the distribution held 1%. Average wealth was about $4 million for families in the top 10% of the wealth distribution, $316,000 for families in the 51st to 90th percentiles, and $36,000 for families in the 26th to 50th percentiles. On average, families at or below the 25th percentile were $13,000 in debt In other words, roughly three-quarter of the $2.4 trillion increase in assets went to benefit just 10% of the population, who also account for roughly 76% of America’s financial net worth,

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Trump and Congress had better go out and do something.

Opioid Overdoses The Leading Killer Of American Adults Under 50 (ZH)

The opioid crisis that is ravaging urban and suburban communities across the US claimed an unprecedented 59,000 lives last year, according to preliminary data gathered by the New York Times. If accurate, that’s equivalent to a roughly 19% increase over the approximately 52,000 overdose deaths recorded in 2015, the NYT reported last year. Overdoses, made increasingly common by the introduction of fentanyl and other powerful synthetic opioids into the heroin supply, are now the leading cause of death for Americans under 50. And all evidence suggests the problem has continued to worsen in 2017. One coroner in Western Pennsylvania told a local newspaper that his office is literally running out of room to store the bodies, and that it was recently forced to buy a larger freezer. The initial data points to large increases in these types of deaths in states along the East Coast, particularly Maryland, Florida, Pennsylvania and Maine.

In Ohio, which filed a lawsuit last week accusing five drug companies of abetting the opioid epidemic, the Times estimated that overdose deaths increased by more than 25% in 2016. In some Ohio counties, deaths from heroin have virtually disappeared. Instead, the primary culprit is fentanyl or one of its many analogues. In Montgomery County, home to Dayton, of the 100 drug overdose deaths recorded in January and February, only three people tested positive for heroin; 97 tested positive for fentanyl or another analogue. In some states in the western half of the US, data suggest deaths may have leveled off for the time being – or even begun to decline. Experts believe that the heroin supply west of the Mississippi River, traditionally dominated by a variant of the drug known as black tar which is smuggled over the border from Mexico, isn’t as easily adulterated with lethal analogues as the powder that’s common on the East Coast.

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Fake News.

Trump’s $110 Billion Arms Deal With Saudis Mostly Speculative (RT)

That $110 billion arms deal President Donald Trump signed with Saudi Arabia isn’t much of a deal at all, according to reports which found the majority of the agreement was based on memos, rather than contracts. On May 20, Trump negotiated an arms deal with Riyadh. The State Department said it was worth nearly $110 billion to support “the long-term security of Saudi Arabia and the Gulf region in the face of malign Iranian influence and Iranian related threat.” White House Press Secretary Sean Spicer hailed it the “largest single arms deal in US history.” The State Department then released a general list of the weapons that were included in the deal. However, many experts have said that most of the arms sales had not been cleared by the State Department, Congress or even the industries themselves.

On Thursday, Defense News released a more detailed list of the weapons included in the deal, according to documents they obtained from the White House. The ‘deal’ lists $84.8 billion under memos of intent (MOI) “to be offered at visit,” and $12.5 billion under letters of agreement (LOA), rather than contracts. NPR also obtained a list of commercial deals from a White House spokeswoman and found that it added up to $267 billion, but said most of the deals were listed as “memoranda of understanding” (MOU). “There is no $110 billion deal,” Brookings Institution Senior Fellow Bruce Riedel wrote in blog post Monday. “Instead, there are a bunch of letters of interest or intent, but not contracts,” Riedel said. “Even then the numbers don’t add up. It’s fake news.”

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So what did they do to prove that?

Defense Minister Kammenos Says US Is Greece’s Best International Ally (K.)

Washington is Greece’s only true international ally, Defense Minister Panos Kammenos insisted on Thursday, and accused the country’s European partners of showing a lack of respect. “The Greek people are well aware that the United States has been the country’s only genuine ally,” Kammenos said. “The others are allies, but they are [allies] only in the form of creditors, without [any sense of] respect and this is because some of them will never forget that they lost World War II to this country,” Kammenos, who is also leader of junior coalition partner Independent Greeks, added during a speech marking the 70th anniversary of the US Office of Defense Cooperation in Athens yesterday. “For this reason, we welcome US support at this very difficult moment for our country,” said Kammenos, who also called for the strengthening of the Hellenic Navy with US help so “that it can operate from Crete to the Suez.”

Bolstering the navy and the country’s military aviation capabilities are necessary, he said, to intercept the flow of drugs, weapons and fuel through which terrorism is funded. He also said that Greece is positively inclined to extend the time frame of the defense agreement between the two countries, adding that Prime Minister Alexis Tsipras and his government are working in that direction. He also referred to the latest developments in the Gulf states and stressed that he supports describing the Muslim Brotherhood as a terrorist organization. Aiming his fire at Turkey, he said that each country must choose “whose side they want to be on.” It is certain, he said, that “Greece will be on the side of the US.” For his part, US Ambassador to Greece Geoffrey Pyatt praised relations between Athens and Washington, adding that as Greece’s economy stabilizes, it will become even more active in its role as a bridge between countries of the region.

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Nobody cares unless you hold their feet to the fire.

European Court Of Justice: Refugee Crisis Trumps Dublin Regulation (K.)

Any countries in the European Union receiving asylum requests from refugees have an obligation to process them irrespective of where the applicants first entered into the bloc, an advocate general at the European Court of Justice said on Thursday. Eleanor Sharpston said in a non-binding opinion that under the “exceptional circumstances” of the refugee crisis, member states should not be bound by the Dublin Regulation’s requirement that first-entry states handle all asylum applications, even after a refugee or migrant has moved on to a different country. “The words ‘irregular crossing’ in the Dublin III Regulation do not cover a situation where, as a result of the mass inflow of people into border member states, those countries allowed third-country nationals to enter and transit through their territory in order to reach other member states,” she wrote.

Sharpston referred to the case of a Syrian national who traveled to Slovenia via Croatia and that of an Afghan family that entered Europe in Greece and then made its way to Austria. Slovenia and Austria should be responsible for examining their asylum applications, she said. “If border member states… are deemed to be responsible for accepting and processing exceptionally high numbers of asylum seekers, there is a real risk that they will simply be unable to cope with the situation,” Sharpston wrote. “This in turn could place member states in a position where they are unable to comply with their obligations under EU and international law,” she added.

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The last thing Greece has left is rumored to be on the way out.

The Shield of Law and Humanism (K.)

It is difficult to believe that after Greece’s judiciary offered protection to eight members of the Turkish military, rejecting Ankara’s request for their extradition, the government would agree to the illegal, secret and inhuman expulsion of people who requested asylum here. Yet unease grows. On Wednesday the government spokesman stated, “The Greek government does not engage in pushbacks.” Let us hope that is so. The Hellenic League for Human Rights cites two instances where groups of Turkish citizens who requested asylum in Greece appear to have been handed over illegally to Turkish authorities. The Council of Europe’s commissioner for human rights, Nils Muiznieks, the UN High Commissioner for Refugees and the head of the Alliance of Liberals and Democrats in the European Parliament, Guy Verhofstadt, have expressed concern at the possibility.

There is also the strange story of three Turkish military men who where arrested in Edirne last month, accused of being part of a group that intended to kidnap President Recep Tayyip Erdogan during the failed coup last July. Turkish media said the men were arrested while on their way to Greece; some Greek lawyers, however, claim that the three had crossed into Greece when they disappeared, only to turn up in Turkish custody. The Citizens’ Protection Ministry in Greece scoffed that the claims were “fairy tales.” The case of the eight servicemen who arrived in Alexandroupoli in a helicopter the day after the coup attempt shows how difficult it is for any country to withstand Ankara’s pressure. It is understandable that no government would like to open a new front with a neighbor who can cause problems at will. But it is of paramount importance that Greece withstand such pressures.

In the past few years, among our country’s very few victories were the welcome provided to refugees and the institutional way in which it dealt with the “Eight.” Our great wound, though, is the lack of strategy, of method, of goals – of follow-up. On the refugee issue, government incompetence undermined the initial, heroic efforts of citizens. In the case of Turkish asylum seekers, the difficulties of handling the case of the Eight should not lead to cynicism, to injustice, to the violation of international conventions. Greece has a responsibility toward its own people and toward the Turkish people, to serve the principles of humanism, to abide by the law. Strenuous defense of these principles is part of the identity we aspire to but also our shield. And it is the best thing that we can offer our neighbors – the hope that there is something better than that which they are now enduring.

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