Jul 152019
 


Jack Delano L. Logan, boilermaker at the roundhouse in the Proviso yard in Melrose Park, near Chicago 1942

 

The Permanent Recession (Haggith)
UK Extreme Poverty, Destitution On The Rise (G.)
Chinese Economic Growth Falls To 6.2%, Weakest In 27 Years (AFP)
China Churns Out Record Daily Steel Output Despite Production Curbs (R.)
China Property Investment Slows, Sales Dip (R.)
China Locks Up Uighur Muslims In Xinjiang, Opens Doors To Tourists (AFP)
US Launches Small-Scale Immigration Raids As Families Hide (R.)
Britain Ramps up Media War on Russia (SCF)
Western Elites Spruik Media Freedom While Torturing Julian Assange (NM)
Turkey Will Drill For Gas Until Greek Cypriots Accept Plan (R.)
Bank of Greece Chief Sees Growth Ahead, Hits Out At Previous Government (K.)
Greece Primary Surplus Target Reduction May Be Feasible But Not Just Yet (K.)
Greece Blocks Social Security Number For Refugees, Non-EU Nationals (KTG)

 

 

The theme is better than the article, but that’s fine once in a while. Is the Longest Expansion in actual fact the Longest Recession?

The Permanent Recession (Haggith)

I say “It’s been a great recession” because we never actually left the Great Recession. Rather than the longest expansion in US history, we’ve been enduring the longest recession in US history ever since the dot-com bust. The above chart shows the GDP growth rate, and the REAL GDP “growth” rate, which has actually been contraction, not growth, for the past two decades if measured by historic standards. So long as GDP is growing, (above 0 on the chart above), we’re in expansion. Whenever GDP is shrinking (below 0 on the chart below), we’re in recession. So, when you see financial commentators writing or talking about “the longest expansion on record,” this month, translate that in light of this article.

It is only the longest expansion on record if you change the way you calculate GDP from the way previous records were calculated. It’s sort of like saying, “This person ran the longest marathon in history,” but not memtion that we’ve reduced the length of the kilometer or mile by which we measure marathons. The government (and the Fed) love to cook the books. They do it under the guise that old numbers really were not all that accurate, but if that were truly the reason, why is it the “corrections” and “adjustments” always serve to make the present regime’s numbers look better? (Perhaps people doing the calculations in the past were willing to be more conservative in terms of how much they patted themselves on the back for how well they were doing?)

Read more …

Brexit will hit like a hammer. Not because Brexit itself is such a bad idea, but because a bunch of complete wankers have been working it out.

UK Extreme Poverty, Destitution On The Rise (G.)

Extreme poverty – where families are routinely unable to afford regular meals, wash clothes or provide their children with basic items such as beds and sheets – is becoming more common, according to frontline family support workers. Three-quarters of support professionals such as health visitors and social workers said they had seen an increase in the numbers of families they regularly worked with who experienced destitution and were in need of basic financial support. Despite more families facing greater difficulties, official support was harder to come by, the survey found. “The only substantive increase in support over the last year was the increase in the number of families support workers have seen using food banks,” it read. The survey of 1,290 frontline family support workers from 616 organisations across the UK was published by the poverty grants charity Buttle UK.


It said it was undertaken to provide a “thermometer reading” of the lives of some the UK’s most vulnerable families. It comes amid rising concern that alongside headline increases in relative poverty in recent years – more than 4 million children in the UK live below the breadline – a cohort of the very poorest families is experiencing the extreme and intractable form of poverty known as destitution. Destitution is defined as experience of at least two of six measures over the previous month, including eating fewer than two meals a day for two or more days; or as a weekly income after housing costs of £70 for a single adult or £140 for a couple with children – an amount below which people “cannot meet their core material needs for basic physiological functioning from their own resources”.

Read more …

Stimulus!

Chinese Economic Growth Falls To 6.2%, Weakest In 27 Years (AFP)

Chinese growth slowed to its weakest pace in almost three decades in the second quarter with the US-China trade war and weakening global demand weighing on the world’s second-biggest economy, official data showed Monday. The slowdown makes it more difficult for president Xi Jinping to fight back forcefully against the US, which is using tariffs as leverage to try to force Beijing into opening up its economy. The 6.2% figure released by the national bureau of statistics on Monday was in line with forecasts by analysts and down from an expansion of 6.4% in the first quarter. The GDP figures are within the government’s target range of 6.0-6.5% for the whole year, down from the 6.6% growth China posted in 2018.


“Economic conditions are still severe both at home and abroad, global economic growth is slowing down and the external instabilities and uncertainties are increasing,” said bureau spokesman Mao Shengyong. “The economy is under new downward pressure,” he said. Beijing has introduced measures this year to boost the economy, but they have not been enough to offset a domestic slowdown and softening overseas demand made worse by a punishing trade war with its biggest trading partner country, the US. Exports to the world rose only 0.1% during the first six months compared with the same period last year. Analysts widely expect Beijing will step up support for the economy in coming months and the prospect cheered investors in China where stocks rose.

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Chinese factories don’t stop producing when there are no clients. That why there’s Belt and Road.

China Churns Out Record Daily Steel Output Despite Production Curbs (R.)

China’s daily crude steel output rose to record levels in June, according to Reuters calculations, even as anti-pollution production curbs pushed whole-month production slightly lower, official data showed on Monday. The world’s biggest steel producer churned out 87.53 million tonnes of crude steel last month, data from the National Bureau of Statistics (NBS) showed. That was down from a record 89.09 million tonnes in May – the first monthly drop this year – as the government stepped up its drive to cut smog, but still well above 80.2 million tonnes in June 2018 as daily output grew.


Average daily output of steel was around 2.92 million tonnes, calculations showed, compared with 2.87 million tonnes in May. The monthly drop for June came as the smog-prone northern province of Hebei, which accounts for a quarter of China’s total steel output, ordered local governments to bring forward capacity cuts and anti-pollution measures to meet annual air quality targets. The Hebei cities of Handan and Tangshan extended production curbs until August. Analysts expect the restrictions, if fully implemented, will have a bigger impact than curbs usually imposed in winter to restrict smog, and will trim blast furnace operations by around 40% in the region.

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There were two headlines for this artilce, the one I used and, kid you not: “China home price growth cools in June, but investment quickens”

China Property Investment Slows, Sales Dip (R.)

Growth in China’s new home prices cooled in June as sales shrank for a second month, but building starts and investment quickened, providing a cushion for the slowing economy while Beijing claims some wins in reducing market froth. Average new home prices in China’s 70 major cities grew 0.6% in June from a month earlier, easing from a 0.7% gain in May, according to Reuters calculations based on National Bureau of Statistics (NBS) data on Monday. That marked the 50th straight month of price gains. Most of the cities still reported higher prices. Sixty-three of the total 70 cities surveyed by the NBS reported higher prices in June, down from 67 cities in May.


On an annual basis, home prices increased 10.3% in June, easing from 10.7% in May. The weakness mainly came from tier-1 cities. Prices in China’s four top-tier cities – Beijing, Shanghai, Guangzhou and Shenzhen – rose an average of 0.2% from a month earlier, slowing from a 0.3% uptick in May. For tier-2 cities, which include most of larger provincial capitals, home prices grew 0.8% in June, identical with the previous month’s advance. Despite still elevated prices in some of China’s biggest cities, many analysts are still bearish on the market’s overall outlook this year as demand in smaller cities – which account for 70% of sales by floor area – will likely falter, and as Beijing has not indicated it will ease nationwide property curbs anytime soon.

Read more …

Article quotes westerners who say everything’s fine, and also suggests it’s not at all.

China Locks Up Uighur Muslims In Xinjiang, Opens Doors To Tourists (AFP)

Xinjiang, a fraught region where flare-ups of interethnic violence have led to unprecedented levels of surveillance, is one of the fastest growing areas for tourism in China. Armed police and frequent checkpoints have not dampened the flow of vacationers visiting the region, which in 2018 saw a 40 percent increase year-on-year of visits – mainly from domestic tourists – outstripping the national average by 25 percent, according to official figures. Business has grown steadily over the years mainly because “Xinjiang is very stable”, explained Wu Yali, who runs a travel agency in the region. Though tourists are not used to the high-level of security at first, “they adapt after a few days,” she told AFP. But travellers are barred from witnessing the most controversial part of Xinjiang’s security apparatus: the network of internment camps spread across the vast region.


Many of these facilities are outside main tourist hubs and are fenced off with razor-wired walls. On a six-day trip to the region last month, AFP reporters encountered roadblocks and were turned away by security forces upon nearing some camps. China describes the facilities as “vocational education centres” where Turkic-speaking “trainees” learn Mandarin and job skills. “The violence that is being inflicted on the bodies of Uighur and other Muslim people…has been rendered invisible,” said Rachel Harris, who studies Uighur culture and music at the School of Oriental and African Studies University of London. “For a tourist who goes and travels around a designated route, it all looks nice,” she told AFP. “It’s all very quiet and that’s because there’s a regime of terror being imposed on the local people.”

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For both the US and EU, the solution to this is clear: help people fix their countries so they can live there and prosper. Unless we do that, the problems will persist and grow.

US Launches Small-Scale Immigration Raids As Families Hide (R.)

The operation, which Trump revealed on Twitter last month, then postponed before telling reporters on Friday that it would proceed, was expected to target hundreds of recently arrived families in about 10 cities who had been ordered deported by an immigration judge. The removal operations are meant to deter a surge in Central American families fleeing poverty and gang violence in their home countries, with many seeking asylum in the United States. Immigrants and their advocates were bracing for mass arrests, but by Sunday night there were only reports of low-profile operations in a few cities.


“We are doing targeted enforcement actions against specific individuals who have had their day in immigration court and have been ordered removed by an immigration judge,” Acting Immigration and Customs Enforcement (ICE) Director Matt Albence told Fox News when asked for an update. Mary Bauer at the Southern Poverty Law Center (SPLC) said there were no confirmed operations in large Southern cities such as Atlanta. There also were no reports of arrests from the American Immigration Council, which has lawyers on standby to give legal advice at the country’s largest family migrant detention center in Dilley, Texas. “Immigrants and immigrant communities all over the country are in hiding and people are living in these terrified, terrorized ways, because that is the point of this whole action, whether enforcement actions take place or not,” said Bauer, the SPLC’s deputy legal director.

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It has become their main identity. Like Novichok is a Monty Python skid.

Britain Ramps up Media War on Russia (SCF)

The British government appears to be more and more aping a Monty Python-type farce with each passing day. Soon the absurd ensemble will be complete if either Boris Johnson or Jeremy Hunt becomes the next prime minister. This week the mandarins at the Ministry of Funny Walks ruled that two internationally respected Russian news media channels were banned from attending a global conference on “press freedom”. RT and another Russia-based news outlet Sputnik were refused permission by the British government to participate in the Global Conference for Media Freedom, held in London. A British Foreign Office spokesperson said: “We have not accredited RT or Sputnik because of their earlier role in spreading disinformation.”

The irony of it. The British government is peddling unsubstantiated accusations (more accurately, ridiculous slander) against Russian media which is then invoked as “justification” for censorship at a much-vaunted international conference supposedly dedicated to freedom of the press. You could hardly make the farce up. It’s a kind of cross between George Orwell and Monty Python. What the British government is doing is blatantly ramping up the media war against Russia. London is giving a license for further outrageous repression of Russian news media, as well as piling on demonization of Russia as a state.

[..] It is bitterly ironic that an independent journalist like Julian Assange of the Wikileaks website is being currently detained in a maximum security British prison on trumped-up extradition charges to the US for spying – when Assange’s real “crime” is that he exposed American and British war crimes in Iraq and elsewhere. Arguably, Assange’s credibility and appreciation among ordinary citizens the world over is much higher than either of the US or British governments, or their mainstream media. The same dichotomy applies to the two above-mentioned Russia-based news channels. Not able to cope with hearing the critical message, the British government has resorted to shooting the messenger. However, the British and international public can see what’s going on here, and so the “emperor” is hastily, clumsily trying to cover up the embarrassment from being exposed.

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Spruik. Good word. Good article too. “..bystanders are complicit”, their silence fuelling ever graver abuses along a “continuum of destruction..”

Western Elites Spruik Media Freedom While Torturing Julian Assange (NM)

Collective violence, such as torturing a publisher for journalism, requires more than persecuting authorities, mobbing states and media smear campaigns to survive. Those who orchestrate and perpetrate state-sanctioned violence depend crucially and fundamentally upon one other thing. That thing is bystanders. Atrocity does not take place without passive, complacent, compliant bystanders: citizens watching silently, declining to take a stand, even as their leaders say one thing at global media conferences and do precisely the reverse in the real world.

Passive bystanders are the social pillars of atrocity, fashioned from “kindly people, struggling to evaluate the actions they are agents or accomplices in” writes Professor of Philosophy, Adam Morton. The infamous murder of Kitty Genovese in 1964, who died screaming as neighbours listened on, prompted psychologists to investigate the processes by which kindly people might become agents and accomplices in horror, such torturing a journalist in Belmarsh while elites parse media freedom at exclusive conference dinners, practically next door. A simple and pedestrian psychological culprit emerged, known as diffusion of responsibility. In numerous research paradigms since 1964, when witnessing an emergency among a group of seemingly unconcerned others, most people will fail to intervene.

The more people that are present, and the less alarmed they all appear to be, the less inclined is each individual to act. The ensuing collective stasis is driven partly by a diminished sense of personal responsibility, and partly by conformity, or a reluctance to stand out. Such prosaic group processes, on display in spades at the Global Media Freedom Conference, can paradoxically make it easier to commit violence before a sea of onlookers than before one or two passers-by. Which is just as well for the elites in London holding Julian Assange bound and gagged in Belmarsh, metaphorically speaking, while listening to Amal Clooney and embracing a joint statement by four Special Rapporteurs on Freedom of Expression, with a straight face.

Peace psychologist Ervin Staub writes, “The passivity of witnesses, internal bystanders who are part of the population… affirms perpetrators and allows the unfolding of the evolution of violence”. He adds, “bystanders are complicit”, their silence fuelling ever graver abuses along a “continuum of destruction”.

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The EU will have to act. But it’s the last thing they want to do.

Turkey Will Drill For Gas Until Greek Cypriots Accept Plan (R.)

Turkey will continue drilling for gas in waters off Cyprus if the internationally recognized Greek Cypriot government does not accept a cooperation proposal put forward by Turkish Cypriots, Ankara’s foreign minister has said. Mevlut Cavusoglu said that a proposal by Turkish Cypriot leader Mustafa Akinci that both parties on the divided island cooperate in exploration and exploitation of gas could contribute to stability and peace in the eastern Mediterranean. Tensions in the region have risen after Turkey told energy firms not to work with the Greek Cypriot government, and sent two ships to drill off the island. Cyprus issued arrest warrants for the crew of one of the ships, and the European Union is discussing curbing contacts and funds for Turkey in response.


The dispute stems from overlapping claims to regional waters by Turkey and Cyprus, linked to the 45-year-old split of the island and Ankara’s rejection of agreements Cyprus has reached with other Mediterranean states on maritime economic zones. In an article for the Cyprus Post published on Sunday, Cavusoglu said that until Greek Cypriots adopt the proposals set out by Akinci on Saturday to work with Turkish Cypriots, Turkey would continue operations in areas where Turkish Cypriot authorities have licensed it to work, “with determination and without change.”

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The old elites are back in charge, and the country will feel it. So what is the EU going to do? Side with the right wing?

Bank of Greece Chief Sees Growth Ahead, Hits Out At Previous Government (K.)

Bank of Greece Governor Yannis Stournaras appears confident that the country can enter a “virtuous cycle” of growth, strengthen market confidence and negotiate a deal with its lenders to trim a high primary surplus target of 3.5 percent of gross domestic product in exchange for an acceleration of reforms and investments now that a center-right government is in power. In a wide-ranging interview with Kathimerini’s Sunday edition, the central banker also said that he would welcome a judicial inquiry into what he describes as a “coordinated effort” by the previous administration to malign his character and prevent him from carrying out his duties.

“Success in restarting the Greek economy… will depend on whether the new government, taking advantage of market confidence, adopts policy measures to attract new investments,” Stournaras said. “If these measures are forward-looking and reliable, the Greek economy will soon enter a self-perpetuating virtuous cycle of reliability, credibility and growth,” the central banker said. This “virtuous cycle” of strengthened credibility, Stournaras said, could lead to rating upgrades, which would be “a key condition to a review of the primary surplus target.” This, he added, would “give the economy the room it needs to grow.”

Commenting on the new government’s plan to introduce a series of tax reductions in order to ease the burden on the middle class, Stournaras said that “changing the fiscal policy mix with a lightening of the tax load (including social security contributions) on workers and businesses is imperative.” He added that while the previous government’s policy of high taxation managed to stem the growth of public debt thanks to large primary surprises, it also suppressed the economy’s growth potential.

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The new PM has promised new agreements with the EU. But they can’t give him any, other than superficial ones.

Greece Primary Surplus Target Reduction May Be Feasible But Not Just Yet (K.)

The high primary surplus targets may be one of the toughest legacies passed down to the new administration by the Alexis Tsipras government. An agreement with creditors for reducing the target of 3.5 percent of gross domestic product is a key priority for Prime Minister Kyriakos Mitsotakis, which analysts and economists speaking to Kathimerini say is feasible but only under specific conditions. “The reduction of the targets for the primary surpluses will be a difficult uphill road for the Greek government, mainly because the northern European states are not so willing to accept the idea of a level below 3.5 percent for the medium term,” says Mujtaba Rahman, managing director for Europe at Eurasia Group. “For the time being no such negotiation is expected, but this is possible for the targets after 2021,” he predicts.


Raffaella Tenconi, an economist at Wood, appears to agree, saying that “the maximum likely is a 0.5 percent of GDP discount for 2021 and 2022 – a short window until it drops to 2 percent,” but reminds that German Chancellor Angela Merkel “again said there is no big reason to change the goals.” Rahman adds that “what Kyriakos Mitsotakis and his government have to do is first build a relationship of confidence with the creditors, second proceed with structural reforms so as to send the right message, and third to continue the fiscal policy and adhere to what has been agreed in order to bring to negotiation in Brussels the reductionn of targets. This is an issue concerning 2021.” Teneo Intelligence Co-President Wolfango Piccoli comments that “only a fool would have expected a positive stance from the creditors about reducing the primary surplus target the day after the election.”

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Just about the very first thing the right wing government has done. Count me not surprised.

Greece Blocks Social Security Number For Refugees, Non-EU Nationals (KTG)

Labor and Social Affair Minister, Nikos Vroutsis, has cancelled a ministerial decision regarding the issuing of social security number (AMKA) to migrants, refugees, asylum seekers, unaccompanied refugee children and non-EU nationals. The decision, in fact a circular signed by three SYRIZA ministers for Health, Migration and Social Solidarity was issued on June 20, less than a month than the general elections. Justifying his decision to block the issue, Vroutsis said that the Issue of AMKA to non-EU nationals will be re-examined and new directives will be published.


The Social security number is essential to access services in Health, Education and Labor. To the immediate and harsh criticism by SYRIZA that conservative New Democracy will implement harsh policies to services provided to refugees and migrants living in Greece, Vroutsis responded with a tweet: “A few days before the election, SYRIZA issued an easily disproved circular, opposed to the law that provides AMKA to third-country nationals in arbitrary way. Labor ministry services were opposing this. I abolished it immediately. Our Country is not an unfenced backyard.”

Read more …

 

 

 

 

 

Jul 102019
 


Pablo Picasso Guernica [Study] V 1937

 

Jeffrey Epstein Shipped Himself A 53-Pound Shredder (Grim)
Doubts Over Deutsche Bank Turnaround Plan Dent Shaky Shares (R.)
Trump’s Twitter Blocking Violates Constitution – Appeals Court (CNN)
Ocasio-Cortez Sued Over Twitter Blocks (Hill)
Facebook’s New Policy Says It’s OK to Post Death Threats Against Me (PJW)
EU Subsidy Loss ‘Could Wipe Out UK Farms’ Like The Coal Industry (BBC)
UK, France To Send Forces To Syria … But Americans Will Pay (RT)
U.S Wants Military Coalition To Safeguard Waters Off Iran, Yemen (R.)
US Urges Turkey To Halt Drilling Operations Off Cyprus Coast (R.)
EU To Cut Contacts, Aid To Turkey Over Cyprus Drilling Violations (K.)
Turkey Rejects Greek, EU Claims That Drilling Off Cyprus Illegitimate (R.)
Holland Covers Hundreds Of Bus Stops With Plants As Gift To Honeybees (Ind.)
David Attenborough: Polluting Planet May Become As Reviled As Slavery (G.)
Glacial Melting In Antarctica May Become Irreversible (G.)

 

 

The news will be all over Epstein for a long time to come. This overview from Ryan Grim is as good as the next one. We must wait till details start leaking out. Trump Labor Sec. Acosta will be gone, but who else pops up?

Jeffrey Epstein Shipped Himself A 53-Pound Shredder (Grim)

Jeffrey Epstein shipped a shredder from the U.S. Virgin Islands to his Palm Beach home in July 2008, shortly after reaching a non-prosecution agreement with then-U.S. Attorney Alex Acosta, maritime records show. Then, in March of this year, shortly after a Florida federal judge invalidated that agreement, Epstein shipped a tile and carpet extractor from the Virgin Islands to his Manhattan townhouse, the records show. Epstein, a billionaire financier, was arrested in New Jersey last Saturday on charges of running a sex trafficking ring that involved luring underage girls to his New York and Florida residences, and taking them on global flights on his airplane, dubbed the “Lolita Express.”

Epstein was first accused of abusing underage girls, some of them as young as 14, more than a decade ago, and he evaded prosecution potentially due to his high-profile connections. A key challenge investigators faced when first targeting Epstein in the mid-2000s was an inability to obtain evidence through subpoena. A 2005 search of Epstein’s Palm Beach home came up empty in its quest for computers that investigators suspected contained critical evidence connected to his alleged sexual abuse of young girls. In 2007, a federal grand jury subpoenaed the computers. That August, Acosta, who is now Donald Trump’s labor secretary, entered into plea agreement discussions with Epstein.

Because of those talks, a motion to compel production of Epstein’s computers was delayed, according to the Miami Herald. Epstein held out, however, resisting the deal because it would require him to register as a sex offender. The FBI continued investigating and in March 2008, according to the Miami Herald, preparations were being made to take the case to a new federal grand jury. That would prove unnecessary, as Epstein agreed to a deal with Acosta. Without notifying the 32 identified victims, the federal government reached a non-prosecution agreement with Epstein in exchange for his guilty plea in state court to a minor offense. He pleaded guilty on June 30.

On July 7, 2008, federal prosecutors told Epstein’s attorneys via email that they intended to notify the 32 victims about the agreement. Epstein’s lawyers and the prosecutors debated how much of the agreement to reveal, settling on a less than full accounting. A week later, on July 15, Epstein received a shipment at his Palm Beach home from the port in the U.S. Virgin Islands closest to his home there, according to maritime shipping records compiled by ImportGenius and provided to The Intercept. The shipment was a 53-pound shredder.

For the next decade, Epstein’s legal troubles appeared to be behind him. Then, in November 2018, the Miami Herald published a new investigation into Epstein’s alleged child sex trafficking ring, which prompted federal investigators to take a new look at the case. However, the agreement not to prosecute first had to be invalidated. That came on February 21, when a Florida federal judge ruled that Acosta’s office had violated the Crime Victims’ Rights Act by keeping the women in the dark.

Read more …

They’re on “on a week-long roadshow to explain the restructuring”?! What century is this?

Doubts Over Deutsche Bank Turnaround Plan Dent Shaky Shares (R.)

Deutsche Bank shares extended losses on Tuesday on investor doubts that its chief executive can revive the lender by shrinking the investment bank and returning to its roots as banker to corporate Germany. Christian Sewing, CEO for just over a year, and his finance chief are on a week-long roadshow to explain the restructuring. To underline his commitment, Sewing plans to invest a quarter of his fixed salary — around 820,000 euros — in Deutsche shares, a person with knowledge of the matter said. Deutsche’s stock price has fallen 10 percent since Sunday’s restructuring announcement to cut 18,000 jobs in a 7.4 billion euro ($8.3 billion) “reinvention”. It is the biggest two-day decline in almost three years.


By 1312 GMT, shares were down 3.8% on the day, after sliding as much as 6.5% earlier. The bank’s bonds also fell. Analysts and investors say Sewing, who joined Deutsche Bank in 1989, is right to cut back its trading desks but question if he can make his plan work when interest rates are still low and U.S. banks have expanded their share of the German market. “There seems to be some concerns around the plan details, particularly the ability for the bank to retain revenues while cutting costs,” one of the bank’s top 25 shareholders told Reuters, citing worries the bank would need fresh equity to execute Sewing’s plan.

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But if this applies to Trump, who’s next?

Trump’s Twitter Blocking Violates Constitution – Appeals Court (CNN)

An appeals court said Tuesday that President Donald Trump violated the First Amendment by blocking users on Twitter. The 2nd US Circuit Court of Appeals upheld a New York judge’s ruling and found that Trump “engaged in unconstitutional viewpoint discrimination by utilizing Twitter’s ‘blocking’ function to limit certain users’ access to his social media account, which is otherwise open to the public at large, because he disagrees with their speech.” “We hold that he engaged in such discrimination,” the ruling adds. The judges on the appeals court concluded that “the First Amendment does not permit a public official who utilizes a social media account for all manner of official purposes to exclude persons from an otherwise-open online dialogue because they expressed views with which the official disagrees.”


The challenge to Trump’s unprecedented use of Twitter in office came from seven individuals he blocked, as well as the Knight First Amendment Institute, which argued that the President’s personal account is an extension of his office. The Justice Department argued in March that the President wasn’t “wielding the power” of the federal government when he blocked certain individuals from his personal Twitter account, @realDonaldTrump, because while the President sends tweets in his official capacity, he blocks users as a personal matter. But the appeals court disagreed with that view.

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The goose and the gander.

Ocasio-Cortez Sued Over Twitter Blocks (Hill)

One former Democratic state lawmaker and one Republican congressional hopeful announced this week that they are suing Rep. Alexandria Ocasio-Cortez (D-N.Y.) over being blocked from her personal Twitter account. Former state assemblyman Dov Hikind (D) and congressional candidate Joseph Saladino, who is running in a Republican primary for the chance to battle Rep. Max Rose (D-N.Y.), announced lawsuits this week against the freshman Democratic congresswoman, seeking injunctive relief in the form of a court order demanding they be unblocked. Saladino announced in a press release that he had filed suit in the Southern District of New York, while Hikind told Fox News that he had filed his claim in the state’s Eastern District.

“I have officially filed my lawsuit against AOC for blocking me on twitter,” Saladino tweeted. “Trump is not allowed to block people, will the standards apply equally? Stay tuned to find out!” “If we can’t talk to one another, the whole system breaks down,” Saladino added in his press release. “Look what is happening in my district when entrenched NeverTrumpers are confronted by America First ideas. Like it or not we live in the same city and we need to be professional.” In an interview with Fox News, Hikind pointed to a recent court ruling declaring that President Trump is not allowed to block critics from his official Twitter account because of his status as a public official as legal precedent for his claim.

“Just today the 2nd Circuit Court of Appeals affirmed a ruling that elected officials cannot block individuals from their Twitter accounts, thereby setting a precedent that Ocasio-Cortez must follow,” Hikind told the network. “Twitter is a public space, and all should have access to the government officials on it.”

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Think of Paul Joseph Watson what you like, but this is insane. Time to tackle Zuck.

Facebook’s New Policy Says It’s OK to Post Death Threats Against Me (PJW)

Facebook has issued a new policy update saying it’s acceptable to post death threats and incite violence against me, despite this being a crime in the United Kingdom. No, I’m not joking. A Community Standards update published by Facebook states (emphasis mine); “Do not post: Threats that could lead to death (and other forms of high-severity violence) of any target(s) where threat is defined as any of the following: “Statements of intent to commit high-severity violence; or Calls for high-severity violence (unless the target is an organization or individual covered in the Dangerous Individuals and Organizations policy)….”

Back in May, Facebook and Instagram banned me under the justification that I was a “dangerous individual”. They provided no evidence whatsoever that I had behaved in a “dangerous” manner or violated any of their policies. Facebook has designated me a “dangerous individual” and now says it’s acceptable for its users to issue death threats against me. This is a crime in the United Kingdom under the 1988 Malicious Communications Act which states, “Any person who sends to another person a letter, electronic communication or article of any description which conveys….a threat….is guilty of an offence.” The largest social media company in the world with over 2 billion users literally says its fine to incite violence against me, despite this being illegal. They are painting a target on my back.

[..] Two months ago, via my lawyers, I filed a Subject Access Request demanding Facebook turn over all information relating to me. Facebook has yet to respond to this request, despite it being a legal requirement to respond within 30 days. If and when Facebook ever responds to this legal demand, the next step will be to begin litigation proceedings. The fact that Facebook has literally said it’s OK to incite violence against me is going to be a very interesting potential addition to those proceedings.

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Maybe the coal industry is not the best example in the time of climate crisis.

EU Subsidy Loss ‘Could Wipe Out UK Farms’ Like The Coal Industry (BBC)

With three months to go before the UK could leave the European Union (EU), farmers say they still face uncertainty about future subsidy levels. Last year farmers received £3.5bn in financial support through the EU’s Common Agricultural Policy (CAP). One farmer from York said he feared farms could soon be “wiped out like the coal industry”. The government said farmers had been told subsidy levels would be maintained until the next general election. But the National Audit Office said farmers had been left unable to plan for the future and the main farming union called for “cast-iron commitments” from the government. CAP funding is one of the EU’s biggest policies with a Europe-wide budget worth more than £50bn a year.


The subsidies are designed to support the farming industry and help farmers and landowners maintain their land. Some farmers have said without long-term guarantees about future subsidy levels, farms could disappear from the landscape. “We could be wiped out like the coal industry,” said Roger Hobson, whose 4,500-acre farm near York qualifies for a subsidy worth £100,000 a year. “This is not just about growing food, these subsidies help us improve the landscape and protect endangered species. “What we fear is that in the future the farm industry will have to go to the government and compete for funding alongside the NHS and other public services. “In that situation the government is always going to pick the NHS over farmers.”

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Don’t.

UK, France To Send Forces To Syria … But Americans Will Pay (RT)

With US President Donald Trump hungry for a withdrawal from Syria, a new report claims Britain and France will send their own forces to pick up the slack, along with other allies. But the swap will cost Washington. Between 1,000 and 2,000 American troops are presently stationed in northeastern Syria, supporting anti-government Kurdish fighters. However, as the US looks to wind down its presence in Syria, the Trump administration has looked to its allies to pick up the slack. Germany rebuffed a request for ground troops on Monday, citing “well known” German policy. Britain and France, on the other hand, are willing to heed Washignton’s call, according to a new report from Foreign Policy.


Both countries have a limited number of special forces on the ground in Syria, and will commit to a troop increase of between 10 and 15 percent to allow the US to withdraw. President Trump is no fan of outsourcing American jobs to foreigners, so why have Britain and France to do America’s dirty work? Well, for one thing, it’ll silence saber-rattlers like John Bolton. Trump announced the US’ complete withdrawal from Syria in December, a country that he said at the time was “sand and death.” The move was seen as a return to the non-interventionist platform he touted during his election campaign, when he mused “why aren’t we letting ISIS go and fight Assad and then we pick up the remnants?”

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Yeah, we really need Europeans involved in the Saudi war on Yemen.

U.S Wants Military Coalition To Safeguard Waters Off Iran, Yemen (R.)

The United States hopes to enlist allies over the next two weeks or so in a military coalition to safeguard strategic waters off Iran and Yemen, where Washington blames Iran and Iran-aligned fighters for attacks, the top U.S. general said on Tuesday. Under the plan, which has only been finalized in recent days, the United States would provide command ships and lead surveillance efforts for the military coalition. Allies would patrol waters near those U.S. command ships and escort commercial vessels with their nation’s flags. Marine General Joseph Dunford, the chairman of the Joint Chiefs of Staff, articulated those details to reporters following meetings on Tuesday about it with acting U.S. Defense Secretary Mark Esper and Secretary of State Mike Pompeo.


“We’re engaging now with a number of countries to see if we can put together a coalition that would ensure freedom of navigation both in the Straits of Hormuz and the Bab al-Mandab,” Dunford said. “And so I think probably over the next couple of weeks we’ll identify which nations have the political will to support that initiative and then we’ll work directly with the militaries to identify the specific capabilities that’ll support that.” Iran has long threatened to close the Strait of Hormuz, through which almost a fifth of the world’s oil passes, if it was unable to export its oil, something U.S. President Donald Trump’s administration has sought as a way to pressure Tehran to renegotiate a deal on its nuclear program.

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Or what? Sanctions? Erdogan is a wounded animal, beware.

US Urges Turkey To Halt Drilling Operations Off Cyprus Coast (R.)

The US State Department on Tuesday urged Turkish authorities to halt energy drilling operations off the Cypriot coast in the Mediterranean, a day after Cyprus protested a Turkish ship dropping anchor there. “This provocative step raises tensions in the region. We urge Turkish authorities to halt these operations and encourage all parties to act with restraint and refrain from actions that increase tensions in the region,” a US State Department spokeswoman said in a statement. Turkey and the internationally recognized government of Cyprus have overlapping claims in that part of the Mediterranean, an area thought to be rich in natural gas.


Cyprus, a member of the European Union, has discovered natural gas in areas off the southern coast of the disputed island, though nothing has been extracted. Turkey contests the rights of Cyprus to explore for gas, sending its own drilling ships to stake claims around the island. Refinitiv Eikon shipping data showed a Turkish ship arrived off the east coast of Cyprus earlier this week. Another Turkish vessel has been spotted off the west of Cyprus since early May. The Cypriot presidency on Monday accused Turkey of a “grave violation,” and an EU statement also rebuked the Turkish action.

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“Such action could target companies, individuals, and Turkey’s deep-sea hydrocarbon exploration and production sectors..”

EU To Cut Contacts, Aid To Turkey Over Cyprus Drilling Violations (K.)

The European Union is considering suspending most high-level contacts with Turkey and cut the flow of funds in protest of the Turkish drilling activities in the Cyprus EEZ, Bloomberg reports. A range of measures will reportedly be discussed by EU ministers on Wednesday in Brussels. One measure could limit the European Investment Bank’s sovereign-backed lending in Turkey and confirm a cut of some 146 million euros ($163 million) in aid for next year. The options proposed by the European Commission also include suspending all ministerial and leaders’ meetings, as well as ongoing talks between the two sides on an aviation agreement.


The European External Action Service would also advise member states to refrain from high-level contacts with Turkey. Bloomberg reports that EU leaders have sided with Cyprus in the dispute, declaring last month that they are ready to consider sanctions if Turkey continues drilling. Such action could target companies, individuals, and Turkey’s deep-sea hydrocarbon exploration and production sectors, though they aren’t currently on the menu of the commission’s proposals. The measures will likely be agreed Wednesday and approved by EU foreign ministers when they meet in Brussels next week.

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Turkey claims northern Cyprus is Turkish land.

Turkey Rejects Greek, EU Claims That Drilling Off Cyprus Illegitimate (R.)

Turkey’s foreign ministry said on Wednesday it rejected statements by Greek and European Union officials that Turkish drilling for gas and oil off Cyprus was illegitimate and said the EU could not be an impartial mediator on the Cyprus problem. The ministry said in a statement that Turkey’s Fatih ship had started drilling activities to the west of the Mediterranean island at the start of May and its Yavuz ship had recently arrived to the east of Cyprus and would conduct drilling activities.

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Sometimes it’s the simplest things. But when they start blabbing about “completely clean public transport”, you know they don’t really have a clue. A long struggle lies ahead.

Holland Covers Hundreds Of Bus Stops With Plants As Gift To Honeybees (Ind.)

The roofs of hundreds of bus stops have been covered in plants as a gift to honeybee, by a city in the Netherlands. Mainly made up of sedum plants, a total of 316 have been covered in greenery in Utrecht. The shelters not only support the city’s biodiversity, such as honey bees and bumblebees, but they also help capture fine dust and store rainwater. The roofs are looked after by workers who drive around in electric vehicles, and the bus stops have all been fitted with energy-efficient LED lights and bamboo benches.

The city aims to introduce 55 new electric buses by the end of the year and have “completely clean public transport” by 2028. The electricity used to power the buses will come directly from Dutch windmills. Utrecht also runs a scheme which allows residents to apply for funding to transform their own roofs into green roofs.

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He woke up late, but he did.

David Attenborough: Polluting Planet May Become As Reviled As Slavery (G.)

The attitude of young people towards tackling the environmental crisis is “a source of great hope”, David Attenborough has told MPs, as he predicted that polluting the planet would soon provoke as much abhorrence as slavery. Giving evidence to the business, energy and industrial strategy committee on how to tackle the climate emergency, the naturalist and TV presenter said radical action was required. Asked by the Tory MP Patrick McLoughlin, a committee member, whether the government’s new commitment of net zero carbon emissions for the UK by 2050 was rapid enough, Attenborough said such targets were not necessarily the best approach. “In a way I would think that is not the way of focusing on the problem,” he said.

“We cannot be radical enough in dealing with the issues that face us at the moment. The question is: what is practically possible? How can we take the electorate with us in dealing with these things?” He said: “The most encouraging thing that I see, of course, is that the electors of tomorrow are already making themselves and their voices very, very clear. And that is a source of great comfort in a way, but also the justification, the reality, that these young people are recognising that their world is the future. “I’m OK, and all of us here are OK, because we don’t face the problems that are coming. But the problems in the next 30 years are really major problems that are going to cause social unrest, and great changes in the way that we live, and what we eat. It’s going to happen.”

Asked by the Labour MP Vernon Coaker to expand on how public attitudes were shifting, Attenborough replied: “There was a time in the 19th century when it was perfectly acceptable for civilised human beings to think that it was morally acceptable to actually own another human being for a slave. And somehow or other, in the space of 20 or 30 years, the public perception of that totally transformed.” He said: “I suspect that we are right now in the beginning of a big change. Young people in particular are the stimulus that’s bringing it about.

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Not surte that talking about things that MIGHT happen in 600 years is very useful…

Glacial Melting In Antarctica May Become Irreversible (G.)

Antarctica faces a tipping point where glacial melting will accelerate and become irreversible even if global heating eases, research suggests. A Nasa-funded study found instability in the Thwaites glacier meant there would probably come a point when it was impossible to stop it flowing into the sea and triggering a 50cm sea level rise. Other Antarctic glaciers were likely to be similarly unstable. Recent research found the rate of ice loss from five Antarctic glaciers had doubled in six years and was five times faster than in the 1990s. Ice loss is spreading from the coast into the continent’s interior, with a reduction of more than 100 metres in thickness at some sites.

The Thwaites glacier, part of the West Antarctic ice sheet, is believed to pose the greatest risk for rapid future sea level rise. Research recently published in the Proceedings of the National Academy of Sciences journal found it was likely to succumb to instability linked to the retreat of its grounding line on the seabed that would lead to it shedding ice faster than previously expected. Alex Robel, an assistant professor at the US Georgia Institute of Technology and the study’s leader, said if instability was triggered, the ice sheet could be lost in the space of 150 years, even if temperatures stopped rising. “It will keep going by itself and that’s the worry,” he said.

Modelling simulations suggested extensive ice loss would start in 600 years but the researchers said it could occur sooner depending on the pace of global heating and nature of the instability. Hélène Seroussi, a jet propulsion laboratory scientist at Nasa, said: “It could happen in the next 200 to 600 years. It depends on the bedrock topography under the ice, and we don’t know it in great detail yet.”

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Jun 242019
 


Pablo Picasso Sleeping girl 1935

 

Free Money Socialism (Henrich)
Iran Goes For “Maximum Counter-Pressure” (Escobar)
Facebook’s Libra Cryptocurrency ‘Poses Risks To Global Banking’ -BIS (G.)
Google’s Chrome Web Browser “Has Become Spy Software” (ZH)
Austerity, Inequality Fuelling Mental Illness – Top UN Envoy (G.)
Republicans Don’t Understand Democrats – and Vice Versa (Atl.)
400 Pilots Sue Boeing In Class Action Over 737 MAX Cover-Up (ABC.au)
How Wall Street Colonized the Caribbean (BR)
Blow To Turkey’s Erdogan As Opposition Wins Big In Istanbul (R.)
Turkey Warns EU Not To Interfere On Cyprus EEZ Issue (K.)
Greek Armed Forces On Standby For Turkish Moves In East Med, Aegean (K.)

 

 

Very close to what I’ve been saying.

Free Money Socialism (Henrich)

According to Jay Powell the Fed’s primary mission is now to “sustain the economic expansion.” I’ve never used the term “manipulation” before, but let’s just be clear what “sustain the economic expansion” really means: To prevent natural market forces from taking hold. That’s manipulation. Business cycles are natural. They serve a purpose, they lay the foundation for new growth, they weed out the excess, they permit for a reset of an aging expansion, for a renewed flourishing of innovation, new solutions, creativity, and yes growth. Of course because of all this recessions bring about temporary pain, but nobody wants pain anymore, and hence central bankers with hero magazine covers have now taken on a new role, that of preventing a recession altogether.

No more cleansing, no more resets, but only ever more excess and propagating the notion that they alone can prevent the cleansing process from taking place with their favorite and only method: Free Money. Oh yes, the free money whores are here again. Hurry back into stocks: “Now, interest rates are coming down en masse. Investors who adjusted their portfolios for a high-rate environment must readjust. That means leaning into growth stocks again, scouring Asia for opportunities, and earning income from investments that won’t succumb to the low-rate trend and will also hold up in a shaky economy”. Barron’s calls the Fed flip flop “graceful”. I call it disgraceful.

Just stop. It’s 2019, wealth inequality is higher than ever, corporate debt is higher than ever, and growth is slowing. Innovation is hampered by a system that has benefitted the few which have grown into bloated monopolies, and the entire system itself remains held afloat by massive and ever more expending debt. After all there is zero intellectual integrity to anything that is being propagated. In recent times Fed chairs have bemoaned rising wealth inequality, oh how un-American it all is, and rising corporate debt being a threat to the economy, but then they proceed to again exacerbate both by promising more easy money, their default solution in the misguided attempt to bail investors out from all pain and any bad decisions.

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“The key in the analysis is what is called notional. They are so far out of the money that they are said to mean nothing. But in a crisis the notional can become real.”

Iran Goes For “Maximum Counter-Pressure” (Escobar)

The facts are stark. Tehran simply won’t accept all-out economic war lying down – prevented to export the oil that protects its economic survival. The Strait of Hormuz question has been officially addressed. Now it’s time for the derivatives. Presenting detailed derivatives analysis plus military analysis to global media would force the media pack, mostly Western, to go to Warren Buffett to see if it is true. And it is true. Soleimani, according to this scenario, should say as much and recommend that the media go talk to Warren Buffett. The extent of a possible derivatives crisis is an uber-taboo theme for the Washington consensus institutions. According to one of my American banking sources, the most accurate figure – $1.2 quadrillion – comes from a Swiss banker, off the record.

He should know; the Bank of International Settlements (BIS) – the central bank of central banks – is in Basle. The key point is it doesn’t matter how the Strait of Hormuz is blocked. It could be a false flag. Or it could be because the Iranian government feels it’s going to be attacked and then sinks a cargo ship or two. What matters is the final result; any blocking of the energy flow will lead the price of oil to reach $200 a barrel, $500 or even, according to some Goldman Sachs projections, $1,000. Another US banking source explains; “The key in the analysis is what is called notional. They are so far out of the money that they are said to mean nothing.

But in a crisis the notional can become real. For example, if I buy a call for a million barrels of oil at $300 a barrel, my cost will not be very great as it is thought to be inconceivable that the price will go that high. That is notional. But if the Strait is closed, that can become a stupendous figure.” BIS will only commit, officially, to indicate the total notional amount outstanding for contracts in derivatives markers is an estimated $542.4 trillion. But this is just an estimate. The banking source adds, “Even here it is the notional that has meaning. Huge amounts are interest rate derivatives. Most are notional but if oil goes to a thousand dollars a barrel, then this will affect interest rates if 45% of the world’s GDP is oil. This is what is called in business a contingent liability.”

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“If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies.”

Facebook’s Libra Cryptocurrency ‘Poses Risks To Global Banking’ -BIS (G.)

Facebook’s plan to operate its own digital currency poses risks to the international banking system that should trigger a speedy response from global policymakers, according to the organisation that represents the world’s central banks. Although the move of big tech firms such as Facebook, Amazon and Alibaba into financial services could speed up transactions and cut costs, especially in developing world countries, it could also undermine the stability of a banking system that has only just recovered from the crash of 2008. Echoing warnings from many tech experts, the Bank for International Settlements (BIS) said that while there were potential benefits to be made, the adoption of digital currencies outside the current financial system could reduce competition and create data privacy issues.

“The aim should be to respond to big techs’ entry into financial services so as to benefit from the gains while limiting the risks,” said Hyun Song Shin, economic adviser and head of research at BIS. “Public policy needs to build on a more comprehensive approach that draws on financial regulation, competition policy and data privacy regulation.” The warning from the BIS on Sunday comes only days after Facebook announced it would launch its own digital currency, Libra, in 2020. It will allow its billions of users to make financial transactions across the globe in a move that could potentially shake up the world’s banking system.

Chris Hughes, a co-founder of Facebook, last week added his voice to concerns being expressed over big tech’s move into finance, warning that Libra could shift power into the wrong hands. Hughes, who is co-chair of the Economic Security Project, an anti-poverty campaign group, said: “If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies. If global regulators don’t act now, it could very soon be too late.”

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Very easy for a government to counter. Should make one suspicious as to why they don’t.

Google’s Chrome Web Browser “Has Become Spy Software” (ZH)

Google’s Chrome is essentially spy software according to Washington Post tech columnist Geoffrey Fowler, who spent a week analyzing the popular browser and concluded that it “looks a lot like surveillance software.” Fowler has since switched to Mozilla’s Firefox because of its default privacy settings, and says that it was easier than one might imagine.

“My tests of Chrome vs. Firefox unearthed a personal data caper of absurd proportions. In a week of Web surfing on my desktop, I discovered 11,189 requests for tracker “cookies” that Chrome would have ushered right onto my computer but were automatically blocked by Firefox. These little files are the hooks that data firms, including Google itself, use to follow what websites you visit so they can build profiles of your interests, income and personality. Chrome welcomed trackers even at websites you would think would be private. I watched Aetna and the Federal Student Aid website set cookies for Facebook and Google. They surreptitiously told the data giants every time I pulled up the insurance and loan service’s log-in pages.

And that’s not the half of it.= Look in the upper right corner of your Chrome browser. See a picture or a name in the circle? If so, you’re logged in to the browser, and Google might be tapping into your Web activity to target ads. Don’t recall signing in? I didn’t, either. Chrome recently started doing that automatically when you use Gmail. -Washington Post”

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Iceland?!

Austerity, Inequality Fuelling Mental Illness – Top UN Envoy (G.)

Austerity, inequality and job insecurity are bad for mental health and governments should counteract them if they want to face up to the rising prevalence of mental illness, the UN’s top health envoy has said. In an exclusive interview with the Guardian to coincide with a hard-hitting report to be delivered to the UN in Geneva on Monday, Dr Dainius Puras said measures to address inequality and discrimination would be far more effective in combatting mental illness than the emphasis over the past 30 years on medication and therapy. “This would be the best ‘vaccine’ against mental illness and would be much better than the excessive use of psychotropic medication which is happening,” said Puras, who as the UN’s special rapporteur on health reports back to the UN human rights council in Geneva.

He said that since the 2008 financial crisis, policies that accentuated division, inequality and social isolation have been bad for mental equilibrium. “Austerity measures did not contribute positively to good mental health,” he said. “People feel insecure, they feel anxious, they do not enjoy good emotional wellbeing because of this insecurity situation.” “The best way to invest in the mental health of individuals is to create a supportive environment in all settings, family, the workplace. Then of course [therapeutic] services are needed, but they should not be based on an excessive biomedical model.”

Puras said there had been an overemphasis on trying to cure mental illness like physical illness, through “good medicine”, without thinking about the social factors that cause or contribute to some mental disorders. The prescription of psychotropic drugs to deal with mental illness, particularly antidepressants, has soared across the developed world in the past 20 years.

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What do Americans understand these days?

Republicans Don’t Understand Democrats – and Vice Versa (Atl.)

Unfortunately, the “Perception Gap” study suggests that neither the media nor the universities are likely to remedy Americans’ inability to hear one another: It found that the best educated and most politically interested Americans are more likely to vilify their political adversaries than their less educated, less tuned-in peers. Americans who rarely or never follow the news are surprisingly good at estimating the views of people with whom they disagree. On average, they misjudge the preferences of political adversaries by less than 10 percent. Those who follow the news most of the time, by contrast, are terrible at understanding their adversaries. On average, they believe that the share of their political adversaries who endorse extreme views is about 30 percent higher than it is in reality.


Perhaps because institutions of higher learning tend to be dominated by liberals, Republicans who have gone to college are not more likely to caricature their ideological adversaries than those who dropped out of high school. But among Democrats, education seems to make the problem much worse. Democrats who have a high-school degree suffer from a greater perception gap than those who don’t. Democrats who went to college harbor greater misunderstandings than those who didn’t. And those with a postgrad degree have a way more skewed view of Republicans than anybody else. It is deeply worrying that Americans now have so little understanding of their political adversaries. It is downright disturbing that the very institutions that ought to help us become better informed may actually be deepening our mutual incomprehension.

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And that’s just in one airline.

400 Pilots Sue Boeing In Class Action Over 737 MAX Cover-Up (ABC.au)

More than 400 pilots have joined a class action against American plane manufacturer Boeing, seeking damages in the millions over what they allege was the company’s “unprecedented cover-up” of the “known design flaws” of the latest edition of its top-selling jet, the 737 MAX. Boeing’s 737 MAX series— first announced in 2011 and put to service in 2017 — is the fourth generation of its 737 aircraft, a widely popular narrow-body aircraft model that has been a mainstay of short-haul aircraft routes across the globe. By March 2019, the entire global fleet was suspended by a US presidential decree, following the second fatal crash involving a 737 MAX that killed 157 people in Ethiopia.

The first crash involving the 737 MAX jet happened off the coast of Indonesia in October 2018, killing 189 people. In the time since the two fatal crashes, some of the families of the 346 people killed have sought compensation, while aircraft carriers — such as Norwegian Air — have sought compensation from the American manufacturer for lost revenue as a result of the plane’s global ban. This latest lawsuit filed against Boeing marks the first class action lodged by pilots qualified to fly the 737 MAX series, who have alleged that Boeing’s decisions have caused them to suffer from monetary loss and mental distress since the jet’s suspension.

The originating plaintiff, known as Pilot X —who has chosen to remain anonymous for “fear of reprisal from Boeing and discrimination from Boeing customers” — lodged the statement of claim on Friday, which seeks damages for them and more than 400 colleagues who work for the same airline. In court documents seen by the ABC, the claim alleges that Boeing “engaged in an unprecedented cover-up of the known design flaws of the MAX, which predictably resulted in the crashes of two MAX aircraft and subsequent grounding of all MAX aircraft worldwide.” They argue that they “suffer and continue to suffer significant lost wages, among other economic and non-economic damages” since the fleet’s global grounding. The class action will be heard in a Chicago court, with a hearing date set for October 21, 2019.

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History lesson” “The Caribbean archipelago was ground zero for U.S. imperial banking.”

How Wall Street Colonized the Caribbean (BR)

Scrubbed from the pages of glossy coffeetable books, the history of U.S. imperialism can be found in the archives of Wall Street’s oldest, largest, and most powerful institutions. A deep dive into the vaults and ledgers of banking houses such as Citigroup, Inc., and J. P. Morgan Chase and Co. reveals a story of capitalism and empire whose narrative is not of morally pure and inspiring economic growth, technological innovation, market expansion, and shareholder accumulation, but rather of blood and labor, stolen sovereignty and pilfered resources, military occupation and monetary control. Sugar comingles with blood, chain gangs cross spur lines, and the magical abstractions of finance are found vulgarized in the base manifestations of racial capitalism.

This history of bankers and empire is also a Caribbean history. The Caribbean archipelago was ground zero for U.S. imperial banking. Wall Street’s first experiments in internationalism occurred in Cuba, Haiti, Panama, Puerto Rico, the Dominican Republic, and Nicaragua, often with disastrous results—for those countries and colonies, and often for the imperial banks themselves. Yet where there was expansion, there was also pushback. The internationalization of Wall Street was met with local resistance, refusal and revolt. And just as the history of imperialism has been excised from popular narratives, so too has this history of Caribbean anti-imperialism and autonomy. The history of imperial banking and racial capitalism begins at the end of the nineteenth century, at the historical horizon where the project of U.S. settler colonialism that spurred the financing of the West became the enterprise of U.S. territorial colonialism in the Caribbean and Asia.

Buoyed by unprecedented wealth and boosted by the expansionist jingoism following the victory over Spain in the Caribbean and the Pacific, New York City’s bankers and merchants believed that the organization of an imperial banking system—one that could compete with Europe’s long-established institutions—was critical to the global rise of the city and to the consolidation of Wall Street’s position in international finance, trade, and commerce. With these ambitions, bankers and business-people set their sights on asserting control over the trade and finance of the Americas. They sought to control local central banks, establish U.S. branch banks, take over commodity financing, reorganize monetary systems on a dollar basis, and refinance European-funded sovereign debt.

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He’s losing it. Beware. Next move will be to suggest Turkey’s under threat, call for patriotism.

Blow To Turkey’s Erdogan As Opposition Wins Big In Istanbul (R.)

Turkey’s opposition has dealt President Tayyip Erdogan a stinging blow by winning control of Istanbul in a re-run mayoral election, breaking his aura of invincibility and delivering a message from voters unhappy over his policies. Ekrem Imamoglu of the Republican People’s Party (CHP) secured 54.21% of votes, according to state-owned Anadolu news agency – a far wider victory margin than his narrow win three months ago. The previous result was annulled after protests from Erdogan’s Islamist-rooted AK Party, which said there had been widespread voting irregularities. The decision to re-run the vote was criticized by Western allies and caused uproar among domestic opponents who said Turkey’s democracy was under threat.


On Sunday, tens of thousands of Imamoglu supporters celebrated in the streets of Istanbul after the former businessman triumphed over Erdogan’s handpicked candidate by almost 800,000 votes. “In this city today, you have fixed democracy. Thank you Istanbul,” Imamoglu told supporters who made heart signs with their hands, in an expression of the inclusive election rhetoric that has been the hallmark of his campaigning. “We came to embrace everyone,” Imamoglu said. “We will build democracy in this city, we will build justice. In this beautiful city, I promise, we will build the future.”

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The EU has no choice anymore.

Turkey Warns EU Not To Interfere On Cyprus EEZ Issue (K.)

Turkey has warned the European Union that any intervention on their part on the issue of Cyprus’ Exclusive Economic Zone (EEZ) would negatively affect relations between Greece and Turkey, as well as any prospects for an end to the occupation of the northern part of Cyprus. The warning was made through a non-paper sent to 27 of the EU’s 28 member-states on June 16, Cyprus’ “Fileleftheros” newspaper reports. Turkey didn’t send the note to Cyprus, whose government it does not recognize. The non-paper says the EU would be wise not to act as a judge in the dispute on sea borders and that a similar stance would further discourage efforts to solve the “Cyprus problem” and would cause Greek-Turkish relations to deteriorate.


Turkey claims that the area where one of its drillships has begun exploring for oil and natural gas, soon to be joined by a second, is within Turkey’s continental shelf and that no islands, Cyprus included, can constitute a “full” EEZ. Turkey repeats its views on “equal rights” between Greek- and Turkish-Cypriots, that-is, between the internationally-recognized Republic of Cyprus and the Turkish-occupied north of the island, which Turkey alone has recognized as the “Turkish Republic of Northern Cyprus” and says the best solution is the appointment of a mixed commission with representatives of both sides. Failing that, Turkey says, it is determined to protect the rights of the Turkish-Cypriot resources in the area. The non-paper ends with the hope that, in the decisions to be taken by the EU, “common sense” will prevail.

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Greece will not give in.

Greek Armed Forces On Standby For Turkish Moves In East Med, Aegean (K.)

As Turkey continues with its provocative behavior in the Eastern Mediterranean, despite European Union calls for it to desist from drilling for oil in Cyprus’ exclusive economic zone (EEZ), Greece’s armed forces are on standby to deal with a possible escalation of tensions in the East Med or the Aegean, Kathimerini understands. According to sources, the key question being pondered in Athens is how to react in the event that Turkey decides to conduct seismic research or drilling within Greece’s continental shelf or its EEZ. The biggest concern is about a potential Turkish intervention east of Rhodes and south of Kastellorizo.

On the political level, Athens has done what it can, underlining the potential repercussions of Turkey’s provocative behavior on stability in the broader region. The statement by the EU last week, though vague, was welcomed by Prime Minister Alexis Tsipras as “the first clear and decisive” condemnation of Turkey by the bloc “after decades of violations of international law.” On the operational level, however, it is less clear what Greece’s response should be. The country’s armed forces will be on high alert over the summer as defense officials prepare a series of plans to deal with a possible Turkish intervention. The plans are primarily based on Hellenic Navy maneuvers, as Turkey is currently using research ships and drilling vessels to entrench its presence in the region.

However, the Hellenic Air Force would likely play a supportive role in any response. Asked last week whether Greece can count on military support from the EU or the United States in the event of an incident, Defense Minister Evangelos Apostolakis told reporters that Greece will have to plan to deal with such a scenario independently. “There is no such promise, nor any such issue at the moment, but as I’ve said before, when we need to do something we expect that we will basically be alone.” Athens also holds little faith in promises by French President Emmanuel Macron to send French Navy ships to the Aegean if necessary, as such pledges have been made in the past.

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Jun 232019
 


Rembrandt van Rijn Saskia en profil in expensive attire 1640-45

 

Mapping the World’s Financial Weak Spots (IMF)
US Launched Cyber Attack On Iranian Rockets And Missiles (AP)
US To Hit Iran With ‘Major’ New Sanctions Monday: Trump (AFP)
Kushner’s Economic Plan For Mideast Peace Faces Broad Arab Rejection (R.)
Three Year Prison Sentence For Damaging EU Flag, German State Proposes (Exp.)
Johnson & Johnson Faces Multibillion Opioids Lawsuit (G.)
Istanbul Votes In Mayoral Re-Run, In Test For Turkish Democracy, Erdogan (R.)
EU Warns Turkey Of Sanctions For Cyprus Drilling (BBC)
Why Is UK Life Expectancy Faltering? (O.)
Great Pacific Garbage Patch: Giant Plastic Trap Put To Sea Again (AP)

 

 

But what does it tell us really?

Mapping the World’s Financial Weak Spots (IMF)

Where will the next financial crisis come from? The short answer is: We don’t know. We can, however, look for vulnerabilities in the system that, if left untreated, can develop into problems. What do we mean by a vulnerability? It is an area of weakness that can amplify and spread an unexpected economic shock, increasing the level of risk to the financial system. Imagine the impact of an earthquake on a house built on sand, as opposed to bedrock. In the financial world, cracks in the bedrock can arise from high levels of debt and mismatches of institutions’ risk factors such as currencies or the maturities of their exposures.


One such weak spot is the debt level in US corporations and the risks investors in their securities take. Lending to heavily indebted companies with weak credit ratings is on the rise and may be a widening crack in the system. This and other vulnerabilities are reflected in the Chart of the Week on a five-point scale ranging from lowest (dark green) to highest (red) for six sectors and five country groups. The chart shows the distribution of vulnerabilities across six sectors in five regions. It was constructed using dozens of indicators going back up to two decades.

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When I see “CrowdStrike” I stop believing anything.

US Launched Cyber Attack On Iranian Rockets And Missiles (AP)

The US military launched a cyber-attack on Iranian weapons systems on Thursday, according to sources, as President Donald Trump backed away from plans for a more conventional strike in response to Iran’s downing of a US surveillance drone. The hack disabled Iranian computer systems that controlled its rocket and missile launchers, two officials told the Associated Press, and were conducted with approval from Trump. A third official confirmed the broad outlines of the strike. All spoke on condition of anonymity because they were not authorised to speak publicly about the operation.

Two of the officials said the attacks, which specifically targeted computer systems of Iran’s Islamic Revolutionary Guard Corps (IRGC), had been provided as options after two oil tankers were bombed. The IRGC has been designated a foreign terrorist group by the Trump administration. Over the past year US officials have focused on persistently engaging with adversaries in cyberspace and undertaking more offensive operations. Tensions with Iran have escalated since the US withdrew last year from the 2015 nuclear deal with Iran and began a policy of “maximum pressure”. Iran has since been hit by multiple rounds of sanctions.[..]

The cyberattacks are the latest chapter in the US and Iran’s ongoing hacking of each other. In recent weeks hackers believed to be working for the Iranian government have targeted US government agencies, as well as sectors of the economy including finance, oil and gas, sending waves of spear-phishing emails, according to representatives of cybersecurity companies CrowdStrike and FireEye, which track such activity. This new campaign appears to have started shortly after the Trump administration imposed sanctions on the Iranian petrochemical sector this month.

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Inevitably hastening the demise of the reserve currency.

US To Hit Iran With ‘Major’ New Sanctions Monday: Trump (AFP)

President Donald Trump said Saturday that the United States would impose “major” new sanctions on Iran in two days — a move sure to exacerbate tensions with the Islamic republic inflamed by the downing of a US spy plane. Trump tamped down the threat of military action on Friday, when he called off retaliatory strikes at the last minute because the response was not “proportionate” to the drone’s destruction over the Strait of Hormuz. But he had said military action is still an option and brandished the threat of sanctions ever since. Now, he has set a timetable for fresh punitive economic measures to heap more pressure on an Iranian economy already reeling from the sanctions in place since Trump withdrew from an international nuclear deal with Tehran.


“We are putting major additional Sanctions on Iran on Monday,” Trump tweeted. “I look forward to the day that Sanctions come off Iran, and they become a productive and prosperous nation again – The sooner the better!” Earlier, before heading to Camp David for meetings with his advisors on the situation, Trump said he would be Iran’s “best friend” and that the Islamic republic could be a “wealthy” country if it renounced nuclear weapons. “We’re not going to have Iran have a nuclear weapon,” Trump told reporters outside the White House. “When they agree to that, they’re going to have a wealthy country. They’re going to be so happy, and I’m going to be their best friend. I hope that happens.”

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In complete denial of what is at stake: “Homelands cannot be sold”.

Kushner’s Economic Plan For Mideast Peace Faces Broad Arab Rejection (R.)

U.S. President Donald Trump’s economic vision as part of the wider plan to resolve the Israeli-Palestinian conflict was met with contempt, repudiation and exasperation in the Arab world, even as some in the Gulf called for it to be given a chance. The $50 billion “peace to prosperity” plan, set to be presented by Trump’s son-in-law Jared Kushner at a conference in Bahrain next week, envisions a global investment fund to lift the Palestinian and neighboring Arab state economies. But the lack of a political solution, which Washington has said would be unveiled later, prompted rejection not only from Palestinians but also in Arab countries that Israel would seek normal relations with.

From Sudan to Kuwait, prominent commentators and ordinary citizens denounced Kushner’s proposals in strikingly similar terms: “colossal waste of time,” “non-starter,” “dead on arrival.” “Homelands cannot be sold, even for all the money in the world,” Egyptian analyst Gamal Fahmy said. “This plan is the brainchild of real estate brokers, not politicians. Even Arab states that are described as moderate are not able to openly express support for it.” Commentator Sarkis Naoum at Lebanon’s An-Nahar newspaper said, “This economic plan, like others, won’t succeed because it has no political foundation.”

While the precise outline of the political plan has been shrouded with secrecy, officials briefed on it say Kushner has jettisoned the two-state solution – the long-standing worldwide formula that envisages an independent Palestinian state alongside Israel in the West Bank, East Jerusalem and Gaza. The PLO has dismissed Kushner’s plans as “all abstract promises,” insisting that only a political solution will solve the problem. It said they were an attempt to bribe the Palestinians into accepting Israeli occupation.

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Huh?

Three Year Prison Sentence For Damaging EU Flag, German State Proposes (Exp.)

Anyone who attacks the blue and gold starred cloth displayed in public, rendering it “removed, destroyed, damaged, unusable or unrecognisable” could be slapped with a lengthy jail term or hefty fine. The proposed law will also protect the European anthem, Beethoven’s Ode to Joy, according to a report in Saarbrucken Zeitung, a daily newspaper in West Germany. The Saxon bill seeks to bring the status of the union’s flag into line with that of other foreign flags and national symbols. The new bill says attacks “on the reputation of the symbols of the European Union” are unacceptable, according to Saarbrucken Zeitung.


It states that it is “a commandment of self-respect and self-assertion” that the state protects the EU “against malicious contempt”. Paragraph 104 of Germany’s criminal code states that anyone who damages the flag or symbol of a foreign nation will be imprisoned or fined. A precondition is that Germany maintains diplomatic relations with the state. Saxony, home to four million people, sits in eastern Germany, where far-right party Alternative for Germany (AfD) emerged as the strongest group in last month’s European elections.

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Will we see as many jail terms as for the financial crisis?

Johnson & Johnson Faces Multibillion Opioids Lawsuit (G.)

Day after day, the memos flashing across screens in an Oklahoma courtroom have jarred with the family-friendly public image of Johnson & Johnson, the pharmaceutical giant best known for baby powder and Band-Aid. In one missive, a sales representative dismissed a doctor’s fears that patients might become addicted to the company’s opioid painkillers by telling him those who didn’t die probably wouldn’t get hooked. Another proposes targeting sales of the powerfully addictive drugs at those most at risk: men under 40.

As the state of Oklahoma’s multibillion-dollar lawsuit against Johnson & Johnson has unfolded over the past month, the company has struggled to explain marketing strategies its accusers say dangerously misrepresented the risk of opioid addiction to doctors, manipulated medical research, and helped drive an epidemic that has claimed 400,000 lives over the past two decades. Johnson & Johnson profited further as demand for opioids surged by buying poppy growing companies in Australia to supply the raw narcotic for its own medicines and other American drug makers. One expert witness at the forefront of combatting the epidemic, Dr Andrew Kolodny, told the court he had little idea about Johnson & Johnson’s role until he saw the evidence in the case. “I think it’s fair to characterize Johnson & Johnson as a kingpin in our opioid crisis,” he said.

Oklahoma’s attorney general, Mike Hunter, is suing Johnson & Johnson for billions of dollars for its alleged part in driving addiction and overdoses in his state in the first full trial of a drug maker over the opioid epidemic. But Hunter’s lawsuit has put the wider industry in the dock, too, by laying out how opioid manufacturers worked together to drive up sales by using their huge resources to influence medical policy and doctor prescribing. Hunter said the strategy was motivated by the industry’s “greed” as profits surged. [..] Purdue Pharma kickstarted the epidemic with its high-strength, long-lasting opioid, OxyContin, in the mid-1990s. The court heard how Johnson & Johnson quickly realized the potential and set about competing.

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Erdogan wobbles.

Istanbul Votes In Mayoral Re-Run, In Test For Turkish Democracy, Erdogan (R.)

Millions of Istanbul residents voted on Sunday in a re-run of a mayoral election that has become a referendum on President Tayyip Erdogan’s policies and a test of Turkey’s ailing democracy. In the initial March 31 vote, the opposition Republican People’s Party (CHP) candidate secured a narrow victory over Erdogan’s AK Party (AKP) in Turkey’s largest city, a rare electoral defeat for the president. But after weeks of AKP appeals, Turkey’s High Election Board in May annulled the vote citing irregularities. The opposition called the decision a “coup” against democracy, which has raised the stakes for round two.

“It is really ridiculous that the election is being re-run. It was an election won fair and square,” said Asim Solak, 50, who said he was voting for the opposition candidate in the CHP stronghold of Tesvikiye. “It is clear who canceled the election. We hope this election re-run will be a big lesson for them,” he said. Erdogan has repeated his line that “whoever wins Istanbul wins Turkey.” A second loss in the city, where in the 1990s he served as mayor, would be embarrassing for Erdogan and could weaken what until recently seemed to be his iron grip on power.

Turkey’s economy is in recession and the United States, its NATO ally, has threatened sanctions if Erdogan goes ahead with plans to install Russian missile defenses. A second AKP loss could also shed further light into what CHP mayoral candidate Ekrem Imamoglu said was the misspending of billions of lira at the Istanbul municipality, which has a budget of around $4 billion. “If Imamoglu wins again, there’s going to be a chain of serious changes in Turkish politics,” journalist and writer Murat Yetkin said. “It will be interpreted as the beginning of a decline for AKP and for Erdogan as well,” he said, noting that the president himself had called the local elections “a matter of survival”.

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NATO and US need Turkey. It’s as central as Iran.

EU Warns Turkey Of Sanctions For Cyprus Drilling (BBC)

The EU has threatened to impose sanctions on Turkey if it continues “illegal drilling” in waters near Cyprus in the eastern Mediterranean. The warning came at an EU summit in Brussels. EU Commission President Jean-Claude Juncker called Turkey’s actions “totally unacceptable”. Turkey launched a second drilling ship – the Yavuz – on Thursday for natural gas and oil prospecting off Cyprus. The Republic of Cyprus is in the EU, but the breakaway north is pro-Turkey. The European Council – the EU government leaders – called on Turkey to “show restraint, respect the sovereign rights of Cyprus and refrain from any such actions”.


“The European Council endorses the invitation to the [EU] Commission and the EEAS [EU foreign affairs service] to submit options for appropriate measures without delay, including targeted measures,” the statement said. The self-declared Turkish Republic of Northern Cyprus is recognised only by Turkey, and is internationally isolated. Turkey said it was drilling inside its continental shelf, complying with international law. Reuters news agency reported that a Turkish drilling ship, the Fatih, had been anchored west of Cyprus since early May and had begun drilling. [..] Turkey – a key Nato partner for the West – has extensive trade ties with the EU and has not yet been hit with EU sanctions, unlike Russia. The US has threatened Turkey with sanctions if Mr Erdogan goes ahead with a deal to buy S-400 air defence missiles from Russia.

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Given the attacks on the NHS, this should not be surprising. Same as in US.

Why Is UK Life Expectancy Faltering? (O.)

In a few days, a team of researchers, statisticians and geographers will gather at University College London to tackle an issue of increasing concern for doctors and health experts. They will investigate why many UK citizens are now living shorter, less healthy lives compared with the recent past. The emergence of faltering life expectancy in Britain has caused particular alarm because it reverses a trend that has continued, almost unbroken, for close to 100 years. Over this period, lives have lengthened continuously, blessing more and more British people with the gift of old age. But now that increase has come to a halt, statisticians have discovered. Indeed, among many sections of the UK population, declines have set in.

Hence the meeting, organised by the British Society for Population Studies, which has been organised so delegates can use data – to be released this week by the Office for National Statistics – to update their life expectancy projections. “It is a perfect storm,” says Danny Dorling, professor of social geography at Oxford University, who has organised the London meeting. “Our faltering life expectancy rates show we have now got the worst trend in health anywhere in western Europe since the second world war. To achieve that, we must have made a lot of bad decisions,” he said. Statisticians first noticed in 2013 that rises in life expectancy in the UK had begun to slow down. Gradually, the graph – which been rising for decades – flattened out until, a few years ago, it started to decline for increasing numbers of people.

The elderly, the poor and the newborn were worst affected. For example, life expectancies for those over 65 have dropped by more than six months. The trend now causes considerable concern among doctors who view life expectancy figures as barometers of the health of Britain. From this perspective, the nation is sickening – and a host of different factors have been put forward as explanations. One frequently made claim is that humans have simply reached the peak of longevity. “Life expectancy cannot be expected to increase forever,” Robert Courts, a Tory MP, told the Commons recently. Many statisticians point out, however, that life expectancy has continued to rise – well above UK levels – in many other places, including Hong Kong, mainland China, Japan and Scandinavia. Other factors must be involved, they state.

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If breaks again will it ever sail again?

Great Pacific Garbage Patch: Giant Plastic Trap Put To Sea Again (AP)

A floating device designed to catch plastic waste has been redeployed in a second attempt to clean up a huge island of garbage swirling in the Pacific Ocean between California and Hawaii. Boyan Slat, creator of the Ocean Cleanup project, announced on Twitter that a 600-metre (2,000-foot) long floating boom that broke apart late last year was sent back to the Great Pacific garbage patch this week after four months of repair. A ship towed the U-shaped barrier from San Francisco to the patch in September to trap the plastic. But during the four months at sea, the boom broke apart under constant waves and wind and the boom wasn’t retaining the plastic it caught.

“Hopefully nature doesn’t have too many surprises in store for us this time,” Slat tweeted. “Either way, we’re set to learn a lot from this campaign.” Fitted with solar-powered lights, cameras, sensors and satellite antennas, the device intends to communicate its position at all times, allowing a support vessel to fish out the collected plastic every few months and transport it to dry land. The plastic barrier with a tapered 3-metre deep (10-foot deep) screen is intended to act like a coastline, trapping some of the 1.8tn pieces of plastic that scientists estimate are swirling in the patch while allowing marine life to safely swim beneath it.

During its first run, the organisation said marine biologists on board the support vessel did not observe any environmental impact. Slat has said he hopes one day to deploy 60 of the devices to skim plastic debris off the surface of the ocean.

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Jun 112018
 


Pierre-Auguste Renoir Les parapluies 1880-86

 

Debt Clock Ticking (Mauldin)
Southern Mayors Defy Italian Coalition To Offer Safe Port To Migrants (G.)
Italy’s New Finance Minister Rules Out Leaving Euro (Pol.eu)
In The Western World Truth Is An Endangered Species (PCR)
Will Bilderberg Still Be Relevant As The Future Of War Is Transformed? (G.)
Saudi Arabia Suffers Shock Collapse In Inward Investment (F.)
French Farmers Start Refinery Blockade Over Palm Oil Imports (R.)
Our Generation Is Presiding Over An Ecological Apocalypse (G.)
Erdogan Ally Says ‘Cyprus Is Turkish And Will Remain So’ (K.)
Austria Closing Mosques May Mean ‘War Between Cross & Crescent’ – Erdogan (RT)
Greece Puts Men Accused Over Turkey Coup Attempt Under Armed Guard (G.)
New Austerity Bill Hits Greeks With €5.1 Billion More Cuts Until 2022 (KTG)
Last Exit to the Road Less Traveled (JD Alt)

 

 

As the G7 leaders have a few days to lick their wounds, and all attention will continue to be on Trump, I’ll leave all that alone for now. One last thing: hope they understand now that ganging up on Trump is not a good idea. It would be good if the Democrats and media understand that too. They must all reinvent themselves.

Let’s turn to debt: “There is no set of math that works to pay this off.”

Debt Clock Ticking (Mauldin)

“Modern slaves are not in chains, they are in debt.” – Anonymous. You can find hundreds of quotes on the Internet discussing the problems of debt. Debt traps borrowers, lenders, and innocent bystanders, too. If debt were a drug, we would demand it be outlawed. The advantage of debt is it lets you bring the future into the present, buying things you couldn’t afford if you had to pay full price now. This can be good or bad, depending on what you buy. Going into debt for education that will raise your income, or for factory equipment that will increase your output, can be positive. Debt for a tropical vacation, probably not.

And that’s our core economic problem. The entire world went into debt for the equivalent of tropical vacations and, having now enjoyed them, realizes it must pay the bill. The resources to do so do not yet exist. So, in the time-honored tradition of lenders everywhere, we extend and pretend. But with our ability to pretend almost gone, we’re heading to the Great Reset. I’ve been analogizing our fate to a train wreck you know is coming but are powerless to stop. You look away because watching the disaster hurts, but it happens anyway. That’s where we are, like it or not.

And we don’t even really like to talk about it in polite circles. In a private email conversation this week, which must remain anonymous, this pithy line jumped out at me: “The total of Federal (remember they do not use GAAP) debt, state debt, and city debt [unfunded liabilities included] exceeds $200 trillion dollars. There is no set of math that works to pay this off. Let me be sure it’s heard by repeating it: There is no set of math that works to pay this off. Therefore, there has to be some form of remediation. This conversation is uncomfortable, so it is avoided.”

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Hopeful but for now not practical. The solution is in Africa itself. Let Salvini work on that, instead of this sort of stunts.

Southern Mayors Defy Italian Coalition To Offer Safe Port To Migrants (G.)

Mayors across the south of Italy have pledged to defy a move by the new Italian government – an alliance of the far right and populists – to prevent a rescue boat with 629 people on board from docking in the Sicilian capital. But the mayors’ defiance appears unlikely to serve any practical purpose without the direct support of the Italian coastguard. In the first evidence of the new government’s hardline approach, the interior minister, Matteo Salvini, said on Sunday that all Italian ports were closed to the rescue boat, Aquarius. The Maltese government rejected a request to take the boat, saying international law required that the migrants should be taken to Italian ports.

Salvini, the leader of the League, a far-right party, wrote on Facebook: “Malta takes in nobody. France pushes people back at the border, Spain defends its frontier with weapons. From today, Italy will also start to say no to human trafficking, no to the business of illegal immigration.” Leoluca Orlando, the mayor of Palermo, said he was ready to open the city’s seaport to allow the rescued migrants to safely disembark. “Palermo in ancient Greek meant ‘complete port’. We have always welcomed rescue boats and vessels who saved lives at sea. We will not stop now,” Orlando said. “Salvini is violating the international law. He has once again shown that we are under an extreme far-right government.’’

Other mayors in Italy’s south, including those in Naples, Messina and Reggio Calabria, also said they were ready to disobey Salvini’s order and allow Aquarius to dock and disembark in their seaports. A representative of Doctors Without Borders said the mayors’ remarks were “nice but not practical” because it was standard practice to wait for the Italian coastguard, which is under the control of the Italian government, to allow a ship to dock.

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Why the confusion between Finance Minister and Economy Minister?

Italy’s New Finance Minister Rules Out Leaving Euro (Pol.eu)

Italy’s new economy minister Giovanni Tria ruled out leaving the euro and said he would focus on structural reforms over deficit spending. “The position of the executive is clear and unanimous,” Tria told Italian newspaper Corriere della Sera in his first major interview since the country’s populist government was sworn in at the start of this month. “There isn’t any discussion on a plan to leave the euro,” he said, adding that “the government is determined, in any event, to prevent market conditions which push towards the exit to be materialized.”

Tria’s comments appeared designed to reassure financial markets — and to calm fears in the European Commission and among other EU governments that the new administration would implement anti-euro policies and clash with Brussels. Tria told Corriere that the government’s strategy would be “growth and employment” with a program “based on structural reforms,” and that his country would also “make progress on many aspects of the European governance program and banking union.” Though the new government has not adopted a policy of leaving the euro, some members of the coalition including Matteo Salvini, the new interior minister, have criticized the currency in the past and others have floated the idea of a referendum on Italy quitting the monetary union.

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Support for Assange is mounting. But not nearly enough yet. This must grow the same way Free Nelson Mandela did

In The Western World Truth Is An Endangered Species (PCR)

Nowhere in the Western world is truth respected. Even universities are imposing censorship and speech control. Governments are shutting down, and will eventually criminalize, all explanations that differ from official ones. The Western world no longer has a print and TV media. In its place there is a propaganda ministry for the ruling elite. Whistleblowers are prosecuted and imprisoned despite their protection by federal statue. The US Department of Justice is a Department of Injustice. It has been a long time since any justice flowed from the DOJ. The total corruption of the print and TV media led to the rise of Intermet media such as Wikileaks, led by Julian Assange, a prisoner since 2012.

Assange is an Australian and Ecuadorian citizen. He is not an American citizen. Yet US politicians and media claim that he is guilty of treason because he published official documents leaked to Wikileaks that prove the duplicity and criminality of the US government. It is strickly impossible for a non-citizen to be guilty of treason. It is strickly impossible under the US Constitution for the reporting of facts to be spying. The function of the media is to expose and to hold accountable the government. This function is no longer performed by the Western print and TV media. Washington wants revenge and is determined to get it.

If Assange were as corrupt at the New York Times, Washington Post, CNN, National Public Radio, MSNBC, etc., he would have reported the leaker to Washington, not published the information, and retired as a multi-millionaire with Washington’s thanks. However, unfortunately for Assange, he had integrity. Integrity today in the Western world has no value. You cannot find integrity in the government, in the global corporations, in the universities and schools, and most certainly not in the media.

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“What the politicians at Bilderberg ought to realise, when they take a break from brainstorming war to enjoy the buffet, is that they are the buffet.”

Will Bilderberg Still Be Relevant As The Future Of War Is Transformed? (G.)

This year’s Bilderberg summit is a council of war. On the agenda: Russia and Iran. In the conference room: the secretary general of Nato, the German defence minister, and the director of the French foreign intelligence service, DGSE. They are joined in Turin, Italy, by a slew of academic strategists and military theorists, but for those countries in geopolitical hotspots there is nothing theoretical about these talks. Not when the prime ministers of Estonia and Serbia are discussing Russia, or Turkey’s deputy PM is talking about Iran. The clearest indication that some sort of US-led conflict is on the cards is the presence of the Pentagon’s top war-gamer, James H Baker.

He is an expert in military trends, and no trend is more trendy in the world of battle strategy than artificial intelligence. Bilderberg is devoting a whole session to AI this year – and has invited military theorist Michael C Horowitz, who has written extensively on its likely impact on the future of war. Horowitz sees AI as “the ultimate enabler”. In an article published just a few weeks ago in the Texas National Security Review, he quotes Putin’s remark from 2017: “Artificial intelligence is the future, not only for Russia, but for all humankind. Whoever becomes the leader in this sphere will become the ruler of the world.”

Horowitz says “China, Russia, and others are investing significantly in AI to increase their relative military capabilities”, because it offers “the ability to disrupt US military superiority”. Global military domination is suddenly up for grabs – which brings us to the most intriguing item on this year’s Bilderberg agenda: “US world leadership”. [..] What the politicians at Bilderberg ought to realise, when they take a break from brainstorming war to enjoy the buffet, is that they are the buffet. There’s not much dignity in undermining democracy. But there is a huge pile of money, and for many people that’s enough.

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Just as MSB is trying to invest a lot in his ‘new’ Saudi Arabia.

Saudi Arabia Suffers Shock Collapse In Inward Investment (F.)

Inward investment into Saudi Arabia collapsed last year, according to newly published data from the UN Conference on Trade and Development (UNCTAD), raising serious questions about the prospects for the economic reform agenda being pursued by Crown Prince Mohammed bin Salman (MBS). According to the latest UNCTAD World Investment Report, published on June 7, foreign direct investment (FDI) into Saudi Arabia last year amounted to just $1.4 billion, down from $7.5bn the year before and as much as $12.2bn in 2012. The precipitous fall means the country was outranked by far smaller economies in terms of its ability to attract international investment last year, with the likes of Oman and Jordan overtaking it in 2017, with inward FDI of $1.9bn and $1.7bn respectively.

The situation is equally stark when one looks at the amount of investment coming to Saudi Arabia compared to the rest of the surrounding West Asia region. While the kingdom accounted for around a quarter of total regional FDI between 2012 and 2016, last year it attracted just 5.6% of the regional total. While the Saudi economy has been losing out, others have been gaining a bigger piece of the pie. The UAE has seen its share of regional FDI more than double over the past six years, from 19% in 2012 to 41% in 2017. And even Qatar – which has been the subject of an economic boycott by Bahrain, Egypt, Saudi Arabia and the UAE since June last year – managed to increase its FDI take in 2017, attracting $986m compared to $774m a year earlier.

UNCTAD attributed the fall in investment into Saudi Arabia to significant divestments and negative intra-company loans by foreign multinationals. As an example, it pointed to the UK/Dutch Shell Group which sold its 50% stake in the Sadaf petrochemicals venture to its partner Saudi Basic Industries Corporation (Sabic) for $820m in August. However, the report also notes that FDI to Saudi Arabia has been contracting since the global financial crisis in 2008/09. And although there has been a similar pattern across the region – inflows to West Asia have fallen in most years since hitting a peak of $85bn in 2008 – the performance of Saudi Arabia last year is still appreciably worse than any other economy in the immediate neighbourhood. It is also far worse than the global picture – worldwide FDI inflows were down 23% last year to $1.43 trillion.

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Palm oil destroys rainforests and orangutans. And you want to burn it?

French Farmers Start Refinery Blockade Over Palm Oil Imports (R.)

French farmers began a blockade of oil refineries and fuel depots on Sunday evening over plans by Total to use imported palm oil at a biofuel plant, which have fanned farmer discontent over unfair competition. The Vatry fuel depot in the Marne region of northeastern France was the first to be blocked on Sunday evening as about 100 farmers set up barricades with tractors and mounds of rubble, a spokesman from the FNSEA farmers union told Reuters. At least five sites will be blocked on Sunday evening, with a total of 13 sites blocked from 9 a.m. Monday, Christiane Lambert, president of the FNSEA said in an interview with France Info television.

French oil and gas major Total, which operates five refineries and nine petrol depots in France, said late on Sunday that farmers have gathered at two depots and it had taken measures together with authorities, to limit disruptions. It urged clients not to rush to petrol stations to fill their tanks, which could spark panic buying and shortages. The French authorities last month gave Total permission to use palm oil as one of the feedstocks at its La Mede biofuel refinery in southern France, infuriating farmers who grow local oilseed crops such as rapeseed and environmentalists who blame palm oil cultivation for deforestation in southeast Asia.

[..] Palm oil has been widely criticized in Europe for environmental destruction and some lawmakers are pushing for a ban on its use in biofuel as part of new EU energy targets. The issue has caused friction with Indonesia and Malaysia, the world’s two largest palm oil producers, with Malaysian officials warning of trade repercussions that could affect a potential deal to buy French fighter jets. The refinery protests in France also illustrate a souring relationship between farmers in the EU’s biggest agricultural producer and the government of President Emmanuel Macron. Many farmers welcome the president’s call for fairer farmgate prices as part of a food chain review last year, but they have been angered by Macron’s attempt to phase out common weedkiller glyphosate before other EU countries.

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“..among the most nature-depleted countries in the world..”

Our Generation Is Presiding Over An Ecological Apocalypse (G.)

He’s currently enjoying a great bounty of nature, from tree-climbing slugs to blackbird-gobbling little owls on this year’s Springwatch, but Chris Packham warns that we are presiding over “an ecological apocalypse” and Britain is increasingly “a green and unpleasant land”. The naturalist and broadcaster is urging people to join him next month on a 10-day “bioblitz”, visiting road verges, farmland, parks, allotments and community nature reserves across the country to record what wildlife remains – from butterflies to bryophytes, linnets to lichens. According to Packham, British people have normalised a “national catastrophe” and only see a wealth of wildlife in nature reserves, with the wider countryside bereft of life.

“Nature reserves are becoming natural art installations,” he said. “It’s just like looking at your favourite Constable or Rothko. We go there, muse over it, and feel good because we’ve seen a bittern or some avocets or orchids. But on the journey home there’s nothing – only wood pigeons and non-native pheasants and dead badgers on the side of the road. “It’s catastrophic and that’s what we’ve forgotten – our generation is presiding over an ecological apocalypse and we’ve somehow or other normalised it.” Packham said he looked at the rolling hills beyond this year’s setting for Springwatch on the National Trust’s Sherborne estate in the Cotswolds and despaired. “How many wildflowers can we see? None. Where’s the pink of ragged robin? Where’s the yellow of flag iris? The other colours are not there. It’s not green and pleasant – it’s green and unpleasant.”

Packham’s recent tweets have gone viral after he commented on the absence of insects during a weekend at his home in the middle of the New Forest national park. He did not see a single butterfly in his garden and said he sleeps with his windows open but rarely finds craneflies or moths in his room in the morning whereas they were commonplace when he was a boy. Since Packham first became passionate about birds, in 1970, Britain has lost 90 million wild birds, with turtle doves (down 95% since 1990) hurtling towards extinction. The State of Nature 2016 report described Britain as being “among the most nature-depleted countries in the world”, with scientific data from more than 50 conservation and research organisations revealing that 40% of all species are in moderate or steep decline.

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Opposition leader is a government ally.

Erdogan Ally Says ‘Cyprus Is Turkish And Will Remain So’ (K.)

The leader of Turkey’s nationalist MHP opposition party Devlet Bahceli, an ally of Turkish President Recep Tayyip Erdogan, attacked Greece and Cyprus during an election rally in Izmir on Sunday, claiming “Cyprus is Turkish.” Bahceli was commenting on Greek criticism over an MHP campaign video that depicts the island of Cyprus as Turkish territory. “What else are we to do? Cyprus is Turkish and will remain so,” he was quoted as saying by Turkish conservative newspaper Yeni Safak. He went on to “warn” Greeks not to forget “the days when their grandfathers drowned in the bottom of the sea,” and accused the Greek government of “playing games” in the Aegean.

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Ehh.. racist it is not.

Austria Closing Mosques May Mean ‘War Between Cross & Crescent’ – Erdogan (RT)

Austria’s move to close mosques and expel “foreign-funded” imams has infuriated Turkish President Recep Tayyip Erdogan, warning of a war “between cross and crescent” and threatening that Ankara will not sit idle. “These measures taken by the Austrian prime minister are, I fear, leading the world towards a war between the cross and the crescent,” Erdogan said in a speech in Istanbul on Sunday. Crescent, which can be seen on mosques and other Muslim entities, symbolizes Islamic religion since time immemorial. “They say they’re going to kick our religious men out of Austria. Do you think we will not react if you do such a thing?” he asked, quoted by AFP. “That means we’re going to have to do something,” Erdogan added without elaborating.

Earlier this week, Austrian Interior Minister Herbert Kickl from the right-wing FPO party announced that the country vows to close seven mosques and potentially expel dozens of Turkish-funded imams and their families in Austria’s crackdown on “political Islam.” Austrian officials, including Chancellor Sebastian Kurz, claimed the move was to battle radicalization and growing ‘parallel societies’. However, this explanation did not sit well with Ankara. “Austria’s decision to close seven mosques and expel imams is a reflection of the Islamophobic, racist and discriminatory wave in this country,” Ibrahim Kalin, the spokesman of Tayyip Erdogan, commented on Twitter.

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A crazy situation. Turkey can not be allowed to enter Greek territory to abduct or murder anyone.

Greece Puts Men Accused Over Turkey Coup Attempt Under Armed Guard (G.)

Greece has put in place the “greatest possible” measures to protect eight Turkish commandos accused of being coup plotters after Ankara said it would do everything possible to bring them back. A week after the men were freed from detention, Athens said they were under 24/7 guard at an undisclosed location, for fear of retaliation. The admission came despite mounting tensions with Ankara, which has scrapped a refugee readmission deal with Athens, arguing the soldiers participated in the abortive coup against Recep Tayyip Erdogan in July 2016. Greece’s deputy defence minister, Fotis Kouvelis, told the Guardian: “We are enforcing the greatest possible measures to secure their safety in a place which for obvious reasons will remain unknown.

“We haven’t forgotten what happened in our region a few months ago.” Kouvelis was referring to the enforced removal from Kosovo of six Turkish citizens also denounced as followers of the US-based cleric Fethullah Gülen, who Ankara has blamed for orchestrating the putsch. Tensions over the eight men, who flew into Greece on a Black Hawk helicopter a day after the failed coup, have added to an increasingly fiery campaign ahead of in Turkey on 24 June. Friction with the west has escalated as the race appears to have tightened. At the weekend, Erdogan accused Austria of fomenting a religious war between “cross” and “crescent” after it raised the prospect of expelling Turkish Muslim clerics.

But Greece has been the focus of growing animus in Ankara. Turkey has consistently argued the eight men were involved in the putsch against Erdogan. The Greek supreme court has rejected any notion of sending the men back, saying they would not get a fair trial in Turkey, where a purge of the military and civil establishment continues. In April, the council of state, Greece’s highest administrative court, granted one of the eight commandos permanent asylum, despite objections by Alexis Tsipras’s leftist-led government. Similar judgments are expected to follow when verdicts are issued in the remaining cases.

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Pile it on!

New Austerity Bill Hits Greeks With €5.1 Billion More Cuts Until 2022 (KTG)

Greece submitted a draft bill to parliament late on Friday, a bill fully packed with austerity measures worth 5.1 billion euros and counter-measures worth 1.5 billion, in an effort to sweeten the bitter pill to thousands of pensioners and employees. The bill outlines reforms in the energy, pension and labor sectors as the government races to secure the last loans from its international bailout program, conclude the last program review and head to a so-called “clean exit” in August. The bill includes the country’s medium-term fiscal strategy framework through 2022, which foresees an average 2 percent annual growth and pledges to increase minimum wages and restore collective labor bargaining.

At the same time, the bill includes measures to expedite privatizations in the energy sector, the reduction of state spending on pensions and labor market reforms including arbitration when there is a dispute between employers and staff. • Pension cuts up to 18% to be implemented as of 2019. • Tax-free basis will be broadening to annual income of 5.686 euros, when EU’s poverty line is at 6,000. The measure to go into effect as of 2020. • Privatizations worth 3.9 billion euros
Lawmakers are expected to vote on the bill on upcoming Thursday, before the Eurogroup of June 21.

Athens is keen to pass a final review by its creditors ahead of a Eurogroup meeting on June 21, where it is also hoping for progress on a deal on further debt relief to be implemented after the current bailout program expires in August. If it gets the green light from the review and Eurogroup, it will receive about 12 billion euros ($14 billion) of new loans. [..] revenues will increase through the pension cuts, the changes in real estate objective value that will increase the property taxes, scrapping the decreased of Value Added Tax on all islands, scrapping the 15% discount on social security contributions as of 2019. • Pension cuts worth €2.9 billion annually. €1.2 billion will be cut from public sector pensions and €1.4 billion on private sector pensions. • Broadening the tax-free basis will bring revenues worth €1.9 billion.

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h/t Lambert Strether

Last Exit to the Road Less Traveled (JD Alt)

We now stand where two roads diverge. But unlike the roads in Robert Frost’s familiar poem, they are not equally fair. The road we have long been traveling is deceptively easy, a smooth superhighway on which we progress with great speed, but at its end lies disaster. The other fork of the road—the one less traveled by—offers our last, our only chance to reach a destination that assures the preservation of the earth. –Rachael Carson, Silent Spring What’s important to keep in mind in this quote from Rachael Carson’s 56-year-old warning shot over the bow of corporate civilization is that there are two roads being traveled now. We are no longer at a fork. The fork is half-a-century behind us. The goal is not to get the superhighway to somehow re-route itself and follow the path less traveled. It can’t.

The superhighway will, and must, continue accelerating in its inevitable direction, simply because the greed and power of the people driving that highway will not allow them to alter course. But if there is any truth to Rachael Carson’s warning (and there seems to be growing evidence of it) the other path—the Road Less Traveled—will become the surviving branch of our evolutionary diagram. The present goal, therefore, should be to create as many exits from the superhighway as possible—and to encourage and enable as many people as possible to take those exits to explore and follow the other path. Visualizing how we all got on this superhighway in the first place will be helpful to seeing the exit ramps. To make this visualization, it isn’t necessary to speculate about an ancient, human pre-history.

The process can be clearly seen and understood in a modern anecdote describing how one particular community of people joined the highway. I quote now from the book Fishing Lessons by Kevin M. Bailey*, where he retells author Robert Johannes’ story of fishermen in Palau, an island country in Micronesia. “Seafood was once abundant there. The Palauan fisherman never had trouble finding enough fish to satisfy their own and their village’s needs. The fisherman gave away the fish they didn’t eat to other villagers…. They lived in a state of ‘subsistence affluence.’ “…. After Japan colonized Palau in the 1920s the fishermen began to sell their fish to obtain attractive and exotic goods offered by the Japanese. The fishermen bought nets and motorized boats with the money, allowing them to catch more fish to sell in order to obtain more goods.

They fished harder to harvest more fish and visited more distant areas of the reef to find them. Over the years, the fish abundance dropped. “The fishermen bought even bigger boats to catch the vanishing fish, but to do that they had to borrow money. They had to sell all their fish to pay off their loans. They stopped giving them away in the villages; instead they sold them to the outsiders and to other villagers. Now the people in the village had to work for the money to buy their food…. “Pretty soon, there were not enough fish over the reefs for the fishermen to make payments on their loans, so the village sold their customary access rights to the fishing grounds. The people in the village began to eat imported fish in cans.”

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Mar 082018
 


Paul Gauguin Tahitian village 1892

 

We May Have Hit ‘Peak Trade’ Even Without Trump’s Tariffs – UBS (CNBC)
China’s Exports Surge At The Fastest Pace In 3 Years (R.)
42% of Americans Are Set To Retire Broke (CNBC)
Trump’s Volley (Lebowitz)
Divorced From Reality (RIA)
A Currency War Is Coming – With Japan (BBG)
Hallelujah! The Squid Regency At The White House Is Finally Over (Stockman)
Canada, Mexico to Get Initial Exemption From Trump Tariffs (BBG)
New iPhones Aren’t Selling In Asia (CNBC)
Vancouver Declares 5% Of Homes Empty And Liable For New Tax (G.)
More People Called David And Steve Lead FTSE 100 Companies Than Women (Ind.)
‘Why Would We Want A World Without Russia?’ – Putin (RT)
Sergei Skripal Is Not Litvinenko (Ind.)
Turkey Renews Threat Against Cyprus Offshore Gas Exploration (AP)
US State Department Stresses Cyprus’s Right To Develop Resources In EEZ (K.)
Tepco’s ‘Ice Wall’ Fails To Freeze Fukushima’s Toxic Water Buildup (R.)
Over 500 Quebec Doctors Protest Their Own Pay Raises (CNBC)

 

 

And not a day too soon. There’s nothing more destructive than schlepping 10 million things 10,000 miles across the planet that don’t neeed to be.

We May Have Hit ‘Peak Trade’ Even Without Trump’s Tariffs – UBS (CNBC)

The world may have hit ‘peak trade,’ according to an expert who pointed to robotics, digitization and localization as major game-changers for the sprawling supply chains that have defined globalization. Paul Donovan, global chief economist at UBS Wealth Management, said Wednesday that President Donald Trump’s recently announced trade tariffs are not to blame. “I don’t think that the modest taxes imposed by Trump are a driver of peak trade, at this stage. Trade protectionism — mainly non-tariff barriers to trade — have been rising for some years,” he told CNBC. Rather, Donovan said, the peak trade argument is based on “a reversal of the structural way in which globalization took place in recent years.” Globalization as we know it has meant long cross-border supply chains, where many different countries and entities would take part in the production or processing of goods.

The resulting value of trade rose for each country as a proportion of GDP. Trade to GDP, therefore, rose as supply chains lengthened. “What is now happening is that robotics and digitization mean we can produce efficiently, locally,” Donovan said. As an example, he compared the purchase of a compact disc — whose components, intellectual property and packaging would come from different places — a decade ago to downloading music now, which requires only one transaction of intellectual property. This reduces the ratio of trade to GDP. [..] “Robotics, digitization and localization mean that trade wars today are fighting battles from the past,” Donovan said. “I think global trade in goods (not services) revert to something like the old ‘imperial model’ of importing raw materials and then processing close to the consumer.”

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Cancer growth.

China’s Exports Surge At The Fastest Pace In 3 Years (R.)

China’s exports unexpectedly surged at the fastest pace in 3 years in February, suggesting its economic growth remains resilient even as trade relations with the United States rapidly deteriorate. Trade tensions have jumped to the top of the list of risks facing China this year, with proposed U.S. tariffs on steel and aluminium imports suggesting more measures may be on the way, Zhou Hao, senior emerging markets economist at Commerzbank, [said]. China’s February exports rose 44.5% from a year earlier, compared with analysts’ median forecast for a 13.6% increase, and an 11.1% gain in January, official data showed on Thursday. Imports grew 6.3%, the General Administration of Customs said, missing analysts’ forecast for 9.7% growth, and down from a sharper-than-expected 36.9% jump in January.

Analysts caution Chinese data early in the year can be heavily distorted by the timing of the Lunar New Year holiday, which fell in February this year but in January in 2017. But combined January-February trade data also showed a dramatic acceleration in export growth. Exports rose 24.4% on-year in Jan-Feb, much better than 10.8% in December and 4% growth in Jan-Feb last year. The government also releases combined data for the first two months in an attempt to smooth out seasonal distortions. The deceleration in import growth for February may be payback for the previous month’s unusual strength, rather than a sign there has been an abrupt weakening in demand. Robust import growth in January was mostly led by commodities as factories scrambled to restock inventories ahead of the long holiday. Imports in the first two months of the year rose 21.7%, compared with 4.5% in December.

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Jesse Colombo’s comment: “And what’s amazing is that these retirement stats are during a massive, Fed-driven asset bubble that has inflated the value of retirement accounts – and people STILL can’t retire! Stick a fork in it…we’re done.”

42% of Americans Are Set To Retire Broke (CNBC)

At this rate, retirement is more of a fantasy than a reality for many people in this country. About 42% of Americans have less than $10,000 saved for when they retire, according to a study by GoBankingRates released Tuesday. The No. 1 reason most people cited for not stashing more away was because they didn’t earn enough to save, followed by the fact that they were already struggling to pay bills, GoBankingRates said. The personal finance site polled more than 1,000 adults online in February.

For those with little or no savings, a serious lack of proper investment income and planning, coupled with a longer life expectancy, has destroyed any retirement expectations. Although millennials are most likely to have less than $10,000 saved, older Americans are also becoming steadily more pessimistic about their future economic prospects, according to a separate study by United Income, a start-up that aims to apply big-data analysis to financial planning.

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The role of teh reserve currency warrants way more attention.

Trump’s Volley (Lebowitz)

America relinquished its role as the world’s leading manufacturer in exchange for cheaper imported goods and services from other countries. The profits of U.S.-based manufacturing companies were enhanced with cheaper foreign labor, but the wages of U.S. employees were impaired, and jobs in the manufacturing sector were exported to foreign lands. This had the effect of hollowing out America’s industrial base while at the same time stoking foreign appetite for U.S. debt as they received U.S. dollars and sought to invest them. In return, debt-driven consumption soared in the U.S. The trade deficit, also known as the current account balance, measures the net flow of goods and services in and out of a country. The graph shows the correlation between the cumulative deterioration of the U.S. current account balance and manufacturing jobs.

Since 1983, there have only been two quarters in which the current account balance was positive. During the most recent economic expansion, the current account balance has averaged -$443 billion per year. To further appreciate the ramifications of the reigning economic regime, consider that China gained full acceptance into the World Trade Organization (WTO) in 2001. The trade agreements that accompanied WTO status and allowed China easier access to U.S. markets have resulted in an approximate quintupling of the amount of exports from China to the U.S. Similarly, there has been a concurrent increase in the amount of credit that China has extended the U.S. government through their purchase of U.S. Treasury securities as shown below.

To further understand why the current economic regime is tricky to change, one must consider that the debts of years past have not been paid off. As such the U.S. Treasury regularly issues new debt that is used to pay for older debt that is maturing while at the same time issuing even more debt to fund current period deficits. Therefore, the important topic not being discussed is the United States’ (in)ability to reduce reliance on foreign funding that has proven essential in supporting the accumulated debt of consumption from years past. Trump’s ideas are far more complicated than simply leveling the trade playing field and reviving our industrial base. If the United States decides to equalize terms of trade, then we are redefining long-held agreements introduced and reinforced by previous administrations.

In breaking with that tradition of “we give you dollars, you give us cheap goods (cars, toys, lawnmowers, steel, etc.), we will most certainly also need to source alternative demand for our debt. In reality, new buyers will emerge but that likely implies an unfavorable adjustment to interest rates. The graph below compares the amount of U.S. Treasury debt that is funded abroad and the total amount of publicly traded U.S. debt. Consider further, foreigners have large holdings of U.S. corporate and securitized individual debt as well. (Importantly, also note that in recent years the Fed has bought over $2 trillion of Treasury securities through QE, more than making up for the recent slowdown in foreign buying.)

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“Investors still believe in stocks as an asset class.”

Divorced From Reality (RIA)

There are many ways of assessing the value of the stock market. The Shiller PE (price relative to the past decade’s worth of real, average earnings) and Tobin’s Q (the value of companies’ outstanding stock and debt relative to their replacement cost) are likely the two best. That doesn’t mean those metrics are accurate crash indicators, or that one can use them profitably as trading signals. Expensive stocks can stay expensive or get more expensive, and cheap stocks can stay cheap or get cheaper for inconveniently long periods of time.

But those metrics do have a good record of forecasting future long-term (one decade or more) returns. And that’s important for financial planning and wealth management. Difficult though it is sometimes, everyone must plug in an estimated return into a formula for retirement savings. And if an advisor is plugging in a 7% or so return for a balanced portfolio currently, he or she is likely not doing their job well. Stocks will almost certainly return less than their long-term 10% annualized average for the next decade or two given a starting Shiller PE over 30. The long-term average of the metric, after all, is under 17.

[..] Companies are always manipulating items on income statements to arrive at a particular earnings number. Recently, record numbers of companies have supported net income numbers with non-GAAP metrics. That can be legitimate sometimes. For example, depreciation on real estate is rarely commensurate with reality. But it can also be nefarious[..] So I created a chart showing sales per share growth and price per share growth of the S&P 500 dating back to the end of 2008. From the beginning of 2009 through the end of 2016, companies in the index grew profits per share by nearly 4% annualized, a perfectly respectable number for a mature economy. But price per share grew by a whopping 14.5% over that time. Over that 8 year period, sales grew less than 50% cumulatively, while share prices tripled.

Anyone invested in stocks should worry about this chart. How do share prices get so divorced from underlying corporate sales? One likely answer is low interest rates. But there must be other reasons because we’ve had low interest rates and low stock prices before – namely in the 1940s. That was after the Great Depression, and stocks were still likely viewed as suspect investments. Today, by contrast, stocks are not viewed with much suspicion, despite the technology bubble peaking in 2000 and the housing bubble in 2008. Investors still believe in stocks as an asset class.

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Japan cannot do a strong yen for too long.

A Currency War Is Coming – With Japan (BBG)

As if a brewing trade war wasn’t enough to worry about, investors also need to be alert to the threat of a major currency conflict. Norihiro Takahashi, president of Japan’s Government Pension Investment Fund, dismissed Donald Trump’s tariffs plan as a “performance” for his supporters, and said U.S. assets are no longer expensive, in an interview with The Wall Street Journal this week. That marks a change in stance since the December quarter, when the world’s largest pension fund scaled back its exposure to foreign assets. Takahashi’s comments could well be a veiled expression of Japan’s displeasure at a stronger yen. The Japanese currency has soared 6.6% against the greenback this year — and we’re only three months into 2018. For a yen-based investor, Treasuries, in particular, do indeed look more reasonably priced than in December.

In theory, currency policy falls under the jurisdiction of Japan’s finance ministry. In practice, government agencies from the Bank of Japan to the GPIF co-ordinate their actions. Don’t forget that on Oct. 31, 2014, the central bank expanded its monetary policy on the same day the GPIF adopted a “new policy asset mix” that increased the fund’s exposure to foreign bonds. BOJ Governor Haruhiko Kuroda can deny it, but the central bank has every interest in seeking a weak yen. Japanese corporate earnings are highly cyclical: On a market-weighted basis, companies on the Topix index derive more than 37% of their revenue from abroad, data compiled by Gadfly show. A strengthening yen can cause stocks to plunge, depressing consumption and tipping the economy back into deflation.

With the Topix down more than 10% from its January high, that’s no idle threat. CPI ex-food, the BOJ’s inflation metric, was 0.9% in January, still nowhere near the 2% target that was last breached in 2015. Kuroda’s domestic toolbox, meanwhile, is starting to look empty. With a record 40% of government bonds already in its hands, the central bank is running out of assets to buy.

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I was wondering yesterday why not more people were happy about this. Question is: how far do the Squid’s tentacles still reach?

Hallelujah! The Squid Regency At The White House Is Finally Over (Stockman)

The financial commentariat and the robo-machines are all in a tizzy this morning because Gary Cohn up and quit. But we say good riddance: The man gave Trump bad advice on nearly every single issue – trade, taxes, fiscal policy and the Fed. We didn’t make any bones about that viewpoint during our appearance on Fox Business this AM. When Maria Bartiromo asked us about Cohn’s departure, our reply was: Hallelujah, the Goldman Sachs Regency in the White House is finally over! The fact is, we do have a trade crisis, but Gary Cohn and the Wall Street pseudo-free traders don’t care and never have. That’s because they fiercely support a perverted, self-serving monetary regime that systematically and massively inflates financial assets, even as it strip mines and deflates the main street economy.

As we have been pointing out in this series, there is a perverse symbiosis between the Fed and the Dirty Float central banks of the 10 major countries (China, Vietnam, Mexico, Japan, etc), which account for 90% of the nation’s $810 billion trade deficit (2017). Together they have ripped the guts out of the US industrial economy – effectively sending jobs and production abroad and cash flow and liquidated capital to Wall Street. For its part, the Fed has monkey-hammered US competitiveness. That’s the result of its insensible 2.00% inflation policy, which has fatally inflated nominal dollar wages in a world market drowning in cheap labor priced in artificially under-valued currencies. At the same time, its massive interest rate repression and price-keeping operations in the stock market have turned the C-suites of corporate America into financial engineering joints.

So doing, they have slashed real net business investment by nearly 3o% since the turn of the century, by 20% from the 2007 pre-crisis peak and, actually, to a level in 2016 that barely exceeded real net investment two decades earlier in 1997. Meanwhile, the C-suites shuttled upwards of $15 trillion of cash flow and debt capacity during the last decade alone into stock buybacks, vanity M&A deals and excess dividends and recaps.

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Re-negotiate.

Canada, Mexico to Get Initial Exemption From Trump Tariffs (BBG)

The Trump administration will initially exclude Canada and Mexico from stiff tariffs on steel and aluminum imports, an exemption they would lose if they fail to reach an updated Nafta agreement with the U.S., White House trade adviser Peter Navarro said on Wednesday. The two nations won’t be subject to tariffs on their steel and aluminum if they sign a new NAFTA that meets the satisfaction of the U.S., Navarro said, adding that other American allies could use a similar system to ask for an exemption. If Nafta talks fall through, Canada and Mexico would face the same tariff as other nations, expected to be 25% on steel and 10% on aluminum. “Here’s the situation, and the president has made this public,” Navarro said. “There’s going to be a provision which will exclude Canada and Mexico until the Nafta thing is concluded one way or another.”

The decision-making process regarding the tariffs has evolved and more changes could be made before President Donald Trump formally approves them. China on Thursday vowed to retaliate, its most forceful comments yet on the threatened tariffs. “A trade war is never the right solution,” China’s Foreign Minister Wang Yi told reporters in Beijing. “In a globalized world, it is particularly unhelpful, as it will harm both the initiator and the target countries. In the event of a trade war, China will make a justified and necessary response.” Earlier Wednesday, White House Press Secretary Sarah Huckabee Sanders said the tariff plan would feature “potential carve outs for Canada and Mexico based on national security” considerations and also possible exclusions for specific countries. Australia is among those making the case for exemption, with Foreign Minister Julie Bishop citing her nation’s status as a “close ally and partner” in a Sky News interview on Thursday.

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Good headline, followed by shameless promo.

New iPhones Aren’t Selling In Asia (CNBC)

Apple’s iPhone X may not have wooed Asian consumers during the Lunar New Year holiday — but the company has some new products in the pipeline, according to Rosenblatt Securities’ Jun Zhang. Zhang chopped 5.5 million units off expectations for iPhone X sales for the first half of this year in a Wednesday research note. But with sales of high-end smartphones shrinking, Apple could offset lower iPhone sales with new products. “We are not surprised with the quick cooldown of iPhone X sales following Chinese New Year,” Zhang wrote. “Further iPhone X cuts, in our view, suggest the high-end smartphone market upgrade cycle continues to extend. We are seeing similar issues for Samsung’s S9 model since our research suggests that preorders are weak.”

Apple and Samsung, like many tech companies, and rarely release data on new products or unit sales outside of quarterly reports or launch events. But, Zhang wrote, Apple could sell 6 million to 8 million iPad Pro units with more advanced 3-D sensing, as well as new phones in the fall. A new red iPhone model, lower-end iPhones and a lower-priced HomePod might also be in the works, Zhang said. (Apple has had a partnership with HIV/AIDS organization (RED) for over a decade, and often sells red-colored products to support AIDS research and prevention.) “Since we expect the overall smartphone market to be flat this year, particularly in the mid-to-high end markets, Apple’s upcoming lower priced iPhone model could drive Apple’s unit growth,” Zhang wrote.

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Why do I get the idea there’s not an actual plan behind any of this, or a philosophy?

Vancouver Declares 5% Of Homes Empty And Liable For New Tax (G.)

Thousands of homes in Vancouver have been declared unused and liable for a new empty homes tax as part of a government attempt to tackle skyrocketing home prices and soaring rents. About 4.6% or 8,481 homes in the western Canadian city stood empty or underutilised for more than 180 days in 2017, according to declarations submitted to the municipality by 98.85% of homeowners. Properties deemed empty will be subjected to a tax of 1% of their assessed value. Vancouver has rolled out a raft of measures to cool prices and improve housing affordability in the country’s most expensive real estate market. Empty houses, also a big issue in the UK, are only one aspect of the problem. In 2017 the provincial government of British Columbia raised its foreign buyer tax from 15% to 20% to target offshore investors blamed for pushing up prices.

Toronto, Canada’s biggest city, followed suit with a 15% tax in April. Before the foreign buyer tax, sales agents said investors in Hong Kong, China and other parts of Asia were acquiring up to 40% of Vancouver condominium projects marketed abroad, absorbing the more expensive units that domestic buyers could not afford. Nearly 61% of the homes declared empty in Vancouver were condos, and other multi-family properties made up almost 6%, according to the city government. More than a quarter of the empty properties were in downtown Vancouver. Property owners who did not submit a declaration and those who claimed exemptions, such as for renovations or if the owner was in hospital or long-term care, were included in the empty homes number.

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I’m a sucker for headlines. The original says “..women and ethnic minorities..”, but that had me wondering how many immigrants are named David or Steve. More than women, I’d bet.

More People Called David And Steve Lead FTSE 100 Companies Than Women (Ind.)

There are more people called David or Steve who head up FTSE 100 companies than there are women or ethnic minorities, underscoring the extent to which corporate Britain is still dominated by men. According to research conducted by INvolve, a group that champions diversity and inclusion in business, there are currently five ethnic minority and seven female chief executives of FTSE 100 companies. Nine are named David and four are called Steve. Later this month Royal Mail, which is headed up by Moya Greene, is set to join the index of the UK’s biggest publicly listed companies, taking the total number of female-led firms to eight.

The number highlights how women and ethnic minorities are still dramatically underrepresented on corporate boards across the UK. According to the Government’s Hampton-Alexander Review into female leaders across FTSE companies published last November, only five FTSE 250 companies had at the time achieved a gender-balanced board. Speaking at an event in London to mark International Women’s Day this week, Carolyn Fairbairn, director general of the Confederation of British Industry, said that women are now joining boards in greater numbers than ever, but often as non-executive directors.

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He doesn’t give an inch. Why would he?

‘Why Would We Want A World Without Russia?’ – Putin (RT)

President Vladimir Putin, who recently startled the world by unveiling Russia’s advanced nuclear arsenal, has again spoken of nuclear arms, clarifying the circumstances in which Moscow is prepared to enter a nuclear war. “Certainly, it would be a global disaster for humanity; a disaster for the entire world,” Putin said, in an interview for a Russian documentary “The World Order 2018,” adding that “as a citizen of Russia and the head of the Russian state I must ask myself: Why would we want a world without Russia?” Even though Putin admitted that any conflict involving the use of nuclear weapons would have dire consequences for humanity, he maintained that Russia would be forced to defend itself using all available means if its very existence is put at stake.

“A decision on the use of nuclear weapons may only be taken if our ballistic missile attack warning system not only detects a launch, but also predicts that the warheads would hit Russian territory. This is called a retaliation strike,” he said in the interview. Russia’s latest edition of its nuclear doctrine allows the use of nuclear weapons in response to a nuclear attack against Russia or its allies, or to a conventional attack that threatens the existence of Russia. Putin also denied Russia was interested in pursuing a nuclear arms race, saying that “to begin with, we did not start this… nuclear bomb was first developed not by us but by the US,” he said in the interview, pointing out that “we have never used nuclear weapons [although] the US used them against Japan.”

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A rare dose of reality in a British press -and politics- engaged in full-steam Russia bashing.

Sergei Skripal Is Not Litvinenko (Ind.)

Boris Johnson just about observed diplomatic protocol when he addressed MPs about the apparent poisoning of Sergei Skripal. He stopped short of accusing the Russian state directly. But his inference – a malevolent and unjustified inference for the Foreign Secretary of a country that harps on about the rule of law – was indeed of Russian guilt. And it was clearest in the parallel he invited MPs to draw with the death of Alexander Litvinenko. Now it may indeed be that Russia – or Russians (something rather different) – are responsible for whatever happened in Salisbury. And it is true that Russians in the UK seem disproportionately accident-prone. But it is premature in the extreme to blame the Russian state, and just as misleading to draw this particular parallel with the Litvinenko case.

Both men may have been Russians branded traitors by their homeland, and both may have been victims of poisoning, but there are important differences. In Russia, Litvinenko worked against organised crime; he was less a spy in the conventional sense than a criminal intelligence officer. He fled the country after blowing the whistle on his corrupt bosses, and applied for asylum in the UK. His first choice, the US, had turned him down on the apparent grounds that the information he had to offer was not valuable enough. Unlike Skripal, he started working for MI5/6 only after arriving in the UK, and even then seems to have had difficulty getting on the payroll. His widow, Marina, is still battling to get the intelligence agencies to pay a pension or recognise a duty of care. It is cruel to say so, but Litvinenko seems almost to have been more use to the UK in death – as a totem of Russia’s general badness – than he was in life.

[..] For the moment, though, I will resist the temptation to delve into my inner Le Carre and return to Litvinenko. As I said, there are crucial differences between the two – differences that should militate against state-sponsored assassination being the favoured explanation for Skripal’s plight. But there should be doubts, too, about this judgment in the case of Litvinenko. The conclusions of the Litvinenko inquiry, now treated as unimpeachable proof of Russian state culpability, are nowhere near as definitive – or credible – as they have since been presented. The much-trumpeted (and over-interpreted) conclusion of the judge, Sir Robert Owen, was that “the FSB operation to kill Litvinenko was probably approved by Mr Patrushev [then head of the FSB] and also by President Putin”. He said there was “a strong probability” that Andrei Lugovoy poisoned Litvinenko “under the direction of the FSB” and the use of polonium-210 was “at very least a strong indicator of state involvement”. What sort of proof is that?

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They better be careful….

Turkey Renews Threat Against Cyprus Offshore Gas Exploration (AP)

Turkey’s prime minister has renewed a threat against efforts to search for offshore gas around Cyprus. Turkey opposes what it says are “unilateral” efforts to search for gas, saying they infringe the rights of Turkish Cypriots to the ethnically split island’s resources. Binali Yildirim said Wednesday during a joint news conference with Tufan Erhurman, the so-called “prime minister” of the breakaway north of Cyprus, that “provocative activities will be met with the appropriate response.” Yildirim’s comments were in response to reports that an ExxonMobil vessel was heading toward the Mediterranean, coinciding with exercises in the area involving the US Navy. Last month, Turkish warships prevented a rig from reaching an area southeast of Cyprus where Italian company Eni was scheduled to drill for gas.

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….because the US must defend Exxon.

US State Department Stresses Cyprus’s Right To Develop Resources In EEZ (K.)

The United States recognizes the right of Cyprus to develop the resources in its Exclusive Economic Zone, and discourages any actions or statements that provoke a rise in tensions in the region, a State Department official has said. In a statement late on Wednesday, the official said that Washington’s policy on Cyprus’ EEZ was longstanding and has not changed, noting that the US “recognizes the right of the Republic of Cyprus to develop its resources in its Exclusive Economic Zone.” “We continue to believe the island’s oil and gas resources, like all of its resources, should be equitably shared between both communities in the context of an overall settlement,” the official said. “We discourage any actions or rhetoric that increase tensions in the region.” The official did not comment directly on threats from Ankara regarding the arrival in the region of a research vessel belonging to US company ExxonMobil.

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How is it possible that TEPCO is allowed to just keep on lying?

Tepco’s ‘Ice Wall’ Fails To Freeze Fukushima’s Toxic Water Buildup (R.)

A costly “ice wall” is failing to keep groundwater from seeping into the stricken Fukushima Dai-ichi nuclear plant, data from operator Tokyo Electric Power Co shows, preventing it from removing radioactive melted fuel at the site seven years after the disaster. When the ice wall was announced in 2013, Tepco assured skeptics that it would limit the flow of groundwater into the plant’s basements, where it mixes with highly radioactive debris from the site’s reactors, to “nearly nothing.” However, since the ice wall became fully operational at the end of August, an average of 141 metric tonnes a day of water has seeped into the reactor and turbine areas, more than the average of 132 metric tonnes a day during the prior nine months, a Reuters analysis of the Tepco data showed.

The groundwater seepage has delayed Tepco’s clean-up at the site and may undermine the entire decommissioning process for the plant, which was battered by a tsunami seven years ago this Sunday. Waves knocked out power and triggered meltdowns at three of the site’s six reactors that spewed radiation, forcing 160,000 residents to flee, many of whom have not returned to this once-fertile coast. Though called an ice wall, Tepco has attempted to create something more like a frozen soil barrier. Using 34.5 billion yen ($324 million) in public funds, Tepco sunk about 1,500 tubes filled with brine to a depth of 30 meters (100 feet) in a 1.5-kilometre (1-mile) perimeter around four of the plant’s reactors. It then cools the brine to minus 30 degrees Celsius (minus 22 Fahrenheit).

The aim is to freeze the soil into a solid mass that blocks groundwater flowing from the hills west of the plant to the coast. However, the continuing seepage has created vast amounts of toxic water that Tepco must pump out, decontaminate and store in tanks at Fukushima that now number 1,000, holding 1 million tonnes. It says it will run out of space by early 2021. “I believe the ice wall was ‘oversold’ in that it would solve all the release and storage concerns,” said Dale Klein, the former chairman of the U.S. Nuclear Regulatory Commission and the head of an external committee advising Tepco on safety issues.

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The people that see the threats to the entire system are not politicians.

Over 500 Quebec Doctors Protest Their Own Pay Raises (CNBC)

In Canada, more than 500 doctors and residents, as well as over 150 medical students, have signed a public letter protesting their own pay raises. “We, Quebec doctors who believe in a strong public system, oppose the recent salary increases negotiated by our medical federations,” the letter says. The group say they are offended that they would receive raises when nurses and patients are struggling. “These increases are all the more shocking because our nurses, clerks and other professionals face very difficult working conditions, while our patients live with the lack of access to required services because of the drastic cuts in recent years and the centralization of power in the Ministry of Health,” reads the letter, which was published February 25.

“The only thing that seems to be immune to the cuts is our remuneration,” the letter says. Canada has a public health system which provides “universal coverage for medically necessary health care services provided on the basis of need, rather than the ability to pay,” the government’s website says. The 213 general practitioners, 184 specialists, 149 resident medical doctors and 162 medical students want the money used for their raises to be returned to the system instead. “We believe that there is a way to redistribute the resources of the Quebec health system to promote the health of the population and meet the needs of patients without pushing workers to the end,” the letter says.

“We, Quebec doctors, are asking that the salary increases granted to physicians be canceled and that the resources of the system be better distributed for the good of the health care workers and to provide health services worthy to the people of Quebec.” A physician in Canada is paid $260,924 ($339,000 Canadian) for clinical services by the government’s Ministry of Health per year on average, according to a report from the Canadian Institute for Health Information published in September 2017. On average, a family physician is paid $211,717 ($275,000 Canadian) for clinical services and a surgical specialist is paid $354,915 ($461,000 Canadian), according to the same report.

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Feb 242018
 
 February 24, 2018  Posted by at 11:21 am Finance Tagged with: , , , , , , , , , ,  5 Responses »


Arthur Rothstein Rear of interstate truck. Elko, Nevada 1940

 

Debt On Track To Destroy The American Middle Class (GoldT)
The Only Thing That Can Save Stocks Is QE (ZH)
Fed ‘Quite Likely’ To Require Large-Scale QE Again (ZH)
VIX Funds Face Fresh Scrutiny From US Regulators (BBG)
Xi Confidant Emerges As Front Runner To Head China’s Central Bank (R.)
Brexit To End London House Price Boom (Ind.)
UK Post-Brexit Plans Based On A “Pure Illusion”- EU (G.)
Ecuador Blames UK As Assange Talks Break Down (G.)
Europe to Wind Down Latvian Bank Targeted by U.S. Over Sanctions (BBG)
After New Incident Off Cyprus, EU Calls On Turkey To Stop Naval Aggression (K.)

 

 

Going down down down.

Debt On Track To Destroy The American Middle Class (GoldT)

Economists report the household debt to be at its highest in decades. Yet, at the same time, we are being told that the economy is doing great. Does anyone see a serious contradiction? In fact, the current economy only favors the wealthy owing to their flourishing financial assets such as stocks and bonds. Owing to the lack of real assets such as property and commodities, the middle and lower classes are becoming overwhelmed due to the serious consequences of the spending/debt cycle. American consumers have a collective outstanding household debt of about $13.15 trillion of which nearly $1 trillion is the credit card debt alone, households are truly on a debt binge. These figures should be a wake-up call to all the Americans. The convulsive household debt has surpassed the bubble of 2008 and is still escalating. The economy may not be doing so great, after all.

Compared to 2008, the automobile credit balances have increased to $367 billion whereas the outstanding student loans are around $671 billion. Moreover, 67% of household debts belong to consumer mortgages. In 2016, 25% of all the Americans purchased a new or used vehicle and two-thirds of them are repaying through high-interest, long-term loans. In fact, the consumer debt has exceeded their income for majority of the Americans. Consumers have become accustomed using easy credit to maintain a lifestyle unaffordable for them otherwise. If this trend continues, and facts indicate that it will, we will be facing a monumental credit crisis in the near future. A huge portion of credit card debt is the interest. Credit cards are a convenience and consumers readily pay for the privilege.

[..] The decline in automobile sales is already an indication of the future consumer debt crisis. If lenders continue to provide easy access to credit regardless of its looming default and delinquent potential, retail purchase will face a sharp decline in 2018. This will have serious consequences on the overall economy. The Federal Reserve and other global lenders are a significant contribution to the problem. They allow printing of trillions of dollars and yens for the lenders to distribute to the borrowing consumers at a high interest, leading to a worldwide inflation. All this printed wealth is merely an illusion yet it is raising the cost of living. Prices are rising at an alamingly faster rate compared to the consumer income. There is no increase in real assets. All this is but a mere mushrooming of debt.

The consequences of federal policy will be inescapable unless reversed and there are no signs of any reversal in near or distant future. At this rate, the consumers will soon face a critical financial bubble. Financial assets, such as stocks and bonds, risk losing substantial value. The wealthy can absorb the losses but the poor and middle class will face financial ruin. Consumers need to seriously consider the need to increase their “real” assets, such as real estate and commodities to prevent a long-term financial nightmare. The chart below shows how the real assets have curved to an all-time low.

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Gee, what a surprise.

The Only Thing That Can Save Stocks Is QE (ZH)

In the last 45 years, there have been seven periods of persistent US dollar and Treasury bond weakness and as BofAML notes, during six of those periods, stocks have been pressured significantly lower.

This could be a problem, as it’s happening again… and stocks are beginning to wake up to it…

There has only been one period in history when falling dollar and bond prices did not lead to slumping stocks…And that was when QE was expanded drastically in March 2009.

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Tightening and then not.

Fed ‘Quite Likely’ To Require Large-Scale QE Again (ZH)

Ahead of Fed Chair Powell’s first semi-annual monetary policy report to Congress next week (brought forward to 2/27), The Fed has released his prepared remarks warning that “valuations are still elevated across a range of asset classes” and fears “signs of rising non-financial leverage.” To wit: Looking at the key topic of inflation, and the labor market, the Fed found that U.S. labor market is “near or a little beyond” full employment in early 2018, and that while the pace of wage growth has been modest, “serious labor shortages” would probably give it an upward push. Ironically, and paradoxically for an “economy beyond full employment”, the Fed observes that “the pace of wage gains has been moderate; while wage gains have likely been held down by the sluggish pace of productivity growth in recent years.”

Regardless, the Fed clearly is concerned about labor supply-demand imbalances, and has even added a new word: serious, as in “serious labor shortages would probably bring about larger increases than have been observed thus far.” In a separate special section on financial stability, the Fed notes that overall vulnerabilities in the U.S. financial system remain moderate, while noting some spots where things are warming up. These include signs of increased leverage to the nonbank sector, noting greater provision of margin credit to equity investors such as hedge funds. Looking at financial imbalances, the Fed warns that “leverage in the nonfinancial business sector has remained high, and net issuance of risky debt has climbed in recent months. In contrast, leverage in the household sector has remained at a relatively low level, and household debt in recent years has expanded only about in line with nominal income.”

[..] Curiously, before Powell’s remarks were dropped, both Dudley and Rosengren were on the tape this morning talking super dovish about QE as “useful to have in the toolkit for those times when the short-term interest rate tool may not be available,” adding that The Fed is “quite likely” to require large-scale asset purchases again because real rates will remain low due to slow productivity and labor-force growth.

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Horse has left that barn ages ago.

VIX Funds Face Fresh Scrutiny From US Regulators (BBG)

U.S. regulators are scrutinizing this month’s implosion of investments that track stock-market turmoil, including whether wrongdoing contributed to steep losses for VIX exchange-traded products offered by Credit Suisse and other firms, several people familiar with the matter said. The Securities and Exchange Commission and the Commodity Futures Trading Commission have been conducting a broad review of trading since Feb. 5, when volatility spiked and investors lost billions of dollars, the people said. Among those looking into what happened are lawyers in the SEC’s enforcement division, which investigates firms for potential misconduct and fines them if it finds violations of securities laws, two of the people said. There is no indication thus far that specific companies, including Credit Suisse, are being probed.

The scrutiny puts a spotlight on a small corner of the $3.4 trillion exchange-traded fund industry that lets everyone from hedge funds to mom-and-pop investors engage in complex trading strategies. With losses now piling up, allegations of market manipulation are getting more attention and government watchdogs face questions about why small-time investors were permitted to buy such products in the first place. “The values of these exchange-traded products are based on a combination of futures, options and three indices. Quite the maze,” Democratic SEC Commissioner Kara Stein said Friday in a speech at a conference in Washington. “What troubles me is that oftentimes complex products fall into the hands of people who don’t fully understand them.”

SEC Chairman Jay Clayton told reporters at the same event Friday that he wasn’t concerned about how the market functioned during the steep decline in equities on Feb. 5 and in the two weeks since. He said it would be appropriate, however, to review which types of more complex investments are widely available to average investors. “The portfolio of products available to retail investors has changed dramatically and it’s worth taking a look at,” Clayton said.

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Tough job. Xi sets rates all by himself.

Xi Confidant Emerges As Front Runner To Head China’s Central Bank (R.)

Liu He, a Harvard-trained economist who is a trusted confidant of Chinese President Xi Jinping, has emerged as the front runner to be the next governor of the People’s Bank of China (PBOC), according to three sources with knowledge of the situation. Liu may be in a position to become one of China’s most powerful economic and financial officials ever, as he is already top adviser to Xi on economic policy and is also expected to become vice premier overseeing the economy. Liu would replace current PBOC chief, 70-year-old Zhou Xiaochuan, who is China’s longest-running head of the central bank, having taken the job in 2002. Zhou is expected to retire around the time of the annual session of parliament in March, sources previously told Reuters.

The change would be part of a wider government reshuffle following the 19th Communist Party Congress in October last year, during which Xi laid out his vision for China’s long-term development, and elevated his key allies. Speculation has been rife for months over the choice of the next central bank governor. Xi will have the final say, and the sources noted that while Liu is clearly the frontrunner he is not yet certain to get the job. Just before last October’s Congress, sources told Reuters that China’s banking regulator head Guo Shuqing and veteran banker Jiang Chaoliang were leading contenders for the PBOC job. But at the congress, the influence of the 66-year-old Liu continued to grow. He was elected into the 25-member Politburo, the second-highest tier in Beijing’s political power structure after the seven-member Politburo Standing Committee.

Sources previously told Reuters that Liu, a fluent English speaker, is set to become one of China’s four vice premiers and would oversee the economy and financial sector. Two of the sources said that Liu could serve concurrently as vice premier and head of the central bank.

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Brexit is not all bad.

Brexit To End London House Price Boom (Ind.)

UK inflation will outstrip gains in house prices this year and next, particularly in the capital, as uncertainty over Brexit and weak consumer spending power hits demand, a Reuters poll found on Friday. According to the latest quarterly Reuters poll of 33 housing market specialists, taken in the past week, property prices will rise 2.0% this year, much slower than the predicted 2.5% rise in general costs in the economy. In London – long the hotbed for foreign investors behind a decade of skyrocketing prices – the difference will be even starker: the average price is expected to fall 0.5% this year. Next year, house prices will rise 0.9% in London and 2.0 nationally, still both below the 2.1% expected inflation rate. In 2020, London prices will increase 2.0% and by 2.3% nationally. “A significant effect of Brexit is subdued investment confidence,” said Rod Lockhart at online mortgage lender LendInvest.

“Would-be sellers are holding onto assets for longer and buyers are being a little more diligent before committing to significant expenditures, all this against a backdrop of inflation-surpassing wage growth.” Most respondents in the poll said the Brexit vote had been negative for both turnover and prices in London but were split over whether it had been negative or had no impact nationally. Sterling is over 6% weaker than before the June 2016 vote to leave the EU, something that should make properties more attractive to foreign investors, who can take advantage of cheaper prices. But uncertainty over how Brexit divorce talks will pan out has deterred overseas buyers. “Foreigners get more pounds in their pockets, but the nation and its capital has lost some of its allure,” said Tony Williams at property consultancy Building Value.

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May the masochist.

UK Post-Brexit Plans Based On A “Pure Illusion”- EU (G.)

Theresa May’s reported agreement with her cabinet on a future trading relationship with the EU has been criticised as based on “pure illusion” by the European council president, Donald Tusk, as frustration with the UK erupted in Brussels. Reports that May’s inner cabinet had agreed on a policy of “managed divergence” during eight hours of talks at an awayday in Chequers were met with incredulity by EU leaders. Tusk told reporters on Friday: “I am glad the UK government seems to be moving towards a more detailed position. “However, if the media reports are correct, I am afraid the UK position today is based on pure illusion. It looks like the cake [and eat it] philosophy is still alive. “From the very start it has been a set principle of the EU27 that there cannot be any cherrypicking of single market à la carte. This will continue to be a key principle, I have no doubt.”

Speaking at a summit of EU27 member states in Brussels, to discuss the EU’s budget and leadership post-Brexit, Leo Varadkar, the Irish taoiseach, also insisted that the single market was “not à la carte”. It is believed the British government is seeking to maintain frictionless trade in some sectors by staying in lock-step alignment with EU regulation, while opening up the prospect of diverging in other areas in order to gain a competitive advantage in the international marketplace. “It is not possible for UK to be aligned to EU when it suits and not when it doesn’t,” Varadkar said. “The UK position needs to be backed up with real detail that can be written into a legal treaty with the EU. We are well beyond the point of aspirations and principle. We need detail.”

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Britain should be taken to The Hague for its involvement.

Ecuador Blames UK As Assange Talks Break Down (G.)

Talks between the UK and Ecuador over the future of Julian Assange at its London embassy have broken down, the South American country’s foreign minister has said. Maria Fernanda Espinosa suggested British officials had been unwilling to negotiate over the Wikileaks founder’s potential release. Earlier this month, a judge upheld an arrest warrant issued when Assange skipped bail as he fought extradition to Sweden in 2012. The 46-year-old has been at the embassy ever since because he fears extradition to the United States for questioning over the activities of WikiLeaks if he leaves. Espinosa said of the failed talks: “To mediate you need two parties, Ecuador is willing, but not necessarily the other party.”

Ecuador said it would continue to protect Assange’s rights, however there was a risk to his physical and psychological wellbeing after spending nearly six years in the building as a “refugee”. The country has assessed more than 30 similar cases in a bid to break the deadlock, including that of British-Iranian citizen Nazanin Zaghari-Ratcliffe, who is in prison in Iran accused of spying. This included options for granting diplomatic immunity, although Ecuador said it would continue to respect the UK’s laws. In November, Espinosa said Assange had been granted Ecuadorian citizenship. The foreign minister said Ecuador was trying to make Assange a member of its diplomatic team, which would grant him additional rights under the Vienna Convention on Diplomatic Relations – including special legal immunity and safe passage.

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All because of North Korea?!

Europe to Wind Down Latvian Bank Targeted by U.S. Over Sanctions (BBG)

European authorities moved to liquidate Latvia’s ABLV Bank after clients pulled assets from the lender following U.S. accusations that it laundered money. The ECB, which had already placed a freeze on payments by the lender, said that ABLV was failing or likely to fail, handing it over to Europe’s Single Resolution Board. That authority said a resolution of the bank, which generally means a sale or restructuring, isn’t in the public interest because neither ABLV nor its Luxembourg-based subsidiary provide “critical functions” and their failure won’t have a “significant adverse impact” on financial stability. ABLV was plunged into crisis after the U.S. Treasury this month proposed to ban it from the American financial system, saying it helped process illicit transactions, including for entities with alleged ties to North Korea’s ballistic missile program.

The bank responded by saying the allegations are wrong and misleading and that it was working to provide information to the Treasury that would help to overturn the proposal. “The bank is likely unable to pay its debts or other liabilities as they fall due,” the ECB said in a statement on Saturday in Frankfurt. “The bank did not have sufficient funds which are immediately available to withstand stressed outflows of deposits before the payout procedure of the Latvian deposit-guarantee fund starts.” ABLV took a different view, saying it accumulated more than €1.36 billion over four business days to strengthen its liquidity and ensure 86% of its demand deposits. “The bank considers that it has fulfilled all requirements of the regulator in order to resume operation,” ABLV said. “It was absolutely sufficient for the bank to resume executing payments and meet all obligations toward its clients, yet due to political considerations the bank was not given a chance to do it.”

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Turkey threatens to fire on an Italian ship.

After New Incident Off Cyprus, EU Calls On Turkey To Stop Naval Aggression (K.)

Just a day after it said it won’t allow Cyprus to conduct a “unilateral” gas search off the Eastern Mediterranean island’s coast if Turkish Cypriots don’t also reap the benefits, Ankara ratcheted up tensions with Nicosia Friday when its warships threatened to use force against a drillship contracted to Italian energy giant Eni as it tried, again, to reach an area in Cyprus’s exclusive economic zone (EEZ) to commence exploratory gas drilling. Turkey has been obstructing the Saipem 12000 drillship from approaching an area in Block 3 of Cyprus’s EEZ since February 9, citing naval exercises. This week it announced it is reserving the area until March 10. Earlier in the month a Turkish gunboat rammed a Hellenic Coast Guard vessel near the eastern Aegean islet of Imia. Turkey’s aggression was raised by Greek Premier Alexis Tsipras and Cypriot President Nicos Anastasiades at the informal summit of EU leaders in Brussels Friday.

European Council President Donald Tusk told reporters after the meeting that the bloc was calling on Turkey to stop activities that have led to recent incidents in Greece and Cyprus, stressing that both countries have the “sovereign right” to explore for resources. He also said the EU will assess during March’s European Council meeting whether the conditions are ripe for a high-level meeting with Turkey in Varna on March 26. The drillship left the area after the incident and headed west for the city of Limassol, where it is expected to remain for a few days before sailing to Morocco. “Unfortunately, the drillship was halted by five Turkish warships and after threats of violence and the threat of a collision, it was compelled to return back,” said Cypriot government spokesman Victoras Papadopoulos, who stressed, however, that the postponement of the scheduled drilling does not mean that the island’s energy plans will change.

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Jul 072017
 
 July 7, 2017  Posted by at 8:08 am Finance Tagged with: , , , , , , , , ,  2 Responses »


Francis Bacon Triptych 1976

 

All Eyes On Trump-Putin Dynamics As They Meet For First Time At G20 (R.)
Deep State Begins Anti-Russia Media Blitz Ahead Of Trump-Putin Meeting
Anti-G20 Protesters Clash With Hamburg Police ‘Like Never Before’ (RT)
The Party Is Over: Central Banks Pull The Plug On Bond Market Rally (CNBC)
Central Bank Easy Money ‘Era Is Ending’ – Ray Dalio (CNBC)
Ray Dalio’s ‘Beautiful’ Deleveraging Delusion (ZH)
‘It’s Too Late’: 7 Signs Australia Can’t Avoid Economic Apocalypse (News)
World-Beating Wealth Props Up Qatar Against Arab Sanctions (R.)
Home Sales In Greater Toronto Area Plunged 37.3% Last Month (CP)
The Fast Track to “Carmageddon” (David Stockman)
Clinton, The IMF And Wall Street Journal Toppled Suharto (Hanke)
Our Political Parties Are Obsolete (CH Smith)
Cyprus Reunification Talks Collapse (R.)

 

 

If only they could have a decent conversation.

All Eyes On Trump-Putin Dynamics As They Meet For First Time At G20 (R.)

U.S. President Donald Trump and Russian President Vladimir Putin are set to size each other up in person for the first time on Friday in what promises to be the most highly anticipated meeting on the sidelines of the G20 summit. Trump has said he wants to find ways to work with Putin, a goal made more difficult by sharp differences over Russia’s actions in Syria and Ukraine, and allegations Moscow meddled in the 2016 U.S. presidential election. That means every facial expression and physical gesture will be analyzed as much as any words the two leaders utter as the world tries to read how well Trump, a real estate magnate and former reality television star, gets along with Putin, a former spy. The fear is that the Republican president, a political novice whose team is still developing its Russia policy, will be less prepared than Putin, who has dealt with the past two U.S. presidents and scores of other world leaders.

“There’s nothing … the Kremlin would like to see more than a (U.S.) president who will settle for a grip and a grin and walk away saying that he had this fabulous meeting with the Kremlin autocrat,” Representative Adam Schiff, the top Democrat on the House of Representatives’ Intelligence Committee, said in an interview on MSNBC. As investigations at home continue into whether there was any collusion between Trump’s presidential campaign and Russia the U.S. president has come under pressure to take a hard line against the Kremlin. Moscow has denied any interference and Trump says his campaign did not collude with Russia. On Thursday, Trump won praise from at least one Republican hawk in the U.S. Congress after his speech in Warsaw in which he urged Russia to stop its “destabilizing activities” and end its support for Syria and Iran.

“This is a great start to an important week of American foreign policy,” said Republican Senator Lindsey Graham, who has often been critical of Trump on security issues. But earlier in the day, Trump declined to say definitively whether he believed U.S. intelligence officials who have said that Russia interfered in the 2016 election. “I think it was Russia but I think it was probably other people and/or countries, and I see nothing wrong with that statement. Nobody really knows. Nobody really knows for sure,” Trump said at a news conference, before slamming Democratic former President Barack Obama for not doing more to stop hacking.

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So much for that decent conversation. James Clapper, who not long ago stated there is no proof of Russian election hacking, now claims that there is no proof of anyone BUT the Russians being involved.

Deep State Begins Anti-Russia Media Blitz Ahead Of Trump-Putin Meeting

It’s been relatively quiet in the last few weeks on the “the Russians did it, and Trump’s Putin’s best-buddy” propaganda-fest, but it appears the Deep State had three stories tonight – just hours ahead of Trump’s face-to-face with Putin – claim Russian hackers are targeting US nuclear facilities, the Russians are nonchalantly stepping up their spying, and that Russia alone interfered with the US election. With all eyes on the ‘handshake’ as Putin and Trump come face-to-face for the first time as world leaders, it seems the Deep State is desperately fearful of some rapprochement, crushing the need for NATO, and destroying the excuses for massive, unprecedented military-industrial complex spending.

And so, three stories (2 anonymously sourced and one with no facts behind it) in The New York Times (who recently retracted their “17 intelligence agencies” lie) and CNN (where do we start with these guys? let’s just go with full retraction of an anonymously sourced lie about Scaramucci and Kushner and the Russians) should stir up enough angst to ensure the meeting is at best awkward and at worst a lose-lose for Trump (at least in the eyes of the media). First off we have the ‘news’ that hackers have reportedly been breaking into computer networks of companies operating United States nuclear power stations, energy facilities and manufacturing plants, according to a new report by The New York Times.

“The origins of the hackers are not known. But the report indicated that an “advanced persistent threat” actor was responsible, which is the language security specialists often use to describe hackers backed by governments. The two people familiar with the investigation say that, while it is still in its early stages, the hackers’ techniques mimicked those of the organization known to cybersecurity specialists as “Energetic Bear,” the Russian hacking group that researchers have tied to attacks on the energy sector since at least 2012.” And Bloomberg piled on…”The chief suspect is Russia, according to three people familiar with the continuing effort to eject the hackers from the computer networks.” So that’s that 5 people – who know something – suspect it was the Russians that are hacking US nuclear facilities (but there’s no proof).

Next we move to CNN who claim a ‘current and former U.S. intelligence officials’ told them that Russian spies have been stepping up their intelligence gathering efforts in the U.S. since the election, feeling emboldened by the lack of significant U.S. response to Russian election meddling. “Russians have maintained an aggressive collection posture in the US, and their success in election meddling has not deterred them,” said a former senior intelligence official familiar with Trump administration efforts. “The concerning point with Russia is the volume of people that are coming to the US. They have a lot more intelligence officers in the US” compared to what they have in other countries, one of the former intelligence officials says.”

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Holding it in Hamburg is a conscious decision intended to show muscle, and the necessity to show that muscle. Do it in the middle of the Pacific and you can’t show off your new high tech water cannon.

Anti-G20 Protesters Clash With Hamburg Police ‘Like Never Before’ (RT)

An anti-G20 rally in Hamburg has erupted into a violent confrontation between police and protesters. Dozens of officers have been injured by rioters as sporadic clashes on the streets of the German city continued into the night. “There have been offenses committed by smaller groups [but] we now have the situation under control… I was there myself, I’ve seen nothing like that before,” Hamburg police spokesman Timo Zill told German broadcaster ZDF. The ‘Welcome to Hell’ anti-globalist rally started off relatively peacefully as activists marched through the streets chanting slogans and holding banners. Clashes begun in the early evening after roughly 1,000 anti-globalism activists, wearing face masks, reportedly refused to reveal their identity to the authorities.

According to an official police statement, the trouble started when officers tried to separate aggressive black-bloc rioters from peaceful protesters at the St. Pauli Fish Market but were met with bottles, poles and iron bars, prompting them to use justifiable force. Police used pepper-spray on rioting protesters. Water cannons were also deployed by authorities and several people seemed to be injured as a number of people were seen on the ground or with bloody faces being led away by police. Footage from the scene also showed columns of green and orange smoke rising above the crowds. At least 76 police officers were injured in the riots, most, though, suffered light injuries, Bild reports. Five of them were admitted to hospital, a police officer told AFP. One policeman suffered an eye injury after fireworks exploded in front of his face. The number of injured demonstrators has not yet been released by authorities, DW German notes.

As a result of the violence, organizers declared the protest over Thursday evening, but pockets of activists remained on the streets throughout the night. Police confirmed persistent sporadic attacks on security forces in the districts of St. Pauli and Altona. Damage to property has also been reported throughout the city. According to RT’s correspondent on the scene, Peter Oliver, one of the protesters’ grievances was that they received no clear directives from the police as to where they were allowed to march and found themselves kettled by officers in riot gear once they set off. “They are macing everyone,” one witness at the scene told RT. “As far as I could tell, they were attacking the demonstration with no reason.” “I’m from Hamburg, [and] I’ve never seen anything like this. We’ve had fights about squatted houses and all that, [but] I’ve never seen anything like that. The aggression, as far as I could tell, the purposelessness… my face hurts, I’ve got mace and everything, this is unbelievable.”

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Central bankers trying to deflect the blame.

The Party Is Over: Central Banks Pull The Plug On Bond Market Rally (CNBC)

Central banks are shutting down the music and turning on the lights after a near decade-long bond market party that resulted in ultra-low yields and low volatility. In the past two weeks, interest rates have been rising, at the prodding of the world’s central banks. Some bond strategists now see the possibility of a shift to a more fundamental-driven market, which could result in higher, more normal interest rate levels that will affect everything from home mortgages to commercial loans. That doesn’t mean the wake-up call will be a jolt, with rates snapping back violently or markets spinning out of control—though it could if rates begin to move too quickly. For now, market pros expect the rising interest rates of the past several weeks to be part of an orderly adjustment to a world in which central banks are preparing to end excessive easy policies.

The Federal Reserve is about to take the unprecedented step of reducing the balance sheet it built up to save the economy from the financial crisis. Since June 26, the U.S. 10- year yield has risen from 2.12% to Thursday’s high of 2.38%. The move has been global, after ECB President Mario Draghi last week pointed to a less risky outlook for the European economy, and Fed officials made consistently hawkish remarks. Some of those officials said they were even concerned that their policies created a too easy financial environment, meaning interest rates should be higher. The stock market caught wind of the rate move Thursday, and equities around the world responded negatively to rising yields. Bond strategists say if higher yields trigger a bigger sell off in stocks it could slow down the upward movement in interest rates, as investors will seek safety in bonds. Bond prices move opposite yields.

Friday’s June jobs report could be a moment of truth for the bond market. Strategists are looking to the wage gains in the report, expected at 0.3%. If they are as expected, the move higher in yields could continue. But a surprise to the upside could mean a much bigger move since it would signal a return of inflation. The Fed has said it is looking past the recent decline in inflation, but the market would become more convinced of the Fed’s rate-hiking intentions if it starts to rise.

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“..our responsibility now is to keep dancing but closer to the exit and with a sharp eye on the tea leaves..”

Central Bank Easy Money ‘Era Is Ending’ – Ray Dalio (CNBC)

Ray Dalio has declared the era of easy money is ending. The founder and chief investment officer of the world’s biggest hedge fund said Thursday in a commentary posted to LinkedIn that central bankers have “clearly and understandably” signaled the end of the nine-year era of monetary easing is coming. They are shifting strategy and are now focused on raising interest rates at a pace that keeps growth and inflation in balance, risking the next downturn if they get it wrong. “Recognizing that, our responsibility now is to keep dancing but closer to the exit and with a sharp eye on the tea leaves,” Dalio wrote.

In May, Dalio posted a commentary that said he was worried about the future, concerned that the magnitude of the next downturn could produce “much greater social and political conflict than currently exists.” On Thursday, he said the aggressive easing policies brought about “beautiful deleveragings,” and it was time to pause and thank the central bankers for pursuing them. “They had to fight hard to do it and have been more maligned than appreciated.” Dalio ends by saying he doesn’t see a big debt bubble about to burst, largely because of the balance sheet deleveraging that came about in the last few years. But, he said, “we do see an increasingly intensifying ‘Big Squeeze.'”

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“..the only reason the world is in its current abysmal socio-political and economic shape is due to the cumulative effect of their disastrous policies..”

Ray Dalio’s ‘Beautiful’ Deleveraging Delusion (ZH)

For some inexplicable reason, Ray Dalio still thinks the the world not only underwent a deleveraging, but that it was “beautiful.” Not only did McKinsey prove that to be completely false two years ago, but for good measure the IIF confirmed as much last week, when it revealed that global debt has hit a record $217 trillion, or 327% of GDP… while Citi’s Matt King showed that with no demand for credit in the private sector, central banks had no choice but to inject trillions to keep risk prices from collapsing.

And now, replacing one delusion with another, the Bridgewater head has penned an article in which he notes that as the “punch bowl” era is ending – an era which made Dalio’s hedge fund the biggest in the world, and richer beyond his wildest dreams – he would like to take the opportunity to “thanks the central bankers” who have ‘inexplicably’ been “more maligned than appreciated” even though their aggressive policies have, and here is delusion #1 again, “successfully brought about beautiful deleveragings.” “In my opinion, at this point of transition, we should savor this accomplishment and thank the policy makers who fought to bring about these policies. They had to fight hard to do it and have been more maligned than appreciated. Let’s thank them.” They fought hard to print $20 trillion in new money? Now that is truly news to us.

That said, we can see why Dalio would want to thank “them”: he wouldn’t be where he is, and his fund would certainly not exist today, if it weren’t for said central bankers who came to rescue the insolvent US financial system by sacrificing the middle class and burying generations under unrepayable debt. Still, some who may skip thanking the central bankers are hundreds of millions of elderly Americans and people worldwide also wouldn’t be forced to work one or more jobs well into their retirement years because monetary policies lowered the return on their savings to zero (or negative in Europe), as these same “underappreciated” central bankers created three consecutive bubbles, and the only reason the world is in its current abysmal socio-political and economic shape is due to the cumulative effect of their disastrous policies which meant creating ever greater asset and debt bubbles to mask the effects of the previous bubble, resulting in unprecedented wealth and income inequality, and which have culminated – most recently – with Brexit and Trump.

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Amen.

‘It’s Too Late’: 7 Signs Australia Can’t Avoid Economic Apocalypse (News)

Australia has missed its chance to avoid a potential “economic apocalypse”, according to a former government guru who says that despite his warnings there are seven new signs we are too late to act. The former economics and policy adviser has identified seven ominous indicators that a possible global crash is approaching – including a surge in crypto-currencies such as Bitcoin – and the window for government action is now closed. John Adams, a former economics and policy adviser to Senator Arthur Sinodinos and management consultant to a big four accounting firm, told news.com.au in February he had identified seven signs of economic Armageddon. He had then urged the Reserve Bank to take pre-emptive action by raising interest rates to prevent Australia’s expanding household debt bubble from exploding and called on the government to rein in welfare payments and tax breaks such as negative gearing.

Adams says he has for years been publicly and privately urging his erstwhile colleagues in the Coalition to take action but that since nothing has been done, the window has now closed and Australia is completely at the mercy of international forces. “As early as 2012, I have been publicly and privately advocating that Australian policy makers take pre-emptive policy action to deal with the structural imbalances within the Australian economy, especially Australia’s household debt bubble which in proportional terms is larger than the household debt bubbles of the 1880s or 1920s, the periods which preceded the two depressions experienced in Australian history,” he told news.com.au this week. “Unfortunately, the window for taking pre-emptive action with an orderly unwinding of structural macroeconomic imbalances has now closed.”

Adams has now turned on his former party and says both its most recent prime ministers have led Australia into a potential “economic apocalypse” and Treasurer Scott Morrison is wrong that we are heading for a “soft landing”. “The policy approach by the Abbott and Turnbull Governments as well as the Reserve Bank of Australia and the Australian Prudential Regulation Authority, which has been to reduce systemic financial risk through new macro-prudential controls, has been wholly inadequate,” he says. “I do not share the Federal Treasurer’s assessment that the economy and the housing market are headed for a soft landing. Data released by the RBA this week shows that the structural imbalances in the economy are actually becoming worse with household debt as a proportion of disposable income hitting a new record of 190.4%.

“Because of the failure of Australia’s political elites and the policy establishment, the probability of a disorderly unwinding, particularly of Australia’s household and foreign debt bubbles, have dramatically increased over the past six months and will continue to increase as global economic and financial instability increases. “Millions of ordinary, financially unprepared, Australians are now at the mercy of the international markets and foreign policy makers. Australian history contains several examples of where similar pre conditions have resulted in an economic apocalypse, resulting in a significant proportion of the Australian people being left economically destitute.”

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Sanctions don’t really work in this case.

World-Beating Wealth Props Up Qatar Against Arab Sanctions (R.)

A month after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed diplomatic, trade and transport ties with Qatar, accusing it of backing terrorism, it is suffering from isolation but is nowhere near an economic crisis. The alliance against it, meanwhile, may not have options to inflict further damage. As the world’s top liquefied natural gas exporter, Qatar is so rich – at $127,660, its gross domestic product per capita in purchasing power terms is the highest of any country, according to the IMF – it can deploy money to counter almost any type of sanction. In the past month it has arranged new shipping routes to offset the closure of its border with Saudi Arabia, deposited billions of dollars of state money in local banks to shore them up, and drawn the interest of some of the West’s biggest energy firms by announcing a plan to raise its LNG output 30%.

The success of these initiatives suggests Qatar could weather months or years of the current sanctions if it has the political will to do so – and that further sanctions being contemplated by the alliance may not prove decisive. On Wednesday, the alliance said Qatar, which denies any support for terrorism, had missed a deadline to comply with its demands. Further steps against Doha will be taken in line with international law “at the appropriate time”, Saudi Foreign Minister Adel al-Jubeir said. Saudi media reported this week that the new sanctions would include a pull-out of deposits and loans from Qatar by banks in alliance states, and a “secondary boycott” in which the alliance would refuse to do business with firms that traded with Qatar. Those steps would cause further pain for Qatar, but not to the point of destabilizing its financial system or breaking the peg of its riyal currency to the U.S. dollar, senior Qatari businessmen and foreign economists said.

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“..a soft month for Toronto real estate market..”, “..a better supplied market and a moderating annual pace of price growth…”

Home Sales In Greater Toronto Area Plunged 37.3% Last Month (CP)

The number of homes sold last month in the Greater Toronto Area plunged a whopping 37.3% compared to the same month a year ago, the city’s real estate board said Thursday, weeks after Ontario introduced measures aimed at cooling the housing market. The Toronto Real Estate Board said 7,974 homes changed hands in June while the number of new properties on the market climbed 15.9% year over year to 19,614. The average price for all properties was $793,915, up 6.3% from the same month last year. In April, the Ontario government implemented rules intended to dampen Toronto’s heated real estate market, where escalating prices have concerned policy-makers at the municipal, provincial and federal levels.

Ontario’s measures, retroactive to April 21, include a 15% tax on foreign buyers in the Greater Golden Horseshoe region, expanded rent controls and legislation allowing Toronto and other cities to tax vacant homes. “We are in a period of flux that often follows major government policy announcements pointed at the housing market,” TREB president Tim Syrianos said in a statement. “On one hand, consumer survey results tell us many households are very interested in purchasing a home in the near future, but some of these would-be buyers seem to be temporarily on the sidelines waiting to see the real impact of the Ontario Fair Housing Plan. On the other hand, we have existing homeowners who are listing their home because they feel price growth may have peaked. The end result has been a better supplied market and a moderating annual pace of price growth.”

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60-odd years later, it’s still true: “As General Motors goes, so goes the nation.”

The Fast Track to “Carmageddon” (David Stockman)

Back in the 1950s when GM had 50% of the auto market they always said that, “As General Motors goes, so goes the nation.” That was obviously a tribute to GM’s economic muscle and its role as the driver of growth and rising living standards in post-war America’s booming economy. Those days are long gone for both GM and the nation. GM’s drastically reduced 20% market share of U.S. light vehicle sales in June was still an economic harbinger, albeit of a different sort. GM offered a record $4,361 of cash incentives during June. That was up 7% from last year and represented 12% of its average selling price of $35,650 per vehicle, also a record. But what it had to show for this muscular marketing effort was a 5% decline in year-over-year sales and soaring inventories. The latter was up 46% from last June.

My purpose is not to lament GM’s ragged estate, but to note that it — along with the entire auto industry — has become a ward of the Fed’s debt-fueled false prosperity. The June auto sales reports make that absolutely clear. In a word, consumers spent the month “renting” new rides on more favorable terms than ever before. But that couldn’t stop the slide of vehicle “sales” from its 2016 peak. In fact, June represented the 6th straight month of year-over-year decline. And the fall-off was nearly universal — with FiatChrysler down 7.4%, Ford and GM off about 5% and Hyundai down by 19.3%. The evident rollover of U.S. auto sales is a very big deal because the exuberant auto rebound from the Great Recession lows during the last six years has been a major contributor to the weak recovery of overall GDP.

In fact, overall industrial production is actually no higher today than it was in the fall of 2007. That means there has been zero growth in the aggregate industrial economy for a full decade. Real production in most sectors of the U.S. economy has actually shrunk considerably, but has been partially offset by a 15% gain in auto production from the prior peak, and a 130% gain from the early 2010 bottom. By comparison, the index for consumer goods excluding autos is still 7% below its late 2007 level. So if the so-called “recovery” loses its automotive turbo-charger, where will the growth come from?

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20th Anniversary, Asian Financial Crisis.

Clinton, The IMF And Wall Street Journal Toppled Suharto (Hanke)

On August 14, 1997, shortly after the Thai baht collapsed on July 2nd, Indonesia floated the rupiah. This prompted Stanley Fischer, then the Deputy Managing Director of the IMF and presently Vice Chairman of the U.S. Federal Reserve, to proclaim that “the management of the IMF welcomes the timely decision of the Indonesian authorities. The floating of the rupiah, in combination with Indonesia’s strong fundamentals, supported by prudent fiscal and monetary policies, will allow its economy to continue its impressive economic performance of the last several years.” Contrary to the IMF’s expectations, the rupiah did not float on a sea of tranquility. It plunged from a value of 2,700 rupiahs per U.S. dollar to lows of nearly 16,000 rupiahs per U.S. dollar in 1998. Indonesia was caught up in the maelstrom of the Asian Financial Crisis.

By late January 1998, President Suharto realized that the IMF medicine was not working and sought a second opinion. In February, I was invited to offer that opinion and was appointed as Suharto’s Special Counselor. Although I did not have any opinions on the Suharto government, I did have definite ones on the matter at hand. After nightly discussions at the President’s private residence, I proposed an antidote: an orthodox currency board in which the rupiah would be fully convertible into and backed by the U.S. dollar at a fixed exchange rate. On the day that news hit the street, the rupiah soared by 28% against the U.S. dollar on both the spot and one year forward markets. These developments infuriated the U.S. government and the IMF. Ruthless attacks on the currency board idea and the Special Counselor ensued. Suharto was told in no uncertain terms – by both the President of the United States, Bill Clinton, and the Managing Director of the IMF, Michel Camdessus – that he would have to drop the currency board idea or forego $43 billion in foreign assistance.

Economists jumped on the bandwagon, trotting out every imaginable half-truth and non-truth against the currency board idea. In my opinion, those oft-repeated canards were outweighed by the full support for an Indonesian currency board by four Nobel Laureates in Economics: Gary Becker, Milton Friedman, Merton Miller, and Robert Mundell. Also, Sir Alan Walters, Prime Minister Thatcher’s economic guru, a key figure behind the establishment of Hong Kong’s currency board in 1983, and my colleague and close collaborator, endorsed the idea of a currency board for Indonesia. Why all the fuss over a currency board for Indonesia? Merton Miller understood the great game immediately. As he said when Mrs. Hanke and I were in residence at the Shangri-La Hotel in Jakarta, the Clinton administration’s objection to the currency board was “not that it wouldn’t work, but that it would, and if it worked, they would be stuck with Suharto.”

Much the same argument was articulated by Australia’s former Prime Minister Paul Keating: “The United States Treasury quite deliberately used the economic collapse as a means of bringing about the ouster of Suharto.” Former U.S. Secretary of State Lawrence Eagleburger weighed in with a similar diagnosis: “We were fairly clever in that we supported the IMF as it overthrew (Suharto). Whether that was a wise way to proceed is another question. I’m not saying Mr. Suharto should have stayed, but I kind of wish he had left on terms other than because the IMF pushed him out.” Even Michel Camdessus could not find fault with these assessments. On the occasion of his retirement, he proudly proclaimed: “We created the conditions that obliged President Suharto to leave his job.”

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Hmm. Treating this is an American phenomenon is not useful. It’s global. And that has a lot to do with deteriorating economic conditions. Centralization is only accepted as long as it has tangible benefits for people.

Our Political Parties Are Obsolete (CH Smith)

History informs us that once something is obsolete, it can disappear far faster than anyone expected. While we generally think of obsoleted technologies vanishing, social and political systems can become obsolete as well. Should a poor soul who entered a deep coma a year ago awaken today, we must forgive his/her astonishment at the political wreckage left by the 2016 election. The Democratic Party, a mere year ago an absurdly over-funded machine confident in an easy victory in the presidential race, is now a complete shambles: its leadership in free-fall, its Fat-Cat donors disgusted, and its demented intoxication with pinning collaboration with Russia on the Trump camp eroding whatever feeble legacy legitimacy it still holds. What the party stands for is a mystery, as its Elites are clearly beholden to insiders, special interests and Corporate donors while glorifying the worst excesses of globalism and the National Security State’s endless war on civil liberties.

The newly awakened citizen would also marvel at the chaotic war zone of the Republican Party, in which the Insider Warlords are battling insurgent Outsiders, while the same Elites that fund the Democratic machine are wondering what they’re buying with their millions of dollars in contributions, for it’s unclear what the Republican Party stands for: it’s for Small Government, except when it’s for Bigger Government, which is 95% of the time; it’s for more law enforcement and the militarization of local police, and more intrusion into the lives of the citizenry; it’s for stricter standards for welfare, except for Corporate Welfare; it’s for tax reform, except the thousands of pages of give-aways, loopholes and tax breaks for the wealthy and corporations all remain untouched, and so on: a smelly tangle of special interests masked by a few sprays of PR air freshener to the millions left behind by the globalization that has so enriched Corporate America and the class of financier-owners, bankers, insiders and technocrats–the same group that funds and controls both political parties.

Political parties arose to consolidate centralized control of the central state. We have now reached the perfection of this teleology: the political elites and the financial elites are now one class. In our pay-to-play “democracy,” only the votes of wealth and institutional power count. As I have often noted here, the returns on centralization are diminishing to less than zero. The initial returns on centralizing capital, production and social-political power were robust, but now the centralized cartel-state is eating its own tail, masking its financial bankruptcy by borrowing from the future, and cloaking its political bankruptcy behind the crumbling facades of the legacy parties. Now that technology has enabled decentralized currency, markets and governance, the centralized political parties are obsolete.

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Erdogan was never going to withdraw his troops. That’s the whole story. Guterres just looks foolish.

Cyprus Reunification Talks Collapse (R.)

Talks to reunify the divided island of Cyprus collapsed in the early hours of Friday, U.N. Secretary General Antonio Guterres said after a stormy final session. “I’m very sorry to tell you that despite the very strong commitment and engagement of all the delegations and different parties … the conference on Cyprus was closed without an agreement being reached,” he told a news conference. The collapse marked a dramatic culmination of more than two years of a process thought to be the most promising since the island was split more than 40 years ago. Guterres had flown in on Thursday to press Greek Cypriot President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci to seal a deal reuniting the east Mediterranean island, while U.S. Vice President Mike Pence had phoned to urge them to “seize this historic opportunity”.

Diplomatic efforts to reunite Cyprus have failed since the island was riven in a 1974 Turkish army invasion triggered by a coup by Greek Cypriots seeking union with Greece. The week of talks in the Swiss Alps, hailed by the United Nations as “the best chance” for a deal, ground to a halt as the two sides failed to overcome final obstacles. Diplomats said Turkey had appeared to be offering little to Greek Cypriots wanting a full withdrawal of Turkish troops from the island, although the Greek Cypriots had indicated readiness to make concessions on Turkish Cypriot demands for a rotating presidency, the other key issue. Guterres finally called a halt at 2 a.m. after a session marred by yelling and drama, a source close to the negotiations said. “Unfortunately… an agreement was not possible, and the conference was closed without the possibility to bring a solution to this dramatic and long-lasting problem,” Guterres said.

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May 282017
 
 May 28, 2017  Posted by at 9:51 am Finance Tagged with: , , , , , , , , , ,  1 Response »


Fred Stein Little Italy New York 1943

 

Trump Tells ‘Confidants’ US Will Leave Paris Climate Deal (R.)
New Home Prices Are Over 50% Higher In Canada Than The US (BD)
Low Volatility Is Market’s Most Significant Danger (BBG)
Jeremy Corbyn Within Striking Distance Of No. 10 (Mirror)
Fourth Turning’s Neil Howe: We Are In The 1930s, “Winter Is Coming” (Mauldin)
We’re Dealing With a New Type of War Lie (Swanson)
Private Mercenary Firm Targeted Dakota Access Pipeline Movement (IC)
Once-in-a-Generation Hopes Of Cyprus Reunification Appear To Be Dashed (G.)
US-Led Syria Strikes Kill Scores Of Relatives Of IS Fighters (AFP)
10,000 Migrants Rescued, Dozens Drown Between Italy And Libya This Week (AFP)

 

 

It’ll take Europe a while to recover from Trump.

Trump Tells ‘Confidants’ US Will Leave Paris Climate Deal (R.)

U.S. President Donald Trump has told “confidants,” including the head of the Environmental Protection Agency Scott Pruitt, that he plans to leave a landmark international agreement on climate change, Axios news outlet reported on Saturday, citing three sources with direct knowledge. On Saturday, Trump said in a Twitter post he would make a decision on whether to support the Paris climate deal next week. A source who has been in contact with people involved in the decision told Reuters a couple of meetings were planned with chief executives of energy companies and big corporations and others about the climate agreement ahead of Trump’s expected announcement later in the week. It was unclear whether those meetings would still take place.

“I will make my final decision on the Paris Accord next week!” he tweeted on the final day of a G7 summit in Italy at which he refused to bow to pressure from allies to back the landmark 2015 agreement. The summit of G7 wealthy nations pitted Trump against the leaders of Germany, France, Britain, Italy, Canada and Japan on several issues, with European diplomats frustrated at having to revisit questions they had hoped were long settled. [..] Although he tweeted that he would make a decision next week, his apparent reluctance to embrace the first legally binding global climate deal that was signed by 195 countries clearly annoyed German Chancellor Angela Merkel. “The entire discussion about climate was very difficult, if not to say very dissatisfying,” she told reporters. “There are no indications whether the United States will stay in the Paris Agreement or not.”

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Is optimism your friend?

New Home Prices Are Over 50% Higher In Canada Than The US (BD)

The price of new homes is quickly diverging in Canada and the US. Data from the Canadian Housing and Mortgage Corporation (CMHC) show that new homes are selling for substantially more than the same time last year. Meanwhile south of the border, data from the US Bureau of Census show that new home prices are on the decline. This has lead to an even wider gap between the average price of a new home in Canada and the US. The price of a new home across Canada is up for the second month in a row. The average sale price in April was CA$751,881 (US$559,123). This represents an 11% increase from the same time last year, when measured in Canadian dollars. When compared in US dollars, that increase drops to a much more conservative 2.64%. Even after factoring in the loonie’s decreased buying power in Canada, new home prices still climbed.

American new home builders aren’t seeing such steep climbs in sale prices. Actually, they aren’t seeing climbs at all. The average price of a new home in the US was CA$495,271 (US$368,300). This represents a 3% decline from the same time last year, when measured in US dollars. In Canadian dollars, this was a 0.49% decline from the same time last year. Both forms of measurement show declining home prices in the US, curious since their economy is in a much better state than Canada right now. New homes are trading at substantially higher values in Canada than the US in April. The average new home in April 2017 was 51% higher in Canada than the US. The same time last year, prices in Canada were only 36% higher. It appears in a post-crash United States, new home buyers are taking much more conservative strides. In a hasn’t-crashed-in-decades Canada, new home buyers are optimistic about future values.

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When markets don’t function, i.e. there is no price discovery, why would there be volatility?

Low Volatility Is Market’s Most Significant Danger (BBG)

Of all the dangers in the world of finance, the enduring low level of market volatility is the most significant. How quiet is quiet? Recently, the six-month realized volatility for the S&P 500 dipped to 6.7 percent, lower than even the period leading up to the financial crisis of 2008-09. During the mid-’90s, volatility was as low as it is now, but the size, complexity and interlinkages of financial market exposures were far less significant. Now, fluctuations are severely muted, and thus send a false signal of safety to both investors and policy makers who misread the calm as an “all clear” sign, dismissing the events above as insufficiently relevant. The result is an inability to appreciate how quickly market conditions can change, especially as trading strategies that capitalize on quiet markets become vulnerable to unwind, serving to amplify a risk-off event.

[..] There is an important debate in markets now about the causes of low realized volatility. A decline in the correlation among stocks, a global economy on more stable footing and a decline in perceptions of systemic risk (a euro-zone unraveling, for example) are among the factors. We should appreciate the importance of money flows as well. According to ETF.com, the exchange-traded fund industry is on pace for $500 billion in new asset growth in 2017. These vehicles can provide cheap, liquid access to market risk exposures. They simply put the money received to work in passive fashion, without evaluating the risk/return trade-off. The flows themselves are a factor in the positive returns and the low volatility that, in turn, attract additional flows.

What results is a dangerous circularity. Recall the period of wonderful outcomes preceding the financial crisis. The demand for housing spurred price appreciation, which enabled mortgage credit to be supplied at increasingly generous terms. The most suspect credit cannot default if the value of the collateral keeps appreciating and, as a result, the supply of credit keeps expanding. The fear of missing out is also supremely powerful. The conservative individual becomes less so when he or she sees a neighbor flipping houses with success. Similarly, the conservative lender is forced to compete with more aggressive suppliers of credit. For lenders, not being accommodative enough during the go-go years can amount to an existential business question.

Today’s risks differ meaningfully from those of a decade ago. However, the excess amount of capital chasing opportunity at increasingly aggressive terms is similar. The competition to put money to work, then, like now, results in low volatility. Investors are in danger of misinterpreting this tranquility as conveying safety when crowded positioning is resulting in more, not less, risk. While spending money on hedging is especially difficult in a seemingly benign environment, investors should be actively vigilant to market risks, devoting time to an action plan that helps protect portfolio wealth against the inevitable return of volatility.

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Different polls have very different numbers.

Jeremy Corbyn Within Striking Distance Of No. 10 (Mirror)

In the first week of the General Election campaign our ComRes poll for the Sunday Mirror gave Theresa May a magic 50% of the vote. She looked unstoppable. Today’s ComRes poll shows Jeremy Corbyn has narrowed her lead to 12 points , six points up on two weeks ago. As the man who invented the Swingometer says he’s never seen swings like it. If the PM goes into polling day on June 8th with this kind of lead she would not be unhappy. It would give her an overall majority of 62. Not the landslide she wished for perhaps, but with enough MPs to get her own way every time. But we are still 11 days from polling day – and on present form that’s enough for Mr Corbyn to pick up another 12 points. And that puts him in striking distance of No10. Our survey puts the Conservatives on 46%, Labour on 34% and the Lib Dems down two points on 8%.

Ukip are unchanged in fourth place at 5%. But the most striking findings are that the Labour leader’s personal ratings are up in every category while Mrs May’s are down in all but one. Mrs May’s Dementia Tax on the elderly and her U-turn over how to pay for it has clearly boomeranged. The Manchester bombing appears to have had little effect on voting intention. Mrs May is still way ahead of Mr Corbyn as being best to deal with terrorism. But she’s five points down on two weeks ago. Only a fifth of voters say she is most likely to protect elderly people dependent on social care while Mr Corbyn scores 43%. Curiously the mess she made of the Dementia Tax has not damaged her among voters aged 65 plus with nearly seven in ten saying they will still vote for her. But Mr Corbyn is ahead in every age group until pollsters get to those 44 or older.

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“..what comes next will be an era in which there is a new order..”

Fourth Turning’s Neil Howe: We Are In The 1930s, “Winter Is Coming” (Mauldin)

From the Balkans to the US, walls are going up, not down, according to demographer and The Fourth Turning author Neil Howe. Speaking to a packed crowd at Mauldin Economics’ Strategic Investment Conference in Orlando, Howe said we are reliving many of the same trends and changes of the 1930s. “Worldwide, people are losing trust in institutions,” he said. “Trust in the military, small business, and police is still there. But trust in democracies, media, and politicians is dropping.” When was the last time we saw these changes and the rise of right-wing populism?” he asked. “The 1930s.” Howe’s statement is borne out of a June 2016 Gallup poll. When poll takers were asked how much confidence they had in institutions in American society, the results were troubling.

Just 15% said they had a “great deal” of confidence in the US Supreme Court. Banks trailed behind at 11%, followed by the criminal justice system (9%), newspapers (8%), and big business (6%). Meanwhile, just 16% expressed a “great deal” of confidence in the presidency, with that number plummeting to 3% for Congress. In his keynote, Howe shared his forecasting logic: “My method is to step back and realize one thing: There is something we know about the world in 20 years’ time. The people who live there will be all of us, 20 years older and playing a different role. I call this ‘looking along the generational diagonal.’ The critical thing to remember about the current crisis period is that what comes next will be an era in which there is a new order.

According to the Strauss-Howe generational theory, as this new order takes root, individualism declines and institutions are strengthened. “History is seasonal, and winter is coming,” Howe has said. But after winter, comes spring. As the American Revolution was followed by calm, as the Civil War was followed by reconstruction and a gilded age, and as the Great Depression and World War II were followed by an age of peace and prosperity, so too will this crisis period be followed by a calm, stable era. It’s simply a matter of time.

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Russiagate.

We’re Dealing With a New Type of War Lie (Swanson)

The “Russian interference in the 2016 United States elections” even exists as a factual event in Wikipedia, not as an allegation or a theory. But the factual nature of it is not so much asserted as brushed aside. Former CIA Director John Brennan, in the same Congressional testimony in which he took the principled stand “I don’t do evidence,” testified that “the fact that the Russians tried to influence resources and authority and power, and the fact that the Russians tried to influence that election so that the will of the American people was not going to be realized by that election, I find outrageous and something that we need to, with every last ounce of devotion to this country, resist and try to act to prevent further instances of that.” He provided no evidence. Activists have even planned “demonstrations to call for urgent investigations into Russian interference in the US election.”

They declare that “every day we learn more about the role Russian state-led hacking and information warfare played in the 2016 election.” (March for Truth.) Belief that Russia helped put Trump in the White House is steadily rising in the U.S. public. Anything commonly referred to as fact will gain credibility. People will assume that at some point someone actually established that it was a fact. Keeping the story in the news without evidence are articles about polling, about the opinions of celebrities, and about all kinds of tangentially related scandals, their investigations, and obstruction thereof. Most of the substance of most of the articles that lead off with reference to the “Russian influence on the election” is about White House officials having some sort of connections to the Russian government, or Russian businesses, or just Russians.

It’s as if an investigation of Iraqi WMD claims focused on Blackwater murders or whether Scooter Libby had taken lessons in Arabic, or whether the photo of Saddam Hussein and Donald Rumsfeld shaking hands was taken by an Iraqi. A general trend away from empirical evidence has been extensively noted and discussed. There is no more public evidence that Seth Rich (a Democratic National Committee staffer who was murdered last year) leaked Democratic emails than there is that the Russian government stole them. Yet both claims have passionate believers. Still, the claims about Russia are unique in their wide proliferation, broad acceptance, and status as something to be constantly referred to as though already established, constantly augmented by other Russia-related stories that add nothing to the central claim. This phenomenon, in my view, is as dangerous as any lies and fabrications coming out of the racist right.

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Blackwater 2.0

Private Mercenary Firm Targeted Dakota Access Pipeline Movement (IC)

A shadowy international mercenary and security firm known as TigerSwan targeted the movement opposed to the Dakota Access Pipeline with military-style counterterrorism measures, collaborating closely with police in at least five states, according to internal documents obtained by The Intercept. The documents provide the first detailed picture of how TigerSwan, which originated as a U.S. military and State Department contractor helping to execute the global war on terror, worked at the behest of its client Energy Transfer Partners, the company building the Dakota Access Pipeline, to respond to the indigenous-led movement that sought to stop the project. Internal TigerSwan communications describe the movement as “an ideologically driven insurgency with a strong religious component” and compare the anti-pipeline water protectors to jihadist fighters.

One report, dated February 27, 2017, states that since the movement “generally followed the jihadist insurgency model while active, we can expect the individuals who fought for and supported it to follow a post-insurgency model after its collapse.” Drawing comparisons with post-Soviet Afghanistan, the report warns, “While we can expect to see the continued spread of the anti-DAPL diaspora … aggressive intelligence preparation of the battlefield and active coordination between intelligence and security elements are now a proven method of defeating pipeline insurgencies.” More than 100 internal documents leaked to The Intercept by a TigerSwan contractor, as well as a set of over 1,000 documents obtained via public records requests, reveal that TigerSwan spearheaded a multifaceted private security operation characterized by sweeping and invasive surveillance of protesters.

As policing continues to be militarized and state legislatures around the country pass laws criminalizing protest, the fact that a private security firm retained by a Fortune 500 oil and gas company coordinated its efforts with local, state, and federal law enforcement to undermine the protest movement has profoundly anti-democratic implications. The leaked materials not only highlight TigerSwan’s militaristic approach to protecting its client’s interests but also the company’s profit-driven imperative to portray the nonviolent water protector movement as unpredictable and menacing enough to justify the continued need for extraordinary security measures. Energy Transfer Partners has continued to retain TigerSwan long after most of the anti-pipeline campers left North Dakota, and the most recent TigerSwan reports emphasize the threat of growing activism around other pipeline projects across the country.

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Not much use talking to Erdogan. He needs his strongman image to much at home.

Once-in-a-Generation Hopes Of Cyprus Reunification Appear To Be Dashed (G.)

The best hope yet of reuniting war-partitioned Cyprus has been dashed after reconciliation attempts were brought to an abrupt halt following two years of intense negotiations. The optimism engendered by talks seen as a once-in-a-generation opportunity to unite the Mediterranean island ended when the United Nations special envoy, Espen Barth Eide, announced that he was terminating negotiation efforts. “Without a prospect for common ground, there is no basis for continuing this shuttle diplomacy,” the Norwegian former foreign minister said in a short statement. Eide now enters the long list of diplomats who, for the best part of 50 years, have attempted to solve one of the world’s most intractable diplomatic disputes.

Split between the majority population of Greeks in the south and Turks in the north, Cyprus has been divided since 1974 when Ankara ordered troops to invade the island in response to an Athens-organised coup to unite it with Greece. In Nicos Anastasiades and Mustafa Akinci – the respective leaders of the island’s Greek and Turkish communities – the two sides had found men who were not only moderate and born in the same town – Limassol – but willing to make the sort of concessions necessary to find a solution. Both had got to the point of poring over maps outlining territorial adjustments in a envisaged bi-zonal, bi-communal federation. In January, the first international conference on Cyprus was held at the UN headquarters in Geneva with representatives from Greece, Turkey and Britain – the island’s three guarantor powers.

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Hundreds of people are collateral damage.

US-Led Syria Strikes Kill Scores Of Relatives Of IS Fighters (AFP)

Dozens of relatives of Islamic State group fighters were killed Friday in Syria in US-led strikes, regime or Russian raids, after the UN urged nations striking the jihadists to protect civilians. Raids by the US-led coalition have pounded IS positions across Iraq and Syria since the jihadist group claimed responsibility for the devastating bombing of a concert in Manchester on Monday. Scores of civilians, many of them families of IS members, have been killed in bombing raids in recent days on the eastern Syrian town of Mayadeen, held by IS since 2014. Early Friday, at least 80 relatives of IS fighters were killed in US-led coalition bombardment, according to the Syrian Observatory for Human Rights.

“The toll includes 33 children. They were families seeking refuge in the town’s municipal building,” said Observatory head Rami Abdel Rahman. “This is the highest toll for relatives of IS members in Syria,” he told AFP. Coalition strikes on the town killed 37 civilians on Thursday night after 15 had been killed on Wednesday, according to the Britain-based Observatory. The US military on Friday confirmed that it had struck “near Mayadeen” on May 25 and 26, but said it was “still assessing the results of those strikes”, according to Pentagon spokesman Eric Pahon. The US military insists that it takes every precaution to avoid hitting civilians, but the United Nations on Friday urged parties bombing IS to do more.

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No moral values left: “The G7 only managed to “reaffirm the sovereign rights of states to control their own borders and set clear limits on net migration levels.“

10,000 Migrants Rescued, Dozens Drown Between Italy And Libya This Week (AFP)

Nearly 10,000 migrants were rescued off the coasts of Italy and Libya this week, as the leaders of G7 gathered for a summit coincidentally held in Sicily. And at least 54 people have drowned in the Mediterranean since Tuesday. Large-scale rescue efforts off the Italian coast on Friday saved 2,200 migrants who risked their lives traveling in unworthy sea vessels to reach Italy. Italian coastguard and commercial boats delivered those rescued to reception centers in Italy. A further 1,200 people were rescued by Libyan ships and taken to Tripoli or Zawiya. Some 6,400 migrants were rescued from the Mediterranean between Tuesday and Thursday. The Italian coastguard also discovered another 10 bodies, bringing to 54 the total number of officially registered deaths this week, officials told AFP.

The biggest tragedy occurred on Wednesday, when 35 migrants drowned, including at least 10 children, after they fell off an overloaded vessel that was hit by a huge wave while being rescued by an aid boat. At least 1,400 people have drowned so far this year trying to make the perilous journey across the sea to Italy, according to UN figures, while more than 50,000 migrants reached Italian coasts, most of them through Libya. Italy has on numerous occasions said that it barely has enough resources to deal with the migrant influx from Libya. The situation has become an EU-wide concern in recent years, with Brussels facing mounting pressure from human rights groups over its handling of the migrant crisis in the Mediterranean.

G7 leaders, who met in Sicily, discussed providing greater assistance to African countries to persuade migrants to stay at home rather than make the dangerous journey across the Mediterranean. However, no concrete plan of action was agreed upon at the end of the two-day summit in Taormina. The G7 only managed to “reaffirm the sovereign rights of states to control their own borders and set clear limits on net migration levels.”

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Mar 152016
 
 March 15, 2016  Posted by at 10:00 am Finance Tagged with: , , , , , , , , ,  1 Response »


John M. Fox WCBS studios, 49 East 52nd Street, NYC 1948

Stocks: Consensual Hallucination (WS)
Mineworkers’ Protests Shake Chinese Leaders (CW)
China Ocean Freight Indices Plunge to Record Lows (WS)
Yuan Loses Its Luster In Global Trade (WSJ)
Chinese Investors Increase Buying in the US (WSJ)
China Drafts Rules for Tobin Tax on Currency Transactions (BBG)
Bank of Japan Holds Fire on Stimulus, Negative Rate Unchanged (BBG)
ECB Rate Cuts Help Spanish Home-Buyers, Hurt Banks (WSJ)
JPMorgan, Goldman Discuss Buying Deutsche Bank Derivatives (BBG)
Fears Rise Over US Car Loan Delinquencies (FT)
The Recession Australia Has To Have (ABC)
Obama To Kill Off Arctic Oil Drilling (Guardian)
The Cyprus Problem (FT)
Greek Asylum System Is Broken Cog In EU-Turkey Plan (EUO)
FYROM Returned About 600 Refugees To Greece (Reuters)
Greek Minister Sees Refugees Stuck For At Least Two Years (Kath.)

“..of the 30 components of the Dow Jones Industrial Average, 20 reported “adjusted” earnings, with 18 of them reporting adjusted earnings that were higher than their earnings under GAAP”

Stocks: Consensual Hallucination (WS)

The simple fact is that corporate earnings data is out there for everyone to see, but no one wants to see it. Instead, everyone wants to see and believe the sweet fairy tale that Wall Street and Corporate America spin with such skill just for us, because if everyone believes that everyone believes in this fairy tale, even knowing that it is a fairy tale, it will somehow lead to ever higher stock prices. This is part of a phenomenon we’ve come to call “Consensual Hallucination.” But that fairy tale got spun to new fanciful extremes in 2015. Revenues of the S&P 500 companies fell 4.0% in the fourth quarter and 3.6% for the year, according to FactSet, with most of the companies having by now reported their earnings. And these earnings declined 3.4% in Q4, dragging earnings “growth” for the entire year into the negative, so a decline in earnings of 1.1%.

While companies can play with revenues to some extent, it’s more complicated and not nearly as rewarding as “adjusting” their profits. That’s the easiest thing to do in the world. A few keystrokes will do. There are no rules or laws against it, so long as it’s called something like “adjusted earnings.” The rewards are huge, in terms of share prices, stock options, bonuses, and for Wall Street, fees. The ultimate target of the magic is earnings per share. EPS is the most crucial term in the canon of the markets. Turns out, the 2015 “growth” in earnings, and particularly the “growth” in EPS – so a decline – as reported by FactSet and others is a figment of the vivid imagination of Wall Street and Corporate America, called “adjusted earnings,” where everything bad has been “adjusted” out of it.

The reason every developed economy uses standardized accounting rules is to give investors a modicum of insight into what is going on in a company, compare these numbers to those of other companies, and make at least not totally ignorant investment decisions. In the US, these are the generally accepted accounting principles, or GAAP, the most despised acronym of Wall Street and Corporate America. Yet even these principles offer plenty of flexibility for financial statement beautification. We get that. Yet they’re way too harsh for Wall Street. So companies file the required financial statements under GAAP for everyone to look at, but then they hype their “adjusted” earnings in their communications with investors. And the gap between the two in 2015 was a doozie.

For example, of the 30 components of the Dow Jones Industrial Average, 20 reported “adjusted” earnings, with 18 of them reporting adjusted earnings that were higher than their earnings under GAAP, according to FactSet. That 18-to-2 relationship alone shows the clear bias of these adjustments: They’re used to inflate earnings, not to lower them to some more realistic level. These adjusted EPS were on average 31% higher in 2015 than EPS under GAAP. That’s way up from 2014 when 19 of the Dow components reported adjusted earnings that were on average 12% higher than under GAAP. And yet, despite the soaring portion of fiction, these adjusted EPS of the companies in the DOW still declined 4.8%. That’s bad enough. But under GAAP, beautified as it might have been, EPS plunged 12.3%.

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It’s beginning.

Mineworkers’ Protests Shake Chinese Leaders (CW)

Thousands of coal miners in the far northeast of China have been on strike for six days, demanding that China’s rulers – the so-called Communist Party dictatorship (CCP) – “give us back our money!” The protests, captured in dramatic video footage that is banned inside China, have shaken the Chinese regime during the very week when its ceremonial National People’s Congress (NPC) has been meeting in Beijing. A key discussion at the NPC has been about how the regime will cut the workforce in state-owned industries, with widely cited reports of 5-6 million redundancies, equivalent to one in six state sector jobs. The striking mineworkers of Heilongjiang province, a region already devastated by closures and layoffs, have given a courageous and resounding answer to these plans.

The mineworkers’ protests began on Wednesday 9 March in the city of Shuangyashan. Longmay Group, the largest state-owned coal producer in Heilongjiang and the whole of northeastern China, operates 10 mines in Shuangyashan and over 40 across the province as a whole. Last September, Longmay announced 100,000 job cuts – 40% of its entire workforce. The company owes a total of 800 million yuan (US$123 million) in unpaid wages dating from 2014. There have been earlier protests to demand payment of wage arrears by Longmay workers in different cities around Heilongjiang. The strike in Shuangyashan did not materialise from nowhere in other words, but is akin to a match being dropped into a large pool of gasoline.

“What the Shuangyashan incident has exposed is just a tip of the iceberg. It has been pretty endemic (workers not getting paid),” a rights activist from Heilongjiang told the Voice of America website. The trigger for the strike was a statement made by Heilongjiang’s governor Lu Hao during the NPC. At a televised meeting on 6 March, Lu claimed there were no wage arrears among Longmay workers and held the company up as an example of successful restructuring. He also stated that annual payrolls of Longmay are 10 billion yuan, equivalent to one-third of the provincial government’s entire budget, implying that the Longmay workforce are a burden on the province. “Their income hasn’t fallen a penny,” said Lu, in comments that made the workers’ anger spill over.

Initially breaking out in the Dongrong district of the city where Longmay runs three mines, the protests quickly spread across the whole of Shuangyashan. According to local sources eight out of the ten pits in Shuangyashan are only partially working, with mineworkers facing months of wage arrears. Whereas underground workers could earn 6,000 yuan a month in the past, most receive just half this level now – when they get paid. For other workers, monthly salaries have been cut to just 800 yuan (US$120)..

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Wolf Richter summarizes China perfectly: “As exports of money from China is flourishing at a stunning pace, exports of goods are deteriorating at an equally stunning pace. “

China Ocean Freight Indices Plunge to Record Lows (WS)

Money is leaving China in myriad ways, chasing after overseas assets in near-panic mode. So Anbang Insurance Group, after having already acquired the Waldorf Astoria in Manhattan a year ago for a record $1.95 billion from Hilton Worldwide Holdings, at the time majority-owned by Blackstone, and after having acquired office buildings in New York and Canada, has struck out again. It agreed to acquire Strategic Hotels & Resorts from Blackstone for a $6.5 billion. The trick? According to Bloomberg’s “people with knowledge of the matter,” Anbang paid $450 million more than Blackstone had paid for it three months ago! Other Chinese companies have pursued targets in the US, Canada, Europe, and elsewhere with similar disregard for price, after seven years of central-bank driven asset price inflation. As exports of money from China is flourishing at a stunning pace, exports of goods are deteriorating at an equally stunning pace.

February’s 25% plunge in exports was the 11th month of year-over-year declines in 12 months, as global demand for Chinese goods is waning. And ocean freight rates – the amount it costs to ship containers from China to ports around the world – have plunged to historic lows. The China Containerized Freight Index (CCFI), published weekly, tracks contractual and spot-market rates for shipping containers from major ports in China to 14 regions around the world. Unlike most Chinese government data, this index reflects the unvarnished reality of the shipping industry in a languishing global economy. For the latest reporting week, the index dropped 4.1% to 705.6, its lowest level ever. It has plunged 34.4% from the already low levels in February last year and nearly 30% since its inception in 1998 when it was set at 1,000. This is what the ongoing collapse in shipping rates looks like:

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What state control gets you.

Yuan Loses Its Luster In Global Trade (WSJ)

The yuan is losing its luster as a means of settling cross-border transactions, a development that trading companies blame in part on the Chinese government’s reluctance to loosen its grip on the currency. Bureaucratic issues and a lack of yuan-denominated assets in which to invest have discouraged non-Chinese companies from using the currency in trade with their Chinese partners. Beijing’s recent heavy-handed market interventions have further reduced the currency’s appeal for foreigners, according to Chinese importers and exporters. The yuan’s popularity outside China slipped 0.2% last year, according to an index of metrics such as deposits and foreign-exchange turnover compiled by Standard Chartered since late 2010.

That was the index’s first ever annual decline, although it ticked up in the first month of 2016. Payments using the yuan fell to 21% of China’s total trade last October, before recovering to 30% in January, still well below the 37% peak recorded in August, according to central-bank data. “Given the yuan’s volatility and the authorities’ murky policy intentions, it’s hard to see interest in using the currency among our customers,” said Zhou Lin, finance director of Ningbo United Group Import & Export, a trading firm from China’s east coast that exports steel products and garments and imports coal and wood. “Demand for [yuan trade settlement] will only shrink further,” Mr. Zhou predicted.

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“..36 purchases of U.S. companies valued at $39 billion, eclipsing 2015’s full-year record of $17 billion..”

Chinese Investors Increase Buying in the US (WSJ)

Chinese companies are continuing their U.S. shopping spree. On Monday, the focus was on real estate. A group led by China’s Anbang Insurance came in with a $12.8 billion takeover offer for Starwood Hotels & Resorts Worldwide. The buyout offer threatens to upend Starwood’s tie-up with Marriott International. Anbang is also near a deal to buy Strategic Hotels & Resorts from a Blackstone-managed real-estate fund, people familiar with the situation said. Chinese companies have announced 36 purchases of U.S. companies valued at $39 billion, eclipsing 2015’s full-year record of $17 billion through 114 deals. And 2015 broke the record set in 2014, when Chinese buyers spent $14 billion on U.S. acquisitions. The tally for each year includes transactions where Chinese firms took big stakes in U.S. firms, such as the 5.6% stake that Alibaba took in Groupon in February.

Globally outbound Chinese M&A activity is closing in on its full-year high. Chinese companies have spent $102 billion to buy companies outside of its borders, just shy of its full-year record set in 2015 of $106 billion. The $43 billion acquisition of Swiss pesticide and seed company Syngenta by government-owned China National Chemical Corp. accounts for a large portion of that volume. Beyond real estate, Chinese companies have aggressively pursued deals for U.S. chip makers. In mid-February, U.S. technology distributor Ingram Microid said it had agreed to be acquired for about $6 billion by a unit of Chinese conglomerate HNA Group. Chinese buyers also have sought break up a number of existing deals for U.S. semiconductor companies with offers of their own.

Late last year, a group including China Resources Microelectronics and Hua Capital Management made an unsolicited bid for Fairchild Semiconductor International, which already had a deal with U.S. chip maker ON Semiconductor. Prior to that deal, the Chinese chip maker Montage Technology sought to break up Diodes planned purchased of Pericom Semiconductor. Both Fairchild and Pericom rejected the proposals from the Chinese firms, citing concerns that they would fail to pass muster with U.S. authorities on national-security grounds. U.S. regulators -specifically the U.S. Committee on Foreign Investment- have pushed back on Chinese purchases. In January, the committee blocked Royal Philips planned $2.8 billion sale of most of its lighting components and automotive-lighting unit to a Chinese investor on national-security grounds. The aggressive push into the U.S. comes amid slowing growth in China.

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Smells desperate.

China Drafts Rules for Tobin Tax on Currency Transactions (BBG)

China’s central bank has drafted rules for a tax on foreign-exchange transactions that would help curb currency speculation, according to people with knowledge of the matter. The initial rate of the so-called Tobin tax may be kept at zero to allow authorities time to refine the rules, said the people, who asked not to be identified as the discussions are private. The tax is not designed to disrupt hedging and other foreign-exchange transactions undertaken by companies, they said. Imposing a levy on foreign-exchange trading would be the most extreme step yet by policy makers to prevent speculative bets against the Chinese currency, after state-run banks repeatedly intervened to support the yuan and the government intensified a crackdown on capital outflows.

A Tobin tax would complicate plans by China to create an international reserve currency and could undermine the leadership’s pledge to increase the role of market forces in the world’s second-largest economy. “These measures can’t guarantee volatility in the market will come down since it’s difficult to identify if currency trading is down to speculation or the genuine need of companies hedging their foreign-exchange exposure,” said Tommy Ong, managing director for treasury and markets at DBS Hong Kong Ltd. “There haven’t been many successful experiences of this happening anywhere else in the world.” The rules still need central government approval and it’s not clear how quickly they can be implemented, the people said. PBOC Deputy Governor Yi Gang raised the possibility of implementing the punitive measure late last year in an article written for China Finance magazine.

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Deflation misunderstood.

Bank of Japan Holds Fire on Stimulus, Negative Rate Unchanged (BBG)

The Bank of Japan refrained from bolstering its record monetary stimulus as policy makers gauge the impact of the negative interest-rate strategy they adopted in January. Governor Haruhiko Kuroda and his board kept the target for increasing the monetary base unchanged, and left their benchmark rate at minus 0.1%, the BOJ said in a statement on Tuesday. The decision was forecast by 35 of 40 economists surveyed by Bloomberg. The central bank reiterated that it will add easing if necessary. With the BOJ far from its 2% inflation goal and economic growth stalling, most analysts have seen additional stimulus as just a matter of time.

The stakes are rising for Kuroda, with household and corporate sentiment waning and investors questioning whether monetary policy is reaching its limits. The governor holds a press briefing later today. “You can see from the statement the agony for the BOJ in the gap between their hopes and the realities in the economy and prices,” said Kyohei Morita, an economist at Barclays. “Japanese inflation is at a level where even the BOJ has to admit its weakness. It is leaning toward additional stimulus and I expect it to be in July.”

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Mortgages for free.

ECB Rate Cuts Help Spanish Home-Buyers, Hurt Banks (WSJ)

Sheila Guerrero loves Mario Draghi. Her Spanish bank probably doesn’t. Ms. Guerrero’s mortgage payments have fallen by about 40% since she and her husband took out a loan in 2006 to buy their two-bedroom home on the southern outskirts of Madrid. The current payments of €485 a month, or about $541, she says, are “less than some people pay in rent.” Mortgage borrowers in Spain, and their banks, are acutely affected by the rate cuts that ECB President Mr. Draghi, rolled out on Thursday. That is because 96% of mortgages in Spain, a far higher percentage than in other European countries, are variable-rate loans that fluctuate with the rise and fall of the euro interbank offered rate. The 12-month Euribor, as the rate is known, plummeted from 2.2% in mid-2011 into negative territory last month. It is now around -0.03%.

The nosedive is a boon to millions of Spanish homeowners, whose mortgage payments are typically repriced each year based on changes in the rate. It has been a bust for the balance sheets of Spanish banks, helping to drive down their stock prices in recent months. The ECB’s announcement Thursday brought some relief for lenders because it included an offer of cheaper funding through new long-term loans to eurozone banks. Investors welcomed the news, and shares of major Spanish banks surged on Friday. Still, negative rates remain a drag on the banks’ profitability. Each drop of 10 basis points in the 12-month Euribor rate triggers around a 2% decline in a profit metric for Spanish banks known as net interest income, Daragh Quinn, an analyst at Keefe, Bruyette & Woods, wrote in a research report Tuesday.

One basis point is equal to one one-hundredth of a percentage point. Net interest income is the difference between what lenders pay clients for deposits and charge for loans. Spanish banks are trying to compensate for the hit to net interest income by shifting away from mortgages, which have accounted for about half their lending, to business loans that carry higher interest rates. But the shift is happening en masse, driving down the rate on business loans too. Ms. Guerrero and her husband, a mechanic, began paying €800 a month when they took out the 50-year loan a decade ago, when they were in their 20s. Their current mortgage will be repriced in April based on February’s negative Euribor rate, which she expects will reduce it by €15, to €470. “Every extra bit you can get is welcome,” said Ms. Guerrero. Mortgages issued by Spanish banks yielded an average of 1.51% in January, one of the lowest rates in all of Europe, ECB data show. That figure compares with 2.58% in Italy and 3.27% in Germany.

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Deutsche derivatives start cracking. Uncleared, single-name, oh boy! How many pennies do they get on the buck?

JPMorgan, Goldman Discuss Buying Deutsche Bank Derivatives (BBG)

Deutsche Bank, the lender exiting some trading operations, is in talks with JPMorgan Goldman Sachs and Citigroup to sell the last batches of about 1 trillion euros ($1.1 trillion) in complex financial instruments, people with knowledge of the matter said. Deutsche Bank, based in Frankfurt, has sold about two-thirds of the portfolio of uncleared, mostly single-name credit default swaps since last year and wants to sell the rest within the next few months, according to the people, who asked not to be identified as the talks are private. The three U.S. banks have already purchased some of the instruments, the people said.

Deutsche Bank is withdrawing from countries, dumping unprofitable clients and pulling out of businesses as co-CEO John Cryan, 55, tries to boost profit and meet tougher capital rules after starting in July. He inherited a plan by his predecessor, Anshu Jain, to stop trading most credit default swaps tied to individual companies after new banking regulations made them costlier. “It’s all about capital and leverage,” said Chris Wheeler at Atlantic Equities. “Cryan clearly feels it’s not a profitable business, given the need to provide more capital under new regulations.” JPMorgan was among banks in talks to purchase more than $250 billion of the swaps, while Citigroup had already bought almost $250 billion, Bloomberg News reported in October. Deutsche Bank’s portfolio of swaps had a gross notional value of about 1 trillion euros when it began sales last year, the people said. That measure includes long and short bets and doesn’t account for offsetting contracts.

[..] Deutsche Bank’s swaps are uncleared, meaning that investors trade them directly with each other rather than through one of the clearinghouses that are mandatory for many trades after the crash. Europe’s biggest banks will need billions of dollars to meet new rules for collateral that they must set aside when trading uncleared swaps, regulators said this week. The swaps are mostly “single-name,” meaning that they’re tied to individual companies’ creditworthiness, as opposed to an index of securities, one of the people said. Deutsche Bank stopped trading these instruments in late 2014, the lender said then. The total size of the credit derivatives market has dropped by almost two-thirds from $33 trillion in 2008, according to the Depository Trust & Clearing Corp.

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Those are old worries, FT.

Fears Rise Over US Car Loan Delinquencies (FT)

HDelinquencies on poor-quality US car loans have climbed to their highest level in almost two decades, according to Fitch Ratings, reinforcing concerns over the rapidly growing market. The rate of “subprime” auto loans overdue by more than 60 days rose to 5.16% in February. This surpassed the post-financial crisis peak and was the highest since the 5.96% reading in October 1996, according to the rating agency. Subprime auto loans have long been a concern for analysts, some of whom feared that rapid issuance since the crisis and weakening lending standards would cause problems in the market for securitised auto loans. There, banks repackage loans into asset-backed securities and sell them on to investors, much like they did with subprime mortgages in the 2000s.

“Sharp origination growth, increased competition and weaker underwriting standards over the past three years have all contributed to the weaker performance of the past year,” Fitch Ratings said in its report. The overall US auto finance market passed $1tn in 2015, powered by strong car sales. Issuance of US auto loan-backed ABS climbed 17% to $82.5bn last year, according to data provider Dealogic, the strongest year for such sales since 2005. Fitch tracks the performance of almost $100bn of auto loans that have been securitised into so-called asset-backed bonds, of which just over a third is considered subprime. The delinquency rate on prime US auto ABS stood at just 0.46% in February, up slightly month-on-month but flat compared to the same month in 2015.

Subprime typically means borrowers with scores below 620 from FICO, the biggest credit risk scorer, which rates consumers from 300 to 850. Fitch expects both prime and subprime auto loan ABS performance to improve this spring thanks to tax refunds, but that the seasonal benefits will be more muted given the weakening of loan quality and the expected softening of the US wholesale car market. “Both the prime and subprime sectors have been buoyed by strong used vehicle values over the past five years, contributing to lower loss severity on defaults,” the report said. “However, with new vehicle sales and expected off-lease vehicle supply levels at historical highs entering 2016, Fitch anticipates weakness in the wholesale market.”

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“Australia’s net foreign debt is now over a trillion dollars, and less than a quarter of that is public debt.”

The Recession Australia Has To Have (ABC)

Earlier this week, Liberal Immigration Minister Peter Dutton warned that Labor’s proposed property investment tax changes would bring the economy to “a shuddering halt” and “crash” the stock market. His comments drew a swift rebuke from Labor’s shadow treasurer Chris Bowen, who described them as “reckless” and part of an “outlandish scare campaign”. But are they really so farfetched? Given the massive impact of Australia’s housing market on the economy as a whole, perhaps not. But that’s precisely why something needs to be done now, so that the possibility of a recession doesn’t become the threat of a depression. If we look closely at Australia’s GDP figures, we can get a sense of how out of kilter our housing market has become – and what might happen if the rug was pulled out from beneath it.

Over the past year, residential construction and renovations grew by around 10%, according to the ABS national accounts. The residential building sector alone thus directly added around half a percentage point to the nation’s 3% GDP growth. Obviously, if the sector stopped expanding, other things being equal, GDP growth would slow to 2.5%. If the industry shrank by an equivalent amount, it would have directly pulled GDP growth back closer to 2%. However, that’s only the beginning. As the home is by far the biggest asset for most of the roughly two-thirds of households who own one (outright or mortgaged), the “wealth effect” of rising property prices is a major driver of household consumption. Unlike residential building which makes up about 5.3% of spending in the economy, household consumption makes up nearly 56%.

If household consumption fell, there is a good chance Australia could see its first recession in a quarter of a century. Last quarter, “final consumption expenditure” was by far the biggest contributor to Australia’s economic growth, adding 0.4 percentage points out of a 0.6% GDP increase. Its mammoth size relative to the total economy saw household expenditure contribute just over half of Australia’s 3% economic growth last year, even though household spending only grew a tepid 2.9%. If falling home prices halted growth in household consumption, that would take a further 1.6 percentage points off growth. Not only has Australian household debt-to-income roughly tripled since the late 1980s to a fresh record 184.6%, driven entirely by surging housing debt, but most of that money has been borrowed from offshore. Australia’s net foreign debt is now over a trillion dollars, and less than a quarter of that is public debt.

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Canada wins?

Obama To Kill Off Arctic Oil Drilling (Guardian)

The Obama administration is expected to put virtually all of the Arctic and much of the Atlantic off limits for oil and gas drilling until 2022 in a decision that could be announced as early as Tuesday. The decision reverses Barack Obama’s move just last year to open up a vast swathe of the Atlantic coast to drilling – and consolidates the president’s efforts to protect the Arctic and fight climate change during his final months in the White House. The five-year drilling plan, which will be formally announced by the interior department, was expected to block immediate prospects of hunting for oil in the Arctic, according to those familiar with the proposals. The move was widely anticipated after Obama and Justin Trudeau, the Canadian prime minister, declared last week they would follow “science-based standards” when it came to sanctioning new oil and gas drilling in the Arctic.

But the plan was also expected to seal off large areas of the Atlantic coast from future exploration, following protests from coastal communities in the Carolinas and Georgia – and that could cause reverberations in the presidential elections. Shell, ExxonMobil and Chevron have been pushing heavily to reopen drilling off the Atlantic coast, and Republicans and some state governors were also in favour. Obama had been inclined to agree. But after protests from dozens of coastal tourist towns, which feared a repeat of BP’s oil disaster in the Gulf of Mexico, and opposition to drilling from the Democratic presidential contenders Hillary Clinton and Bernie Sanders, Georgia and the Carolinas were expected to remain closed to future drilling, sources familiar with the plans said.

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Why the EU doesn’t work, and never will. This time it’s all of Europe against tiny Cyprus.

The Cyprus Problem (FT)

Donald Tusk, the European Council president who has been attempting to broker a deal to stop the influx of refugees into the EU, has flown to Nicosia for a meeting this morning with Cypriot president Nicos Anastasiades. For a man who spent the week before the last EU migration summit travelling to seven different capitals in four days, the fact that Mr Tusk is making Cyprus his only stop ahead of the next two-day gathering beginning Thursday is telling: the small island nation may prove the most difficult needle to thread in Brussels’ nascent deal with Turkey to take back thousands of migrants now washing ashore in Greece. [UPDATE: Mr Tusk has tacked on an evening trip to Ankara at the last minute.]

Cyprus has long been one of the biggest complicating factors in EU-Turkey relations, so objections from Nicosia to the demands being made by Ankara– another €3bn in aid, a visa-free travel scheme, opening of new “chapters” in EU membership talks – may have been expected. But the small group of EU leaders who brokered last week’s deal, led by Germany’s Angela Merkel, seemed to have forgotten that Cypriot objections this time around are far more consequential: the country is in the middle of delicate talks that diplomats believe are the best (and perhaps last) chance to reunify an island divided since Turkey invaded and held its northern half in 1974.

For Mr Anastasiades, making concessions to Ankara now without any compensation would not only cost him politically at home, but could wreck reunification talks altogether since the Greek Cypriot community he leads would likely abandon him. Like all other 27 EU heads of state, Mr Anastasiades can, on his own, veto the Turkey deal. Officials involved in last week’s summit now admit they may have mishandled the Cyprus issue; at one point, Mr Anastasiades was put into a room with Ms Merkel and the leaders of four other countries, all of whom pressured him to give up the “freeze” Nicosia has on the five membership chapters. The freeze was imposed by Cyprus in 2009 because Ankara had not lived up to commitments made to the EU to recognise the Nicosia-based Greek Cypriot government, and Mr Anastasiades has repeatedly insisted he cannot simply give up on the position without something in return.

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There’s enough being blamed on Greece as is.

Greek Asylum System Is Broken Cog In EU-Turkey Plan (EUO)

Much has been said on the merits of a draft EU-Turkey deal to return unwanted migrants from Greek islands. The plan hinges on designating Turkey as a “safe” country in order to send all “irregular migrants” packing. But Turkey’s patchy application of the Geneva Convention, Europe’s post-WWII human rights bible, and allegations of push-backs have cast a shadow over the draft accord. Big questions also remain on how Greece intends to implement EU asylum law under the new plan. Even if Ankara fulfills its side of the bargain, Greece can still expect a years-long backlog of asylum applications, appeals and meta-appeals that risk undermining the objective of speedy returns. Greece’s asylum system is dysfunctional. Some asylum seekers have waited up to 13 years to have their cases heard.

For rapid returns to work, Greece would need to overhaul its system and hire many more judges. The European Commission wants Greece to make it quick and efficient. “It’s up to the Hellenic authorities to organise this,” commission spokesman Margaritis Schinas said on Monday (14 March). The Greek deputy minister for citizens’ protection, Nikos Toskas, over the weekend said a return under its bilateral agreement with Turkey could take just 48 hours. But a glance at EU laws and at the Greek asylum process makes that prospect seem unlikely. EU law gives anyone, Syrian or otherwise, the right to defend their case before a Greek court after having transited through Turkey. “Asylum seekers won’t be denied the rights to be heard,” said Schinas.

It means all will have the right to claim Turkey is not safe enough for them to be returned to. If Greek authorities reject their initial claim, the asylum seeker can appeal. That appeal must heard before a Greek court. Past cases in Greece show that the system is cumbersome and already overstretched. The Greek Forum for Refugees, an Athens’ based migrants’ group, said in a blog post earlier this month that people who have had their appeal interviews “are now waiting for months, or even years, to receive a decision from the authorities”. As of September last year, Greece had 23,000 pending appeals for applications filed before June 2013. Nobody seems to know how many more cases were filed after June 2013 when the vast bulk of asylum seekers arrived in Greece.

The Greek administrative body that oversees them stopped digging into the cases last October after its mandate expired. “So currently there is a freeze in the examination of appeals. We don’t know how many are pending,” the Brussels-based European Council on Refugees and Exiles, a non-profit watchdog on EU policy, told EUobserver. Meanwhile, 35,000 more people became stuck in Greece in recent weeks after the EU slammed shut its Western Balkan borders About 2,000 more are arriving on Greek shores from Turkey each day. It is likely that many people who struggle across the Aegean will exploit their legal rights to prevent their immediate return. In an added complication, it is also unclear if the legal challenge would be handled in the zones where people are first screened, identified and registered or in separate courts in the Greek islands’ local capitals.

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Another sorrowful episode. Should Greece let them in? Or should it protect its borders?

FYROM Returned About 600 Migrants To Greece (Reuters)

The Former Yugoslav Republic of Macedonia (FYROM) has sent about 600 refugees who crossed the border on Monday back to Greece, a FYROM police official said on Tuesday. Most of the migrants were taken back to Greece on Monday or overnight on trucks, the official said. Hundreds of migrants marched out of a Greek transit camp, hiked for hours along muddy paths and forded a rain-swollen river on Monday to get around a border fence and cross into FYROM, where they were detained.

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It’ll get completely out of hand way before.

Greek Minister Sees Refugees Stuck For At Least Two Years (Kath.)

It may take up to two years for refugees and migrants trapped in Greece by closed borders at its north to be relocated to other countries of the EU or deported, Alternate Defense Minister and coordinator of the ministerial team managing the crisis Dimitris Vitsas, told the Financial Times on Sunday. “The thousands of migrants at the border are awaiting the outcome of the March 17 summit [of EU leaders] on refugees, hoping they will then be able to cross”, Vitsas said, referring to a summit later this week with Turkish officials to finalize a plan for migrant returns and relocations. “We have to persuade them this is not going to happen .. then the Idomeni camp will quickly empty, I think by the end of the week”, Vitsas told the FT.

His interview came a day before a spokesman for the UNHCR warned that conditions at the makeshift camp that is home to over 10,000 migrants on Greece’s border with the Former Yugoslav Republic of Macedonia (FYROM) are just unbelievable. Official estimates on Monday put the number of migrants trapped in Greece at over 44,000 as new arrivals kept landing on the country s eastern islands. Vitsas estimated that even if EU and Turkish leaders agree to speed up relocations, clearing the backlog in Greece may take up to two years. “We also have to recognize that some migrants will stay in Greece permanently. It’s going to happen”, Vitsas told the FT.

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