May 272018
 
 May 27, 2018  Posted by at 9:03 am Finance Tagged with: , , , , , , , , , , , , ,  


Edvard Munch Separation 1896

 

The ECB Is Preventing An Italian Rerun Of The Euro Crisis – For Now (MW)
Italy President Under Pressure To Accept Eurosceptic Minister (R.)
We’re Engaging In Self-Deception And Unsupported Hopefulness (Ron Paul)
Putin Warns “US Sanctions Hurt Trust In Dollar As Reserve Currency” (ZH)
Erdogan Calls On Turks To Convert Dollar, Euros Into Lira (R.)
Spain’s Ciudadanos Party Open To Alternative Candidate To Oust PM Rajoy (R.)
Daimler Threatened With Recall Of Over 600,000 Diesel Models (R.)
British Arms Exports To Israel Reach Record Level (G.)
Koreas Discuss Non-Aggression Pledge, Peace Treaty Ahead Of Summit (R.)
How Did The Swedish Matter End? (Justice4Assange)

 

 

Draghi must save Italy. Even if he doesn’t like its government.

The ECB Is Preventing An Italian Rerun Of The Euro Crisis – For Now (MW)

As a result of the ECB’s purchases, only 32% of Italian government bonds are still held by foreign investors, Solveen noted, and only a third of those are held outside the eurozone. That compares with more than 40% before the sovereign debt crisis. [..] The ECB’s deposit rate stands at negative 0.4%, while its key lending rate stands at 0%. Rates wont’ rise soon, Solveen notes, and that’s curbing the rise of short-term bond yields. It also means Italy will be able to issue new bonds with low coupons, at least in the two-to-three-year maturity range, he said, which should also anchor long-end yields.

And since the average duration of Italian bonds has risen significantly in recent years, Italy’s Treasury can shift its issuance back toward shorter-dater maturities if needed. But it’s weakness at the short end of the yield curve—the line plotting yields across all debt maturities—that might be most troubling for investors right now. “Strong selling pressure at the short end is noteworthy…, while there have been a few other such episodes since the start of QE, this is the strongest one,” said Luca Cazzulani, deputy head of fixed income at UniCredit, in Milan (see chart below).

An important near-term test looms Monday when the Treasury is due to sell 2-year zero-coupon notes and inflation-indexed BTPs. The auction round “will be closely watched and results are likely to drive BTPs more than usual,” Cazzulani said, in a note. “Considering the still fragile market environment, pressure ahead of the auction should not come as a surprise.” Both auctions are smaller than usual, which should help keep supply pressures low, he said. Solveen said that while the new government’s policies are unlikely to trigger a new sovereign debt crisis, the situation underlines the fundamental differences in economic policy thinking within the eurozone.

“The ECB’s very expansionary monetary policy and the resulting cyclical economic recovery can conceal this fact to some extent but, at the next recession at the latest, the difference could become very apparent again and prove a real test for the monetary union,” he said.

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Power games. The establishment protests.

Italy President Under Pressure To Accept Eurosceptic Minister (R.)

Italy’s would-be coalition parties turned up the pressure on President Sergio Mattarella on Saturday to endorse their eurosceptic pick as economy minister, saying the only other option may be a new election. Mattarella has held up formation of a government, which would end more than 80 days of political deadlock, over concern about the far-right League and anti-establishment 5-Star Movement’s desire to make the 81-year-old economist Paolo Savona economy minister. Savona has been a vocal critic of the euro and the European Union, but he has distinguished credentials, including in a former role as an industry minister. Formally, Prime Minister-designate Giuseppe Conte presents his cabinet to the president, who must endorse it.

Conte, a little-known law professor with no political experiences, met the president on Friday without resolving the deadlock. “I hope no one has already decided ‘no’,” League leader Matteo Salvini shouted to supporters in northern Italy. “Either the government gets off the ground and starts working in the coming hours, or we might as well go back to elections,” Salvini said. Later 5-Star leader Luigi Di Maio said he expected there to be a decision on whether the president would back the government within 24 hours. 5-Star also defended Savona’s nomination. “It is a political choice … Blocking a ministerial choice is beyond (the president’s) role,” Alessandro Di Battista, a top 5-Star politician, said.

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“Everybody’s practically euphoric and Trump is a good cheerleader. But, there is a lot of weakness behind the numbers..”

We’re Engaging In Self-Deception And Unsupported Hopefulness (Ron Paul)

When you think about it, I was born in 1935, in the middle of the Depression. I remember my early life. I remember when I was 3 years old and 5 years old and the Depression lasted through World War II and the conditions were such as I remember very clearly, but it wasn’t a big deal for me even though we lived in close quarters and we didn’t have a lot of shoes and were just skimping by. So, we went through a Depression and World War II. Those were pretty tough times and since that time — since the war issue’s always been a big issue with me — I remember the tragedies of World War II. We had relatives in Germany, so it always caught my attention. Then we had the Korean War. I could remember my mother saying, “another war this soon?”

We just got over one, so she was negative on that and then we had the Vietnam War and I knew that I probably would be drafted and that was one of the reasons that helped me move toward medicine. So, those were pretty bad times. Think of the people that were dying over those first 30 or 40 years. Things weren’t great economically either. In America, we were not even allowed to own gold. Those were conditions that existed that changed for the better to some degree. Philosophically, I think, we’re still on the wrong track overall, although some things have improved. Once again, we’re able to own gold. The United States government and I pushed it along when I was in Congress to mint gold coins again and talk about monetary policy.

Philosophically, we are making progress in some areas, though, and I give a lot of credit to the institutions that do this, like the Mises Institute and FEE. And of course, I want to participate in changing foreign policy and we keep working on that through the Ron Paul Institute. But, on the downside of all this, I see we’re on a disastrous course even though the official economic indicators look great and wonderful. Everybody’s practically euphoric and Trump is a good cheerleader. But, there is a lot of weakness behind the numbers, and we’re engaging in self-deception and unsupported hopefulness that things will be all good, there will be no inflation or high unemployment, and there’ll be no major war. I think when I look at the seeds that have been sown, the future looks rather bleak in many ways, even compared to what it was like as we finished World War II and Vietnam.

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“Breaking the rules is becoming the new rule..”

Putin Warns “US Sanctions Hurt Trust In Dollar As Reserve Currency” (ZH)

Despite his absence from Vladimir Putin’s annual economic showcase – which included such US allied luminaries as Japanese Prime Minister Shinzo Abe, French President Emmanuel Macron, China’s Vice President Wang Qishan and IMF chief Christine Lagarde – the conversation kept coming back to President Trump. Led by an unusually outspoken Putin, Macron – who seemed more enamored with Putin than the rest, agreed with the Russian president’s concerns over the erosion of trust and the specter of a global crisis brought on by Washington’s disruptions. “The free market and fair competition are being squeezed by confiscations, restrictions, sanctions,” Putin said. “There are various terms but the meaning is the same – they’ve become an official part of the trade policy of certain countries.”

The “spiral” of U.S. penalties is targeting “an ever larger number of countries and companies,” undermining “the current world order,” he said. Macron replied: “I fully share your point of view.” Such warnings only confirm Mr Putin’s world view. Without mentioning the US, he complained that the multilateral economic world order was being “crushed” by a proliferation of exceptions, restrictions and sanctions. The “darkest cloud” on the economic horizon is the “determination of some to actually rock the system,” Lagarde said, prompting Wang, a new point-man for Chinese foreign policy, to agree. “Politicizing economic and trade issues, and brandishing economic sanctions, are bound to damage the trust of others,” he said.

[..] The global economy is facing a threat of a spiraling protectionist measures that can lead to a devastating crisis, Vladimir Putin warned. Nations must find a way to prevent this and establish rules on how the economy should work. The Russian president spoke out against the growing trend of using unilateral restrictions to achieve economic advantage, as he addressed guests of the St. Petersburg International Economic Forum (SPIEF) on Friday. “The system of multilateral cooperation, which took years to build, is no longer allowed to evolve. It is being broken in a very crude way. Breaking the rules is becoming the new rule,” he said. Putin sharply criticized the sanctions, saying they signal “not just erosion but the dismantling of a system of multilateral cooperation that took decades to build.”

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Which will cause them to do the exact opposite.

Erdogan Calls On Turks To Convert Dollar, Euros Into Lira (R.)

Turkish President Tayyip Erdogan called on Turks on Saturday to convert their dollar and euro savings into lira, as he sought to bolster the ailing currency which has lost some 20 percent of its value against the U.S. currency this year. “My brothers who have dollars or euros under their pillow. Go and convert your money into lira. We will thwart this game together,” Erdogan said at a rally in the eastern city of Erzurum ahead of parliamentary and presidential elections on June 24.

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One moment they claim to have gotten it done, the next they start all over again..

Spain’s Ciudadanos Party Open To Alternative Candidate To Oust PM Rajoy (R.)

Spain’s center-right Ciudadanos party said on Saturday it would be willing to back an unspecified neutral candidate to oust Prime Minister Mariano Rajoy over a far-reaching graft case engulfing members of his People’s Party (PP). Jose Manuel Villegas, secretary-general of Ciudadanos, told a news conference his party could work with the opposition Socialists to support an alternative candidate in a no-confidence vote to unseat its former ally Rajoy, who leads a minority government beset by numerous corruption scandals. Rajoy said on Friday he would fight the no-confidence vote and finish his four-year term, ruling out early elections.

Pro-business Ciudadanos (meaning Citizens in English) declined to support the no-confidence motion put forward by Socialist leader Pedro Sanchez earlier that day. But Villegas said on Saturday his party could back a “practical candidate” who was neither Sanchez nor Ciudadanos leader Albert Rivera. To succeed, the two parties would need to agree a joint candidate to replace Rajoy and on other questions such as calling a snap election. They would also need the backing of leftist party Podemos. A no-confidence vote requires the candidate to gather 176 or more votes in Spain’s lower house, a difficult task in the fragmented parliament where nationalists, among them two Catalan separatist parties, could be decisive if the larger parties cannot reach an agreement.

Speaking to Cope radio on Saturday, Socialist Secretary General Jose Luis Abalos said the party would not work with Catalan separatist parties and called on Ciudadanos to support Sanchez’s bid to replace Rajoy as PM in exchange for a promise to call snap elections soon after taking office. [..] The graft case, which relates to the use of a slush fund by the PP in the 1990s and early 2000s to illegally finance campaigns, has plagued Rajoy since he took office in 2011. He has always denied wrongdoing. 29 people related to the PP, including a former treasurer and other senior members, were convicted on Thursday of offences including falsifying accounts, influence-peddling and tax crimes. They were sentenced to a combined 351 years behind bars.

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They just keep at it. Jail time is required.

Daimler Threatened With Recall Of Over 600,000 Diesel Models (R.)

Daimler faces a recall order for more than 600,000 diesel-engine vehicles including C-Class and G-Class models because of suspected emissions manipulation, German magazine Der Spiegel reported on Friday. Germany’s KBA vehicle authority is probing concrete suspicions that the affected cars were fitted with illicit defeat devices designed to manipulate emissions levels, the magazine said, without citing sources. Daimler said on Friday it had not received a formal summons from KBA regarding its C-Class and G-Class models, a precursor to a recall, but declined to comment in detail on the Spiegel report.

The report comes a day after the KBA ordered Daimler to recall the Mercedes Vito van model fitted with 1.6 liter diesel Euro-6 engines because of engine control features to reduce exhaust emissions which KBA said breached regulations. Daimler has said it is appealing the KBA findings on the Vito and will go to court if necessary. Since rival Volkswagen admitted in 2015 to cheating U.S. emissions tests, German carmakers including VW, Daimler and BMW have faced a backlash against diesel technology in which they have invested billions of euros.

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And that calls for a royal visit…

British Arms Exports To Israel Reach Record Level (G.)

British defence contractors are selling record amounts of arms to Israel, new figures reveal, just days after it was confirmed that Prince William will represent the UK government on a visit to the country next month. Figures from the Campaign Against Arms Trade reveal that last year the UK issued £221m worth of arms licences to defence companies exporting to Israel. This made Israel the UK’s eighth largest market for UK arms companies, a huge increase on the previous year’s figure of £86m, itself a substantial rise on the £20m worth of arms licensed in 2015. In total, over the past five years, Israel has bought more than £350m worth of UK military hardware.

Licences issued to UK defence contractors exporting to Israel last year include those for targeting equipment, small arms ammunition, missiles, weapon sights and sniper rifles. In 2016 the UK issued licences for anti-armour ammunition, gun mountings, components for air-to-air missiles, targeting equipment, components for assault rifles, components for grenade-launchers and anti-riot shields. Human rights groups have questioned the wisdom of sending a senior royal to a country whose use of lethal force last month has been the subject of concern from the UK government.

“After the appallingly excessive response of the Israeli security forces at the Gaza border, tensions in the occupied Palestinian territories are likely to be close to boiling point when Prince William makes this historic visit,” said Kerry Moscogiuri, Amnesty International UK’s campaigns director.

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Kim makes a call, and they meet less than 24 hours after. That is a big change all by itself.

Koreas Discuss Non-Aggression Pledge, Peace Treaty Ahead Of Summit (R.)

North and South Korea are discussing a possible non-aggression pledge by the United States to the North and a start of peace treaty talks to address Pyongyang’s security concerns before a North Korea-U.S. summit, a senior South Korean official said on Sunday. South Korean President Moon Jae-in and North Korean leader Kim Jong Un held a surprise second meeting on Saturday after U.S. President Donald Trump called off his talks, set for June 12 in Singapore, before floating a reinstatement of the plan.

“For the success of the North Korea-U.S. summit, we’re exploring various ways of clearing North Korea’s security concerns at the working level,” the senior South Korean presidential official told reporters. “That includes an end to hostile relations, mutual non-aggression pledge, a launch of peace treaty talks to replace the current armistice,” the official said. The two Koreas are also in talks over a three-way declaration of the end to 1950-53 Korean War but there has not been any agreement yet over a tripartite summit, the official said.

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Everyone’s deleting emails. The FBI is all over this. Assange was framed. If prosecutors are not independent, this is what you get. And she’s a lousy liar to boot.

How Did The Swedish Matter End? (Justice4Assange)

The extradition warrant from Sweden was revoked on 19 May 2017, when the prosecutor also closed the entire underlying investigation. Having obtained Mr. Assange’s testimony, the prosecutor decided it would be disproportionate to proceed. The investigation had already been found to be baseless by Stockholm’s senior prosecutor, Eva Finne, who found that the conduct alleged by the police “disclosed no crime at all”. SMS messages from the alleged complainant made public in 2015 showed that she “did not want to accuse Assange of anything”, that she felt “railroaded by police and others around her”, and “police made up the charges”.

The UK’s role in the Swedish affair was exposed in emails obtained under Freedom of Information Act which revealed that Sweden moved to drop the investigation in 2013, but the UK Crown Prosecution Service persuaded Sweden to keep it alive. Emails show the UK advised Sweden not to interview Mr. Assange in the UK in 2011 and 2012. UK prosecutors admitted to deleting key emails concerning Assange and engaged in elaborate attempts to keep correspondence from the public record. The Swedish prosecutor admitted to deleting an email from an FBI agent about Assange which she received in 2017, and claimed it could no longer be recovered (Video in English and Swedish):

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Feb 182018
 
 February 18, 2018  Posted by at 11:02 am Finance Tagged with: , , , , , , , , , , , , ,  


Jerome Liebling Butterfly Boy, Harlem, New York City 1949

 

US Tax Cuts, Repatriated Cash Used For Record Stock Buybacks (ZH)
VIX Products Were Extremely Ill-Designed (Eric Peters)
Until There Are Facts On Election Meddling, It’s All Just Blather – Lavrov (RT)
Apocalypse Now For Britain’s Retailers As Low Wages And The Web Cause Ruin (G.)
UK Will Need ‘Thousands’ More Customs Officers After Brexit (R.)
The Big PFI Heist: How Big Banks Launched The Takeover Of UK Plc (Ind.)
Software Helped Daimler Pass US Emissions Tests (R.)
Global Sea Ice Hits New Record Low For January (Ind.)
Should We Give Up Half Of The Earth To Wildlife? (O.)

 

 

The last few drops squeezed from a stone-dry stone. Buybacks kill economies.

US Tax Cuts, Repatriated Cash Used For Record Stock Buybacks (ZH)

While there is still some fringe debate what companies will do with the hundreds of billions in offshore funds repatriated to the US as part of the recently passed Trump tax reform, the discussion is largely over, especially after last week’s Cisco results. The company, which has $68 billion of overseas cash, third after AAPL and MSFT, announced that it would raise its buyback authorization by $25 billion, and revealed plans to repurchase its entire authorization of $31 billion during the next 6-8 quarters, equal to roughly 15% of its current market cap. Call it a partial LBO, courtesy of Donald Trump.

[..] Here’s what Goldman’s David Kostin said in his latest Weekly Kickstart report: “Since December, S&P 500 firms have announced buybacks totaling $171 bn. YTD announcements of $67 bn represent a 22% increase versus the same period in 2017. The buyback window has re-opened and firms are taking advantage of the recent correction; the GS Buyback Desk reported that last week was the most active week in its history.” The $171 billion in YTD stock buyback announcements is the most ever for this early in the year. In fact, it is more than double the prior 10 year average of $77 billion in YTD buyback announcements.

[..] in addition to what we first pointed out over two years ago, namely that all net debt issuance in the 21st century has been used to pay for stock buybacks… here is what John Hussman commented on this record last hurrah in stock buybacks: “Though buybacks are primarily debt-financed, they are also highest at market peaks, and contract sharply at major market troughs. Corporations are still borrowing to buy the dip at peak valuations, within a few percent of extremes associated with prospective 10-12yr market losses.”

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There was no need for better design, the Fed has traders’ backs regardless.

VIX Products Were Extremely Ill-Designed (Eric Peters)

There’s no question that, in an economy and in a financial system where there’s the level of debt that we have and the sensitivity to interest rates, rising rates are kind of a pre-condition to equity market disruptions and selloffs. I think that the level of volatility selling and its integration into risk models across virtually every type of investment strategy are contributors. And, having gone through such a long period with very, very little movement, I’d say that many people’s trading books were robust for relatively small moves. But once you’ve passed a certain move – and I think in this case it was probably the S&P down 3-ish% that triggered a whole series of different adjustments that people needed to make to their books and their option books – that then amplified the move in volatility and led to this blowup in the VIX product.

But you have to remember that these VIX products were extremely ill-designed. And they were very vulnerable to this. They’re a rare thing that you see in our industry, which is they had a predefined stop loss. And markets are pretty good at finding stop losses and triggering them. I started my career in the commodity pits, and I witnessed firsthand how the commodity pit is built around finding stop losses on the top side of the bottom side of markets. So I think the market did a great job of finding the stops – and in this case finding the weakest ones, which were in the VIX complex – and hitting them. But I don’t think that that really explains why this move happened. Why did we get the first leg down, and why are markets starting to move with very little news flow? And, again, that’s something that’s difficult to explain for a lot of people that are trying to do it.

[..] The biggest problem in the investment industry today, the portfolio construct that investors have come to rely on, which is a brilliant construct really pioneered by Ray Dalio – he naturally has done incredibly well from this, and it’s been a fantastic strategy – this risk parity strategy. And, while there’s certainly more complexity to it that just being long equities and leveraged funds, let’s just view it as that strategy for a moment. It’s essentially what the dominant portfolio has become at all the major investors, pensions, endowments, etc. in the industry. And the beauty of that portfolio has been that you’ve been able to own risk assets and then you’ve been able to own a hedge, which is a leveraged bond portfolio, and that hedge has actually paid you a positive return.

The problem is when equity valuations become very high and interest rates get very low it’s difficult for that strategy to continue to perform very well. All else being equal. Now, however, if you add modest inflation into the formula, that portfolio actually becomes pretty toxic. That’s the environment I think we’re entering into. And that’s why, ultimately, I see some of these shocks like this most recent market shock as just being trail markers on this path to a much more difficult investment environment.

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Deputy A.G. Rod Rosenstein: “There is no allegation in the indictment that the charged conduct altered the outcome of the 2016 election.”

Virginia State Senator Richard Black: “When you become a special counsel, you have an open checkbook for the US Treasury and you are guaranteed to become a mega-millionaire if you simply can drag out the proceedings,”

Until There Are Facts On Election Meddling, It’s All Just Blather – Lavrov (RT)

Russian Foreign Minister Sergey Lavrov has again dismissed claims of Russian meddling in the US election, saying that until facts are presented by Washington, they are nothing but “blather.” Speaking at the Munich Security Conference in Germany on Saturday, he said that “Until we see facts, everything else will be just blather.” When asked to comment on the indictment of Russian nationals and companies in the US over alleged meddling in the 2016 US election, the foreign minister answered:“You know, I have no reaction at all because one can publish anything he wants. We see how accusations, statements, statements are multiplying.”

On Friday, a US federal grand jury indicted 13 Russian nationals and three entities accused of interfering in the 2016 election and political processes. According to the indictment, those people were “supporting the presidential campaign of then-candidate Donald J. Trump… and disparaging Hillary Clinton” as they staged political rallies and bought political advertising, while posing as grassroots entities.

[..] Even US Deputy Attorney General Rod Rosenstein had to admit that there were “no allegations” that this “information warfare” yielded any results and affected the outcome of the presidential election. The underwhelming indictment was also slammed in the US. Virginia State Senator Richard Black accused FBI Special Counsel Robert Mueller of deliberately dragging out the Russian meddling probe for his own gain. “To a certain extent, I think, Robert Muller is struggling to keep alive his position of a special counsel. The special counsel has already earned seven million dollars. When you become a special counsel, you have an open checkbook for the US Treasury and you are guaranteed to become a mega-millionaire if you simply can drag out the proceedings,” Black told RT.

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Maxed out. Forget the web. Think savings, pensions.

Apocalypse Now For Britain’s Retailers As Low Wages And The Web Cause Ruin (G.)

“Who’d be a retailer now?” That was the comment from City economist Jeremy Cook when the latest set of grim retail sales data was released by the Office for National Statistics last Friday. “The average Brit,” he added, “has spent the past few years living by the mantra ‘When the going gets tough, the tough go shopping.’” After a grim December, many had been hoping for a bounceback, but the figures showed that consumers were not as hardy as they once were, said Cook, and the retail sector was facing a long-term, continuing slowdown. Shoppers are being hit by declining real wages, record levels of consumer debt and the prospect of higher borrowing costs. But the wider problem is a structural shift in the way consumers spend their money.

This is threatening famous retailers and forcing a rethink about how high streets will look in years to come, and what might be done with retail parks and malls when retailers shut up shop. It is not just about shoppers preferring to buy online – although 20% of fashion sales, where the pressures are perhaps worst, have now moved to the internet. There’s been a seismic shift in the way we spend our time and money. Social media, leisure, travel, eating out, eating in – using takeaways and delivery services – and technology are all taking time and cash that would once have gone straight to shops. In food, increasing numbers of people now prefer to buy local and often. Fewer big weekly shops mean out-of-town superstores are under pressure and the big supermarkets are trying to lure in other retailers to take space they no longer need.

This rapid change in shopping habits is boosting sales at the likes of Amazon, Asos and Boohoo, but forcing radical change on British towns and cities as physical retail space becomes redundant. The past few months have seen a stream of collapses – from fashion store East to shoe chain Shoon and bed specialists Warren Evans and Feather & Black. Toys R Us is teetering on the brink of bankruptcy, while House of Fraser, Debenhams and New Look are all struggling, with all three considering large-scale closures of stores or space.

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Almost funny.

UK Will Need ‘Thousands’ More Customs Officers After Brexit (R.)

The Dutch government plans to hire at least 750 new customs agents in preparation for Britain’s exit from the European Union. The Dutch parliament’s Brexit rapporteur, Pieter Omtzigt, who had recommended the move, said both sides of the English Channel had been slow to wake up to the reality that Britain was on course to leave the EU in 14 months’ time. “If we need hundreds of new customs and agricultural inspectors, the British are going to need thousands,” he said. Omtzigt warned that “for a trading nation like the Netherlands, you just cannot afford for customs not to work, it would be a disaster”.

In a letter to parliament on Friday, the deputy finance minister, Menno Snel, said the cabinet had “decided that the Customs and Food and Wares agencies should immediately begin recruiting and training more workers”. He said the government was working on the basis of two scenarios: that Britain leaves the EU with no deal in place, or that it leaves on similar terms to those of the EU’s recent trade deal with Canada. “The results are that … around 930 or 750 full-time employees are needed,” Snel said. “It speaks for itself that the cabinet is following the negotiations closely in order to be able to react appropriately.”

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“The real story of how Britain’s economy has been left high and dry by a doomed economic philosophy..”

The Big PFI Heist: How Big Banks Launched The Takeover Of UK Plc (Ind.)

Sir Howard Davies, chairman of the Royal Bank of Scotland (RBS), recently made an astonishing admission on BBC1’s Question Time when he stated that private finance initiatives (PFI) had been a “fraud on the people”. Beyond seemingly populist rhetoric, the real story of PFI reveals that RBS alongside other global banks, notably HSBC, were instrumental in what Sir Howard has effectively labelled a great heist. The past month has seen the demise of construction giant Carillion followed by the collapse of Capita’s market value: both firms having built huge empires by providing outsourced services to public authorities. These initial tremors might be the canary in the coal mine. Profit warnings have been issued for other government contractors, such as Interserve. The domino effect has shades of the 2007-08 financial crisis even though it is clearly not of the same magnitude.

All this has thrown up searching questions, not least around staff redundancies and pensions, bailouts, inflated dividends and executive remuneration. Yet even in the throes of this PFI and outsourcing crisis, public-private Partnerships (PPP) are far from dead and buried. On the contrary, the Naylor Review – a report recommending the disposal of NHS land and assets to generate investment – is rehabilitating PPP. Furthermore, the Government is pushing through Accountable Care Organisations (ACO), a form of PPP based on an American model of healthcare. The Government cites too the model of Alzira in Spain where a consortium of private companies not only financed and built facilities but also delivered health services.

Of course, PFI was not always a toxic brand. In 1997 it appeared to be New Labour’s magical solution to chronic underinvestment in public services in the wake of Thatcherism. As Alan Milburn – the former Labour Health Secretary described by Private Eye as an “almost maniacal convert to PFI” – put it: “It’s PFI or bust.” The argument went that Labour had inherited public services in such a diabolical state of neglect that there was no alternative to the private financing of whole swathes of infrastructure. It was a persuasive argument which seduced many. The Blairite Third Way would somehow square the circle by delivering new schools, hospitals, roads, railways and prisons without the debt or inefficiency of the public sector. It seemed too good to be true yet those who dared to question the orthodoxy du jour were swatted away.

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“..including one which switched off emissions cleaning after 26 km of driving..”

Software Helped Daimler Pass US Emissions Tests (R.)

U.S. investigators probing Mercedes maker Daimler have found that its cars were equipped with software which may have help them to pass diesel emissions tests, a German newspaper reported on Sunday, citing confidential documents. There has been growing scrutiny of diesel vehicles since Volkswagen admitted in 2015 to installing secret software on 580,000 U.S. vehicles that allowed them to emit up to 40 times legally allowable emissions while meeting standards when tested by regulators. Daimler, which faces ongoing investigations by U.S. and German authorities into excess diesel emissions, has said investigations could lead to significant penalties and recalls.

The Bild am Sonntag newspaper said that the documents showed that U.S. investigators had found several software functions that helped Daimler cars pass emissions tests, including one which switched off emissions cleaning after 26 km of driving. Another function under scrutiny allowed the emissions cleaning system to recognize whether the car was being tested based on speed or acceleration patterns. Bild am Sonntag also cited emails from Daimler engineers questioning whether these software functions were legal.

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We don’t we just shoot the remaining polar bears right now, and move on?!

Global Sea Ice Hits New Record Low For January (Ind.)

The world’s sea ice shrank to a record January low last month as the annual polar melting period expanded, experts say. The 5.04 million square miles of ice in the Arctic was 525,000 square miles below the 1981-to-2010 ice cover average, making it the lowest January total in satellite records, according to the US National Snow and Ice Data Center (NSIDC). Combined with low levels in the Antarctic, global sea ice amounted to a record low for any first month of the year, the organisation concluded. The news comes just days after researchers from the University of Colorado Boulder said the rate at which sea levels are rising was increasing every year, driven mostly by accelerated melting in Greenland and Antarctica.

The NSIDC, a respected authority on the Earth’s frozen regions, which researches and analyses snow, glaciers and ice sheets among other features, said that ice in the Arctic Ocean hit “a new record low” at both the start and end of last month. In an online post, the group said: “January of 2018 began and ended with satellite-era record lows in Arctic sea ice extent, resulting in a new record low for the month. Combined with low ice extent in the Antarctic, global sea ice extent is also at a record low.” It said the Arctic experienced a week of record low daily ice totals at the start of the month, with the January average beating 2017 for a new record low. “Ice grew through the month at near-average rates, and in the middle of the month daily extents were higher than for 2017,” the report went on. “However, by the end of January, extent was again tracking below 2017.”

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• Yes, we should. Even if 50% ia an arbitrary number.

• No, we won’t.

Should We Give Up Half Of The Earth To Wildlife? (O.)

The orangutan is one of our planet’s most distinctive and intelligent creatures. It has been observed using primitive tools, such as the branch of a tree, to hunt food, and is capable of complex social behaviour. Orangutans also played a special role in humanity’s own intellectual history when, in the 19th century, Charles Darwin and Alfred Russel Wallace, co-developers of the theory of natural selection, used observations of them to hone their ideas about evolution. But humanity has not repaid orangutans with kindness. The numbers of these distinctive, red-maned primates are now plummeting thanks to our destruction of their habitats and illegal hunting of the species. Last week, an international study revealed that its population in Borneo, the animal’s last main stronghold, now stands at between 70,000 and 100,000, less than half of what it was in 1995.

“I expected to see a fairly steep decline, but I did not anticipate it would be this large,” said one of the study’s co-authors, Serge Wich of Liverpool John Moores University. For good measure, conservationists say numbers are likely to fall by at least another 45,000 by 2050, thanks to the expansion of palm oil plantations, which are replacing their forest homes. One of Earth’s most spectacular creatures is heading towards oblivion, along with the vaquita dolphin, the Javan rhinoceros, the western lowland gorilla, the Amur leopard and many other species whose numbers are today declining dramatically. All of these are threatened with the fate that has already befallen the Tasmanian tiger, the dodo, the ivory-billed woodpecker and the baiji dolphin – victims of humanity’s urge to kill, exploit and cultivate.

As a result, scientists warn that humanity could soon be left increasingly isolated on a planet bereft of wildlife and inhabited only by ourselves plus domesticated animals and their parasites. This grim scenario will form the background to a key conference – Safeguarding Space for Nature and Securing Our Future – to be held in London on 27-28 February. The aim of the symposium is straightforward: to highlight ways of establishing sufficient reserves and protected areas to halt or seriously limit the major extinction event that humanity now faces. According to one recent report, the number of wild animals on Earth has halved in the past 40 years, as humans kill for food in unsustainable numbers and pollute or destroy habitats, and worse probably lies ahead.

[..] The current focus on protecting what humans are willing to spare for conservation is unscientific, they say. Instead, conservation targets should be determined by what is necessary to protect nature. This point is stressed by Harvey Locke, whose organisation, Nature Needs Half, takes a far bolder approach and campaigns for the preservation of fully 50% of our planet for wildlife by 2050. “That may seem a lot – if you think the world is a just a place for humans to exploit,” Locke told the Observer. “But if you recognise the world as one that we share with wildlife, letting it have half of the Earth does not seem that much.” The idea is supported by E O Wilson, the distinguished Harvard biologist, in his most recent book, Half Earth. “We thrash about, appallingly led, with no particular goal other than economic growth and unfettered consumption,” he writes. “As a result, we’re extinguishing Earth’s biodiversity as though the species of the natural world are no better than weeds and kitchen vermin.”

The solution, he says, is to fill half the planet with conservation zones – though just how this division is to be decided is not made clear in his book. In any case, Hoffman points out, simply setting aside huge chunks of land or marine areas will not, on its own, save the day. “We could earmark the whole of northern Canada as a wildlife reserve but, given the paucity of animals who live in these frozen regions, that would not have a significant effect on a great many species who live elsewhere,” he said.

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