May 102020
 


Andre Derain The port of Collioure 1905

 

Closing Borders Is The Most Effective Way Of Combatting Coronavirus (SN)
Accepting Death Is Not an Option (Kahn)
Early Herd Immunity: A Dangerous Misconception (Johns Hopkins)
US COVID19 Test Results: Third Consecutive Day Over 300K (CR)
Over 1 Out of Every 1000 People in NY and NJ Die From COVID19 (Mish)
Trump Says ‘No Rush’ On More Aid As Jobless Crisis Grows (AP)
South Korea Reports 34 New Coronavirus Cases, Highest In A Month (R.)
China Reports 14 New Confirmed Coronavirus Cases, Most in 2 Weeks (R.)
China Asked WHO To Cover Up Coronavirus Outbreak: German Intelligence (TN)
Top German Politician Wants To ‘Urgently’ Reopen French Border (RT)
Corona Under Control: Bavaria Lets Residents Go Out & Businesses Reopen (RT)
German Towns Bring Back Lockdown After Infections Spike Within Days (DM)
Facebook Censors Iconic Photo With Soviet Flag Raised Over Reichstag (RT)
Swiss National Bank Battling Enormous Pressure On Safe-Haven Franc (R.)
Obama Says That ‘Rule Of Law Is At Risk’ In Michael Flynn Case (Y!)

 

 

• US adds 1,568 #coronavirus deaths in 24 hours. Total deaths 80,037

 

• Significant progress in slowing growth in India, today 3,115 with plateau for 5 days at about 3,000 cases after earlier rapid increase.

• Pakistan has rapid increase from 1,165 three days ago doubling to 2,301 today.

 

 

 

Cases 4,121,778 (+ 89,015 from yesterday’s 4,032,763)

Deaths 280,868 (+ 4,191 from yesterday’s 276,677)

 

 

 

From Worldometer yesterday evening -before their day’s close-

 

 

From Worldometer

 

 

From SCMP:

 

 

From COVID19Info.live:

 

 

 

 

First point of Crushing the Curve. Re: New Zealand. As long as air travel is the no. 1 mode of transport, it’s relatively easy to do, and to prove as well. But too late now. Next up: testing.

Closing Borders Is The Most Effective Way Of Combatting Coronavirus (SN)

Scientists in Brazil have found that the countries most affected by the coronavirus spread are the ones who continued to allow unrestricted travel across their borders, prompting further arguments that the most effective method of preventing the spread is tighter frontier controls. The research, carried out by the Federal University of Bahia in Salvador, suggests that screening and quarantining those coming into countries from outside could have been “a cheap solution for humanity”. The researchers based their analysis on records of 7,834 airports, using online flight databases documenting 67,600 transport routes in 65 countries.

The scientists factored in a number of forces, including climate, socioeconomic factors, as well economic and air transport, in an attempt to ascertain how the size of outbreaks was affected in 65 countries which had more than 100 cases. The overwhelming factor was found to be air travel, leading to a conclusion that it is “the main explanation for the growth rate of COVID-19.” The study notes that “The 2019 – 2020 world spread of COVID-19 highlights that improvements and testing of board control measures (i.e. screening associated with fast testing and quarantine of infected travellers) might be a cheap solution for humanity in comparison to health systems breakdowns and unprecedented global economic crises that the spread of infectious disease can cause.”

The data tallies with the fact that the US and the UK, which have the first and third highest air travel globally, have also suffered the most COVID-19 deaths with 74,600 and 30,615, respectively so far. The US did not close its airports until late March, while Britain’s borders have remained completely open with little to no testing or quarantining of incoming travellers happening at all. On the other hand, nations like Austria, Denmark and New Zealand closed their borders within days of their first confirmed cases, and have experienced much fewer deaths. Austria in particular has enacted tight border controls, refusing entry to anyone without a medical certificate confirming they had tested negative for the virus, and placing a mandatory 14 day quarantine on those who do not have them. The country has suffered just 68 deaths per million of its population, with only 606 overall.

Denmark closed its borders to all non-citizens in mid March, only excluding those with ‘credible purpose’ such as non-citizen Danish residents. The Scandinavian nation has recorded just 503 deaths. The UK, on the other hand has allowed some 18 million people to enter from outside the country with hardly any of them undergoing health screenings or being put into quarantine. Labour MP Stephen Doughty noted that “The fact that many of these people then likely arrived and travelled onwards across the UK with little or no adherence to social distancing, and with no checks or protections at the border is deeply disturbing.” The UK has seen 100,000 people arriving from foreign countries at UK airports every single week, all with virtually no health checks whatsoever.

Read more …

A good point. But you’re not making it better by blaming things on the “conservative movement”, or by dragging climate change into the topic.

Accepting Death Is Not an Option (Kahn)

The worst-case scenario with coronavirus is not mass death. It’s that people come to accept mass death—to accept that someone will die in the U.S. every 30 seconds as “just how it is.” Yet that is the proposition being thrust on us now. Yesterday, 2,746 people died of covid-19 in the U.S., the highest daily death toll recorded since the first confirmed deaths on American soil in February. That’s on the high end of leaked Trump administration forecasts for this time period and shows the 3,000 daily deaths come June in those forecasts might be wishful thinking. This is, in a word, horrific. But the Trump administration and its backers from conservative media to the small but vocal “reopen” movement are trying to convince people it’s not only normal but worth it.

They have turned the idea we should avoid the Bad Thing—namely, the needless deaths of thousands of Americans—on its head, arguing we should embrace it full-on and just plow forward with reopening the country. It’s a monstrous idea in the here and now, but it also sets up a dangerous precedent, priming people to accept policy failure—or, worse, reject legitimate policy solutions—on what remains the biggest issue facing humanity: climate change. Unless we demand more from our leaders and each other, we risk an even bigger catastrophe in our lifetimes. There is nothing acceptable about 3,000 people dying every day from coronavirus. What’s so nauseating about this is that we know what it looks like to contain the virus.

We’ve seen it in action. Countries as diverse as South Korea, New Zealand, and Vietnam have all successfully flattened the curve of death and suffering. The steps they broadly followed are proactive lockdowns and a slow reopening as the curve of infections flattened followed by contact tracing, mass testing, and ensuring frontline workers have ready access to personal protective equipment.

Read more …

Even if herd immunity were achievable, and this takes the fattest question mark you have ever seen, we don’t need it anymore than we need a vaccine. Which is good, because we have neither.

Early Herd Immunity: A Dangerous Misconception (Johns Hopkins)

We have listened with concern to voices erroneously suggesting that herd immunity may “soon slow the spread” of COVID-19. For example, Rush Limbaugh recently claimed that “herd immunity has occurred in California.” As infectious disease epidemiologists, we wish to state clearly that herd immunity against COVID-19 will not be achieved at a population level in 2020, barring a public health catastrophe. Although more than 2.5 million confirmed cases of COVID-19 have been reported worldwide, studies suggest that (as of early April 2020) no more than 2-4% of any country’s population has been infected with SARS-CoV-2 (the coronavirus that causes COVID-19). Even in hotspots like New York City that have been hit hardest by the pandemic, initial studies suggest that perhaps 15-21% of people have been exposed so far.

In getting to that level of exposure, more than 17,500 of the 8.4 million people in New York City (about 1 in every 500 New Yorkers) have died, with the overall death rate in the city suggesting deaths may be undercounted and mortality may be even higher. Some have entertained the idea of “controlled voluntary infection,” akin to the “chickenpox parties” of the 1980s. However, COVID-19 is 100 times more lethal than the chickenpox. For example, on the Diamond Princess cruise ship, the mortality rate among those infected with SARS-CoV-2 was 1%. Someone who goes to a “coronavirus party” to get infected would not only be substantially increasing their own chance of dying in the next month, they would also be putting their families and friends at risk.

COVID-19 is now the leading cause of death in the United States, killing almost 2,000 Americans every day. Chickenpox never killed more than 150 Americans in a year. To reach herd immunity for COVID-19, likely 70% or more of the population would need to be immune. Without a vaccine, over 200 million Americans would have to get infected before we reach this threshold. Put another way, even if the current pace of the COVID-19 pandemic continues in the United States – with over 25,000 confirmed cases a day – it will be well into 2021 before we reach herd immunity. If current daily death rates continue, over half a million Americans would be dead from COVID-19 by that time.

As we discuss when and how to phase in re-opening, it is important to understand how vulnerable we remain. Increased testing will help us better understand the scope of infection, but it is clear this pandemic is still only beginning to unfold.

Read more …

Someone tries to claim that less than a million tests per day will be enough.

US COVID19 Test Results: Third Consecutive Day Over 300K (CR)

The US might be able to test 400,000 to 600,000 people per day sometime in May according to Dr. Fauci – and that might be enough for test and trace. However, the US might need more than 900,000 tests per day according to Dr. Jha of Harvard’s Global Health Institute. There were 300,842 test results reported over the last 24 hours. This data is from the COVID Tracking Project. The percent positive over the last 24 hours was 8.4% (red line). The US probably needs enough tests to push the percentage positive below 5%. (probably much lower based on testing in New Zealand).

Read more …

Singapore is not the greatest example. It had another 876 new cases yesterday.

Over 1 Out of Every 1000 People in NY and NJ Die From COVID19 (Mish)

New Jersey joined New York today in the dubious distinction of coronavirus deaths rates of over 1 in 1,000 people. As states start opening up here are some charts to consider. The chart is not population adjusted. I made the chart as a spot check to see if new deaths were generally in line with the lead chart. There are some new states, notably Texas and Florida, but they are not in the front of the pack, and the day-to-day totals are very noisy.

Three Obvious Standouts • Singapore • South Korea • Japan.


Singapore , South Korea, and Japan all did three things that the US did not do and many in the US still do not want to do.
1) Aggressive Early Testing
2) Cooperative Society on Social Distancing Rules
3) Contact Tracing
1: The US did not do aggressive early testing and it’s too late for that now.
2: The US was late in social distancing and some want to fight it
3: The US did not do contact tracing and may still view that as violation of personal privacy.

Too Late for Early Testing, But Not Overall Testing: Most do want aggressive testing, but despite Trump’s claims, the US is not where we need to be. However, the number of tests is finally ramping up. Coupled with spotty social distancing (compared to other countries) Is that enough? I don’t know, but we are about to find out.

Read more …

Guess the bankers are satisfied for a few weeks.

Trump Says ‘No Rush’ On More Aid As Jobless Crisis Grows (AP)

President Donald Trump says he’s in “no rush” to negotiate another financial rescue bill, even as the government reported that more than 20 million Americans lost their jobs last month due to economic upheaval caused by the coronavirus. The president’s low-key approach came Friday as the Labor Department reported the highest unemployment rate since the Great Depression and as Democrats prepared to unveil what Senate Democratic leader Chuck Schumer calls a “Rooseveltian-style” aid package to shore up the economy and address the health crisis. Some congressional conservatives, meanwhile, who set aside long-held opposition to deficits to pass more than $2 trillion in relief so far, have expressed reservations about another massive spending package.

“We’ve kind of paused as far as formal negotiations go,” Larry Kudlow, the director of the National Economic Council told reporters Friday. He said the administration wanted to let the last round of recovery funding kick in before committing to hundreds of billions or more in additional spending. “Let’s have a look at what the latest round produces, give it a month or so to evaluate that.” Kudlow added that talks were in a “lull” and that administration officials and legislators would “regroup” in the next several weeks. Still, White House aides are drawing up a wish-list for a future spending bill, including a payroll tax cut, liability protection for businesses that reopen and potentially billions in infrastructure spending.

Kudlow added that the White House was also considering allowing businesses to immediately expense the costs of modifiying their facilities to accommodate public safety measures necessary to reopen. The notion was brought up on a call with House members advising the White House on reopening plans Thursday evening and drew bipartisan support. “We’re in no rush, we’re in no rush,” Trump told reporters Friday during an event with House Republicans. He called on Democratic-controlled House to return to Washington, adding, “We want to see what they have.”

Read more …

One guy “meets” 1,500 people in one day, infects 42.

South Korea Reports 34 New Coronavirus Cases, Highest In A Month (R.)

South Korea reported 34 new coronavirus cases on Sunday, the highest daily number in a month, after a small outbreak emerged around a slew of nightclubs that a confirmed patient had visited. Of the new cases, 26 were domestically transmitted infections and eight were imported cases, the Korea Centers for Disease Control and Prevention (KCDC) said. Sunday’s total was the highest since April 9. After battling the first major epidemic outside China, South Korea posted zero or very few domestic cases over the past 10 days, with the daily tally hovering around 10 or less in recent weeks.


The resurgence followed a small but growing coronavirus outbreak centred around a handful of Seoul nightclubs, which a man in his late 20s had visited before testing positive for the virus. At least 15 people were traced to that man as of Friday, and 14 of the 26 cases were reported from Seoul on Sunday, although the KCDC did not specify how many were linked. The outbreak prompted Seoul city to impose an immediate temporary shutdown of all nightly entertainment facilities on Saturday. The city said it is tracking down abut 1,500 people who have gone to the clubs, and has asked anyone who was there last weekend to self-isolate for 14 days and be tested.

Read more …

Time for more lockdowns.

China Reports 14 New Confirmed Coronavirus Cases, Most in 2 Weeks (R.)

China’s National Health Commission reported 14 new confirmed coronavirus cases on May 9, the highest number since April 28, including the first for more than a month in the city of Wuhan where the outbreak was first detected late last year. While China had officially designated all areas of the country as low-risk last Thursday, the new cases according to data published on Sunday represent a jump from the single case reported for the day before. The number was lifted by a cluster of 11 in Shulan city in northeastern Jilin province.


Jilin officials on Sunday raised the Shulan city risk level to high from medium, having hoisted it to medium the day before after one woman tested positive on May 7. The 11 new cases made public on Sunday are members of her family or people who came into contact with her or family members. The new Wuhan case, the first reported in the epicentre of China’s outbreak since April 3, was previously asymptomatic, according to the health commission. Aside from the Shulan cluster and the Wuhan case, the remaining two new confirmed cases were imported infections. It also said newly discovered asymptomatic cases were at 20, the highest since May 1 and up from 15 a day earlier.

Read more …

Is this why Tedros didn’t declare a pandemic for another 7 weeks after?

China Asked WHO To Cover Up Coronavirus Outbreak: German Intelligence (TN)

Chinese leader Xi Jinping asked World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus to suppress news about the Wuhan coronavirus (COVID-19) outbreak, the German intelligence agency BND found, according to a report by German magazine Der Spiegel. During a conversation on Jan. 21, Xi reportedly asked Tedros not to announce that the virus could be transmitted between humans and to delay any declaration of a coronavirus pandemic. It took until the end of January before the WHO declared that the coronavirus outbreak needed to receive international attention.


Because of China’s delay, the world wasted four to six weeks it could have used better to counter the virus from spreading, the BND concluded. Germany’s Robert Koch Institute also said that China failed to reveal all relevant information at the outset of the epidemic, leading it to turn to the BND for advice, according to a report in the Sueddeutsche Zeitung quoted by CNA. In a response to the German media reports, Chinese diplomats said the opposite was true, arguing that the communist country’s handling of the virus saved time that was then wasted by other governments.

Read more …

Keeping the borders shut would risk “permanently damaging cross-border coexistence”. But exporting the virus from one country to the next would not?

Top German Politician Wants To ‘Urgently’ Reopen French Border (RT)

The head of Germany’s most populous state has called for the reopening of the country’s French border to be fast-tracked. The federal government earlier warned that such actions risk launching a new wave of Covid-19 infections. “We urgently need to open the border with France,” Armin Laschet, minister president of the country’s North Rhine-Westphalia state, which borders France, told German media. The lockdown there ends on May 11. That would be a good time to send a signal to our neighbors that we are striving for a common European response to the pandemic. Laschet suggested that the German government should also “talk to Austria in this sense.”


France is due to initiate its first phase of relaxing quarantine rules on Monday. However, Interior Minister Christophe Castaner said earlier this week that the border will remain closed until at least June 15. The German government has been under pressure to lift restrictions on international travel early as some European countries begin to gradually ease their lockdowns. A group of German lawmakers and members of the European Parliament have called on Interior Minister Horst Seehofer to fast-track the reopening of the border crossings. The foreign minister of the small nation of Luxembourg, Jean Asselborn, has also written a letter to Seehofer, arguing that the shutdown of the border crossings is causing “growing discontent” among the population on both sides of the border and risks “permanently damaging cross-border coexistence” in the region.

Read more …

And how does one define “under control”? “.. the number of fresh cases has dropped by more than half across the region..”

Corona Under Control: Bavaria Lets Residents Go Out & Businesses Reopen (RT)

Despite warnings the Covid-19 crisis isn’t over, one of Germany’s wealthiest states is set to open up, allowing people to go out for any reason and letting almost all businesses – from retail to tourism – welcome visitors again. “Now it is time to act,” proclaimed Bavaria’s Prime Minister Markus Soeder as he rolled out“a path of reason” for the wealthy Alpine state. “In the beginning we had an explosive [rate of] infection,” Soeder admitted, adding though that “coronavirus is now under control.” Bavaria claims almost one-quarter – over 43,000 – of all confirmed coronavirus infections in Germany, but the number of fresh cases has dropped by more than half across the region, he said, explaining why relaxing the lockdown is an option. The current figures “allow for careful steps toward opening up,” provided that a “combination of caution and freedom” prevail.


Starting from May 6, Bavarians can visit anyone outside their own household. Seeing relatives in nursing homes will also become possible this weekend, although strict rules will remain in place, with visitors still having to wear masks at all times and meet their loved ones outdoors wherever possible. From May 11, zoos, botanical gardens, museums, libraries, galleries, exhibitions, and memorials will likewise open their doors – but only conditionally, meaning that their staff will have to accommodate social distancing and coronavirus hygiene measures. Supermarkets and stores with premises bigger than 800 square meters are also cleared to resume their activities. Locals will be able to more fully enjoy the outdoors in the second half of May when the state-wide ban on open-air dining is lifted. Bavaria, on a par with a handful of other German states, is also allowing hotels and leisure places to welcome visitors again, to much relief of its tourism industry.

Read more …

They’re risking the country falling apart. Just like the US does.

German Towns Bring Back Lockdown After Infections Spike Within Days (DM)

Local authorities in Germany are bringing back lockdown measures after coronavirus infections spiked just days after Angela Merkel started to ease them. Germany has 16 federal states, with the power to relax restrictions, who have all agreed to reimpose lockdown if new cases hit 50 per 100,000 people over seven days. The regional government in North Rhine-Westphalia, Germany’s most populated state, recorded a spike in coronavirus cases after 150 of 1,200 employees tested positive at a slaughterhouse in Coesfeld. The regional government has postponed reopening restaurants, tourist spots, fitness studios and larger shops which was supposed to happen on May 11.

Reopening schools and daycare centres is set to go ahead as planned. North Rhine-Westphalia’s health minister Karl-Josef Laumann said the slaughterhouse infection rate had pushed the region above 50 per 100,000 people to 61 per 100,000 people. He closed the slaughterhouse temporarily and said employees at all of the state’s meat processing plants would be tested. A different slaughterhouse in the northern state Schleswig-Holstein also saw a rise in employees testing positive for the virus taking the district’s infection rate over the 50 per 100,000 people threshold. In the eastern state of Thuringia, the local government recorded more than 80 infections per 100,000 people over the past week.

The majority of these infections were among employees and residents in six care homes and one geriatrics hospital. Martina Schweinsburg, the chief administrator of Thuringia’s Greiz, said: ‘To be clear: We’re not going to put the entire district in quarantine just two small towns were particularly affected.’

Read more …

Note: the photo apparently wasn’t taken on May 2, but the day after during a re-enactment.

Facebook Censors Iconic Photo With Soviet Flag Raised Over Reichstag (RT)

Social media feeds are filled with historic shots marking Victory Day, but Facebook seems to have taken issue with one that symbolizes the Soviet victory over Nazi Germany, and it keeps deleting a recently-colorized version of it. Taken during the Battle of Berlin on May 2, 1945, Yevgeny Khaldei’s ‘Raising a Flag over the Reichstag’ commonly springs to mind when it comes to the subject of World War II and Victory Day celebrations. It universally appears in literature, documentaries and, indeed, in social media posts. RT has even reenacted the iconic moment as part of its V-Day project.

All the more puzzled, then, were social media users who tried posting the iconic shot on Facebook on May 9, as Russia marked 75 years since the defeat of Nazi Germany. While the vintage black-and-white versions of the famous photo seemed to pass FB algorithms with flying colors, the version skilfully colorized by Olga Shirnina (aka Klimbim) –showing the Soviet flag in its original bright red– set off alarm bells. “Your post goes against our Community Standards on dangerous individuals and organisations,” was the message shown to several RT employees who’d set out to verify the reports and tried to post the picture. The warning appeared minutes after posts were completed, after which the image just vanished altogether.

Details provided in the warning only broadly outline the topics banned on FB, such as terrorism and incitement of hate and violence. There is no indication that FB has ever consistently associated the Soviet symbols with any on the list, although the network does have a history of erroneously censoring certain historic shots.


Yevgeny Khaldei – 75 years ago the Soviet banner was raised over the Reichstag. 11 million Soviet soldiers died in WW2 and three-quarters of German losses were suffered at the hands of the Red Army – May 2 1945

Read more …

Just link it to the euro.

Swiss National Bank Battling Enormous Pressure On Safe-Haven Franc (R.)

The Swiss National Bank has no alternative to its ultra-expansive monetary policy, with the coronavirus crisis heaping “enormous” appreciation pressure on the safe-haven Swiss franc, SNB Chairman Thomas Jordan said in newspaper interviews. The SNB was not happy about the negative interest rate of minus 0.75% it charges banks who park money with it overnight, Jordan told the SonntagsZeitung paper. It would lift the rates — the lowest in the world — as soon as circumstances allowed, he said, although this was currently impossible. “We unfortunately have no choice but to maintain the negative interest rate,” said Jordan. “Without it, we would be in a much more difficult situation now.

“The Swiss franc would be massively more attractive and the financing conditions for the Swiss economy would be much worse,” he added. “The negative interest is necessary at the moment to avert major damage to Switzerland.” The SNB was also stepping up foreign currency purchases to dampen the rise of the franc, Jordan said. Sight deposits at the central bank, a proxy for SNB interventions, have risen by nearly 77 billion Swiss francs ($79.33 billion) this year, while the franc has risen to its highest level against the euro since July 2015. “We have emphasized several times … we are active in the foreign exchange markets to reduce the pressure on the Swiss franc,” Jordan told the paper.

“We deliberately never report our transactions in detail, but I would like to emphasise that we are making a substantial commitment,” he said. All this was necessary to prevent the franc from strengthening, hurting Switzerland’s export-orientated economy and triggering deflation.

Read more …

It certainly is. But not in the way he means.

Obama Says That ‘Rule Of Law Is At Risk’ In Michael Flynn Case (Y!)

Former President Barack Obama, talking privately to ex-members of his administration, said Friday that the “rule of law is at risk” in the wake of what he called an unprecedented move by the Justice Department to drop charges against former White House national security adviser Michael Flynn. In the same chat, a tape of which was obtained by Yahoo News, Obama also lashed out at the Trump administration’s handling of the coronavirus pandemic as “an absolute chaotic disaster.” “The news over the last 24 hours I think has been somewhat downplayed — about the Justice Department dropping charges against Michael Flynn,” Obama said in a web talk with members of the Obama Alumni Association.

“And the fact that there is no precedent that anybody can find for someone who has been charged with perjury just getting off scot-free. That’s the kind of stuff where you begin to get worried that basic — not just institutional norms — but our basic understanding of rule of law is at risk. And when you start moving in those directions, it can accelerate pretty quickly as we’ve seen in other places.” The Flynn case was invoked by Obama as a principal reason that his former administration officials needed to make sure former Vice President Joe Biden wins the November election against President Trump. “So I am hoping that all of you feel the same sense of urgency that I do,” he said.

“Whenever I campaign, I’ve always said, ‘Ah, this is the most important election.’ Especially obviously when I was on the ballot, that always feels like it’s the most important election. This one — I’m not on the ballot — but I am pretty darn invested. We got to make this happen.” Obama misstated the charge to which Flynn had previously pleaded guilty. He was charged with false statements to the FBI, not perjury. But the Justice Department, in a filing with a federal judge on Thursday, asked that the case brought by special counsel Robert Mueller be dismissed, arguing that FBI agents did not have a justifiable reason to question the then national security adviser about his conversations with Russian Ambassador Sergei Kislyak — talks FBI agents and Mueller’s prosecutors concluded he had lied about.

Read more …

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Mar 162020
 


DPC Manhattan landmark Flatiron Building under construction 1902

 

UK Corona Crisis ‘To Last Until Spring 2021, 7.9m To Be Hospitalised’ (G.)
NYC & LA Mayors Order Bars, Nightlife, Gyms, & Restaurants To Shut (ZH)
Americans Urged To Scrap Gatherings Of 50 Or More People (G.)
Anger In Germany At Report Trump Seeking Exclusive Coronavirus Vaccine Deal (G.)
More Coronavirus Cases Outside Of Mainland China Than Inside (CNN)
Scientists Worry About Coronavirus Spread In Africa (ScienceMag)
The American Mask of Death (Lauria)
Goldman Sachs Predicts A 5% Contraction In The US Economy In Q2 (CNBC)
Fed Cuts Rates To Zero, Launches Massive $700 Billion QE (CNBC)
The End of the Central Bank [Put]? (Jim Bianco)
Fed Disaster: S&P Futures Crash, Halted Limit Down; Gold, Treasuries Soar (ZH)
America’s Biggest Banks Suspend Buybacks In Effort To Support Economy (F.)
China’s Industrial Output, Retail Sales Plummet (MW)
World’s Most Powerful Supercomputer Tasked With Finding COVID19 Cure (ZH)

 

 

We’re setting regrettable records, and there’s very little reason to think the upward trend in cases and deaths will halt any time soon. Most of Europe is under some form of quarantine, only supermarkets and pharmacies remain open, and the UK and US have no choice but to follow suit -preferably very- soon. A -very- different world.

The central banks are so off in their approaches it’s getting harder to see how they will survive in their present shapes. This is not a time to bail out banks, it’s a time to help people. But they refuse that.

 

Cases 170,852 (+ 13,375 from yesterday’s 157,477)

Deaths 6,526 (+ 681 from yesterday’s 5,845)

 

These numbers are fit to silence a body. Just look at all the new cases.

From Worldometer yesterday evening (before their day’s close)

 

 

While everyone is discussing whether the case mortality rate is 0.1%, 1% or 2%, the rate for known cases just crept back up to 8%. That is much scarier than I see anyone admit.

From Worldometer (NOTE: mortality rate is back up to 8%!)

 

 

From SCMP: (Note: the SCMP graph was useful when China was the focal point; they are falling behind now)

 

 

COVID2019.app graph is not avaliable, the site is closed. But this is even better:

 

 

Note: what this graph does not sufficiently reflect is that Switzerland has 10 million people, and China 1,400 million. The graph starts at the 10th death.

 

 

The UK cannot hospitalize 7.9 million people, not even spread over a year. Does that cover all of your questions?

UK Corona Crisis ‘To Last Until Spring 2021, 7.9m To Be Hospitalised’ (G.)

The coronavirus epidemic in the UK will last until next spring and could lead to 7.9 million people being hospitalised, a secret Public Health England (PHE) briefing for senior NHS officials reveals. The document, seen by the Guardian, is the first time health chiefs tackling the virus have admitted that they expect it to circulate for another 12 months and lead to huge extra strain on an already overstretched NHS. It also suggests that health chiefs are braced for as many as 80% of Britons becoming infected with the coronavirus over that time. Prof Chris Whitty, the government’s chief medical adviser, has previously described that figure as the worst-case scenario and suggested that the real number would turn out to be less than that.

However, the briefing makes clear that four in five of the population “are expected” to contract the virus. The document says that: “As many as 80% of the population are expected to be infected with Covid-19 in the next 12 months, and up to 15% (7.9 million people) may require hospitalisation.” [..] “For the public to hear that it could last for 12 months, people are going to be really upset about that and pretty worried about that”, said Paul Hunter, a professor of medicine at the University of East Anglia. “A year is entirely plausible. But that figure isn’t well appreciated or understood,” added Hunter, an expert in epidemiology. “I think it will dip in the summer, towards the end of June, and come back in November, in the way that usual seasonal flu does. I think it will be around forever, but become less severe over time, as immunity builds up,” he added.

[..] The document also discloses that an estimated 500,000 of the 5 million people deemed vital because they work “in essential services and critical infrastructure” will be off sick at any one time during a month-long peak of the epidemic. The 5 million include 1m NHS staff and 1.5 million in social care. However, the briefing raises questions about how Britain would continue to function normally, warning that: “It is estimated that at least 10% of people in the UK will have a cough at any one time during the months of peak Covid-19 activity.”

[..] A senior NHS figure involved in preparing for the growing “surge” in patients whose lives are being put at risk by Covid-19 said an 80% infection rate could lead to more than half a million people dying. If the mortality rate turns out to be the 1% many experts are using as their working assumption then that would mean 531,100 deaths. But if Whitty’s insistence that the rate will be closer to 0.6% proves accurate, then that would involve 318,660 people dying.

Read more …

Time to make it a national policy. And as I said yesterday, cut down on domestic flights, close down highways, the works. There’s no escaping anyway, and delaying it will kill lots of people.

NYC & LA Mayors Order Bars, Nightlife, Gyms, & Restaurants To Shut (ZH)

Update (1130ET): Shortly after New York’s mayor de Blasio pulled the plug, Los Angeles mayor Eric Garcetti has ordered the closing of all bars, nightclubs, gyms and entertainment venues from midnight March 16 until March 31. Restaurants will be limited to take-out and delivery. Grocery stores will remain open. “There is no food shortage and grocery stores will remain open. We’re taking these steps to help protect Angelenos, limit the spread of the novel coronavirus, and avoid putting a dangerous strain on our health care system. This will be a tough time, but it is not forever. Angelenos have always risen to meet difficult moments, and we will get through this together.”


Update (1030ET): After announcing earlier that restaurants and venues would be enforced to ensure no more than 50% occupancy, Mayor Bill de Blasio just tweeted that he is ordering all “nightclubs, movie theaters, small theater houses, and concert venues to close”. That leaves restaurants still open, but with max 50% occupancy, as the city encourages residents to order our and stay in instead of venturing anywhere outdoors.

Update (1630ET): Germany joined the list of European nations reporting new coronavirus figures on Sunday, and like France and Italy, it reported its largest daily spike in new cases, confirming another 1,228 new cases for a new total of 5,813, a roughly 20% increase. It also reported 4 new deaths, bringing its national total to 12. Update (1555ET): France just reported 901 new cases diagnosed on Saturday, bringing the country’s total confirmed cases to ~5,400. The death toll climbed by 29 cases to 120.

Read more …

Yeah, yeah, let’s pretend Fauci contradicts Trump. Scores well with 50% of the people. Problem is, they have two very different tasks in this. And Trump’s is not to worry Americans. It’s to reassure them, while working to solve issues. If you want to blame Trump for saying things are not so bad, you need a crash course in politics. If you want to blame him for policy failures, you’re right, but you will have to do the same with just about every other world leader as well. They all make such mistakes. How about Italy PM Conte to begin with? A lot more of his people died so far.

Americans Urged To Scrap Gatherings Of 50 Or More People (G.)

The US Centers for Disease Control (CDC) has recommended that gatherings of 50 people or more be cancelled or postponed for the next eight weeks because of the coronavirus pandemic, as officials across the country continued to curtail freedoms to fight the coronavirus outbreak. The CDC guidance was soon followed by an announcement on Sunday night that several Las Vegas hotels and casinos would suspend operations, and New York City would limit restaurants, bars and cafes to only offer take-out and delivery starting on Tuesday, and nightclubs, movie theaters and other entertainment venues would close.

“These places are part of the heart and soul of our city. They are part of what it means to be a New Yorker,” Mayor Bill de Blasio said in a statement on Sunday night. “But our city is facing an unprecedented threat, and we must respond with a wartime mentality.” Moments later, the Washington state governor, Jay Inslee, took a similar step, announcing restaurants and bars would be limited to take-out only until the end of March, and entertainment and recreational facilities such as gyms would also close. Illinois, Ohio, Massachusetts had already taken similar steps. MGM Resorts International, which operates several vast Las Vegas hotels and casinos including Bellagio and Luxor, said it would begin to suspend operations in the city from Monday.

[..] The new advice came as the nation sank deeper into chaos over the crisis. Hours earlier, Donald Trump urged Americans to refrain from panic buying basic supplies, as the administration announced plans to expand testing for the virus and health officials were preparing to release “advanced guidelines” on how to mitigate its spread. During a press briefing at the White House on Sunday evening, Trump again appeared to downplay the threat of the virus. “Relax, we’re doing great,” he said, during short, meandering comments that focused mostly on celebrating a decision by the Federal Reserve to lower interest rates. “It all will pass.”

But the president’s remarks stood in marked contrast to his lead infectious diseases expert, Dr Anthony Fauci, who used the same conference to warn: “The worst is ahead for us”, describing the crisis as reaching a “very, very critical point now”. Earlier in the day, Dr Fauci had declined to rule out a national lockdown of bars and restaurants as he urged more aggressive measures, similar to those in Europe and elsewhere, to contain the virus. “I think Americans should be prepared that they are going to have to hunker down significantly more than we as a country are doing,” said Fauci, a member of the White House task force on combating the spread of coronavirus. He heads the National Institute of Allergy and Infectious Diseases at the National Institutes of Health.

Read more …

Don’t worry, I know exactly what half the (US) population will say about what I say here. It doesn’t matter. If Trump wants to buy a German medical company that makes a vaccine (and that’s two really big ifs), how can that be portrayed negatively? Well, we’ll say he wants to keep it all to himself. But doesn’t he perhaps want it for the 330 million Americans, those his job description tells him to look after? Cue: this is an anonymous source quoted by a German yellow paper.

“The German government is trying to fight off what it sees as an aggressive takeover bid by the US, the broadsheet Die Welt reports, citing German government circles. The US president had offered the Tübingen-based biopharmaceutical company CureVac “large sums of money” to gain exclusive access to their work, wrote Die Welt. According to an anonymous source quoted in the newspaper, Trump was doing everything to secure a vaccine against the coronavirus for the US, “but for the US only”.”

Along the same line, I see a lot of people combining Trump’s “We have no shortages” with pictures of empty shelves, insinuating he is lying. But those can exist together, and in fact do in many European countries as well as the US. The cause is panic buying. Would these folk like to blame those empty EU shelves on Trump as well? Or are they caused by these countries’ own politicians, many of whom claim to despise Trump? Your call.

Look, Trump makes a lot of mistakes. But saying that things are not that bad is not one of them (literally: “Relax, we’re doing great; It all will pass”). Would you rather he said things are terrible, thereby inviting more panic buying and empty shelves, that you could then blame on him as well? That way you could blame him for two completely opposite things.

Anger In Germany At Report Trump Seeking Exclusive Coronavirus Vaccine Deal (G.)

German ministers have reacted angrily following reports US president Donald Trump offered a German medical company “large sums of money” for exclusive rights to a Covid-19 vaccine. “Germany is not for sale,” economy minister Peter Altmaier told broadcaster ARD, reacting to a front page report in Welt am Sonntag newspaper headlined “Trump vs Berlin”. The newspaper reported Trump offered $1bn to Tübingen-based biopharmaceutical company CureVac to secure the vaccine “only for the United States”. The German government was reportedly offering its own financial incentives for the vaccine to stay in the country.

The report prompted fury in Berlin. “International co-operation is important now, not national self-interest,” said Erwin Rueddel, a conservative lawmaker on the German parliament’s health committee. Christian Lindner, leader of the liberal FDP party, accused Trump of electioneering, saying: “Obviously Trump will use any means available in an election campaign.” The German health minister, Jens Spahn, said a takeover of CureVac by the Trump administration was “off the table”. CureVac would only develop vaccine “for the whole world”, Spahn said, “not for individual countries”.

[..] At a news conference on Sunday, interior minister Horst Seehofer was asked to confirm the attempts to court the German company. “I can only say that I have heard several times today from government officials today that this is the case, and we will be discussing it in the crisis committee tomorrow,” he said. A US official told AFP on Sunday that the report was “wildly overplayed”. “The US government has spoken with many [more than 25] companies that claim they can help with a vaccine. Most of these companies already received seed funding from US investors.” The official also denied the US was seeking to keep any potential vaccine for itself. “We will continue to talk to any company that claims to be able to help. And any solution found would be shared with the world,” the official said.

Read more …

That still took a long time.

More Coronavirus Cases Outside Of Mainland China Than Inside (CNN)

There have now been more cases of the novel coronavirus outside of mainland China than inside, according to numbers from the World Health Organization and from public health agencies tracked by CNN. While China, the early epicenter of the outbreak, has still had more confirmed cases than any other country – more than 80,000 – a number of other countries have surged in recent days, including Italy with more than 24,000 cases, Iran with almost 14,000 and Spain with more than 7,000. On February 26, the World Health Organization reported for the first time that the majority of new cases per day had come from outside of China. This trend has continued as newly confirmed cases in China have dwindled in recent days, while other countries have discovered thousands of new infections – including the United States, which has now reported more than 3,000 cases.

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It’s starting. 100 million frail forms at Europe’s door soon?

Scientists Worry About Coronavirus Spread In Africa (ScienceMag)

Late on Sunday evening, South African President Cyril Ramaphosa, in a televised address to the nation, declared that COVID-19, the respiratory disease spreading globally, had become a “national disaster.” [..] “Never before in the history of our democracy have we been confronted by such a severe situation,” Ramaphosa said before announcing a raft of measures to curb the virus’ spread, including school closures, travel restrictions, and bans on large gatherings. So far, the official numbers seemed to suggest that sub-Saharan Africa, home to more than 1 billion people, had been lucky. The interactive map of reported COVID-19 cases run by Johns Hopkins University shows big red blobs almost everywhere—except sub-Saharan Africa.


But now the numbers are rising quickly. South Africa, which had its first case 10 days ago, now has 61. According to Ramaphosa, the virus has begun spreading inside the country. And just yesterday, Rwanda, Equatorial Guinea, and Namibia all reported their first cases, bringing the number of affected countries to 23. Some scientists believe COVID-19 is circulating silently in other countries as well. “My concern is that we have this ticking time bomb,” says Bruce Bassett, a data scientist at the University of Cape Town who has been tracking COVID-19 data since January. And while Africa’s handling of the pandemic has received scant global attention so far, experts worry the virus may ravage countries with weak health systems and a population disproportionately affected by HIV, tuberculosis (TB) and other infectious diseases. “Social distancing” will be hard to do in the continent’s overcrowded cities and slums.

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“And Darkness and Decay and the Red Death held illimitable dominion over all..”

The American Mask of Death (Lauria)

The U.S. is unlike the rest of the industrialized world, which, since the end of the Second World War, has had some kind of nationalized health insurance covering all citizens, regardless of their ability to pay. Many of the partisans who helped defeat the Nazis were socialists who demanded something in return from their governments after the war. Many British soldiers were Labour voters. They threw out war leader Winston Churchill in the 1945 election and the National Health Service was begun in 1948. Though Harry Truman around the same time floated the idea of socialized medicine in the U.S., and the 1965 Medicare Act was to eventually cover all Americans, the greed of medical business interests has always won. It leaves millions of potentially infected Americans unable to be tested or treated. And that endangers even those in their high towers who “might bid defiance to contagion.”


The Mask of the Red Death by FlamiatheDemon (Deviant Art- flamiathedemon.deviantart.com)

“And now was acknowledged the presence of the Red Death. He had come like a thief in the night. And one by one dropped the revellers in the blood-bedewed halls of their revel, and died each in the despairing posture of his fall. And the life of the ebony clock went out with that of the last of the gay. And the flames of the tripods expired. And Darkness and Decay and the Red Death held illimitable dominion over all.”


When the oligarchs’ economic system crashed in 2008 from over-speculation, the U.S. government did the unimaginable. It nationalized industries to save them. It used socialism to rescue capitalism. But it was temporary. Once the economy had sufficiently recovered, the U.S. returned to its market fundamentalism. If the coronavirus crisis approaches the numbers recent studies point to—as many as 240 million Americans infected and one million dead—expect serious consideration to a single-payer system sweeping through Congress and signed into law. But once the virus is contained expect your premiums to rise again. Just like the nationalizations in the 2008 financial crisis, a temporary national health insurance would only be enacted to save the oligarchs from the Red Death.

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Can the US fall 5% without breaking?

Goldman Sachs Predicts A 5% Contraction In The US Economy In Q2 (CNBC)

Goldman Sachs on Sunday downgraded its outlook for the economy in the first two quarters of 2020 as the coronavirus zaps all growth from the U.S. Jan Hatzius, Goldman’s chief economist, lowered his first-quarter GDP growth forecast to zero from 0.7%. The economist also sees a 5% contraction in the second quarter, followed by a sharp snapback for the remainder of the year. “We expect US economic activity to contract sharply in the remainder of March and throughout April as virus fears lead consumers and businesses to continue to cut back on spending such as travel, entertainment, and restaurant meals,” Hatzius said in a note to clients Sunday. [..] The rapid spread of the virus has sent stocks tumbling into a bear market, with both the Dow Jones and S&P 500 now trading more than 20% below their record highs set just last month.


“Even with monetary and fiscal policy turning sharply further toward stimulus … these shutdowns and rising public anxiety about the virus are likely to lead to a sharp deterioration in economic activity in the rest of March and throughout April,” Hatzius said. In addition to the consumer spending hit, Goldman also noted the growing likelihood of “significant supply chain disruptions” as the outbreak sends business activity to a standstill. Hatzius believes that U.S. economic growth should pick up in the second half of 2020. He expects GDP growth of 3% in the third quarter and a 4% expansion in the final three months of the year. Factoring in his new estimates, for 2020 he sees the economy growing 0.4%, compared with a prior growth estimate of 1.2%.

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Save people not banks. Didn’t we say that 10 years ago as well?

Fed Cuts Rates To Zero, Launches Massive $700 Billion QE (CNBC)

The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to essentially zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus. The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consumer rates, will now be targeted at 0% to 0.25% down from a previous target range of 1% to 1.25%. Facing highly disrupted financial markets, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 basis points to 0.25%, and lengthened the term of loans to 90 days.

Despite the aggressive move, the market’s initial response was negative. Dow futures pointed to a decline of some 1,000 points at the Wall Street open Monday morning. The discount window “plays an important role in supporting the liquidity and stability of the banking system and the effective implementation of monetary policy … [and] supports the smooth flow of credit to households and businesses,” a separate Fed note said. The discount window is part of the Fed’s function as the “lender of last resort” to the banking industry. Institutions can use the window for liquidity needs, though some are reluctant to do as it can indicate they are experiencing financial issues and thus sends a bad message.

The Fed also cut reserve requirements for thousands of banks to zero. In addition, in a global coordinated move by centrals banks, the Fed said the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank took action to enhance dollar liquidity around the world through existing dollar swap arrangements.

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The Fed is choking on its own policies.

The End of the Central Bank [Put]? (Jim Bianco)

The past week has seen unprecedented market movements and action taken by central banks. We have also seen unprecedented action by governments. Given the events that took place in 2008, this is saying a lot.

We’ll save detailing what happened for another time. Instead, we’ll focus on what it means and what to focus on next. Two titanic forces are at play. First, the economy is at a real risk of collapsing. This is not hyperbole. Goldman Sachs has already revised its Q2 GDP forecast to -5%.

We fear this might look optimistic in a few weeks. Yes, this virus-driven economic collapse is temporary, one or two quarters, but the risk is very real that long-lasting damage is being done that will hamper the economy for years. The other titanic force is world central banks and governments going “all in” to keep markets from falling further. They have effectively done everything they can. This better work. This better stimulate risk markets to hold last week’s low. If risk markets continue to fall, effectively there is nothing left that central banks can do. They can always invent more programs, but they already fired their most potent weapons.

Many will argue that the Fed should buy corporate bonds and/or equities, but this requires Congress amending the Federal Reserve Act. Considering Congress has still not passed virus relief, this will not happen fast enough and is not advisable as it could make things worse. Simply put, if this does not work, the central bank “put” no longer works. So stop devising new ways to exercise it and move on to other actions. So that leaves one tool left should risk markets continue to fall through last week’s low – close financial markets before they collapse.

The S&P 500 has already declined more than 25% in just 16 days. We have never seen this big a decline this fast. Should stock prices fall to new lows and corporate bond prices decline accordingly, it risks chaos in financial markets. Margin calls will force involuntary liquidation. The inability to properly price illiquid securities like high yield bonds and emerging market securities may prompt funds to halt redemptions. People’s money may be trapped. Covenants will be triggered, forcing unwanted restructurings or change of control. Pension fund minimum funding requirements are at risk of being violated.

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Not done yet.

Fed Disaster: S&P Futures Crash, Halted Limit Down; Gold, Treasuries Soar (ZH)

The Fed may have a very big problem on its hands. After firing the biggest emergency “shock and awe” bazooka in Fed history, one which was meant to restore not just partial but full normalcy to asset and funding markets, Emini futures are not only not higher, but tumbling by the -5% limit down at the start of futures trading on Sunday evening… … with Dow futures down over 1,000, and also limit down… … the VIX surging 14%…. … perhaps because the Fed has not only tipped its hand that something is very wrong by failing to wait just an additional three days until the March 18 FOMC, but that it can do nothing more to fix the underlying problem, while gold is surging over 3% following today’s dollar devastation (if only until risk parity funds resume their wholesale liquidation at some point this evening when we expect gold to tumble again)…


… as US Treasury futures soar (which will also likely be puked shortly once macro funds are hit again on their basis trades), as it now appears that the Fed’s emergency rate cut to 0% coupled with a $700BN QE is seen as not enough by a market which is now openly freaking out that the Fed is out of ammo and has not done enough. In short, with the ES plunging limit down, this has been an absolutely catastrophic response to the Fed’s bazooka; expect negative interest rates across the curve momentarily… oh and Trump demanding Powell’s resignation in the next 48 hours.

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Jamie Dimon loves you long time. Nationalize the suckers. Divvy up the spoils and start anew.

America’s Biggest Banks Suspend Buybacks In Effort To Support Economy (F.)

America’s largest and most important lenders are temporarily suspending their stock buybacks so they can help pump money into an economy battered by the coronavirus pandemic. The move means that Wall Street is prioritizing supporting the U.S. economy with its cash, instead of using it to engineer stock prices higher after a sharp market drop. Eight of the biggest banks in America said on Sunday evening they will be suspending their stock buybacks for the remainder of the first quarter, ending on March 30, and the second quarter, so as to use the spare cash to lend to individuals and businesses in need of credit. Banks suspending their buybacks are JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon and State Street.


The coordinated move, among firms who’ve recently bought back a collective tens of billions of dollars in stock annually, underscores Wall Street’s vital role in helping to pull the American economy though what economists increasingly forecast will be a deep recession. “The COVID-19 pandemic is an unprecedented challenge for the world and the global economy and the largest U.S. banks have an unquestioned ability and commitment to supporting our customers, clients and the nation,” said the Financial Services Forum, an advocacy group for banks, on behalf of the eight lenders. “The decision on buybacks is consistent with our collective objective to use our significant capital and liquidity to provide maximum support to individuals, small businesses, and the broader economy through lending and other important services,” it added

Read more …

CHINA BREAKING NEWS:
• Jan-Feb Fixed Investment: -25.5% vs -2% estimate
• Jan-Feb Retail Sales: -20.5% vs -4%
• Jan-Feb Industrial Production: -13.5% vs -3% estimate

“#China is able to achieve 6% GDP growth in 2020 despite #COVID19, as the impact is temporary and China has uniquely high savings to help cushion shocks by black swan events”
Liang Hong, chief economist of China International Capital Corp

China’s Industrial Output, Retail Sales Plummet (MW)

China’s economic activity contracted sharply across the board in the first two months of the year amid Beijing’s aggressive measures to contain the coronavirus epidemic. Industrial output declined 13.5% in the January-February period from a year earlier, compared with December’s 6.9% increase, the National Bureau of Statistics said Monday. The result was worse than the 3.0% drop expected by economists polled by The Wall Street Journal. China typically combines economic data for the first two months to reduce distortions from the Lunar New Year holiday.

Fixed-asset investment, a gauge of construction activity, slid 24.5% during the period, reversing growth of 5.4% in 2019. Economists expected fixed-asset investment to fall 1.0%. Retail sales tumbled 20.5% in the first two months of the year–typically a boom season for consumption–compared with growth of 8.0% in December. Economists expected retail sales to fall 5%. Meanwhile, China’s urban unemployment rate rose to 5.7% in February from 5.2% in December, official data showed. To contain the spread of the coronavirus, Beijing in January locked down cities hit most by the epidemic, ordered an extended shutdown of factories and businesses and advised residents to stay home.

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Somehow I could see this succeed. In 2021.

World’s Most Powerful Supercomputer Tasked With Finding COVID19 Cure (ZH)

Researchers at the Department of Energy’s Oak Ridge National Laboratory have used the world’s most powerful supercomputer to identify 77 drug compounds that could lead to scientific breakthroughs to combat Covid-19. The supercomputer, dubbed Summit, has been tasked to run complex computation across existing databases of drug compounds to see which combinations could thwart Covid-19 from infecting cells. Summit has been able to “simulate 8,000 compounds in a matter of days to model which could impact that infection process by binding to the virus’s spike, and have identified 77 small-molecule compounds, such as medications and natural compounds, that have shown the potential to impair COVID-19’s ability to dock with and infect host cells,” read an IBM press release, whose technology is present in Summit.

“Summit was needed to rapidly get the simulation results we needed. It took us a day or two whereas it would have taken months on a normal computer,” said Jeremy Smith, Governor’s Chair at the University of Tennessee, director of the UT/ORNL Center for Molecular Biophysics, and principal researcher in the study. “Our results don’t mean that we have found a cure or treatment for COVID-19. We are very hopeful, though, that our computational findings will both inform future studies and provide a framework that experimentalists will use to further investigate these compounds. Only then will we know whether any of them exhibit the characteristics needed to mitigate this virus.” Smith’s team is expected to pass on the findings to others in the scientific community, who will then begin to experiment on Summit’s 77 compounds to see which one is the most effective against Covid-19.

Read more …

 

Things to do while staying home: feed a mini donkey, watch the remarkably enticing marble racing.

 

https://twitter.com/i/status/1239196410857340933

 

 

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Jan 222016
 
 January 22, 2016  Posted by at 9:46 am Finance Tagged with: , , , , , , , , , ,  Comments Off on Debt Rattle January 22 2016


DPC The steamer Cincinnati off Manhattan 1900

Two Refugee Boats Sink off Greek Islands; At Least 21 Dead (GR)
At Least 12 Refugees Killed In New Tragedy Off Turkey (AFP)
Japanese Stocks Surge by Most in 4 Months In ‘Short Squeeze Galore’ (BBG)
Japan Must Let Zombie Companies Die (BBG)
China Shares Struggle Higher On Global Stimulus Hopes (Reuters)
Draghi’s Groundhog Day Heralds Seven Weeks of ECB Market Dialog (BBG)
A Scared World Is Taking Its Money And Running Back Home – and to the US (BBG)
Battered Emerging Markets Race to Stem Outflows (WSJ)
US Is Hiding -Saudi- Treasury Bond Data That’s Suddenly Become Crucial (BBG)
Is Something Blowing Up In OIL? (ZH)
Trillions Could Be Lost In British Housing Bubble Collapse (WMN)
Hundreds Of Mountain Tops Leveled To Make Way For The New Silk Road (Forbers)
Glory Days Of Chinese Steel Leave Behind Abandoned Mills And Broken Lives (G.)
Italy Could Trigger Europe’s Next Financial Crisis (Stratfor)
IMF Demands EU Debt Relief For Greece Before New Bailout (Guardian)
Capital Controls Cut Greek Exports By €3.5 Billion In 6 Months (Kath.)
Over 120,000 Greek Homes Close To Repossession (Kath.)
One Third of Greeks Cannot Afford Heating Or Hot Water (KTG)
Greece Demands That Refugees Declare Final EU Destination (Reuters)
Germany Takes Refugees’ Valuables ‘To Pay For Their Stay’ (Local)

And these f**king clowns are partying in Davos?

Two Refugee Boats Sink off Greek Islands; At Least 21 Dead (GR)

Two boats carrying refugees and migrants from Turkey to Greece have sunk in the Aegean, leaving 21 dead with six children among them. In two separate incidents off the Greek islands of Kalolymnos and Farmakonisi, at least 21 people lost their lives dead, while dozens were saved by the Hellenic Coast Guard. In the Kalolymnos island area, a boat carrying an unknown number of refugees and migrants sank, despite the good weather conditions. The coast guard rescue boats pulled 14 dead out of the water and managed to rescue 26 people so far.

According to survivors, more than 50 people were aboard the vessel. Rescue efforts continue. Earlier, on another similar incident off Farmakonisi island, seven refugees drowned with six of them being children. According to the coast guard, the refugees were aboard a wooden boat that crashed on rocks. As a result a woman and six children lost their lives. A Frontex boat and a Hellenic Coast Guard boat rushed on the spot and managed to rescue an underage girl. The remaining passengers had managed to reach the coast safely.

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That’s a total of at least 33 deaths overnight.

At Least 12 Refugees Killed In New Tragedy Off Turkey (AFP)

At least 12 migrants were killed and several more went missing Thursday when their boat sank while trying to cross the Aegean Sea from Turkey to EU member Greece, Turkish media reports said. The boat, carrying some 50 migrants, struck trouble after leaving the western Turkish resort of Foca in the Izmir region for the Greek island of Lesvos. Twenty-eight people were saved while up to dozen more are still feared missing, NTV television said.

Turkey, which is home to some 2.2 million refugees from Syria’s civil war, has become a hub for migrants seeking to reach Europe, many of whom pay people smugglers thousands of dollars for the risky crossing. Ankara reached an agreement with the EU in November to stem the flow of refugees heading to Europe, in return for financial assistance. Brussels vowed to provide €3 billion as well as political concessions to Ankara in return for its cooperation in tackling Europe’s worst migrant crisis since World War II. But onset of winter and rougher sea conditions do not appear to have deterred the migrants, with boats still arriving on the Greek islands daily.

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Yeah, central banks offered some ‘hope’ too, but that‘s not it: some ‘barrier’ in the markets got triggered big time. Is it that Japan fell into bear territory yesterday?

Japanese Stocks Surge by Most in 4 Months In ‘Short Squeeze Galore’ (BBG)

Japanese stocks surged by the most in four months as investors weighed prospects for central bank stimulus and bought back into a bear market to cover short positions. The Topix index jumped 5.6% to 1,374.19 at the close in Tokyo, the most since Sept. 9 and paring its worst monthly loss since October 2008. The Nikkei 225 Stock Average soared 5.9% to 16,958.53, also supported by a report the Bank of Japan is considering extra monetary easing. Global equities halted losses on the brink of a bear market as oil rallied and the ECB signaled it may boost stimulus. “We’re seeing short squeeze galore,” said Mikey Hsia at Sunrise Brokers. “Much of this is technical. Japan has had big moves for three days in a row now – it’s becoming common.”

All of the 33 Topix industry groups rose, led by developers, oil explorers and harbor transporters. Volume was 21% above the 30-day average. The index still closed down 2% for the week. [..] The Topix’s 14-day relative strength index closed at 21.29 Thursday, below the level of 30 that some traders say indicates shares will rise. When the measure slid to 24.4 on Jan. 12, the Topix jumped 2.9% the next day. Bearish bets on Tokyo’s stock exchange accounted for more than 40% of total trading value on Thursday. [..] The Japanese gauges fell into a bear a bear market on Wednesday. The Nikkei 225 previously entered a bear market in June 2013, after plunging 20% in less than a month. The gauge soon rebounded, rallying 31% from its low on June 13, 2013, through the end of that year.

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FoxConn is reportedly preparing a bid for Sharp.

Japan Must Let Zombie Companies Die (BBG)

[..] one day, in May 2015, you open your newspaper and see that Sharp has been bailed out by two of Japan’s largest banks, Mizuho Bank and Bank of Tokyo-Mitsubishi. These banks are themselves backed by government bailout guarantees, meaning that Sharp has been indirectly rescued by the government – a prime example of the zombie-firm phenomenon that economists have been complaining about for decades. With those cheap bank loans, the ailing Japanese giant can afford to keep putting out TVs at fire sale prices, making no profit but squeezing your own margins. But you soldier on. The bank bailout does nothing to improve Sharp’s corporate strategy — the company’s managers are content to drag out the status quo for as long as possible.

Eventually, you think, Sharp will quit, the market will become less crowded, and your innovative products and manufacturing processes will be rewarded with bigger profit margins. Then, in January 2016, the Japanese government steps directly into the fray. The Innovation Network Corp. of Japan offers to bail out Sharp with an injection of 200 billion yen (about $1.7 billion). INCJ, which is funded by industrial giants but backed by government guarantees, will keep Sharp’s struggling LCD division alive and merge it with a rival, Japan Display Inc., itself a consortium of large corporations. Faced with this kind of firepower, there is no way you can stay in the market. Nor can you expect a similar bailout – you employ only 100 people, while Sharp employs 50,000.

You fold your startup and move across the Pacific to Silicon Valley, following in the footsteps of other Japanese entrepreneurs. The story of this young Japanese entrepreneur is fictitious, though there are some real-world parallels. But the part about the Sharp bailouts – first by the banks and now by the government – is all too true. Japan Inc. looks dead set on keeping the flailing electronics giant alive. That will keep the market flooded with artificially cheap Sharp products – mobile phones, solar panels, air conditioners, printers, microwave ovens and a host of other items. Entrepreneurs looking to use the Japanese market as a launching pad for innovative products and processes will find themselves blocked by zombies.

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Beijing needs to get cautious about its reassuring statements. It’s about credibility.

China Shares Struggle Higher On Global Stimulus Hopes (Reuters)

China’s fragile shares rose modestly on Friday, showing only a muted response to hints of more policy stimulus in Europe and Japan, which prompted a rally in battered oil prices and global equities. The benchmark Shanghai Composite Index was up 0.6% in the early afternoon, recovering a little of Thursday’s sharp losses. The CSI300 index of the largest listed companies in Shanghai and Shenzhen was also up 0.6%. The indexes veered between positive and negative territory in the morning, with little volume behind the trading. Investors appear increasingly reluctant to risk their money on China’s fickle markets, which have slumped about 17-18% so far this year, and morning gains have often turned to losses by close of day as traders quickly take profits.

Highlighting the lack of faith in the markets, trading volumes in January have been about a third of typical levels last year, which only exaggerates price movements. On Thursday, Vice President Li Yuanchao sought to reassure investors that Beijing would use regulations to prevent volatility in a market that was “not yet mature”. “An excessively fluctuating market is a market of speculation where only the few will gain the most benefit when most people suffer,” Li, who is attending the World Economic Forum in Davos, said in an interview with Bloomberg. Measured by actions rather than words, regulators’ attempts to curb volatility, notably a new circuit breaker mechanism that was ditched after three days of violent falls, have conspicuously failed. The stock markets and China’s yuan currency have come under pressure as a raft of economic indicators have confirmed the country’s declining growth, putting the world’s second-largest economy at the top of global investors’ worry list along with plunging crude oil prices.

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That stupid inflation focus is a killer.

Draghi’s Groundhog Day Heralds Seven Weeks of ECB Market Dialog (BBG)

Once again, Mario Draghi has given himself a month and a half to convince investors he’ll do what’s needed to reignite consumer prices. This time he may hone the message more. The ECB president’s hint that policy makers will bolster stimulus on March 10 raises the prospect of the Governing Council delivering another expansion to its €1.5 trillion bond-buying program, including potentially taking it into new asset classes. Emphasizing the ECB’s ambition to reporters on Thursday, Draghi said that there are “no limits” to how far officials will go to safeguard their inflation goal. “It’s a bit like Groundhog Day,” said Carsten Brzeski at ING-Diba in Frankfurt, reminiscing about the 1993 Bill Murray comedy. “The only question is, will he fulfill the dreams of markets this time around, or will he disappoint again?”

Draghi’s comments herald seven weeks of expectation management as officials hope to better guide some investors stung by the result of the last meeting of 2015, when fresh stimulus fell short of predictions stoked at the previous decision. While the president didn’t elaborate on how he plans to better explain things this time round, he also didn’t exclude that officials had a role in an outcome that sent bond yields and the euro surging. “Communication is a two-way affair,” Draghi said. “It’s very hard to put the blame of some disappointment on one side only.” His challenge has become tougher. With an inflation rate that hasn’t been near the goal of just under 2% in three years, and China’s economic slowdown increasingly dragging on global trade and disrupting markets, the 25-member Governing Council risks being seen as too slow and cumbersome.

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Long predicted: the USD is coming home.

A Scared World Is Taking Its Money And Running Back Home – and to the US (BBG)

A tide of money went out to emerging markets for more than a decade, pushed by accommodative monetary policy in the U.S. and pulled by the promise of robust growth. Now that tide is coming back in as investors seek to repatriate funds or flock to U.S.-dollar denominated assets as a safe haven amid sluggish economic growth and global market turmoil. “There are around $47 trillion in private and official investment abroad and far too many that wish to retreat home or to the U.S.,” writes Deutsche Bank Macro Strategist Sebastien Galy in a report titled “The Retreat of Global Balance Sheets.” “These flows are triggered in good part by a recognition that emerging markets’ potential growth is slowing down structurally without enough compensating growth in developed economies.”

The broad implications of this is that liquidity will be starved in parts of the emerging markets but ample in advanced economies and that the U.S. dollar and euro should benefit, the latter more so from direct investments than from portfolio inflows. In some respects, emerging markets have become victims of their own success, notes Galy, who explains how we reached this point: “Growth is easier initially in an emerging economy as each additional unit of capital and labor offers a high return. As the economy grows their returns diminish as the relatively inefficient services sector grows relative to manufacturing. Intervening against currency appreciation accelerates this transition by importing easier Fed policy. But with a mispricing of capital, it typically leads to an over usage, inefficiencies and in some cases excessive domestic valuations. As growth slows down structurally, the promises of ever stronger growth fades leaving investors potentially with unsustainable debt levels.”

China, which has seen its marginal return on credit growth continue to shrink, is perhaps the poster child for the sequence Galy describes. This course of events has led Beijing to begin drawing down on its foreign reserves, which are primarily composed of U.S. debt, in a move that puts upward pressure on U.S. Treasury yields and has the opposite effect on the value of the dollar. This dynamic, however, is swamped by the appetite for Treasuries from the private sector, says the strategist. [..] Repatriation will be fueled primarily by portfolio outflows from riskier emerging market positions and sovereign wealth fund liquidations. Since U.S. investors have far and away the highest stock of foreign equity ownership, this trend is also conducive to more greenback strength.

In fact, Galy found that “during the rapid rise in the dollar in 2015, the foreign exchange hedging decision had a clear causal and feedback loop on the spot price.” That is, as the dollar rose, more investors chose to use hedged equity exchange-traded funds, which provided an impetus for further gains in the greenback.

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But they can’t.

Battered Emerging Markets Race to Stem Outflows (WSJ)

A number of emerging markets are taking a risky approach to dealing with growing pressure on their currencies: They’re trying to ban it. Oil-dependent Azerbaijan said this week it would slap a 20% tax on any transaction that takes money out of the country. Saudi Arabia told banks with branches there to stop allowing traders to make certain bets on further depreciation of its currency, the riyal. Nigeria recently halted imports of goods including rice and toothpicks and imposed spending limits on credit and debit cards denominated in foreign currency. The capital controls are aimed at deterring or slowing the outflow of money and reducing the downward pressure on currencies that traders are betting have farther to fall.

But they also risk exacerbating the problem by driving away foreign investors who bristle at limitations on the flow of capital and hurting businesses that need to hedge. “It’s a sign of economic weakness and a dramatic shift in terms of trade, and it also increases the risk premium because of the policy uncertainty,” said George Hoguet at State Street Global Advisors. How emerging markets will manage a massive outflow of capital, weakness in their currencies and a swollen debt burden is a major question hanging over the global economy. Trillions of dollars flowed into emerging markets in the years after the financial crisis. But slowing growth in China and a collapse in oil and other commodity prices has reversed the tide.

Emerging markets suffered record net outflows of $732 billion in 2015, with China accounting for the bulk of that, according to the Institute of International Finance. Their currencies, meanwhile, weakened an average 17.6% against the dollar last year, according to money manager Ashmore Group, and the trend has shown no signs of letting up. The Russian ruble, Mexican peso and Colombian peso all hit record lows against the dollar on Wednesday. Emerging-market currencies fell 3% in the first two weeks of 2016.

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Bonkers.

US Is Hiding -Saudi- Treasury Bond Data That’s Suddenly Become Crucial (BBG)

It’s a secret of the vast U.S. Treasury market, a holdover from an age of oil shortages and mighty petrodollars: Just how much of America’s debt does Saudi Arabia own? But now that question – unanswered since the 1970s, under an unusual blackout by the U.S. Treasury Department – has come to the fore as Saudi Arabia is pressured by plunging oil prices and costly wars in the Middle East. In the past year alone, Saudi Arabia burned through about $100 billion of foreign-exchange reserves to plug its biggest budget shortfall in a quarter-century. For the first time, it’s also considering selling a piece of its crown jewel – state oil company Saudi Aramco. The signs of strain are prompting concern over Saudi Arabia’s outsize position in the world’s largest and most important bond market.

A big risk is that the kingdom is selling some of its Treasury holdings, believed to be among the largest in the world, to raise needed dollars. Or could it be buying, looking for a port in the latest financial storm? As a matter of policy, the Treasury has never disclosed the holdings of Saudi Arabia, long a key ally in the volatile Middle East, and instead groups it with 14 other mostly OPEC nations including Kuwait, the United Arab Emirates and Nigeria. For more than a hundred other countries, from China to the Vatican, the Treasury provides a detailed breakdown of how much U.S. debt each holds. “It’s mind-boggling they haven’t undone it,” said Edwin Truman, the former Treasury assistant secretary for international affairs during the late 1990s. Because relations were rocky and the U.S. needed their oil, the Treasury “didn’t want to offend OPEC. It’s hard to justify this special treatment for OPEC at this point.”

For its part, the Treasury “aggregates data where more detailed reporting might disclose the positions of individual holders,” spokeswoman Whitney Smith said. While that position is consistent with the International Investment and Trade in Services Survey Act, which governs disclosures of investments made by foreign persons and governments, and shields individuals in countries where Treasuries are narrowly held, it hasn’t kept the Treasury from disclosing figures for a whole host of other countries – large and small. They range from the $3 million stake held by the Seychelles, to the $69.7 billion investment from the oil-producing economy of Norway, and those of China and Japan, which are both in excess of $1 trillion. Apart from the kingdom itself, only a handful of Treasury officials, and those at the Federal Reserve who compile the data on their behalf, have a clear picture of Saudi Arabia’s U.S. debt holdings and whether they’re rising or falling. For everyone else, it’s a guessing game.

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“Even after [yesterday’s] drop, OIL is still at a roughly 20% premium to its underlying index.”

Is Something Blowing Up In OIL? (ZH)

A week ago we warned of some insane movements and mysterious bid in OIL (the Barclays iPath oil tracking ETN) as it traded a stunning 36% rich to its underlying NAV. Well with oil resurgent today, as contracts roll, something just imploded in OIL…

As Barrons noted, the sharp performance divergence stems from the ETN’s massive price premium over the value of the index it tracks. Pravit Chintawongvanich, head derivatives strategist at Macro Risk Advisors, notes that OIL’s premium rose sharply in recent days and accelerated to 48% by Wednesday’s close. He told Barron’s that institutional traders noticed the extreme premium and are now betting against OIL on the premise that the unusually large premium will revert to normal.

Trading volume in OIL was already more than triple the average over the past month on Thursday with three hours left in the trading day. Even after today’s drop, OIL is still at a roughly 20% premium to its underlying index. Chintawongvanich says that it’s not too late for investors who own OIL to ditch it for USO: “You don’t want to be stuck holding the bag when this drops to NAV.” Simply put – retail moms and pops who piled into OIL without thinking about NAV or technical flows just got f##ked! As we concluded previously, The current situation is eerily reminiscent to the heyday of the mortgage market in 2007, when mortgage defaults started to pick up, and yet the credit default swaps that tracked them continued to decline, bringing losses to those brave enough to trade against the crowd.

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Not could, will.

Trillions Could Be Lost In British Housing Bubble Collapse (WMN)

It is interesting how the Brits’ fascination with property has evolved over time. At present prices, UK residential property is now ‘worth’ about £5 trillion (£5,000 billion) and about 65% is owner occupied. Commercial property, all those shops, factories, offices, plant is ‘only’ £400 billion. The London Stock Exchange, which includes multinational giants with most of their assets and income overseas, is only worth £2.25 trillion. British Government Bonds are £1.5 trillion. There is approximately £700 billion of cash on deposits held by individuals.

It is interesting how something in which we live – and costing us considerable upkeep – has become so significant in terms of our societal structure. I am very alarmed at the excessive price levels of the average ‘home’ but our governments must be concerned that so much of our economics are impacted by what is happening in housing – and the confidence of those who own it. We should all never forget that over-reliance upon one economic asset, a simple box in which to live, however pretty or comfortable, does not make it immune from irrational excess and frankly, the figures are all out of kilter regardless of the lack of enough new homes being built and the insatiable demand for them – apparently (but never forget that all the people here at the moment do have somewhere to live).

[..] the order of asset values should perhaps be: stock market (the base of all our commerce), residential property, commercial property, government bonds. You can see the model requires some considerable re-balancing but perhaps a doubling of the stockmarket is more unlikely than a halving of the value of homes (though the latter would still constitute significant ‘value’ though I shouldn’t wish even to countenance what that would mean for the economy and bad debts). Sadly though, this may be the necessary adjustment required to return to ‘normality’ so watch-out as each could indeed arise.

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Man’s respect for his planet.

Hundreds Of Mountain Tops Leveled To Make Way For The New Silk Road (Forbers)

“Four years ago, all mountains,” my local driver Li Wang said as we putted slowly forward in his diminutive, beaten and battered old Japanese car through the newly built-up downtown of Lanzhou New Area (LNA). This is a place where hundreds of mountain tops have been removed to make flat land for development — an initiative which surely ranks among the most extreme undertakings in the history of urbanization. Lanzhou, the 3.6 million person provincial capital of western China’s Gansu province, was once a big market town on the ancient Silk Road, and there is now a major movement underway to revive this historic relevance. Strategically located on the geographic and cultural cusps between the Chinese heartland and Central Asia, Lanzhou is again being utilized as a gateway to the west, and is being primed to be a major hub of the Silk Road Economic Belt.

The Silk Road Economic Belt is the land-based half of China’s One Belt One Road (OBOR) initiative that will facilitate the creation of a colossal network of new highways, rail lines, logistics and industrial zones, pipelines, power plants, sea ports, administrative centers, and new cities that will stretch from East Asia to Western Europe, spanning 60 countries and over half of the world’s GDP. I was on my way out to see where some of this New Silk Road infrastructure was going to be built, riding along the new six lane highway that extended over an expanse of perfectly flat land through the center of LNA. On both sides of the road were arrays of nearly identical 30-story high-rises packed neatly within their respective 500X500 meter plots. Dozens of these complexes were lined up in bunches, amounting to hundreds of towers and tens of thousands of new apartments.

This was a planned city, a giant grid branded onto the parched desert silt, devised by urban designers who seemed to deify the right angle, and built in a singular blast of development. Most of the buildings of this new city were still empty, but it was evident that life here was starting to simmer. Some of the apartment complexes had opened and residents had already moved in; there were people walking on the sidewalks and cars in the streets. Shops were beginning to open. Li Wang took great pride in pointing out the almost ridiculous amount of banks that lined the main drag. Sprinklers showered the bare desert in hopes that something would grow. An excessive amount of gigantic jumbotrons — mainstays in new Chinese cities — were switched on, blasting promotional videos from the development companies and the local government about the great things they were building here. Just a few years ago none of this existed; it was all mountains.

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“China is blessed with the strong and long-term focused leadership of President Xi Jinping, the best leader in the world … With his leadership, we can deal with the inevitable risks and volatilities arising out of the transition.”

Glory Days Of Chinese Steel Leave Behind Abandoned Mills And Broken Lives (G.)

A billboard on the motorway into China’s steel capital evokes the golden era of the country’s blistering economic rise. “Gathering great wealth!” it boasts. “Business wins the future!” But at the Fufeng steel plant on the outskirts of Tangshan, a once booming industrial hub about 200km south-east of Beijing, there is scant sign of those glory days. Since Fufeng’s owners declared bankruptcy early last year – laying off about 2,000 workers and sparking protests in the process – weeds and rust have begun to consume the steel mill’s industrial ruins. “There’s nobody here – just us,” said one of three security guards braving snow and sub-zero temperatures to watch over the dilapidated facility, which, like many others in the region, has been forced out of business by massive over-capacity and plummeting demand.

Tangshan, a city of about seven million inhabitants in Hebei, China’s steel-making heartlands, was levelled by a devastating 1976 earthquake that is said to have claimed 250,000 lives. But it rose from the ashes to become a heavy-industry powerhouse, propping up a massive Chinese construction boom and churning out more steel in 2014 than the United States. Those days now appear over, as concerns mount over the health of China’s economy and its possible impact on the rest of the world, and Beijing fights to reinvent the world’s second-largest economy and clear its smog-choked skies, in turn piling the pressure on heavily polluting steel plants.

Since China began ramping up efforts to slash steel over-capacity and transition to a more sustainable, consumption-led economic model, some corners of Tangshan’s once bustling industrial sprawl have taken on the appearance of ghost towns. [..] “Things are bleak,” said one retired mill worker who lives in Kua Number One village, just beside Fufeng. Another man, who works at the nearby Guofeng mill, which is still operating, but only just, claimed his monthly pay had been cut by 25%. “Life is really hard right now,” he complained. “Everything here is about steel. If it shuts down, it’s over. If our mill closes, we will have no land, no money and no work,” said the 52-year-old father of one, who declined to give his name.

This week, China announced that its economy last year grew at its slowest rate in 25 years, contributing to fears of an accelerated slowdown that could affect financial markets across the world. On Thursday, Fang Xinghai, a Stanford-educated top economic adviser to president Xi Jinping, attempted to reassure the world over his country’s ability to avoid a hard landing that would have severe consequences for the global economy. “China is blessed with the strong and long-term focused leadership of President Xi Jinping, the best leader in the world,” Fang, the former deputy head of the Shanghai Stock Exchange, told the Wall Street Journal. “With his leadership, we can deal with the inevitable risks and volatilities arising out of the transition.”

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How will the ECB try to solve this with Hollande stating that France is in an economic emergency?

Italy Could Trigger Europe’s Next Financial Crisis (Stratfor)

In the current period of uncertainty, Italy – particularly its banks – appears to be the victim of the moment. The Italian banking index is down 18% this year, and Italy’s third-largest and most historically troubled bank, Monte dei Paschi, has lost 50% of its value during the same period. The most dramatic drops have taken place this week. The Italian stock market regulator has deemed it necessary to ban short selling on Monte dei Paschi stock in an attempt to prevent speculators from benefiting by driving it lower, yet it continues to fall. As is so often the case with the markets, these actions are rooted in fact but with a layer of sentiment on top. Italy’s banks are indeed troubled; their non-performing loans amount to more than €200 billion, and Monte dei Paschi had an extremely weak balance sheet long before a 2013 derivatives scandal dealt it another blow.

But those non-performing loans have been growing ever since 2008, and that growth has slowed of late. Italy’s banking crisis has long been brewing, and the markets appear to be taking it seriously for the first time since ECB President Mario Draghi defused the last market panic by promising to do “whatever it takes to save the euro” in mid-2012. Either way, the market sell-off could seriously damage Italy’s economy. New regulations brought in at the start of the year heighten the risk of a bank run because investors and depositors must now bear the pain of an Italian bank going bust. This is a strong incentive for a bank’s depositors and investors to move their funds elsewhere if they believe the bank is in danger (sentiment plays a role again), and there are reports that Monte dei Paschi depositors are doing just that.

Italy and the European institutions must now look for ways to reverse the sentiment that is making Italian banks the victims and reassure the markets of the banks’ safety. The drastic way of achieving this would be a government bailout, but this is unlikely both because of the new rules and because bailouts typically occur when a crisis is in a more developed state. Another way would be persuading another Italian bank to buy Monte dei Paschi and take on its risky assets at a discount, thereby reassuring the market that Italy’s largest problem is now solved. This is possible in theory, though the travails of banks that bought their weaker peers in the crisis of 2008 might make it a hard sell for potential suitors.

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And the EU won’t give it.

IMF Demands EU Debt Relief For Greece Before New Bailout (Guardian)

The EU will need to provide significant debt relief for Greece if it is to persuade the IMF to put its financial clout behind the country’s third bailout package, the Washington-based organisation has said. After what was described as a cordial meeting between the IMF’s managing director, Christine Lagarde, and the Greek prime minister, Alexis Tsipras, on the sidelines of the World Economic Forum in Davos, the fund said it was only prepared to support the recession-ravaged eurozone country on a strings-attached basis. It said Greece had to be prepared to implement a tough package of economic reform and the country’s eurozone partners had to be willing to write down Greece’s debts.

The IMF took part in the first two Greek bailouts but is concerned that, at 175% of GDP, Greece’s debts are too burdensome and will prevent a lasting recovery. Lagarde told Tsipras the IMF regarded reform of Greece’s pension system, which accounts for 10% of GDP, as vital. The IMF said of the talks: “The managing director reiterated that the IMF stands ready to continue to support Greece in achieving robust economic growth and sustainable public finances through a credible and comprehensive medium-term economic programme. “Such a programme would require strong economic policies, not least pension reforms as well as significant debt relief from Greece’s European partners to ensure that debt is on a sustainable downward trajectory.” The Greek government said the talks had been sincere.

Earlier in the day, Tsipras told Davos he was committed to reforming the Greek economy, which lost 25% of its GDP through austerity programmes which sent jobless rates to twice the eurozone average. But he criticised Europe’s insistence on lowering budget deficits, saying: “We must all understand that, next to balanced budgets, we must also have growth … We need to be more realistic, and show more solidarity too.” The German finance minister, Wolfgang Schäuble, appeared unimpressed by Tsipras’s call for greater solidarity, and suggested he needed to deliver on the promises made to creditors. “My advice is, if we want to make Europe stronger we should implement what we agreed to implement. We can simply say, ‘implementation, stupid’,” Schäuble said.

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The EU leaves behind only rubble.

Capital Controls Cut Greek Exports By €3.5 Billion In 6 Months (Kath.)

From end-June to November 2015, the capital controls cost Greek exports, and therefore the economy in general, some €3.5 billion, or 2 %age points of the country’s GDP, according to an analysis of Bank of Greece data by the Panhellenic Exporters Association. In addition to the €1.88 billion net loss in takings in the first 11 months of last year compared with the year before, exports are believed to have missed out on another €1.65 billion as according to the course set in the first half of the year, the momentum would have seen exports swell considerably in 2015.

At the same time, the transactions terms between Greek enterprises and foreign partners (clients or suppliers) remain very tough, according to the exporters. Furthermore, foreign clients of Greek companies are delaying payments as the local firms are at a disadvantage and cannot exert pressure on them. In 2015 foreign companies extended the payment time for Greek exports by an average of 13 days compared to 2014. The ratio of payments to declared exports dropped to 96.27% in 2015, from 98.48% in 2014, the Bank of Greece data showed. The value of exported goods came to €23.6 billion last year while payments came to just €22.7 billion.

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Who’s better off when all these people are evicted? BTW, you think Tsipras is going to throw them out on the street?

Over 120,000 Greek Homes Close To Repossession (Kath.)

An estimated 122,700 households in Greece are facing the threat of losing their homes due to accumulated loan and tax obligations that they cannot pay, a survey by Marc research company for the Hellenic Confederation of Professionals, Craftsmen and Merchants showed on Thursday. Households’ fears are on the rise due to a change in the legislative framework concerning repossessions valid as of January 1 that has made the criteria for acquiring protection status stricter. A great number of households surveyed (36.3%) said that they live on up to €10,000 per year, which is the lowest income bracket. This is up from 34.4% in 2014 and 28.1% in 2013. Of particular concern is the finding that more than half of the households polled (51.8%) have a pension as their main source of income, up from 42.3% in 2012. Just 6.1% of respondents said they have a business activity as the main source of income, less than half of the share recorded in 2012 (12.6%).

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Dire straits.

One Third of Greeks Cannot Afford Heating Or Hot Water (KTG)

Residents in several underprivileged suburbs of Athens and Piraeus have seen their economic situation to have dramatically deteriorate and consequently also their living standards. According to a survey conducted by the Greek Ombudsman: one in five residents seeks soup kitchens and social groceries in order to get food. Three in ten have no heating and hot water. One in four living in apartment buildings have not turn on the radiators since 2010. The survey has been conducted in 2015 and in Kypseli, Ano Patisia and Agios Panteleimonas districts of Athens as well as in Nikaia-Rendis and Perama suburbs of Piraeus. 17% of the residents of these areas have experienced electricity and/or water outage due to unpaid bills. One in four had to make debt arrangements with the Power or Water company in order to gain again access to electricity and/or water.

Almost half (48.5%) said that in the last five years, they have faced difficulties in the repayment of debts to banks, credit cards, taxes, rents, building maintenance cost, tutor schools and schools. One in six (17%) said that they have experienced power/water outage and one in four (23.4%) said that they live in apartment buildings where the central heating does not operate for economic reasons. 80.2% said that their need for heating in winter and cooling in summer is not covered. 29.2% said that their needs for heating/cooling, cooking, hot water, refrigerator and electricity are not covered due to economic reasons. 35.03% use electricity for heating (electric radiator or A/C), 33.09% use heating oil, 9.04% use natural gas, 8.47% use firewood and 7.34% use LPG. 17% said that they had no telephone landline, 23.2 had no personal computer and 27.7% had no internet access.

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All I can think is: poor people. Children freezing to death, caught between politicians playing a power game, who care nothing about human lives.

Greece Demands That Refugees Declare Final EU Destination (Reuters)

Migrants and refugees arriving in Greece must state their final destination to travel further into the European Union, a Greek police source told Reuters on Thursday, following moves by neighbouring states to quell migrant flows. Serbia on Wednesday said it would deny migrants access to its territory unless they planned to seek asylum in Austria or Germany. “As of today, the final destination – as stated by the migrants – will be registered in the official documents,” the official said without disclosing the reason for the decision.

It was not clear whether the refugees would be banned from travelling further depending on their final destination. But most migrants were expected to state Austria or Germany, refugee agency officials said. Greece, a main gateway to Europe for migrants crossing the Aegean sea, has faced criticism from other EU governments who say it has done little to manage the flow of hundreds of thousands of people arriving from Turkey on its shores. Austria wants to cap the number of people it allowed to claim asylum this year at less than half last year’s figure, it said on Wendesday. It has said it would bar all migrants intending to pass through its northern neighbour Germany to other western European countries.

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Sure, why not. They haven’t lost enough yet.

Germany Takes Refugees’ Valuables ‘To Pay For Their Stay’ (Local)

Germany’s southern states are confiscating cash and valuables from refugees after they arrive, authorities in Bavaria confirmed on Thursday. “The practice in Bavaria and the federal rules set out in law correspond in substance with the process in Switzerland,” Bavarian interior minister Joachim Herrmann told Bild on Thursday. “Cash holdings and valuables can be secured [by the authorities] if they are over €750 and if the person has an outstanding bill, or is expected to have one.” Authorities in Baden-Württemberg have a tougher regime, where police confiscate cash and valuables above €350. The average amount per person confiscated by authorities in the southern states was “in the four figures,” Bild reported.

By confiscating valuables, the states are implementing federal laws, which require asylum seekers to use up their own resources before receiving state aid. “If you apply for asylum here, you must use up your income and wealth before receiving aid,” Aydan Özoguz, the federal government’s integration commissioner, told Bild. “That includes, for example, family jewellery. Even if some prejudices persist – you don’t have it any better as an asylum seeker as someone on unemployment benefit,” Özoguz added. [..] Only the Left party (Die Linke) criticized the confiscations, with MP Ulla Jelpke telling Der Tagesspiegel that “those who apply for asylum are exercising their basic rights [under the German Constititution]. “That must not – even if they are rejected – be tied up with costs,” she argued.

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Nov 042015
 
 November 4, 2015  Posted by at 10:51 am Finance Tagged with: , , , , , , , , , , ,  1 Response »


Lesvos town hall mourns the dead Nov 4 2015

China’s Slump Might Be Much Worse Than We Thought (Bloomberg)
China Burns Much More Coal Than Reported (NY Times)
Investors Are Way More Scared of China Than of Janet Yellen (Bloomberg)
Corporate Debt in China: Above Cruising Altitude (CEW)
A 127-Year-Old US Industry Collapses Under China’s Weight (Bloomberg)
Xi Says China Needs at Least 6.5% Growth in Next Five Years (Bloomberg)
China’s Xi Says 6.5% Annual Growth Enough To Meet Goals: Xinhua (AFP)
China’s Money Exodus (Bloomberg)
Standard Chartered’s Bad Loans Reveal Cracks in Asian Economies (Bloomberg)
VW Admission Suggests Cheats Went Much Further Than Diesel Emissions (Guardian)
VW Emissions Issues Spread to Gasoline Cars (Bloomberg)
VW Says Fuel Usage Understated On Some Models; Porsche Warns (Reuters)
Hugh Hendry: “Today We Would Advise You That You Don’t Panic!” (Zero Hedge)
Hugh Hendry Says “Don’t Panic”; Paul Singer Says You May Want To (Zero Hedge)
Europe’s Biggest Banks Are Cutting 30,000 Jobs, More To Come (Bloomberg)
Wall Street/Washington Revolving Door More Dangerous Than Ever: Prins (Yahoo)
Gathering Financial Storm Just One Effect Of Corporate Power Unbound (Monbiot)
Merkel Warns Of Balkans Military Conflicts Amid Migrant Influx (AFP)
European Union States Have Relocated Just 116 Refugees Out Of 160,000 (Guardian)
Greek Coast Guard Says 5 Refugees Die In Boat Accident Tuesday Night (AP)

As I’ve said a thousand times now.

China’s Slump Might Be Much Worse Than We Thought (Bloomberg)

The unreliability of Chinese official economic data has become almost a cliche. A few years before he became China’s premier, Li Keqiang said that the country’s numbers were “man-made” and “for reference only.” If the top economic policy maker of a country says that the numbers aren’t reliable … well, you believe him. But how unreliable? [..] Economic number-fudging is a cheap way to prevent jittery investors from making a stampede for the exits. Of course, knowing this, a number of people have tried to estimate China’s true growth rate. Tom Orlik, Bloomberg’s chief Asia economist, recently rounded up a number of independent figures, and collected them in the following chart:

The numbers range from Lombard Street’s pessimistic figure of a bit more than 3% to Bloomberg Intelligence’s optimistic number of just under 7%. In other words, there is a wide band of uncertainty here. But I would like to suggest a scenario even more pessimistic than the lowest of the numbers above. After reading reports by Peking University professor Chris Balding on the state of China’s financial sector, I think there’s a possibility that China’s growth is lower even than 3%. Chinese electricity usage is growing at more like 1%. Rail freight traffic, though volatile, has suffered some dizzying drops in recent months. These are traditional proxies for heavy industry output. That they are barely growing, if at all, implies that much of Chinese industry has ground to a halt.

China bulls, of course, will argue that the country is merely in the middle of a transition from industry to services, and from wasteful power usage to greater efficiency. That is probably true. But the speed of the transition would have to be incredible to make up for the precipitate drop in industrial activity. Why would China’s service sector and energy efficiency suddenly skyrocket immediately following the bursting of a major stock bubble? One reason is government spending. A stealth stimulus is underway. But another big part of the equation is the financial sector, which has logged stunning growth in recent months despite the stock crash. Why are Chinese financial services growing? Loan growth alone will not do the trick – banks need to be paid in order to log revenue. Or do they? Chris Balding reports:

“[S]ome Chinese researchers…compared the loan payments made by firms to the amount owed to banks…[Their findings imply] that Chinese firms are paying only half the financial costs they should be paying…The amount of revenue that banks are recording from loans is nearly four times the cost firms are associating with those loans…[B]ank revenue [has been] outpacing firm financial cost growth by a factor of almost four.” In other words, the amount of loan payments Chinese banks say they are receiving is a whole lot more than the amount Chinese borrowers say they are paying. If Balding’s numbers are to be believed – and of course, they are only one glimpse into a murky financial system – a large portion of the recent growth surge of China’s financial services sector may simply be fake.

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Rounding error: “.. the new figures add about 600 million tons to China’s coal consumption in 2012 — an amount equivalent to more than 70% of the total coal used annually by the United States.”

China Burns Much More Coal Than Reported (NY Times)

China, the world’s leading emitter of greenhouse gases from coal, is burning far more annually than previously thought, according to new government data. The finding could vastly complicate the already difficult efforts to limit global warming. Even for a country of China’s size and opacity, the scale of the correction is immense. China has been consuming as much as 17% more coal each year than reported, according to the new government figures. By some initial estimates, that could translate to almost a billion more tons of carbon dioxide released into the atmosphere annually in recent years, more than all of Germany emits from fossil fuels. Officials from around the world will have to come to grips with the new figures when they gather in Paris this month to negotiate an international framework for curtailing greenhouse-gas pollution.

The data also pose a challenge for scientists who are trying to reduce China’s smog, which often bathes whole regions in acrid, unhealthy haze. The Chinese government has promised to halt the growth of its emissions of carbon dioxide, the main greenhouse pollutant from coal and other fossil fuels, by 2030. The new data suggest that the task of meeting that deadline by reducing China’s dependence on coal will be more daunting and urgent than expected, said Yang Fuqiang, a former energy official in China who now advises the Natural Resources Defense Council. “This will have a big impact, because China has been burning so much more coal than we believed,” Mr. Yang said. “It turns out that it was an even bigger emitter than we imagined.

This helps to explain why China’s air quality is so poor, and that will make it easier to get national leaders to take this seriously.” The adjusted data, which appeared recently in an energy statistics yearbook published without fanfare by China’s statistical agency, show that coal consumption has been underestimated since 2000, and particularly in recent years. The revisions were based on a census of the economy in 2013 that exposed gaps in data collection, especially from small companies and factories. Illustrating the scale of the revision, the new figures add about 600 million tons to China’s coal consumption in 2012 — an amount equivalent to more than 70% of the total coal used annually by the United States.

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“..concern over growth in China and the rest of the developing world coincided with a rise in the share of investors who think deflation is a larger risk to the markets than inflation.”

Investors Are Way More Scared of China Than of Janet Yellen (Bloomberg)

China—not the prospect of the first rate hike from the Federal Reserve in almost a decade—is what keeps investors up at night. Barclays surveyed 651 of its clients around the world to glean their biggest fears, as well as their thoughts on commodities, yields, currencies, and other questions about the market outlook. “Only 7% sees Fed normalization as the main risk for markets over the next 12 months, compared with 36% whose main worry is China,” said Guillermo Felices, head of European asset allocation. The share of investors who judged softness in China and other developing economies to be the biggest risk to markets spiked in the third quarter, the period in which Beijing unexpectedly moved to devalue the yuan. The elevation in concern over growth in China and the rest of the developing world coincided with a rise in the share of investors who think deflation is a larger risk to the markets than inflation.

China’s devaluation sparked similar moves from other nations that had pegged their currencies to the greenback. All else being equal, this process engenders a stronger U.S. dollar and weaker commodity prices, thereby exerting downward pressure on headline inflation rates. As such, investors’ reactions to the Fed’s Oct. 28 statement, which resulted in an increase in the implied odds of a December rate hike, may not fully be reflected in its results. Nonetheless, roughly 40% of those surveyed indicated that they expected the Fed to initiate its tightening phase before the year was out. A plurality of respondents think liftoff will be a negative for risk assets, though only for a short period. “Indeed, the risk of Fed policy withdrawal is at a two-year low, suggesting complacency about the threat of higher rates,” warned Felices.

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Pon Zi.

Corporate Debt in China: Above Cruising Altitude (CEW)

By far the most worrying debt in China is held by the corporate sector. Total borrowing by the nonfinancial sector shows that the total debt-to-GDP ratio has reached 240% of GDP as of the first quarter of 2015. The corporate debt-to-GDP ratio was 160% of GDP, or $16.7 trillion as of the first quarter of 2015, and total corporate liabilities up to 200% of GDP when including corporate debt securities (bonds). For some perspective, the corporate debt-to-GDP ratio in the United States is 70%, less than half that of China’s. China’s economy has seen some cyclical scares this year (think stock market and currency), but high corporate debt is a structural issue, potentially leading to a period of slower expansion of credit in an effort to reduce the debt-to-GDP ratio weighing on rapid growth.

Corporate debt has risen faster than expected. As noted in an earlier blog post, in 2013, Standard & Poor’s predicted that China’s corporate debt would be between 136 and 150% of GDP by 2017. This year Standard & Poor’s said China’s corporate debt has already reached 160% of GDP, a figure in line with data from the Bank of International Settlements. Yu Yongding, a senior fellow at the Chinese Academy of Social Sciences (CASS), has calculated that without any fundamental change in the current situation, the corporate debt-to-GDP ratio will reach 200% by 2020. Increased borrowing by state-owned enterprises (SOEs) has contributed significantly to this rise, and SOEs account for around half of all the corporate debt in China. But problematically, SOEs have a much lower return on assets than private firms, as low as one-third.

Which begs the question: If a large SOE is unable to pay its interest payments, what will the government do? Will it take control of the debt, and will the debt therefore be counted as government rather than corporate debt? This would do nothing to the overall credit-to-GDP ratio but may cause moral hazard. Besides corporate debt from bank loans, China has seen dramatic growth of the corporate bond market. Overall this growth is seen as a positive move, as it means the firms are either refinancing old loans with bonds at lower yields or simply expanding their balance sheets using the bond market rather than bank loans. Also helpful is that the majority of corporate bonds in China are in renminbi, protecting them from foreign exchange fluctuations. The IMF reports that total bond issuance in China in 2014 was over $600 billion.

Real estate, construction, mining, and energy production have been leading the increase in leverage. These cyclical sectors loaded up on credit after the 2008 financial crisis and have some of the most highly leveraged firms in China. The rise in corporate debt in China is one of the most pressing issues for future growth. A drop in corporate revenue could prompt a number of defaults, lowering overall economic growth and reducing revenue further—a vicious cycle. Potential headwinds include normalizing interest rates in the United States, decreasing capital efficiency, disinflation, or a property market slowdown. Moreover, banks lend about half of their loans to corporations, so a rise in corporate defaults could have broader banking implications, including liquidity concerns and nonperforming loans.

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“If prices don’t recover, the researcher predicts almost all U.S. smelting plants will close by next year..”

A 127-Year-Old US Industry Collapses Under China’s Weight (Bloomberg)

Alcoa’s latest aluminum-making cutback is signaling the end of the iconic American industry. For 127 years, the New York-based company has been churning out the lightweight metal used in everything from beverage cans to airplanes, once making it a symbol of U.S. industrial might. Now, with prices languishing near six-year lows, it’s wiping out almost a third of domestic operating capacity, Harbor Intelligence estimates. If prices don’t recover, the researcher predicts almost all U.S. smelting plants will close by next year. While that’s a big deal for the U.S. industry and the people it employs, it doesn’t mean much for global supplies. Alcoa’s decision to eliminate 503,000 metric tons of smelting capacity accounts for about 31% of the U.S. total for primary aluminum, but less than 1% of the global total, according to Harbor.

For more than a decade, output has been moving to where it’s cheaper to produce: Russia, the Middle East and China. A global glut has driven prices down by 27% in the past year, rendering American operations unprofitable and accelerating the pace of the industry’s demise. “You’ve seen a fair clip of closures in the U.S., that is just unfortunate, but a development that’s very difficult to change,” Michael Widmer at Bank of America said. “It means you’ll just have to purchase from somewhere else.” That’s exactly what Jay Armstrong, the president of Trialco is doing. The company, which turns aluminum into finished manufactured products, now buys about 80% of the supplies it turns into car wheels from overseas. That’s up from 40% five years ago, he said. “It’s not the kind of business where we’re going to pay more and buy all American,” Armstrong said in a telephone interview. “It’s too competitive a business to do that.”

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Not.Going.To.Happen. So what then?

Xi Says China Needs at Least 6.5% Growth in Next Five Years (Bloomberg)

China’s president signaled policy makers will accept slower growth, but not much slower, as details of a blueprint set to define his term as leader were released Tuesday. Annual growth should be no less than 6.5% in the next five years to realize the goal to double 2010 gross domestic product and per capita income by 2020, President Xi Jinping said Tuesday, according to the official Xinhua News Agency. The 13th five-year plan, details of which were announced Tuesday, is the first to confront an era of sub-7% economic growth since Deng Xiaoping opened the nation to the outside world in the late 1970s. “Policy makers still want to maintain a high growth pace, while the policy expectation is tuned slightly lower,” said Tao Dong at Credit Suisse in Hong Kong.

“The stance of policy makers is to gradually transform to a ’new normal.’ But to maintain the peoples’ confidence, the bar is set relatively high.” China will seek to increase the yuan’s convertibility in an orderly manner by 2020 and change the way it manages currency policy, according to the Communist Party’s plan. Authorities will opt for a “negative list” foreign-exchange system – an approach that lets companies do anything that’s not specifically banned – and open the finance industry as it promotes the yuan’s inclusion in the International Monetary Fund’s Special Drawing Rights basket, Xinhua reported. The proposals coincide with heightened anxiety over China’s economic outlook following a stock market slump and a surprise yuan devaluation in August that roiled global markets.

China will target medium- to high-speed growth during the period, and officials pledged to reduce the income gap, further open up to overseas investment and boost consumption, according to the draft. Officials said they will accelerate financial system reform and promote transparent and healthy capital markets while also overhauling stock and bond sales. They’ll continue reforms of the fiscal and tax systems and transfer some state capital to pension funds. [..] Xi’s growth baseline matches guidance provided by Premier Li Keqiang, who said Sunday that China needs average growth of more than 6.5% in the next five years to meet the goal of achieving a “moderately prosperous” society by 2020. Xi and Li are managing the priorities of both reforming the economy and keeping short-term growth fast enough so that structural changes don’t cause a hard landing.

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“..Xinhua cited Xi as saying that annual growth should be no less than 6.5% in the next five years to achieve the Communist Party’s aim of doubling GDP per capita from 2010 by the end of the decade..”

China’s Xi Says 6.5% Annual Growth Enough To Meet Goals: Xinhua (AFP)

Growth of only 6.5% a year in 2016-2020 will be enough for China to meet its wealth goals, President Xi Jinping said on Tuesday according to the official news agency Xinhua. The report came as the ruling Communist party issued guidelines for the next five-year plan for the world’s second-largest economy, whose slowing growth has alarmed investors worldwide. The first documents released by the leadership conclave did not include a numerical growth target. But Xinhua cited Xi as saying that annual growth should be no less than 6.5% in the next five years to achieve the Communist Party’s aim of doubling GDP per capita from 2010 by the end of the decade. It said he made the remarks in a speech, without giving direct quotes. The doubling target is part of achieving what China’s ruling party calls a “moderately prosperous society” in time for the 100th anniversary of its foundation.

The comments are the clearest indication yet that Beijing will reduce its target growth rate from the current “around 7%”, after expansion slowed last quarter to its lowest in six years. Some economists say that the current figure is unattainable going forwards, and that trying to do so risks derailing painful but necessary markets reforms. The country has faced economic turbulence in recent months as it attempts to transition its economy from years of super-charged growth to a more modest pace it has dubbed the “new normal”. Botched stock market interventions and a sudden currency devaluation have rattled confidence in the country’s leadership, which has staked its legitimacy on maintaining an aura of economic infallibility.

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“..during the three weeks in August after China devalued its currency, Goldman Sachs calculated that another $200 billion may have left.”

China’s Money Exodus (Bloomberg)

The ranks of China’s wealthy continue to surge. As their economy shows signs of weakness at home, they’re sending money overseas at unprecedented levels to seek safer investments — often in violation of currency controls meant to keep money inside China. This flood of cash is being felt around the world, driving up real estate prices in Sydney, New York, Hong Kong and Vancouver. The Chinese spent almost $30 billion on U.S. homes in the year ending last March, making them the biggest foreign buyers of real estate. Their average purchase price: about $832,000. Same trend in Sydney, where Chinese investors snap up a quarter of new homes and are forecast to double their spending by the end of the decade. In Vancouver, the Chinese have helped real estate prices double in the past 10 years.

In Hong Kong, housing prices are up 60% since 2010. In total, UBS Group estimated that $324 billion moved out last year. While this year’s numbers aren’t yet in, during the three weeks in August after China devalued its currency, Goldman Sachs calculated that another $200 billion may have left. So how do these volumes of cash get out when Chinese are limited by rules that allow them to convert only $50,000 per person a year? The methods include China’s underground banks, transfers using Hong Kong money changers, carrying cash over borders and pooling the quotas of family and friends – a practice known as “smurfing.” The transfers exist in a gray area of cross-border legality: What’s perfectly legitimate in another country can contravene the law in China.

“It’s not legal for people to use secret channels to move money abroad, because this is smuggling,” says Xi Junyang, a finance professor at Shanghai University of Finance & Economics. “But the government has kept a laissez-faire attitude until recently.” Now, policy makers are starting to take the outflow seriously. While it’s not about to run out of money, China has intensified a crackdown on underground banks that illegally channel cash abroad. It’s also trying to capture officials suspected of fleeing overseas with government funds. Longer term, China has pledged to remove its currency controls and make the yuan fully convertible by 2020.

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There’s so much more of this in the pipeline.

Standard Chartered’s Bad Loans Reveal Cracks in Asian Economies (Bloomberg)

As China’s growth sputters, the troubles at Standard Chartered are another bad omen for what were once Asian economic darlings. The bank, which generates most of its income in the region, had gambled on success in emerging markets such as India, which instead saddled the lender with delinquent loans. As a result, the company which opened its offices in Mumbai under Queen Victoria is now axing 15,000 jobs and is asking investors for $5.1 billion. “Standard Chartered are Asian specialists and are in all the main markets in the region, so in looking at them you can get a good sense for credit direction and lending appetite,” said Mark Holman at TwentyFour Asset Management. For now, Asia still has fewer corporate debt defaults than other developing countries, but rising leverage from India to Indonesia point to the risk of further nonpayments.

More stringent conditions from banks like Standard Chartered are slowing loan growth in the region, exposing more fissures in the corporate credit market. “The picture that emerges is that Asian credit cycles are far more advanced than those in Europe and loan losses and impairment charges are mounting,” Holman said. Like other developing nations, Asian companies took advantage of low interest rates overseas to go on a borrowing binge. The move is backfiring as slower economic growth makes it more difficult to pay back the obligations. Fitch Ratings warned on Nov. 2 that 11% of India’s loans will fall into the category of “stressed assets” in the fiscal year ending in March 2016 and only improve “marginally” the next year. In China, Sinosteel, a state-owned steelmaker, missed an interest payment last month, becoming the latest firm that teeters on the verge of default.

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It’s still only about money: “VW said it estimated the “economic risks” of the latest discovery at €2 billion..”

VW Admission Suggests Cheats Went Much Further Than Diesel Emissions (Guardian)

The crisis at Volkswagen has deepened after the carmaker found “irregularities” in the carbon dioxide levels emitted by 800,000 of its cars. An internal investigation into the diesel emissions scandal has discovered that CO2 and fuel consumption were also “set too low during the CO2 certification process”, the company admitted on Tuesday night. The dramatic admission raises the prospect that VW not only cheated on diesel emissions tests but CO2 and fuel consumption too. VW said it estimated the “economic risks” of the latest discovery at €2bn (£1.42bn). The company said the “majority” of cars involved have a diesel engine, which implies that petrol cars are involved in the scandal for the first time.

Matthias Müller, chief executive of VW, said: “From the very start I have pushed hard for the relentless and comprehensive clarification of events. We will stop at nothing and nobody. This is a painful process, but it is our only alternative. For us, the only thing that counts is the truth. That is the basis for the fundamental realignment that Volkswagen needs.” VW said it will now work with the authorities to clarify what took place during the CO2 tests and “ensure the correct CO2 classification for the vehicles affected”. Müller added: “The board of management of Volkswagen AG deeply regrets this situation and wishes to underscore its determination to systematically continue along the present path of clarification and transparency.”

VW has already admitted fitting a defeat device to 11m vehicles worldwide that allowed them to cheat tests for emissions of nitrogen oxides. The carmaker has put aside €6.7bn to meet the cost of recalling the 11m vehicles, but also faces the threat of fines and legal action from shareholders and customers. The company has hired the accountancy firm Deloitte and the law firm Jones Day to investigate who fitted the device into its vehicles. It is understood that the carmaker believes a group of between 10 and 20 employees were at the heart of the scandal.

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“VW is leaving us all speechless..”

VW Emissions Issues Spread to Gasoline Cars (Bloomberg)

Volkswagen said it found faulty emissions readings for the first time in gasoline-powered vehicles, widening a scandal that so far had centered on diesel engines. Separately, the company’s Porsche unit said it’s halting North American sales of a model criticized by U.S. regulators. Volkswagen said an internal probe showed 800,000 cars had “unexplained inconsistencies” concerning their carbon-dioxide output. Previously, the automaker estimated it would need to recall 11 million vehicles worldwide — more than Volkswagen sold last year. It was unclear how much overlap there was between the two tallies. The company said the new finding could add at least €2 billion to the €6.7 billion already set aside for fixes to the affected vehicles but not litigation, fines or customer compensation.

The crisis that emerged after Volkswagen admitted in September to cheating U.S. pollution tests for years with illegal software has shaved more than one-third of the company’s stock price and led to a leadership change. Today’s revelation adds to the pressure on Volkswagen’s new chief executive officer, Matthias Mueller, who replaced Martin Winterkorn and was previously head of Porsche. Volkswagen’s supervisory board said it will meet soon to discuss further measures and consequences. “VW is leaving us all speechless,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI. [..] The 3.0-liter diesel motors targeted on Monday by a U.S. Environmental Protect Agency probe aren’t part of the latest finding. The company rejected allegations that its cheating on diesel-emissions tests included Porsche and other high-end vehicles.

The EPA said its new investigation centers on the Porsche Cayenne and VW Touareg sport utility vehicles and as well as larger sedans and the Q5 SUV from Audi. But then late Tuesday, Porsche’s North American division said it would voluntarily discontinue sales of diesel-powered Cayennes from model years 2014 to 2016 until further notice. The Atlanta-based unit’s statement reiterated that the EPA notice was unexpected and that owners can operate their vehicles normally. “We are working intensively to resolve this matter as soon as possible,” Porsche said in the statement.

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Porsche is worried about ‘its results’. It should rethink that one.

VW Says Fuel Usage Understated On Some Models; Porsche Warns (Reuters)

Volkswagen on Tuesday said it had understated the fuel consumption of 800,000 cars sold in Europe, while majority stakeholder Porsche Automobil Holding warned that VW’s latest findings could further weigh on its results. The latest revelation about fuel economy and carbon dioxide emissions, which Germany’s largest automaker said represented a roughly €2 billion economic risk, deepened the crisis at VW. The scandal initially centered on software on up to 11 million diesel vehicles worldwide that VW admitted vastly understated their actual emissions of smog-causing pollutant nitrogen oxide. U.S. environmental regulators said on Monday that similar “defeat devices” were installed on larger 3.0 liter engines used in luxury sport utility vehicles from Porsche and Audi, although VW has denied those allegations.

Porsche’s North American unit said it was discontinuing sales of Porsche Cayenne diesel sport utility vehicles until further notice, citing the allegations. The latest findings that VW understated fuel consumption and carbon dioxide emissions, areas which U.S. regulators have yet to address, were disclosed as VW continues a broad review of its handling of all pollution-related issues. While the findings mostly apply to smaller diesel engines, one gasoline-powered engine is also affected. “VW is leaving us all speechless,” said Arndt Ellinghorst of banking advisory firm Evercore ISI. “It seems to us that this is another issue triggered by VW’s internal investigation and potentially related to Europe.” The carmaker said it would immediately start talking to “responsible authorities” about what to do about the latest findings.

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Will Hugh be the greater fool?

Hugh Hendry: “Today We Would Advise You That You Don’t Panic!” (Zero Hedge)

In his latest letter, he valiantly trudges on down the path of bullish abandon and tries to convince if not so much others as himself why continuing his desertion of the bearish camp he did two years ago is the right thing to do, and how in the aftermath of the VIX explosion in August, he “learned to stop worrying and love the bomb.” Key highlights:

… it is ironic that we are perhaps best known for advising “that you panic”. However, if you are anxious at the wrong time it can prove very painful. Today, we would advise that you don’t panic!

… by withdrawing the “Greenspan put” and using their asset purchase schemes to eviscerate any notion of value, the authorities have paradoxically created a safer yet more paranoid market.

… first it was Europe, then the high yield credit space with the vulnerabilities of the shale oil issuers, and then it was back to Greece and then the mother of them all, China, with its falling property and stock prices seemingly knocking economic growth and making a sizeable devaluation inevitable. And yet nada… the weeping prophets have failed to force a crisis after one hell of a go.

… perhaps we are being premature and the cards are about to fall. Or perhaps there simply are no dead bodies in the system and the global economy has proven itself much more resilient to shocks. We certainly believe that if we had been forewarned two years ago that the dollar would rise versus selected EM currencies by 50% and that important commodities such as oil and iron ore would fall by 50% we would never have been able to predict just how orderly things have turned out at both the company and sovereign level. The turmoil it seems has remained contained within financial markets in a very curious way.

… perhaps it’s time to stop worrying and love the bomb?

Actually at last check, practically all the “bears” predicted exactly what happened: trapped by their own policies, central banks would have no choice than to unleash another onslaught of easing. This is precisely what happened when first the ECB previewed its QE2, then the PBOC cut rates, then Sweden boosted QE, then the BOJ said it would “not hesitate” to act (and would have done so had other central banks not pushed the Yen lower thanks to its carry trade status). The real question, Hugh, is how much time did the latest doubling down by the world’s central banks buy? We should know the answer in 2-4 months.

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“What policymakers will do, in all likelihood, is hope and pray, and when that fails, they will likely double down on monetary extremism. ”

Hugh Hendry Says “Don’t Panic”; Paul Singer Says You May Want To (Zero Hedge)

Businesspeople in today’s world are either concerned, actively sweating or oblivious to the rumblings and dangers around them. We recommend that both investors and businesspeople be highly alert to the implications of populism, the increasing concentration of power into the hands of unaccountable elites and the dissipation of the rule-of-law protections of liberty. It is very odd and dangerous that governments, satisfied with policies which, by raising asset prices (stocks, bonds, real estate, high-end art), are seemingly designed to make the rich richer, nevertheless simultaneously excoriate inequality as the cause of slow growth and societal disquiet. It is also strange that policymakers are not concerned by the obvious failure of monetary extremism to achieve the predicted levels of growth, or by the risks that may exist either in the continuation of the monetary experiment or in its ultimate unwinding.

Policymakers who are sticking with the failed policy mix have invented creative explanations for why growth has been so bad for such a long a period of time. The most prevalent (and tautological) of these explanations is “secular stagnation,” a theory that the developed world simply cannot grow faster due to ageing populations, growth-destructive technologies and competition from cheap labor around the world. We disagree with this theory, and assert that it can be examined for validity only after a full range of first-line “fiscal” policies (as we have defined them) has been put firmly and comprehensively in place. In contrast to the “secular stagnationistas,” we believe that there is a great deal of low-hanging fruit (that is, far higher rates of growth in incomes, jobs and national wealth) to be had from simple changes in leadership and policies.

The question of the day is: What will be the policy response of the developed world toward the currently deteriorating (at least in EMs and China) conditions, and the policy response if the deterioration spreads to Europe and the U.S.? If we know anything about the policy decision-making landscape in developed countries, it is that policymakers are all on super-keen-alert for signs of deflation (which they basically equate with credit collapse — a false and misleading connection, but that is a topic for another day). They will not remain passive in the face of a renewed global recession and/or financial crisis. So what will they do next, and how will it affect global markets? We can be reasonably certain that policymakers will not leap into action on the fiscal measures that we have described as the front-line policies needed to meaningfully quicken economic growth. Try to imagine more flexible and business-friendly tax, regulatory and labor policies being enacted by current political leadership in the U.S., Europe and Japan.

Sorry, our imaginations — never inert — just can’t get there. What policymakers will do, in all likelihood, is hope and pray, and when that fails, they will likely double down on monetary extremism. This landscape is essentially baked, unless you think that sometime in the near future the global economy will turn higher, either on its own or in anticipation of such policy measures in the future. To many policymakers today, jawboning seems like a magic button, since markets often create the desired result in anticipation of possible future actions. Consequently, governments may be able to get a particular outcome without requiring the central bankers to actually take any action.

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This is nothing yet. Wait till next year’s pring cleaning.

Europe’s Biggest Banks Are Cutting 30,000 Jobs, More To Come (Bloomberg)

Standard Chartered became the third European bank in less than two weeks to announce sweeping job cuts, bringing the total planned reductions to more than 30,000, or almost one in seven positions. The London-based firm said Tuesday it will eliminate 15,000 jobs, or 17% of its workforce, as soaring bad loans in emerging markets hurt earnings. Deutsche Bank last week announced plans for 11,000 job cuts, while Credit Suisse said it would trim as many as 5,600 employees. The three firms, which all named new chief executive officers this year, are undertaking the deepest overhauls since the financial crisis as stricter capital rules erode profitability. Standard Chartered and Credit Suisse will tap shareholders for funds, while Deutsche Bank scrapped its dividend for this year and next to conserve capital.

“It’s just further evidence that Europe’s banks didn’t adapt quickly enough to the post-crisis world and are now playing catch up,” said Christopher Wheeler at Atlantic Equities in London. More bloodletting may be on the way. UniCredit is considering as many as 12,000 job cuts as it seeks to improve profit and capital levels, people with knowledge of the discussions said last week. The numbers, which are still under review, increased from 10,000 a month ago and may change depending on the outcome of asset sales. The largest Italian bank reports earnings next week. Including jobs lost through asset sales, John Cryan, Deutsche Bank’s co-CEO since July, intends to eliminate 26,000 employees, or a quarter of the workforce, by 2018. Tidjane Thiam, Credit Suisse’s new CEO, will shed jobs in the U.S., U.K. and Switzerland.

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“..the big six banks in this country control 97% of all trading assets in the U.S. and 93% of all derivatives.”

Wall Street/Washington Revolving Door More Dangerous Than Ever: Prins (Yahoo)

What are the consequences of regulators leaving government work to join the financial services industry, and vice versa? Nomi Prins, a Senior Fellow at Demos, chronicles the problems of the revolving door between Washington and Wall Street in her latest book “All the Presidents’ Bankers.” “The difference is that now people know each other less in their personal lives before they make those transitions,” she says. “Now it’s a little more like ‘I know you from the industry of Wall Street and Washington’ as opposed to ‘We hung out and our dads smoked cigars together.’ Prins notes that there was more personal accountability in the relationships between Wall Street and Washington during the mid-20th century.

She points out that before the crash of 1929, the Morgan bank (predecessor of J.P. Morgan) had strong connections with Presidents Coolidge and Hoover. Yet, a shift in the relationships occurred during the Great Depression. “There was this accountability moment where the bankers that ascended to run these banks, to run Chase, to run Citibank & they wanted economic stability throughout the country,” she says. “They actually thought [stability] was important for confidence in the banking system & people would actually keep their money there and trust that they had a future with this bank, so the relationships with individuals and corporations and countries all mattered.” Prins says that the modern-day deterioration of the bank-customer relationship is a direct result of the growing size and risk profiles of bank behemoths.

“The banks are so big right now [and] they have access to so much of apercentage of the deposits of individuals, she says. “The leverage is so much higher on the back of those deposits, the bailouts that have happened for numerous reasons in the past 25 years have all been an indication that is okay to take more reckless bets.” And while the idea of banks being “too big to fail” caused widespread Main Street anger towards Wall Street, Prins believes the policy of government bailouts will continue post-Financial Crisis as banking has become more concentrated. She noted that the big six banks (J.P. Morgan, Citi, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo) in this country control 97% of all trading assets in the U.S. and 93% of all derivatives.

Prins also added that the anti-banking rhetoric of many U.S. Presidents (remember President Obama’s Wall Street “fat cats”?) has a long history, but one that is at odds with actual policy. It goes all the way back to Woodrow Wilson and the creation of the Federal Reserve, she said. “In practice Woodrow Wilson was behind the creation of the Fed, which we know now has substantiated a lot of Wall Street losses, has a $4.5 trillion book. It’s the largest hedge fund in the world right now…But [Dodd Frank] hasn’t fundamentally changed the concentration of power. The revolving door…influences the risk inherent to what’s going on on Wall Street. It hasn’t made the economy more stable with respect to the banking industry, which is an industry that infiltrates every aspect of our individual and political lives.

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“..to force nations to accept new financial products and services, to approve the privatisation of public services and to reduce the standards of care and provision.”

Gathering Financial Storm Just One Effect Of Corporate Power Unbound (Monbiot)

What have governments learned from the financial crisis? I could write a column spelling it out. Or I could do the same job with one word: nothing. Actually, that’s too generous. The lessons learned are counter-lessons, anti-knowledge, new policies that could scarcely be better designed to ensure the crisis recurs, this time with added momentum and fewer remedies. And the financial crisis is just one of the multiple crises – in tax collection, public spending, public health and, above all, ecology – that the same counter-lessons accelerate. Step back a pace and you see that all these crises arise from the same cause. Players with huge power and global reach are released from democratic restraint. This happens because of a fundamental corruption at the core of politics.

In almost every nation the interests of economic elites tend to weigh more heavily with governments than do those of the electorate. Banks, corporations and landowners wield an unaccountable power, which works with a nod and a wink within the political class. Global governance is beginning to look like a never-ending Bilderberg meeting. As a paper by the law professor Joel Bakan in the Cornell International Law Journal argues, two dire shifts have been happening simultaneously. On one hand governments have been removing laws that restrict banks and corporations, arguing that globalisation makes states weak and effective legislation impossible. Instead, they say, we should trust those who wield economic power to regulate themselves.

On the other hand, the same governments devise draconian new laws to reinforce elite power. Corporations are given the rights of legal persons. Their property rights are enhanced. Those who protest against them are subject to policing and surveillance – the kind that’s more appropriate to dictatorships than democracies. Oh, state power still exists all right – when it’s wanted. Many of you will have heard of the Trans-Pacific Partnership and the proposed Transatlantic Trade and Investment Partnership (TTIP). These are supposed to be trade treaties, but they have little to do with trade, and much to do with power. Theyenhance the power of corporations while reducing the power of parliaments and the rule of law. They could scarcely be better designed to exacerbate and universalise our multiple crises – financial, social and environmental.

But something even worse is coming, the result of negotiations conducted, once more, in secret: a Trade in Services Agreement (TiSA), covering North America, the EU, Japan, Australia and many other nations. Only through WikiLeaks do we have any idea of what is being planned. It could be used to force nations to accept new financial products and services, to approve the privatisation of public services and to reduce the standards of care and provision. It looks like the greatest international assault on democracy devised in the past two decades. Which is saying quite a lot.

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Damn right. Damn late too.

Merkel Warns Of Balkans Military Conflicts Amid Migrant Influx (AFP)

German Chancellor Angela Merkel warned that fighting could break out in the Balkans, along the main route of migrants trying to reach Europe, if Germany closed its border with Austria, in remarks published Tuesday. Amid ever-louder calls for Merkel to undertake drastic action to stem the tide of people entering her country, she again rejected the appeals, noting that tensions were already running high between the Western Balkans countries. With an eye to deep rifts exposed after Hungary closed its frontier with Serbia and Croatia, Merkel said blocking the border with Austria to refugees and migrants would be reckless. “It will lead to a backlash,” Merkel was quoted in media reports as saying late Monday in an address to members of her conservative Christian Democratic Union (CDU) in the western city of Darmstadt.

“I do not want military conflicts to become necessary there again,” Merkel added, referring to the Balkans. She said disputes in a region already ravaged by war in the 1990s could quickly escalate, touching off a cycle of violence “no one wants.” Germany has become the main destination for people fleeing war and poverty in the Middle East, Africa and Asia via the Balkans, with up to one million people expected this year. The EU vowed last month to help set up 100,000 places in reception centres in Greece and along the migrant route through the Balkans as part of a 17-point action plan devised with the countries most affected by the crisis. But just as Merkel attempts to convince European partners to share out the burden more fairly, she has faced a revolt from within her own conservative alliance against the welcome she has extended to people escaping violence and persecution.

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Must take this out of the hands of the EU. All it is is a facade for sociopaths to hide behind.

European Union States Have Relocated Just 116 Refugees Out Of 160,000 (Guardian)

EU member states have so far relocated only 116 refugees of the 160,000 they are committed to relocating over the next two years, according to new figures. EU members states agreed in September to relocate 160,000 people in “clear need of international protection” through a scheme set up to relocate Syrian, Eritrean, and Iraqi refugees from the most affected EU states – such as Italy and Greece – to other EU member states. So far 116 people have been relocated, and only 1,418 places have been made available by 14 member states, according to data released on Tuesday by the European Commission. A total of 86 asylum seekers have been relocated from Italy, and 30 asylum seekers will travel from Athens to Luxembourg on Wednesday.

Denmark, Ireland and the UK have an opt-out from the scheme, but Britain is the only member state that has said it will not contribute to the relocation. The EU’s emergency relocation mechanism is only one facet of the broader refugee crisis. Syria, Iraq and Eritrea account for the majority of those crossing the Mediterranean. According to the UNHCR, more than one in two are fleeing from Syria. While 6% of those arriving via the Mediterranean are originally from Iraq, and 5% from Eritrea. Not all those seeking asylum remain or travel via Italy or Greece. About 770,000 asylum applications were lodged across the EU in the first nine months of 2015, compared to 625,920 in all of 2014 and 431,090 in 2013. This has contributed to a backlog of applications.

At the end of last year there were just under 490,000 pending applications across EU member states. In July of this year, the figure stood at 632,000. The backlog is not showing signs of receding any time soon: for every asylum decision made there are 1.8 new applications. Approximately 240,000 applications were processed between January and June this year. Over the same six months, 432,345 applications were filed. However, the European Commission data also reveals that beyond the logistical challenges, a “large number of member states has yet to meet financial commitments” and “too few member states” have responded to calls to help Serbia, Slovenia and Croatia; among the most used routes by asylum seekers, with essential resources such as beds and blankets.

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What happened to numb the rich west the way it did?

Greek Coast Guard Says 5 Refugees Die In Boat Accident Tuesday Night (AP)

Greece’s coast guard says the total number of people rescued from a boat carrying people from Turkey to the nearby Greek island of Lesvos has increased to 65, while a total of five bodies were recovered from the water. The coast guard said Wednesday that the bodies were those of three children and two men. There were no further missing people reported. The migrant boat ran into trouble north of Lesvos Tuesday night. The coast guard says a total of 457 people were rescued between Tuesday morning and Wednesday morning in 13 separate incidents. More than 600,000 people have arrived in Greece so far this year, with most arriving on Lesbos. From there, they make their way to the Greek mainland on ferries and then head overland to more prosperous EU countries in the north. Thousands of migrants are stranded on Lesvos due to a ferry strike that began Monday.

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