Jul 052019
 


Pablo Picasso Rest 1932

 

US Job Growth Seen Accelerating, Rate Cut Still Expected (R.)
German Industrial Orders Fell Far More Than Expected In May (R.)
Iran Demands Britain Release Oil Tanker Held In Gibraltar (AFP)
Europe Trade Channel With Iran Close To First Deal In Days (R.)
Has Trump Turned an Important Corner? (Luongo)
Mueller Report Gets Trump Tower Meeting Wrong; Promotes Browder Hoax (CN)
Vast Chinese Loans Pose Risks to Developing World (Spiegel)
The End Of Inheritance For The Middle Class (F.)
Electric Cars Will Not Solve Transport Problem (BBC)
Brazil Deforestation Increase Exceeds 88% In June (R.)
From Madagascar to Brazil, Researchers Pick Best Spots To Replant Forests (R.)
Tree Planting ‘Has Mind-Blowing Potential’ To Tackle Climate Crisis (G.)
Europe’s Treatment of Migrants Is Shameful (Spiegel)
82 Migrants Feared Dead After Boat Capsizes Off Tunisia (AlJ)

 

 

No, no fireworks, jets or tanks here.

 

The world of finance has developed a whole new logic.

US Job Growth Seen Accelerating, Rate Cut Still Expected (R.)

U.S. job growth likely rebounded in June, with wage gains expected to pick up, but that would probably not be enough to discourage the Federal Reserve from cutting interest rates this month amid growing evidence the economy is slowing. Lack of concrete progress in resolving an acrimonious trade war between the United States and China was also seen forcing the U.S. central bank’s hand, regardless of a strong employment report from the Labor Department on Friday. The Fed last month signaled it could ease monetary policy as early as July, citing low inflation as well as growing risks to the economy from an escalation in trade tensions between Washington and Beijing.

President Donald Trump and Chinese President Xi Jinping last week agreed to a trade truce and a return to talks. White House trade adviser Peter Navarro said on Tuesday talks were heading in the right direction, but it would take time to get the right deal made. The trade fight has undercut business confidence, leading to a downturn in equipment spending and manufacturing. “Given signs of slowing growth and little material progress on the trade war, a rebound in job growth would still leave the Fed on course to cut rates at the July meeting and we expect a 25 basis points cut,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Nonfarm payrolls probably increased by 160,000 jobs last month after rising by only 75,000 in May, according to a Reuters survey of economists. May marked the second time this year that job gains dropped below 100,000. Reports on Wednesday showed private employers hired far fewer-than-expected workers last month and a measure of services industries employment declined.

Read more …

When Germany has a problem, the entire EU does.

German Industrial Orders Fell Far More Than Expected In May (R.)

German industrial orders fell far more than expected in May, and the Economy Ministry warned on Friday that this sector of Europe’s largest economy was likely to remain weak in the coming months. Contracts for ‘Made in Germany’ goods were down by 2.2% on the month after rising slightly in March and April, data from the Economy Ministry showed. The reading undershot the Reuters consensus forecast for a 0.1% decline. “The great order book deflation continues,” ING economist Carsten Brzeski said. Devastating new orders data just undermined any hopes for an industrial rebound.”


Other recent data have painted a gloomy picture of the sector too, with engineering orders falling and activity in the manufacturing sector contracting. In a sign that the economic slowdown is beginning to bite, a survey by the Ifo institute published on Thursday showed German manufacturers expect to make more use of “Kurzarbeit” — a short-hours facility aimed at avoiding mass lay-offs. “What misery!” VP Bank economist Thomas Gitzel said after the orders data was published. “Given the significant decline in incoming orders, industrial production will remain extremely weak in the second half of the year and that increases the risk of recession for the German economy.”

Read more …

It didn’t even dock, it just slowed down to take on provisions. In waters that EU member Spain says are Spanish.

Iran Demands Britain Release Oil Tanker Held In Gibraltar (AFP)

Iran demanded Friday that Britain immediately release an oil tanker it has detained in Gibraltar, accusing it of acting at the bidding of the United States. A senior foreign ministry official “described the UK move as unacceptable” in a meeting with British ambassador Rob Macaire, who had been summoned to hear a formal protest, the ministry said in a statement. He “called for the immediate release of the oil tanker, given that it has been seized at the request of the US, based on the information currently available”, the statement added. Authorities in Gibraltar, a British overseas territory on Spain’s southern tip at the western entrance to the Mediterranean, said they suspected the tanker was carrying crude to Syria in violation of EU sanctions.


The detention of the 330-metre (1,000-feet) Grace 1 vessel comes at a sensitive time in Iran-EU ties as the bloc mulls how to respond to Tehran announcing it is poised to breach the uranium enrichment limit it agreed to in a troubled 2015 nuclear deal. The Grace 1 tanker was halted in the early hours of Thursday by police and customs agencies in Gibraltar, aided by a detachment of British Royal Marines. The ship was detained 2.5 miles (four kilometres) south of Gibraltar in what it considers British waters, although Spain, which lays claim to the territory, says they are Spanish. It was boarded when it slowed down in a designated area used by shipping agencies to ferry goods to vessels.

Read more …

So how do we link the seized Iran tanker to the new Instex trade channel set up to bypass the US?

Europe Trade Channel With Iran Close To First Deal In Days (R.)

French Finance Minister Bruno Le Maire said on Thursday he hoped a special trade channel set up with Iran would complete a first, limited transaction in the coming days. Set up by France, Britain and Germany, Instex is a barter trade mechanism that aims to avoid direct financial transfers by offsetting balances between importers and exporters on the European side. The mechanism is aimed at making it possible for trade between European Union members and Iran to continue in the face of stiff U.S sanctions since Washington quit a 2015 nuclear accord between Tehran and world powers last year.


Those sanctions have effectively suffocated Iran’s economy by clamping down on its oil sales. “We want Instex to enter into force in a few days, and I hope that we will be able to operate in a few days. I hope the first transaction will be completed in a few days,” Le Maire told journalists at a meeting in Poland. “The first transaction will be a limited one, but this is a starting point and we expect Instex to be an efficient tool,” Le Maire added. [..] France’s foreign ministry said on Wednesday that Instex would become operational based on Iran’s “full compliance with its JCPOA (Iran deal) commitments.” “We aren’t going to press the yes button if there are doubts about its compliance,” said one European diplomat.

Read more …

Bolton in Mongolia, Tucker Carlson in Air Force One.

Has Trump Turned an Important Corner? (Luongo)

Donald Trump’s surprise visit to North Korea last week was impressive. It was a bold first step in repairing a foreign policy in tatters after more than a year of assaults by his neoconservative boobsie-twins Secretary of State Mike Pompeo and National Security Advisor John Bolton. Trump took Kim at his word who said after talks broke down thanks to Bolton and Pompeo in Hanoi that no dialogue would be possible if Bolton was involved. So, Trump sent Bolton to Mongolia. Then he went to Korea and did the one thing he had to do to begin unraveling the mess he’d gotten himself into. Last week I asked where does Trump go after his confrontation with Iran? Trump answered that question in dramatic fashion. And he deserves a lot of credit for it.

But what does this mean in the wider context? It’s a good first step but we’ve seen this game from him before, making bold moves only to be reined in by his staff. I would say that the optics of sending Bolton to Mongolia are pretty clear. Bolton’s time in the White House is nearly over. This is also a strong signal to Iran that Trump trying to back down without actually saying that. The drone incident was intended to box Trump into a path to war with Iran after the tanker attack in the Gulf of Oman two weeks prior. That was likely not the Iranians but the Saudis and/or MEK, again trying to get Trump to fly off the handle, since he’s easily manipulated into emotional acts. But he was talked out of it at the last minute, presumably by Tucker Carlson, who was with him on Air Force One when Trump went to meet Kim.

[..] A lot has changed in the past four months since the end of the Mueller investigation. And the signs are all there that Trump is feeling a lot more secure both politically and financially that would allow him to not only make bold first moves but follow through on them. Speaker Nancy Pelosi backed down on border wall funding. She’s ruled out impeachment as a bad political tactic. And she’s under fire from the hard-core Progressives in the party. This makes them weak. So, from a re-election standpoint Trump looks very secure, especially after the “I’m more woke than you” fest that was the first debate among DNC candidates. We’re looking at a mirror of 2016 with the Republicans that Trump beat. A wide and shallow pool of less than capable candidates who will all eat each other alive while he rides to re-election.

Read more …

“On the issue of Browder, the Magnitsky story and the essence of the Trump Tower meeting, the Mueller Report is a deception intended to keep the myth of collusion in the air while dismissing that any collusion took place.”

Mueller Report Gets Trump Tower Meeting Wrong; Promotes Browder Hoax (CN)

The Mueller report thus focuses instead on “efforts to prevent disclosure of information about the June 9, 2016 Trump Tower meeting between Russians and senior campaign officials.” But the report on this topic is deceptive. Ironically, as it attacks Donald Trump and top campaign officials for lying, the report itself lies about the issue the meeting addressed. It wasn’t to provide dirt on Hillary Clinton, which the Russian lawyer did not have and never produced. That was a ploy by Robert Goldstone, a British music publicist whose job is to get what his clients want, in this case, a meeting. So, recklessly, he invented the idea of Clinton dirt as a bait-and-switch to get Trump’s people to come to it. He got the lawyer the meeting for her to lobby a potentially incoming administration against the Magnitsky Act, which is why she was in the United States in the first place.

The Magnitsky Act is a 2012 U.S. law that was promoted by William Browder, an American-born British citizen and hedge fund investor, who claimed his “lawyer” Sergei Magnitsky had been imprisoned and murdered because he uncovered a scheme by Russian officials to steal $230 million from the Russian Treasury. It sanctioned Russians he said were involved or benefitted from Magnitsky’s death. It has since been used by the U.S. to put sanctions on other Russians and nationals from other countries.

The lawyer lobbying against the act, Natalia Veselnitskaya, told Trump Jr., Kushner and Manafort that Browder’s story was fake, a smokescreen to block the Russians from going after him for multi-millions in tax evasion. She argued the Magnitsky Act was built on this fraud. Manafort’s notes, included in the Mueller Report, trace what she said.

Read more …

At the heart of Belt and Road is Chinese overcapacity.

Vast Chinese Loans Pose Risks to Developing World (Spiegel)

The future rail link cuts its way through the jungles of Laos for over 400 kilometers. Soon, trains will be rolling through — over bridges, through tunnels and across dams built just for the line, which runs from the Chinese border in the north to the Laotian capital of Vientiane on the Mekong River. After five years of construction, the line is set to go into service in 2021. And the Chinese head of one of the sections has no doubt that it will be finished on time. “Our office alone employs 4,000 workers,” he says. There is also no lack of money: The Chinese government in Beijing has earmarked around 6 billion dollars for the project and has recently become both Laos’s largest creditor and most significant provider of development aid.

China, after all, isn’t just directly financing 70 percent of the new train lain, it is also building dams, schools, military hospitals and has even launched a communications satellite into space for the country. In April, Beijing loaned Laos another 40 million dollars for road construction — a credit that was provided through the multilateral Asian Infrastructure Investment Bank based in Beijing, a financial institution that China established as an alternative to Western development banks. If Hong Kong is included, China isn’t just the largest creditor in Laos, but in the entire world. Beijing’s foreign loans dominate global markets almost to the same degree as its toys, smartphones and electric scooters do.

From Kenya to Montenegro, from Ecuador to Djibouti, roads, dams and power plants are being built with billions in loans from Beijing. And all of those countries will have to pay back those loans in the years to come. With interest. The flood of capital from China helped prevent the global economy from plunging into depression following the bankruptcy of Lehman Brothers and the ensuing financial crisis. But it isn’t without controversy. For some, the billions of dollars from China are a welcome contribution to helping many underdeveloped regions in Asia and Africa expand infrastructure. For others, the loans from Beijing have forced half the world into economic and political dependency on Beijing.

Read more …

What is left of Americans’ wealth dies by a thousand cuts. A predator society.

The End Of Inheritance For The Middle Class (F.)

Increasingly, the old family homestead is not being passed down to the family when the parents die. Older parents are taking advantage of reverse mortgages to pay off credit cards and to escape poverty and debt. This reduces equity in the home and often leads to foreclosure, leaving traditional heirs with nothing but memories. Not only are reverse mortgage companies feasting upon the assets of older Americans; so too are health insurers and prescription drug companies. Moreover, seniors on a fixed income were adversely affected by President Trump’s Tax Cuts and Jobs Act, which raised the threshold on medical expense tax deductions and placed a cap of $10,000 on the itemized deductibility of state and local taxes.

America seems to be in the midst of a paradigm shift. Wealth transfer is skipping the deceased’s traditional heirs and going directly into the pockets of mortgage companies, banks, international corporations and the government. An alarming percentage of older Americans have insufficient money to cover basic necessities. According to the Institute on Assets and Social Policy, one-third of senior households have no money left over each month or are in debt after meeting essential expenses. This makes them vulnerable to the lure of reverse mortgages.

Reverse mortgages allow homeowners age 62 and above to withdraw a portion of their home’s equity to help them pay expenses in retirement. The debt usually comes due when the borrower dies and is repaid through the sale of the home. However, borrowers can face foreclosure while living if they fall behind on property taxes or homeowner’s insurance.

Read more …

That a report must be written on this is what drives me to despair.

Electric Cars Will Not Solve Transport Problem (BBC)

Car use will still need to be curbed even when all vehicles are powered by clean electricity, a report has said. It warns that electrifying cars will not address traffic jams, urban sprawl and wasted space for parking. The Centre for Research into Energy Demand Solutions (CREDS) report calls on the government to devise a strategy allowing people to have a good standard of living without needing a car. The government said it was spending £2bn to promote walking and cycling. It also says it plans to spend £50bn on improving roads. However, critics accuse the government of not having a serious plan to deal with the social problems associated with mass car ownership.


CREDS is an academic consortium of more than 80 academics across the UK. “Car use is a massive blind spot on government policy,” Prof Jillian Anable, one of the authors of the report, said. She added: “For many years ministers have adopted the principle of trying to meet demand by increasing road space. “They need to reduce demand instead.” The authors say there will always be people who depend on cars, especially in the countryside or suburbs. But, they point out that many young people in cities are choosing not to buy cars. Instead they are using public transport, walking, cycling, taking minicabs and hiring cars when they are needed.

Read more …

Imagine all the species that vanish with the trees.

Brazil Deforestation Increase Exceeds 88% In June (R.)

Deforestation in Brazil’s portion of the Amazon rainforest soared more than 88% in June compared with the same month a year ago, the second consecutive month of rising forest destruction under new President Jair Bolsonaro, who has called for development of the region. According to data from Brazil’s space research agency, deforestation in the world’s largest tropical rainforest totaled 920 square km (355 square miles). The data showing an 88.4% deforestation increase is preliminary but indicates the official annual figure, based on more detailed imaging and measured for the 12 months to the end of July, is well on track to surpass last year’s figure.


In the first 11 months, deforestation already has reached 4,565 square km (1,762 square miles), a 15 percent increase over the same period in the previous year. That is an area larger than the U.S. state of Rhode Island. Environmentalists have warned that Bolsonaro’s strong remarks calling for the development of the Amazon and criticizing the country’s environmental enforcement agency Ibama for handing out too many fines would embolden loggers and ranchers seeking to profit from deforestation. “Bolsonaro has aggravated the situation. … He has made a strong rhetorical attack,” said Paulo Barreto, a researcher at Brazilian nongovernment organization Imazon.

Read more …

“..more than half of the tropical forests in the world are gone – most of that in the last 50 years..”

From Madagascar to Brazil, Researchers Pick Best Spots To Replant Forests (R.)

Researchers have identified swathes of lost tropical rainforests as the best places to replant trees, hoping to redress some of the damage done by deforestation and limit climate change. A four-year study used high-resolution satellite imagery to pinpoint more than 100 million denuded hectares (247 million acres) – from South Sudan to Brazil and India – that would deliver good results if reforested. “Globally, more than half of the tropical forests in the world are gone – most of that in the last 50 years,” said Robin Chazdon, a professor at the University of Connecticut and co-author of the study published on Wednesday in the journal Science Advances.


“These forests provide a huge amount of functioning and services for our planet and people that have gone unappreciated,” she told the Thomson Reuters Foundation. The tropics lost 12 million hectares of tree cover in 2018, the fourth-highest annual loss since records began in 2001, according to forest monitoring service Global Forest Watch. Of greatest concern, it said, was the disappearance of 3.6 million hectares of old-growth rainforest, an area the size of Belgium, much due to fires, land-clearing for farms and mining. Environmentalists say protecting existing forests and restoring damaged ones prevents flooding, stores carbon, limits climate change and protects biodiversity.

Read more …

Strong contender for stupidest headline.

Tree Planting ‘Has Mind-Blowing Potential’ To Tackle Climate Crisis (G.)

Planting billions of trees across the world is by far the biggest and cheapest way to tackle the climate crisis, according to scientists, who have made the first calculation of how many more trees could be planted without encroaching on crop land or urban areas. As trees grow, they absorb and store the carbon dioxide emissions that are driving global heating. New research estimates that a worldwide planting programme could remove two-thirds of all the emissions that have been pumped into the atmosphere by human activities, a figure the scientists describe as “mind-blowing”. The analysis found there are 1.7bn hectares of treeless land on which 1.2tn native tree saplings would naturally grow. That area is about 11% of all land and equivalent to the size of the US and China combined.


Tropical areas could have 100% tree cover, while others would be more sparsely covered, meaning that on average about half the area would be under tree canopy. The scientists specifically excluded all fields used to grow crops and urban areas from their analysis. But they did include grazing land, on which the researchers say a few trees can also benefit sheep and cattle. “This new quantitative evaluation shows [forest] restoration isn’t just one of our climate change solutions, it is overwhelmingly the top one,” said Prof Tom Crowther at the Swiss university ETH Zürich, who led the research. “What blows my mind is the scale. I thought restoration would be in the top 10, but it is overwhelmingly more powerful than all of the other climate change solutions proposed.”

Read more …

“This year alone, just under 600 migrants have drowned in the Mediterranean, a figure that is far greater than the number who have died along the U.S.-Mexican border.”

Europe’s Treatment of Migrants Is Shameful (Spiegel)

Today’s migration policies in the European Union are even more brutal than those pursued by Donald Trump. It may be true that the Europe doesn’t have border officials separating children from their parents, but the Europeans have entered into pacts with Libyan militias that operate horrific camps where torture and rape are commonplace, and they work together with the so-called Libyan coast guard, which is little more than a militia at sea. Sea rescue operations in the Mediterranean have practically been shut down, and Italian hardliner Matteo Salvini is no longer allowing private rescue ships to come ashore in the country.

The aim of all of this is clear: The crossing to Europe should be made more dangerous as a way of discouraging migrants from attempting it. And it seems to have worked: Fewer boats are coming. But more of those who try are dying. This year alone, just under 600 migrants have drowned in the Mediterranean, a figure that is far greater than the number who have died along the U.S.-Mexican border. The horrors of the EU’s migration policies aren’t playing out in front of the cameras — they are unfolding in North Africa and on the high seas. There was one exception last week: The captain of a ship with the German rescue organization Sea Watch, Carola Rackete, steered her ship to Lampedusa because people on board had already spent two weeks crammed together on deck and she felt the situation was no longer tenable. The captain was promptly arrested upon the vessel’s arrival in Italy. She was released by an Italian court on Tuesday.

Despite the suffering, the situation in the Mediterranean Sea is quite convenient for countries in northern Europe, while Italian Interior Minister Salvini is playing the role of brutal doorman and scapegoat. The numbers of refugees are stable, but the status quo also means that the issue of migration isn’t being solved. And meanwhile, the EU is selling its soul.

Read more …

Time to normalize Libya.

82 Migrants Feared Dead After Boat Capsizes Off Tunisia (AlJ)

A boat carrying at least 86 refugees and migrants has capsized off the coast of Tunisia with most feared drowned. Some of the four initial survivors told the Tunisian coastguard on Thursday the boat sank off the town of Zarzis, Tunisian Red Crescent official Mongi Slim told Reuters news agency. Tunisian fishermen came across the sinking boat and were able to pull four survivors out on Wednesday night, but could not find any of the other passengers, said Lorena Lando, head of the International Organization for Migration (IOM) in Tunisia.


Eighty-two people remain missing in the incident, which comes a day after a deadly air attack on a Libyan detention centre killed at least 44 migrants. Al Jazeera’s Sarah Khairat, reporting from a refugee camp in Zarzis where the survivors were brought, said the vessel was heading from the west of Libya to Europe when it capsized. The four survivors were all men – three from Mali and one from the Ivory Coast. The Ivory Coast national later died and two of the others are in hospital. Slim told dpa news agency the boat set sail from Libya on Monday. Earlier this week, another boat from Libya made it to the Tunisian port of Sfax with 65 people on board.

Read more …

 

Europe c.1320

 

 

 

 

Jun 052019
 
 June 5, 2019  Posted by at 10:14 am Finance Tagged with: , , , , , , , ,  


Henri Matisse Notre-Dame, une fin d’après-midi 1902

 

The Fed Has No Choice But to Return to Ultra-Low Interest Rates (Polleit)
Australia’s Economy Slows To Levels Last Seen During The GFC (ABC.au)
Australia Federal Police Raid Home Of News Corp Journalist (SMH)
Australian Police Raids On National Broadcaster, News Corp Prompt Outcry (R.)
Global Semiconductor Sales Plunge 24% from Peak (WS)
CNN, Maddow Ratings In Absolute Freefall After Russia Narrative Collapses (ZH)
Ex-Trump Aide Hicks Agrees To Hand Over Campaign Documents To Congress (R.)
EU Gives Nigel Farage 24 Hours To Explain Arron Banks Funds (G.)
10 Million Acres Of US Farmland Won’t Be Planted With Crops This Year (Snyder)
Brazil Amazon Deforestation Rising At Fastest Rate In A Decade (R.)
Chimpanzees In The Wild Reduced To ‘Forest Ghettos’ (AFP)

 

 

End the Fed before it’s too late.

The Fed Has No Choice But to Return to Ultra-Low Interest Rates (Polleit)

If interest rates and returns hit rock bottom, people have little reason to save, and investors little incentive to invest. Consumption increases at the expense of savings, and capital consumption sets in. Existing capital will be used up and not replaced. It might take a while for people to find out that a central bank monetary policy that pushes the interest rate to ever lower levels does not bring prosperity but is very damaging, even ruinous, for the future prosperity of the commonweal. Once investors realize that the economy is losing its strength, elevated asset prices, previously driven up by an ultra-low interest rate, will come crashing down. In the case of stocks, for instance, profit expectations are scaled back, and a downward adjustment of stock prices sets in.

Falling asset prices in general would hit hard consumers’ and corporates’ balance sheets. Their equity positions and credit standing deteriorate. Malinvestment comes to the surface, and the boom is finally turning into bust. The lesson to learn is this: The monetary policy of ever lower interest rate is not the solution to problems caused by a low interest rate policy in the first place. In the short-term it might look promising, but it is a way towards economic destruction. The longer the boom is kept going by central banks’ ultra-low interest rate policy, the bigger will be the ensuing crisis – as the economists of the Austrian School of Economics have pointed out in great detail a long time ago. Murray N. Rothbard put it succinctly:

“It is only when bank credit expansion must finally stop or sharply slow down, either because the banks are getting shaky or because the public is getting restive at the continuing inflation, that retribution finally catches up with the boom. As soon as credit expansion stops, the piper must be paid, and the inevitable readjustments must liquidate the unsound over-investments of the boom and redirect the economy more toward consumer goods production. And, of course, the longer the boom is kept going, the greater the malinvestments that must be liquidated, and the more harrowing the readjustments that must be made.”

Read more …

No recession for 27 years.

Australia’s Economy Slows To Levels Last Seen During The GFC (ABC.au)

Australia’s economy has slowed further, with GDP growth tumbling under 2 per cent over the past year. The economy grew at 0.4 per cent in first three months of the year, to be up 1.8 per cent over the year — the slowest growth since the September quarter in 2009. While the quarterly figure was a step up from the moribund 0.2 per cent growth in final quarter of last year, it still fell below market expectations. It was also much weaker than the 1 per cent growth recorded in the March quarter last year. Excluding the impact of population growth, GDP growth was marginally negative for the third consecutive quarter, further extending the so-called GDP per capita recession.


The result was dragged down by weak household spending, slowing further from last year and up just 1.8 per cent over the year, with households cutting back on their discretionary spending, particularly in new household items, recreation and hospitality. However, spending rose in non-discretionary, essential areas such as insurance, power and health. Household spending overall contributed just 0.1 percentage point to growth. The rapidly cooling residential construction sector was also a significant drag, with dwelling investment falling 2.5 per cent over the quarter having been at record levels in late 2018.

Read more …

Part of me thinks Australia’s a testing ground. Another part wonders what the link might be to the economic collapse.

Australia Federal Police Raid Home Of News Corp Journalist (SMH)

Police have raided the home of a News Corp journalist in what the media company has called a “dangerous act of intimidation” after she reported on a top secret government proposal to give Australia’s cyber spies unprecedented powers. Australian Federal Police officers presented Annika Smethurst, the national political editor of News Corp’s Sunday tabloids, with a search warrant on Tuesday morning. The warrant granted officers authority to access her home, computer and mobile phone. The actions are in connection to a story published in April 2018 which revealed internal government discussions about introducing new powers for electronic intelligence agency the Australian Signals Directorate.

News Corp’s report included details from a top secret internal document proposing new abilities to “proactively disrupt and covertly remove” onshore threats by “hacking into critical ≠infrastructure”. The federal police confirmed the execution of a search warrant on Tuesday as part of an “investigation into the alleged unauthorised disclosure of national security information”. In a statement, the police said they would allege the disclosure of “these specific documents undermines Australia’s national security”. [..] 2GB radio host Ben Fordham also revealed on Tuesday that he has been contacted by Home Affairs this week about his reporting, with the department investigating how he obtained “highly confidential” information about asylum seeker vessels.

Smethurst’s story reported the top secret proposal as one that would for the first time allow the ASD to target Australians, as opposed to enemies on foreign soil. The use of the powers would be subject to approval from the defence and home affairs ministers.

Read more …

John Lyons on Twitter: “AFP: I’m still staggered by the power of this warrant. It allows the AFP to “add, copy, delete or alter” material in the ABC’s computers. All Australians, please think about that: as of this moment, the AFP has the power to delete material in the ABC’s computers. Australia 2019.”

Australian Police Raids On National Broadcaster, News Corp Prompt Outcry (R.)

Police raided the offices of Australia’s national broadcaster on Wednesday over allegations it had published classified material, the second raid on a media outlet in two days, prompting complaints that the “outrageous” raids hindered media freedom. The Australian Federal Police (AFP) said its officers carried out a search warrant at the head office of the government-funded Australian Broadcasting Corp. (ABC) in Sydney on Wednesday. That came a day after police raided the home of a News Corp editor, although the AFP said the raids were unrelated. “It is highly unusual for the national broadcaster to be raided in this way,” ABC Managing Director David Anderson said in a statement.


“This is a serious development and raises legitimate concerns over freedom of the press and proper public scrutiny of national security and defense matters,” he said. The AFP said the ABC raid was in relation to allegations it had published classified material and followed a referral from the chief of the Australian Defence Force and a former acting defense secretary in 2017. The ABC raid was authorized by a court and based on evidence that provided “sufficient suspicion that a criminal offence has been committed”, the AFP said in a statement. Marcus Strom, president of the Media Entertainment and Arts Alliance trade union, said on his Twitter account the two raids were “just outrageous”. “Police raiding journalists is becoming normalized. It has to stop,” he said.

Read more …

Something’s afoot.

Global Semiconductor Sales Plunge 24% from Peak (WS)

Global semiconductor sales dropped 14.6% in April from April last year, to $32.1 billion, on a three-month moving average basis, the World Semiconductor Trade Statistics (WSTS) organization reported Tuesday afternoon. The three-month moving average in April has plunged 24% from the peak last October, thus continuing the deepest plunge in semiconductor sales since the Financial Crisis. In dollar terms, semiconductor sales plunged by over $10 billion in April compared to the pace in October 2018, the largest peak-to-trough dollar-drop ever. During the Financial Crisis, chip sales dropped by $9 billion from peak to trough.


But in percentage terms, the current plunge doesn’t quite measure up: 24% versus the 39% collapse during the Financial Crisis and the 45% collapse during the long dotcom bust. The Semiconductor Industry Association (SIA) said in its press release that sales, based on the data compiled by the WSTS, dropped in all major geographic regions in April (three-month moving averages compared to the same period last year): • Americas: -29.5% • Europe: -8.0% • Japan: -10.9% • China: -10.9% • Asia Pacific/All Other: -10.7

Read more …

“..Rachel Maddow has lost 500,000 viewers who realized life is too short for her bullshit…”

CNN, Maddow Ratings In Absolute Freefall After Russia Narrative Collapses (ZH)

According to Breitbart’s John Nolte, CNN’s primetime ratings suffered a 16% collapse in May – luring just 761,000 members of the resistance and captive airport audiences alike. Overall, the network’s total day viewers dropped to just 559,000. As Nolte points out, “Fox News earned three times as many primetime viewers (2.34 million) and more than twice as many total day viewers (1.34 million). What’s more, when compared to this same month last year, Fox lost none of its primetime viewers and only four percent of its total day viewers.” “Do you have any idea just how low 761,000 primetime viewers is…? How does a nationally known brand like CNN, a brand that is decades old, only manage to attract 761,000 viewers throughout a gonzo news month in a country of over 300 million?

But his is just how far over the cliff CNN has gone… CNN has lost almost all of its viewers, all of its moral authority, and every bit of trust it once had. Over the past six years, as soon as Jeff Zucker took over, CNN got every major national story exactly wrong, including… • Hispanic George Zimmerman: The White Racist Killer • Hands Up, Don’t Shoot • Trump Can’t Win • Brett Kavanaugh: Serial Rapist • The KKKids from KKKovington High School • Trump Colluded with Russia. And in every one of those cases, CNN got it deliberately wrong because CNN is nothing less than a hysterical propaganda outlet, a fire hose of hate, violence, and lies… -Breitbart

In a separate Tuesday article, Nolte notes that MSNBC’s top conspiracy theorist Rachel Maddow has lost 500,000 viewers who realized life is too short for her bullshit. During the first quarter of 2019, prior to the release of the Mueller Report (which debunked the media’s Russia Collusion Hoax and proved Trump did not obstruct justice), Maddow averaged 3.1 million nightly viewers. Last month, after the release of the Mueller Report (which debunked the media’s Russia Collusion Hoax and proved Trump did not obstruct justice), she averaged only 2.6 million viewers. -Breitbart

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Mueller 2.0.

Ex-Trump Aide Hicks Agrees To Hand Over Campaign Documents To Congress (R.)

Former White House Communications Director Hope Hicks, once a close aide to President Donald Trump, has agreed to turn over documents related to his 2016 election campaign to congressional investigators, a top Democratic lawmaker said on Tuesday. The agreement marks a step forward for House of Representatives Judiciary Committee Chairman Jerrold Nadler in investigations of Republican Trump and his inner circle, digging into the campaign, his turbulent presidency and business interests. Hicks, Trump’s former campaign press secretary, agreed to supply the documents from the campaign, despite a White House directive advising her not to provide the committee with material from her subsequent time at the White House.

She and former White House lawyer Annie Donaldson were subpoenaed on May 21 by the panel as part of its inquiry into whether Trump obstructed Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 election and contacts between Trump’s campaign and Moscow. Hicks’ attorney Robert Trout said in a letter to Nadler that Hicks would not hand over documents related to Trump’s time in the White House and his presidential transition period because administration attorneys believe the papers may be subject to a claim of executive privilege by Trump.

[..] The committee is seeking any material Hicks has on a June 2016 meeting at Trump Tower in New York between campaign officials including the president’s son Donald Trump Jr. and son-in-law Jared Kushner and Russians offering to help Trump’s candidacy. The subpoena also seeks documents relating to any payments made to Trump’s convicted former personal lawyer Michael Cohen. Cohen said Trump directed “hush money” payments he made for two women’s silence before the election about their alleged sexual relations with Trump.

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Like he cares. Note that they have no instruments to punish him: “..he could potentially lose the right to make a victory speech in the chamber..”

EU Gives Nigel Farage 24 Hours To Explain Arron Banks Funds (G.)

Nigel Farage has been given 24 hours by the European parliament to explain in person his failure to declare lavish expenses funded by Arron Banks, an insurance tycoon under investigation by the UK’s National Crime Agency. The summons came just two hours before the Brexit party leader was spotted arriving at the US ambassador’s residence in London for a meeting with Donald Trump during the US president’s state visit to the UK. Last month Channel 4 News revealed emails, invoices and documents suggesting that Banks had covered Farage’s costs for a £13,000-a-month Chelsea home in the year of the Brexit referendum, visits to the US and a chauffeur-driven car. Should Farage fail to convince the parliament of his reason for not declaring Banks’s funding, he could potentially lose the right to make a victory speech in the chamber in July as head of his parliamentary group.

None of the donations were declared to the European parliament despite the MEPs’ code of conduct stipulating that all members must declare travel, accommodation or subsistence expenses from third parties. The European parliament’s president, Antonio Tajani, had referred the matter to a committee of five MEPs who act as watchdogs over the parliament’s code of conduct. They met on Tuesday to agree on an unusually short deadline for Farage to explain the failure to declare the expenses at a hearing in Brussels on Wednesday. Farage, who earns €102,000 (£90,000) each year as an MEP and received up to €700,000 from media appearances in 2014-18, told the Guardian that he had no intention of attending the hearing.

He said: “What is this but an EU kangaroo court where I am given 24 hours notice about allegations picked up from press stories? “I will not be attending at such short notice. And if they try to bar me from the building, who else gives voice to the thousands of people who voted for me? Is this democracy EU style? “I did not receive any private money for political purposes. This committee would better spend its time investigating the waste of public money by well-known MEPs.” A failure to attend the advisory committee’s hearing does not bring with it any sanction in itself…

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What are the costs to Monsanto?

10 Million Acres Of US Farmland Won’t Be Planted With Crops This Year (Snyder)

It looks like 2019 could be the worst year for U.S. agriculture in modern American history by a very wide margin. As you will see below, millions upon millions of acres of U.S. farmland will go unused this year due to cataclysmic flooding. And many of the farmers that did manage to plant crops are reporting extremely disappointing results. The 12 month period that concluded at the end of April was the wettest 12 month period in U.S. history, and more storms just kept on coming throughout the month of May. And now forecasters are warning of another series of storms this week, and following that it looks like a tropical storm will pummel the region. As Bloomberg has pointed out, we have truly never seen a year like this ever before…

“There has never been a spring planting season like this one. Rivers topped their banks. Levees were breached. Fields filled with water and mud. And it kept raining.” Many farmers just kept waiting for the flooding and the rain to end so that they could plant their crops, but that didn’t happen. At this point it is too late for many farmers to plant crops at all, and it is now being projected that 6 million acres of farmland that is usually used for corn will go completely unsown this year… “There has never been weather like this, either. The 12 months that ended with April were the wettest ever for the contiguous U.S. That spurred other firsts: Corn plantings are further behind schedule for this time of year than they have been in records dating to 1980 and analysts are predicting an unheard-of 6 million acres intended for the grain may simply go unsown this year.”

[..] In the end, we could easily see more than 10 million acres of U.S. farmland go completely unused this year. And please don’t assume that the acres that have been planted are going to be okay. In Nebraska, farmer Ed Brummels said that conditions are so bad that it is “like we are trying to plant on top of a lake!”… “It’s like we are trying to plant on top of a lake! Planting will be over soon as farmers continue to be frustrated with these very saturated conditions.”

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“They are removing the lungs of our planet… ”

Brazil Amazon Deforestation Rising At Fastest Rate In A Decade (R.)

Deforestation of the Amazon rainforest in Brazil sped up in May to the fastest rate in a decade, according to data from an early-warning satellite system, as experts pointed to activity by illegal loggers encouraged by the easing of environmental protections under President Jair Bolsonaro. According to the Brazilian space research institute INPE, the DETER alerting system registered deforestation of 739 square kilometers (285 square miles) in May, the first of three months in which logging tends to surge following the region’s rainy season. That is up from 550 square kilometers in May 2018 and more than double the deforestation detected two years earlier.


“If this upward curve continues, we could have a bad year for the Amazon forest,” Claudio Almeida, head of INPE’s satellite monitoring program, said on Tuesday. “It will depend on how much policing there is in the next two critical months,” he added. The data adds to concerns from environmentalists who warn that Bolsonaro’s five-month-old government has dismantled conservation agencies, shown skepticism about fighting climate change and cut the budget to enforce environmental laws. Brazil’s environmental protection agency IBAMA, which has been starved of funds in recent years, lost authority when he took office in January, and the forestry commission was moved to the Agriculture Ministry, which is run by farm industry allies.

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The sadness is deafening.

Chimpanzees In The Wild Reduced To ‘Forest Ghettos’ (AFP)

Urban expansion and hunting have pushed chimpanzees, humanity’s closest relative in the animal kingdom, into shrinking islets of wildness, top experts said Tuesday after a three-day meeting in Germany. All four sub-species of the African primate are threatened with extinction, with at least one – the western chimpanzee – declining in number by more than 80 percent over three generations. Forty chimp experts from around the world – with a combined 300 years of field experience – issued a collective appeal to save the only animal whose DNA overlaps with humans by 98%. “Over the decades that we have been working with wild chimpanzee communities, we have all seen our study groups become isolated,” they said in a statement.


“Chimpanzees are being reduced into living in forest ghettos.” The main threat to chimps and other large mammals is habitat loss. Africa still has large tracts of undisturbed savannah and forest, but these areas are shrinking rapidly due growing cities, mining, deforestation, and industrial agriculture. The continent’s human population of more than 1.2 billion is expected to double by mid-century, and could top four billion by the end of the century.

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Mar 052018
 
 March 5, 2018  Posted by at 11:04 am Finance Tagged with: , , , , , , , , , , , ,  


Astor Theater, Times Square NYC 1945

 

Monetary Policy In The Grip Of A Pincer Movement (BIS)
The Arithmetic of Risk (John Hussman)
BOJ’s Kuroda Joins Queue of Central Banks Looking Toward Exit (BBG)
Trump’s Trade War Is For The Forgotten People (Eric Peters)
Italy Faces Political Gridlock After 5-Star Surges (R.)
China Sets 2018 GDP Target at About 6.5%, Turns Fiscal Screws (BBG)
Tax the Wealth of Older Britons to Help the Young, Report Argues (BBG)
Eliminate The Deficit? Eliminate Economic Hope, More Like (McDuff)
15,000 New Manchester Homes And Not A Single One ‘Affordable’ (G.)
The Tyranny of Algorithms (G.)
US Embassy In Turkey Closed Due To Security Threat (R.)
Erdogan Advisor Says Ankara Ready To ‘Strike’ In Eastern Med (K.)
Australia: Global Deforestation Hotspot (G.)
Europe Tree Loss Pushes Beetles To The Brink (BBC)

 

 

Financial cycles appear to have grown in amplitude and length. Next move could be really wild.

Monetary Policy In The Grip Of A Pincer Movement (BIS)

The emergence of disruptive financial cycles and the limited sensitivity of inflation to domestic slack may at first sight seem to be unrelated. In fact, there may be a common thread: the behaviour of monetary policy. Consider each in turn. The first major development is that, since around the early 1980s, financial cycles appear to have grown in amplitude and length. There is no unique definition of the financial cycle. A useful one refers to the self-reinforcing processes between funding conditions, asset prices and risk-taking that generate expansions followed by contractions. These processes operate at different frequencies. But if one is especially interested in those that cause major macroeconomic costs and banking crises, probably the most parsimonious description is in terms of credit and property prices.

Graph 1 illustrates the phenomenon for the United States using some simple statistical filters, although the picture would not be that different for many other countries or using other techniques (eg peak-trough analysis). The graph shows that the amplitude and length of the fluctuations has been increasing, that the length of the financial cycle is considerably longer than that of the traditional business cycle (blue versus red line) and that banking crises, or serious banking strains, tend to occur close to the peak of financial cycle. Another key feature of financial cycles is that the bust phase tends to generate deeper recessions. Indeed, if the bust coincides with a banking crisis, it causes very long-lasting damage to the economy.

There is evidence of permanent output losses, so that output may regain its pre-crisis long-term growth trend while evolving along a lower path. There is also evidence that recoveries are slower and more protracted. And in some cases, growth itself may also be seriously damaged for a long time. Some recent work with colleagues sheds further light on some of the possible mechanisms at work. Drawing on a sample of over 40 countries spanning over 40 years, we find that credit booms misallocate resources towards lower-productivity growth sectors, notably construction, and that the impact of the misallocations that occur during the boom is twice as large in the wake of a subsequent banking crisis.

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“.. I continue to expect the S&P 500 to lose about two-thirds of its value over the completion of the current market cycle…”

The Arithmetic of Risk (John Hussman)

At present, I view the market as a “broken parabola” – much the same as we observed for the Nikkei in 1990, the Nasdaq in 2000, or for those wishing a more recent example, Bitcoin since January. Two features of the initial break from speculative bubbles are worth noting. First, the collapse of major bubbles is often preceded by the collapse of smaller bubbles representing “fringe” speculations. Those early wipeouts are canaries in the coalmine. In July 2007, two Bear Stearns hedge funds heavily invested in sub-prime loans suddenly became nearly worthless. Yet that was nearly three months before the S&P 500 peaked in October, followed by a collapse that would take it down by more than 55%.

Observing the sudden collapses of fringe bubbles today, including inverse volatility funds and Bitcoin, my impression is that we’re actually seeing the early signs of risk-aversion and selectivity among investors. The speculation in Bitcoin, despite issues of scalability and breathtaking inefficiency, was striking enough. But the willingness of investors to short market volatility even at 9% was mathematically disturbing. See, volatility is measured by the “standard deviation” of returns, which describes the spread of a bell curve, and can never become negative. Moreover, standard deviation is annualized by multiplying by the square root of time. An annual volatility of 9% implies a daily volatilty of about 0.6%, which is like saying that a 2% market decline should occur in fewer than 1 in 2000 trading sessions, when in fact they’ve historically occurred about 1 in 50.

The spectacle of investors eagerly shorting a volatility index (VIX) of 9, in expectation that it would go lower, wasn’t just a sideshow in some esoteric security. It was the sign of a market that had come to believe that stock prices could do nothing but advance, and could be expected to do so in an uncorrected diagonal line. I continue to expect the S&P 500 to lose about two-thirds of its value over the completion of the current market cycle. With market internals now unfavorable, following the most offensive “overvalued, overbought, overbullish” combination of market conditions on record, our market outlook has shifted to hard-negative. Rather than forecasting how long present conditions may persist, I believe it’s enough to align ourselves with prevailing market conditions, and shift our outlook as those conditions shift.


Annotation in blue by Mish

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Perhaps this is truly a coordinated effort. The BIS could be doing the coordination.

BOJ’s Kuroda Joins Queue of Central Banks Looking Toward Exit (BBG)

The end of the easy money era which spanned the global economy for the last decade came into even sharper focus as the Bank of Japan gave fresh insight into when it might slow its stimulus program. Governor Haruhiko Kuroda’s remarks on Friday that the central bank will start thinking about how to complete its unprecedented easing around the fiscal year starting April 2019 was the clearest signal yet that a conclusion might be in sight to emergency support for the Japanese economy. While Kuroda’s statement in response to questions from lawmakers was in some ways stating the obvious – the BOJ forecasts inflation to reach its 2% target in fiscal 2019 – the significance is that he’s put down a marker in public that he can be held to.

“It’s notable how over the past few weeks Kuroda has been forced into talking more specifically about the exit,” said Izumi Devalier, head of Japan economics at BofAML. “A year and a half ago he would have shut down the discussion altogether with the blanket ‘it’s too early to talk about it’ statement.” That means the last of the big central banks is finally thinking out loud about policy normalization or how to begin the process of unwinding years of asset purchases and ultra-low interest rates that were used to stoke growth after the 2008 financial crisis sparked the worst global recession in decades. The Fed, Bank of Canada and Bank of England have already raised interest rates and may do so again soon, while the ECB is debating how soon to end its own bond-buying. China’s central bank is sticking to what it describes as neutral policy settings and is ratcheting up money market rates to cool the pace of borrowing.

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Peters is never boring.

Trump’s Trade War Is For The Forgotten People (Eric Peters)

“The import restrictions announced by the US President are likely to cause damage not only outside the US, but also to the US economy itself, including to its manufacturing and construction sectors, which are major users of aluminum and steel,” warned the IMF, their army of nerds in full sweat. Panic. Just 200k Americans work in steel, aluminum and iron. 5.5mm of our 154mm workers are employed by businesses that use steel. “How could the Americans make such an idiotic mistake?” howled the nerds. But of course, they entirely miss the point. “If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a Tax on their Cars which freely pour into the US. They make it impossible for our cars (and more) to sell there. Big trade imbalance!” tweeted Trump.

The US currently imposes a 2.5% tariff on EU auto imports. The EU imposes a 10% tariff on US auto imports. Germany exports $25bln of autos to America annually. “US auto prices will rise,” warned the Washington Post. But of course, they entirely miss the point. “Trade wars are good, easy to win,” tweeted Trump, knowing the statement would trigger every nerd with a college degree. Some worried about their jobs. But not terribly. Because their unemployment rate is just 2%, their labor force participation is 74%. They’re as well off as they’ve ever been. Particularly when set against those who never went to college, 5% of whom are unemployed, and 50% don’t even participate in the labor force. They’ve given up. These trade policies are for these forgotten people. To hell with the consequences. That’s the point.

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More for forgotten people. Beppe got them where he wanted; largest party by a huge margin. Merkel and Macron’s “More Europe” plans can be shelved. But first, expect more tricks to keep the old guard in power.

Italy Faces Political Gridlock After 5-Star Surges (R.)

Italy faces a prolonged period of political instability after voters delivered a hung parliament on Sunday, spurning traditional parties and flocking to anti-establishment and far-right groups in record numbers. With votes counted from more than 75% of polling stations, it looked almost certain that none of the three main factions would be able to govern alone and there was little prospect of a return to mainstream government, creating a dilemma for the EU. A rightist alliance including former prime minister Silvio Berlusconi’s Forza Italia (Go Italy!) held the biggest bloc of votes. In a bitter personal defeat that appeared unlikely last week, the billionaire media magnate’s party looked almost certain to be overtaken by its ally, the far-right League, which campaigned on a fiercely anti-migrant ticket.

But the anti-establishment 5-Star Movement saw its support soar to become Italy’s largest single party by far, and one of its senior officials said on Monday that forming a coalition without it would be impossible. The League’s economics chief on Monday raised the possibility of an alliance with 5-Star. Any government based on that combination would be euro-skeptic, likely to challenge EU budget restrictions and be little interested in further European integration. The full result is not due until later on Monday and, with the centre-right coalition on course for 37% of the vote and 5-Star for 31%, swift new elections to try to break the deadlock are another plausible scenario.

Despite overseeing a modest economic recovery, the ruling centre-left coalition trailed a distant third on 22%, hit by widespread anger over persistent poverty, high unemployment and an influx of more than 600,000 migrants over the past four years.

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Plus huge cuts to steel production. China is hurting.

China Sets 2018 GDP Target at About 6.5%, Turns Fiscal Screws (BBG)

China stepped up its push to curb financial risk, cutting its budget deficit target for the first time since 2012 and setting a growth goal of around 6.5% that omitted last year’s aim for a faster pace if possible. The deficit target – released Monday as Premier Li Keqiang delivered his annual report to the National People’s Congress in Beijing – was lowered to 2.6% of GDP from 3% in the past two years. The 6.5% goal is consistent with President Xi Jinping’s promise to deliver a “moderately prosperous” society by 2020. Policy makers dropped a target for M2 money supply growth, saying it’s expected to expand at similar pace to last year. Authorities reiterated prior language saying prudent monetary policy will remain neutral this year and that they’ll ensure liquidity at a reasonable and stable level.

Xi has ratcheted up his drive to curb debt risk, pollution and poverty at a time when the world’s second-largest economy is on a long-term growth slowdown. His efforts to rein in spending contrast with an historic expansion of U.S. borrowing under Donald Trump during a period of economic expansion. The 2018 targets “suggest slower growth and a fiscal drag,” said Callum Henderson, a managing director for Asia-Pacific at Eurasia Group in Singapore. “This makes sense for China in the context of the new focus on financial de-risking, poverty alleviation and environmental clean-up, but is less good news at the margin for those economies that have high export exposure to China.”

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Is it too late to close the gap in a peaceful manner?

Tax the Wealth of Older Britons to Help the Young, Report Argues (BBG)

Britain should impose higher wealth taxes on the older generation to ease the growing burden on young people, according to the Resolution Foundation. In a speech Monday, Executive Chair David Willetts will warn that welfare spending is set to rise by the equivalent today of 60 billion pounds ($83 billion) by 2040 as aging “baby boomers” drive up the cost of health care. “The time has come when we Boomers are going to have reach into our own pockets,” he will say. “The alternative could be an extra 15 pence on the basic rate of tax, paid largely by our kids. Is that kind of tax really the legacy we – a generation who own half the nation’s wealth – want to bequeath our children and grandchildren?”

Willetts, a former minister in the ruling Conservative Party, will make the case for reform of council tax – a property-based levy that helps fund local services – and of inheritance tax. Failure to act could fuel a sense of grievance among young people who are already struggling to match to the living standards enjoyed by older generations, he will say.

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“..deficits aren’t only not bad, they’re necessary…”

Eliminate The Deficit? Eliminate Economic Hope, More Like (McDuff)

Congratulations, everyone! We did it! The deficit has been eliminated! George Osborne, the architect of austerity, emerged from one of his non-jobs as the editor of the London Evening Standard to tell us all it was a “remarkable national effort” on Twitter, as if he’d ever broken a sweat over it. David Cameron, who will go down as arguably the worst prime minister in history thanks to the gigantic power move of doing a Brexit and running away, simply added: “It was the right thing to do” – safe in the knowledge that he was now out of the line of fire from tough questions.

That will all be cold comfort to the thousands of homeless people struggling to cope with sub-zero temperatures, or those having to choose between keeping the heating on, or risk going into rent arrears and losing their home entirely; to public sector workers in the NHS or local government, trying to keep the wheels from falling off as they deliver vital services in the face of budget cuts; and to disabled and unemployed people, bearing the brunt of the government’s spending cuts and facing harassment from the authorities. Forget all that. We’ve eliminated the deficit, and all we had to do was attack the poor and vulnerable with a relentless fury, create a new generation of young people for whom the concept of pensions or even steady wages is a fantasy, and undermine public services to such a grotesque extent that it will take years to rebuild what we’ve lost. Hooray!

[..] As Richard Murphy of Tax Research UK points out: “A growing economy requires general price increases, or inflation. Except under unusual circumstances, a general increase in prices requires an increasing money supply. A fiscal deficit is the only way in which money can be injected into an economy continuously. It follows that governments must run a near perpetual deficit or face the risk of creating a liquidity crisis due to a shortage in the money supply, which would then create a risk of deflation.” In other words, deficits aren’t only not bad, they’re necessary. Without them we get deflation, an over-indebted household sector, and an explosion in inequality.

The government is not like your household. It does not “run out of money,” because its job is to match the quantity of money to the desired economic activity. Its “debts” are not like your debts – they’re your savings and your pension funds. Osborne’s “remarkable national effort” was always and only to ensure that the government sector took more money out of the economy than it put into it. His great legacy is that we’re now at the stage where for every pound the government spends in day-to-day services, it taxes, and therefore destroys, more than a pound somewhere else. And we put people on the streets to freeze to achieve it. Go us.

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Thatcher-inflicted pain continues.

15,000 New Manchester Homes And Not A Single One ‘Affordable’ (G.)

Some of the UK’s biggest cities are allowing developers to plan huge new residential developments containing little or no affordable housing. In Manchester, none of the 14,667 homes in big developments granted planning permission in the last two years are set to be “affordable”, planning documents show – in direct contravention of its own rules, and leading to worries that London’s affordable housing crisis is spreading. In Sheffield – where house prices grew faster last year than in any other UK city, according to property portal Zoopla – just 97 homes out of 6,943 (1.4%) approved by planners in 2016 and 2017 met the government’s affordable definition. That says homes must either be offered for social rent (often known as council housing), or rented at no more than 80% of the local market rate.

In Nottingham, where the council aims for 20% of new housing to be affordable, just 3.8% of units given the green light by council planners meet the definition, Guardian research found. In Manchester, named by Deloitte earlier this month as one of Europe’s fastest growing cities and where property now sells three times as quickly as in London, planners have routinely waved through huge new developments – some containing swimming pools, tennis courts and more than 1,000 flats. Not one of the swanky apartments meets the national definition of “affordable” – leading critics to accuse the council of social cleansing. Others worry the city could become like London, where people on average salaries can no longer afford to live anywhere central.

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Aka the terror of social media.

The Tyranny of Algorithms (G.)

For the past couple of years a big story about the future of China has been the focus of both fascination and horror. It is all about what the authorities in Beijing call “social credit”, and the kind of surveillance that is now within governments’ grasp. The official rhetoric is poetic. According to the documents, what is being developed will “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step”. As China moves into the newly solidified President Xi Jinping era, the basic plan is intended to be in place by 2020. Some of it will apply to businesses and officials, so as to address corruption and tackle such high-profile issues as poor food hygiene.

But other elements will be focused on ordinary individuals, so that transgressions such as dodging transport fares and not caring sufficiently for your parents will mean penalties, while living the life of a good citizen will bring benefits and opportunities. Online behaviour will inevitably be a big part of what is monitored, and algorithms will be key to everything, though there remain doubts about whether something so ambitious will ever come to full fruition. One of the scheme’s basic aims is to use a vast amount of data to create individual ratings, which will decide people’s access – or lack of it – to everything from travel to jobs. The Chinese notion of credit – or xinyong – has a cultural meaning that relates to moral ideas of honesty and trust.

There are up to 30 local social credit pilots run by local authorities, in huge cities such as Shanghai and Hangzhou and much smaller towns. Meanwhile, eight ostensibly private companies have been trialling a different set of rating systems, which seem to chime with the government’s controlling objectives. The most high-profile system is Sesame Credit – created by Ant Financial, an offshoot of the Chinese online retail giant Alibaba. Superficially, it reflects the western definition of credit, and looks like a version of the credit scores used all over the world, invented to belatedly allow Chinese consumers the pleasures of buying things on tick, and manage the transition to an economy in which huge numbers of people pay via smartphones. But its reach runs wider.

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What does Washington have to say?

US Embassy In Turkey Closed Due To Security Threat (R.)

The U.S. embassy in Turkey’s capital Ankara will be closed to the public on Monday due to a security threat and only emergency services will be provided, it said in a statement on Sunday. The embassy advised U.S. citizens in Turkey to avoid large crowds and the embassy building and to be aware of their own security when visiting popular tourist sites and crowded places. It did not specify what the security threat was that prompted the closure. Additional security measures were taken after intelligence from U.S. sources suggested there might be an attack targeting the U.S. embassy or places U.S. citizens were staying, the Ankara governor’s office said in a statement. Visa interviews and other routine services would be canceled on Monday, the embassy said, adding that it would make an announcement when it was ready to reopen.

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Same guy said if Greeks set foot on -their own- Imia islets, it will basically mean war.

Erdogan Advisor Says Ankara Ready To ‘Strike’ In Eastern Med (K.)

A close advisor of Turkish President Recep Tayyip Erdogan has warned of a “strike” in the eastern Mediterranean if any attempt to explore or drill for hydrocarbons goes ahead without Ankara’s approval. Yigit Bulut, who is known for his incendiary remarks, was quoted by the Cyprus News Agency as telling Turkish state broadcaster TRT that Erdogan is prepared to call a “strike” at any “attempt at provocation.” “Have no doubt about it,” he said. Ankara has vowed to prevent any exploration for oil or gas around Cyprus and last month was accused to threatening to use force against a drillship chartered by Italy’s Eni to explore Block 3 of Cyprus’s exclusive economic zone.

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3 million hectares to be lost over 15 years.

Australia: Global Deforestation Hotspot (G.)

Australia is in the midst of a full-blown land-clearing crisis. Projections suggest that in the two decades to 2030, 3m hectares of untouched forest will have been bulldozed in eastern Australia. The crisis is driven primarily by a booming livestock industry but is ushered in by governments that fail to introduce restrictions and refuse to apply existing restrictions. And more than just trees are at stake. Australia has a rich biodiversity, with nearly 8% of all Earth’s plant and animal species finding a home on the continent. About 85% of the country’s plants, 84% of its mammals and 45% of its birds are found nowhere else. But land clearing is putting that at risk. About three-quarters of Australia’s 1,640 plants and animals listed by the government as threatened have habitat loss listed as one of their main threats.

Much of the land clearing in Queensland – which accounts for the majority in Australia – drives pollution into rivers that drain on to the Great Barrier Reef, adding to the pressures on it. And of course land clearing is exacerbating climate change. In 1990, before short-lived land-clearing controls came into place, a quarter of Australia’s total greenhouse gas emissions were caused by deforestation. Emissions from land clearing dropped after 2010 but are rising sharply again. “It has gotten so bad that WWF International put it on the list of global deforestation fronts, the only one in the developed world on that list,” says Martin Taylor, the protected areas and conservation science manager at WWF Australia. In Queensland, where there is both the most clearing and the best data on clearing, trees are being bulldozed at a phenomenal rate.

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And more deforestation. Sometimes you wonder what will be left of Europe in 100 years. Or 50.

Europe Tree Loss Pushes Beetles To The Brink (BBC)

The loss of trees across Europe is pushing beetles to the brink of extinction, according to a new report. The International Union for the Conservation of Nature assessed the status of 700 European beetles that live in old and hollowed wood. Almost a fifth (18%) are at risk of extinction due to the decline of ancient trees, the European Red List of Saproxylic Beetles report found. This puts them among the most threatened insect groups in Europe. Saproxylic beetles play a role in natural processes, such as decomposition and the recycling of nutrients. They also provide an important food source for birds and mammals and some are involved in pollination.

“Some beetle species require old trees that need hundreds of years to grow, so conservation efforts need to focus on long-term strategies to protect old trees across different landscapes in Europe, to ensure that the vital ecosystem services provided by these beetles continue,” said Jane Smart, director of the IUCN Global Species Programme. Logging, tree loss and wood harvesting all contribute to the loss of habitat for the beetles, said the IUCN. Other major threats include urbanisation and tourism development, and an increase in wildfires in the Mediterranean region. Conservation efforts need to focus on long-term strategies to protect old trees and deadwood across forests, pastureland, orchards and urban areas, the report recommended.

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